Court: District Court, E.D. Louisiana; September 30, 2014; Federal District Court
Defendants OS Restaurant Services, Inc., Outback Steakhouse of Florida, LLC, and OSF Louisiana Services, LTD filed a motion to dismiss a lawsuit initiated by Steven Boudreaux following his termination from Outback Steakhouse around May 24, 2013. Boudreaux contested the validity of a noncompetition clause in his Employment Agreement. His initial lawsuit was dismissed for lack of a justiciable case, and this current suit, filed on May 22, 2014, includes a request for a declaratory judgment on the noncompetition agreement, which has become moot after the defendants formally waived their right to enforce it. Boudreaux's complaint also contains claims for intentional interference with contractual relations (Count 3) and violations of the Louisiana Unfair Trade Practices Act (Count 4), both of which the defendants seek to dismiss under Rule 12(b)(6) for failure to state a claim. The legal standard for dismissal requires that a complaint must state a claim that is plausible on its face, with sufficient factual content to allow reasonable inferences of liability. The court must view all allegations in the light most favorable to the plaintiff, but dismissal is warranted when the complaint shows a clear bar to relief.
Count 3 of the complaint addresses intentional interference with contractual relations, asserting that the plaintiff is entitled to damages under Louisiana law. This law recognizes a narrow cause of action for tortious interference, particularly concerning the duty of corporate officers to avoid intentional and unjustified interference with contracts between their employer and third parties, as established in 9 to 5 Fashions, Inc. v. Spurney. The elements necessary to establish this claim include: (1) existence of a contract or legally protected interest, (2) the corporate officer's knowledge of the contract, (3) intentional inducement or causation of the corporation's breach of the contract, (4) absence of justification for the officer's actions, and (5) the resulting damages to the plaintiff. Louisiana courts and the Fifth Circuit have not expanded this tortious interference action beyond claims against individual corporate officers. The plaintiff's complaint fails to allege any wrongdoing by such officers and only names corporate entities as defendants, thus failing to meet the necessary elements for Count 3.
Count 4 pertains to alleged violations of the Louisiana Unfair Trade Practices Act (LUTPA), which allows any person who suffers ascertainable losses due to unfair or deceptive practices to seek damages. LUTPA does not define specific unfair practices, delegating this determination to the courts for case-by-case assessment.
Under the relevant statute, plaintiffs must demonstrate that the alleged conduct violates established public policy and is characterized as immoral, unethical, oppressive, unscrupulous, or significantly harmful. Courts have clarified that only egregious actions involving fraud, misrepresentation, or other unethical behavior fall under the Louisiana Unfair Trade Practices Act (LUTPA). Mere negligence is insufficient for sanctions under this statute, which does not impede legitimate business practices or sound decision-making.
The defendants argue for the dismissal of count 4 under Rule 12(b)(6), asserting that their sole action was sending a letter post-termination reminding the plaintiff of the surviving clauses of the employment agreement, which they claim is not prohibited behavior under LUTPA. The plaintiff counters that the letter was not the only measure taken by the defendants to enforce the noncompetition agreement, referencing their opposition to the plaintiff's earlier petition to declare it invalid.
However, the court will only consider the factual allegations within the complaint for the motion, dismissing any external references. The complaint claims that the defendants only sent the letter stating their intent to enforce the noncompetition agreement and does not provide evidence of fraud or deception. While sympathetic to the plaintiff's situation, the court finds that the allegations do not substantiate claims of unfair or deceptive practices as defined by LUTPA. Previous cases allowing LUTPA claims do not apply here, as the plaintiff fails to demonstrate any illegal conduct or improper motive by the defendants in enforcing their agreement.
The Supreme Court has acknowledged the potential for an actionable breach of an employer's obligation not to enforce an illegal non-solicitation agreement under the Louisiana Unfair Trade Practices Act (LUTPA), referencing Preis v. Standard Coffee Service Co. The determination of whether a specific action constitutes an unfair or deceptive trade practice is to be made by the Court based on the specific circumstances of each case. While the Court does not categorically rule out the possibility of a LUTPA claim arising from the enforcement of an invalid non-competition agreement, it finds that the plaintiff has not sufficiently articulated such a claim in the current complaint.
In conclusion, the motion is granted, leading to the dismissal of counts 1 and 2 with the consent of counsel. The plaintiff is permitted to file an amended complaint addressing deficiencies in counts 3 and 4 by October 10, 2014; failure to amend will result in the dismissal of those counts. The Employment Agreement in question imposes a two-year non-competition clause prohibiting the employee from engaging with any steakhouse within a 30-mile radius of any Outback Steakhouse location. The plaintiff references Gearheard v. De Puy Orthopaedics, which explores employee remedies against unenforceable covenants not to compete, but acknowledges that the Fifth Circuit's interpretations may not universally apply. The defendants speculate that the plaintiff may have intended to plead tortious interference with business relations, a suggestion the Court will not entertain given the opportunity for amendment. Additionally, the plaintiff's argument regarding the defendants' belief in the enforceability of the non-competition clause lacks sufficient support in the complaint.
