Rodney Tow v. Organo Gold Intl, Inc., 18-20394

Background

AmeriSciences was an MLM that spent ~$6.2M to build a ~6,400-person distributor network; distributor agreements contained non‑solicit and confidentiality provisions.
By early 2012 AmeriSciences was insolvent; CEO Barry Cocheu and chairman Louis Gallardo discussed moving to Organo (an MLM) and met with Holton Buggs (Organo exec).
In April 2012 Cocheu directed export of AmeriSciences’ complete distributor data and WMS software; the files were emailed to Organo personnel and Buggs; AmeriSciences received no consideration.
AmeriSciences ceased MLM operations and later entered bankruptcy; trustee Rodney Tow sued Cocheu, Organo, and Buggs for trade secret misappropriation, tortious interference, breach of fiduciary duty, unjust enrichment, and fraudulent transfer.
A jury found liability on multiple claims and awarded $3,461,166; the district court later amended judgment to add fraudulent transfer findings and prejudgment interest; the Fifth Circuit affirmed except it remanded to apply a $110,000 settlement credit.

Issues

Issue	Plaintiff's Argument (Tow)	Defendant's Argument (Organo/Buggs)	Held
Whether Tow lacked standing / lost rights after sale of assets to SRD	Tow maintained trustee had Article III standing and retained claims (fraudulent transfer reserved) or SRD would seek reformation; Tow prosecuted claims on estate’s behalf	Appellants argued the SRD purchase transferred rights to sue for trade secrets, so Tow cannot recover	Court: Appellants’ contract‑interpretation claim was waived (not raised in Rule 50); also lacked merit as Appellants were non‑parties to the SRD contract — issue not properly before court and rejected
Whether district court erred by amending judgment to add fraudulent transfer findings post‑verdict (Rule 59(e) / Rule 49)	Tow argued jury instructions covered fraudulent transfer and post‑verdict amendment merely reflected jury findings	Appellants argued they waived jury trial on transferee questions and Rule 49 required submission of specific questions	Court: No abuse of discretion. Jury was instructed on fraudulent transfer and answered questions that support findings; amendment proper despite imperfect wording
Whether prejudgment interest on trade secret award was improper	Tow sought prejudgment interest; argued Texas law and equitable principles authorize interest on trade secret damages	Appellants argued Texas Finance Code limits prejudgment interest to tangible property and that future damages preclude interest	Court: Prejudgment interest proper — Texas law authorizes interest for trade secret claims and damages here were not purely future damages
Whether Tow’s damages expert and valuation were admissible and legally sufficient	Tow relied on expert Weingust (cost and income approaches averaged) to value distributor network at ~$3.45M; damages for multiple claims derive from that valuation	Appellants attacked reliability of methods and sought exclusion; also argued separate damages questions were required and some claims lacked evidentiary support	Court: District court did not abuse discretion admitting expert; Fifth Circuit found methodologies permissible under Texas law (avoided costs/development cost approach), sufficiency of evidence supported each claim, and single damages question acceptable because same measure and joint liability applied

Key Cases Cited

Cotton v. Certain Underwriters at Lloyd’s of London, 831 F.3d 592 (5th Cir. 2016) (distinguishing Article III standing from contract‑interpretation defenses)
Perry v. Thomas, 482 U.S. 483 (U.S. 1987) (contract‑party arguments do not raise jurisdictional standing)
GlobeRanger Corp. v. Software AG U.S. of Am., Inc., 836 F.3d 477 (5th Cir. 2016) (approving development‑cost/avoided‑cost approach to trade‑secret damages)
United States v. Flores, 63 F.3d 1342 (5th Cir. 1995) (district court has substantial latitude in framing jury instructions)
Lujan v. Defenders of Wildlife, 504 U.S. 555 (U.S. 1992) (Article III standing elements)
Roman v. W. Mfg., Inc., 691 F.3d 686 (5th Cir. 2012) (abuse‑of‑discretion standard for admission of expert testimony under Rule 702)