Court: District Court, S.D. Texas; June 6, 2014; Federal District Court
Plaintiff GE Betz, Inc. has filed motions for summary judgment against Defendants AMSPEC Services, L.L.C., Michelle Moffitt-Johnston, and others, addressing counterclaims for business disparagement and tortious interference with customer and employment contracts. Moffitt, previously employed by GE and a founder of its Distressed Fuels Team (DFT), left GE in 2012 to join AmSpec as Vice President. GE alleges that Moffitt breached her non-solicitation agreement and misused trade secrets, fiduciary duties, and engaged in unfair competition. Conversely, AmSpec and Moffitt counterclaim that GE has interfered with their employment agreement and disparaged their business.
Moffitt's career at GE began in 1996 as a phase separation engineer, and she led the DFT from its inception in 2009. The DFT provided chemical treatments for fuel and collaborated with AmSpec for inspections and marketing efforts. Moffitt signed an employment contract that included a confidentiality clause, requiring her to protect GE's trade secrets and proprietary information during and after her employment. This confidential information encompasses any non-public information that gives GE a competitive advantage and is subject to reasonable secrecy measures.
Moffitt entered into an agreement with GE that included a non-solicitation covenant, preventing her from engaging with GE's customers and prospective customers for eighteen months post-termination. "Customer" was defined as any current GE client with whom Moffitt had contact in the eighteen months prior to her departure, while "prospective customer" included any entity she aided in proposals or contacted multiple times within the prior twelve months. The covenant specifically prohibits her from discussing competitive products or services she learned about during her employment, and it bars her from circumventing this restriction, including supervising others in solicitation or sharing confidential information.
Upon termination, Moffitt had obligations to return confidential information, participate in exit interviews, and notify GE in writing about any new job offers within the following eighteen months. After resigning from GE on September 19, 2012, Moffitt sought employment and contacted customers, receiving an offer from AmSpec and preparing a business plan using GE's resources. She accepted the job as Vice President at AmSpec shortly after her resignation. GE's Human Resources Manager noted that Moffitt did not disclose plans to compete with GE, suggesting she represented that her new role would not conflict with her previous position at GE.
Moffitt participated in an exit interview with Iragorri on October 16, during which she checked "No" to the question of whether she was resigning from GE to work for a competitor. Iragorri confirmed that Moffitt verbally stated she would not compete with GE's DFT at her new job with AmSpec. However, Moffitt had previously informed Iragorri that she would be working at AmSpec, where she planned to develop an Additives product line. Iragorri suggested that at that time, AmSpec was not considered a competitor. Despite this, AmSpec was entering the fuel treatment market, and Moffitt was hired alongside Scott Hagstrom, a former employee in fuel treatments, where they held similar roles with different focuses. Additionally, three other former GE employees were hired by AmSpec. On October 19, Moffitt, now with AmSpec, attended a yacht cruise co-hosted by GE and AmSpec, where she interacted with GE's customers, raising concerns about her presence. GE subsequently filed a lawsuit against AmSpec and Moffitt on February 21, 2013, claiming Moffitt breached her post-employment contract and that AmSpec tortiously interfered with her employment contract. GE sought a preliminary injunction on March 8, 2013, which was initially denied as a temporary restraining order on March 27. After expedited discovery, the court heard the motion for a preliminary injunction on June 11, 2013.
The parties reached an agreement for an injunction during a hearing and intended to submit an agreed order to the Court within a week, leading to the denial of GE's motion for a preliminary injunction without prejudice. However, no order was submitted, leaving no injunction in effect. On July 22, 2013, GE filed an amended complaint against Moffitt and AmSpec, presenting thirteen causes of action including breach of contract, misappropriation, fraud, and unfair competition. Moffitt filed counterclaims against GE for declaratory judgment and tortious interference on September 17, 2013, while AmSpec also filed counterclaims for business disparagement and tortious interference.
Subsequently, on February 15, 2014, GE sought summary judgment on the counterclaims, and Moffitt and AmSpec filed their own motion for summary judgment on GE's claims the same day. The parties exchanged responses and replies regarding these motions in March 2014. Moffitt and AmSpec raised objections to evidence and a motion to strike, which the Court granted on April 22, 2014, while objections to evidence remained pending. The defendants objected to a demonstrative timeline (Exhibit 10) that included references to a previously struck DLP Report, leading to a sustained objection for that portion but an overruling for other parts of the timeline. Defendants also objected to portions of a deposition transcript (Exhibit 18) on hearsay grounds, where Kevin Kurtz discussed feedback about Moffitt from a Statoil employee, with specific statements regarding Moffitt's departure and its implications for GE's business.
Defendants object to Kurtz’s statements as hearsay, asserting they originate from a second-hand conversation regarding Michelle Moffitt. However, the specific portions being contested are unclear, and the Plaintiff points out that Defendants reference parts of the same excerpt in their motions. The Plaintiff uses this testimony to illustrate that a statement was made, not to assert its truth, thus it is not classified as hearsay. Consequently, Defendants' objections to Exhibit 18 are overruled.
Defendants also challenge Exhibits 33-3 and 33-4, which contain lists related to "Confidential Information" and "Measures to Protect Trade Secrets," prepared by Scott Nalven for his deposition. They argue these documents are inadmissible hearsay. The Court finds that it does not need to rely on these exhibits since Nalven has testified to their contents; therefore, the objections are deemed moot.
Further, Defendants contest Kevin Kurtz's March 18, 2013 affidavit, claiming it lacks personal knowledge because Kurtz admitted he had not reviewed Moffitt's Employment Agreement before signing the affidavit. The Plaintiff counters that Kurtz's familiarity with his own similar Employment Agreement provides a basis for personal knowledge. Additionally, Defendants argue that Kurtz's list is hearsay based on information from other employees. The Plaintiff cites Fifth Circuit precedent allowing for personal knowledge of activities not directly participated in, leading to the overruling of Defendants' objections.
Lastly, Defendants object to several paragraphs of Kurtz's March 10, 2014 affidavit, specifically regarding sales data linked to GE customers prior to Moffitt's departure. The objections pertain to the credibility and source of the information presented by Kurtz.
Defendants objected to certain paragraphs in Kurtz's affidavit, claiming they were hearsay and speculative, asserting that the financial statement is the best evidence of Kurtz's claims. However, Kurtz is allowed to express his rational perceptions based on his experience (Fed. R. Evid. 701(a)), and the Defendants did not challenge the accuracy of paragraph four. Therefore, the court overruled the objections to paragraphs four and five.
Regarding paragraph five, Kurtz stated his belief that the same individuals awarded nominations to both AmSpec and GE, based on his customer knowledge. In paragraph six, he claimed that AmSpec used GE's confidential information, drawing from his understanding of GE's business and AmSpec's financials. In paragraph seven, he asserted that without the use of GE's confidential information, GE would likely have received more nominations. Defendants argued these statements lacked foundational support and were speculative. While Kurtz's testimony was rooted in his experience as GE's Sales Director, his conclusions were deemed unsubstantiated and lacked factual basis. Consequently, the court sustained the Defendants' objections to the portions of paragraph five and to paragraphs six and seven.
The document further clarifies that summary judgment is appropriate when there are no genuine issues of material fact, and the moving party is entitled to judgment as a matter of law (Fed. R. Civ. P. 56(c)). The movant must identify evidence demonstrating the absence of genuine issues, where a material fact's resolution could impact the lawsuit's outcome, and an issue is "genuine" if sufficient evidence exists for a reasonable jury to rule for the nonmoving party. If the burden of proof lies with the nonmoving party, the movant can meet its burden by showing a lack of evidence supporting the nonmoving party's case.
The party seeking summary judgment must prove there is no genuine issue of material fact without needing to disprove the nonmovant's claims. Should the moving party fail to meet this initial burden, the motion is denied regardless of the nonmovant's arguments. Once the moving party has met its burden, the opposing party must provide admissible evidence that creates a factual dispute regarding every essential element of their case. Merely relying on pleadings is insufficient; the nonmovant must specifically identify evidence in the record and explain how it supports their claims. The court will consider all reasonable inferences in favor of the nonmovant, but mere doubts, conclusory allegations, or minimal evidence do not satisfy the burden. Unsupported claims or vague affidavits are inadequate to oppose summary judgment. The district court does not evaluate credibility or weigh evidence, nor does it search the record for support for the nonmovant's position. Evidence not referenced in the nonmovant's response is not considered by the court. Additionally, AmSpec and Moffitt have filed for summary judgment on all thirteen claims brought by GE.
Defendants seek summary judgment on Plaintiff's claim regarding a breach of a non-solicitation covenant in Moffitt's Employment Agreement. They assert that the covenant is unenforceable due to the lack of a reasonable geographic limitation and an excessive time restriction. Even if enforceable, they argue there is no evidence of a breach. According to Texas law (Tex. Bus. Com. Code § 15.50(a)), a non-solicitation covenant must be ancillary to an enforceable agreement and include reasonable limitations on time, geography, and scope to protect the promisee’s interests. The court determines enforceability as a legal question.
Defendants contend the covenant lacks any geographic limitation, while Plaintiff counters that it restricts Moffitt to customers she engaged with in the last eighteen months at GE, which serves as a reasonable alternative to a geographic restriction. Courts have recognized that a reasonable geographic scope can be defined by the territory where the employee worked. Previous rulings support that a non-compete clause limited to an employee's clients can substitute for geographic boundaries.
Plaintiff presents an affidavit from Sales Director Kevin Kurtz, stating Moffitt is restricted from contacting twenty specific customers as per the agreement. This limitation is argued to imply a "tight" geographic constraint. However, it is noted that Kurtz had not reviewed Moffitt's employment contract prior to signing the affidavit, casting doubt on his interpretation of its scope.
Kurtz testified to compiling a list of twenty customers or prospective customers by consulting with team members to identify critical clients for legal protection. His affidavit claims these companies were contacted by Moffitt during her last eighteen months at GE, but this assertion lacks competent evidence, as it does not provide a precise list of customers as required by the employment contract. Courts have upheld restrictive covenants without geographic limits when a clear list of clients is provided. In cases cited, agreements were deemed enforceable when they specifically identified customers with whom the former employee had dealt. Conversely, the absence of competent evidence regarding Moffitt's customers prevents GE from demonstrating that the restriction is reasonable. Even if Kurtz's list were considered valid, the restrictive covenant remains unreasonable as it broadly restricts Moffitt from soliciting twenty global companies regardless of her actual contacts. Many companies listed operate multiple independent refineries, making it unreasonable to limit her solicitation efforts across the entire corporate entity. GE has not defended the reasonableness of its customer definition and instead suggests that its evidence regarding AmSpec's sales to similar locations is irrelevant to the overly broad customer definition in the agreement.
GE contends that the definition of "customer" in Moffitt's Employment Agreement is irrelevant to proving a violation, as it does not intend to show that she solicited clients outside her previous markets. However, this argument pertains to Moffitt's compliance with the Agreement rather than its restrictiveness. Throughout the litigation, GE has claimed that the definition of "customer" encompasses entire corporate entities, aiming to prevent Moffitt from soliciting entire companies. The court finds that such expansive definitions of "customer" and "prospective customer" are unreasonable, as a restrictive covenant must relate to the employee's activities. GE's request to substitute a geographic restriction with a customer-based one fails since the definitions extend beyond individuals or divisions to entire corporations, lacking the geographic relevance necessary for enforcement under Texas law. Consequently, the non-solicitation covenant in Moffitt's Employment Agreement is deemed unenforceable. Typically, when a covenant is found unreasonable, courts reform it to make it valid; however, since the terms of Moffitt's non-solicitation agreement expired on April 18, 2014, any reformation would be futile. The Court also addresses the defendants' claim that there is insufficient evidence of Moffitt violating the non-solicitation agreement, which prohibits her from soliciting or communicating with customers regarding competing products or services she learned about while employed by GE. The agreement further restricts her from engaging in any indirect solicitation activities.
Moffitt's attendance at the New York Harbor Show cruise is cited by GE as evidence of a breach of her Employment Agreement, claiming she solicited customers there. However, AmSpec's COO clarified that the event was primarily social, intended for networking rather than direct business solicitation. GE's assertion relies on Moffitt's conversations with two GE customers and her remark about her red shoes being "AmSpec red." Despite GE's corporate representative stating Moffitt was restricted from contacting GE's customers for eighteen months, this limitation is not reflected in her Employment Agreement, which only prohibits discussions about competitive products or services. Therefore, merely speaking with GE's customers does not constitute solicitation under the Agreement.
Additionally, GE argues that since AmSpec's marketing director, Fusco, does not engage in marketing for the additives division due to its complexity, Moffitt must be soliciting customers. However, this inference lacks merit as Fusco's role was to inform potential clients of AmSpec's capabilities, not to conduct direct marketing. Moffitt is permitted to supervise employees engaged in solicitation, as her Agreement does not restrict her from overseeing others.
Finally, GE points to interactions between Moffitt and Hagstrom as further evidence of breach. Hagstrom's testimony indicates that they both refer potential clients to each other when their interactions might conflict with their respective agreements, demonstrating compliance rather than breach. The evidence provided by GE does not substantiate claims of Moffitt soliciting customers or breaching her Employment Agreement.
Confidential Information was not improperly shared by Moffitt to assist in soliciting or serving Customers or Prospective Customers. Hagstrom's testimony indicated both he and Moffitt would not work with clients if it violated their agreements, but this does not demonstrate any subterfuge by Moffitt in referring her former GE clients to Hagstrom. Supervising an employee who solicits former customers does not breach the Employment Agreement, which specifically restricts Moffitt from supervising Hagstrom in solicitation efforts. An e-mail from Hagstrom to Moffitt about a meeting in San Antonio does not imply Moffitt was supervising Hagstrom's solicitation activities or sharing confidential information, thus failing to support GE's claim of a breach of Moffitt's non-solicitation covenant. Consequently, the Court granted Defendants' motion for summary judgment regarding this claim.
Regarding the misappropriation of trade secrets, a trade secret is defined as information that provides a business advantage over competitors. Under Texas law, to establish a claim for misappropriation, a plaintiff must prove the existence of a trade secret, improper acquisition through breach of a relationship or improper means, and unauthorized use by the defendant. While Defendants acknowledge that GE's pricing and sales data could qualify as trade secrets, they assert there is no admissible evidence proving they utilized this information.
Plaintiff alleges that Moffitt misappropriated various confidential materials, including customer lists and financial information. However, the only supporting evidence presented is the Data Loss Prevention Report, which has been deemed inadmissible by the Court. Consequently, Plaintiff fails to demonstrate that the trade secrets were acquired through a breach of confidentiality or improper means, as established in CQ, Inc. Plaintiff's claim that AmSpec used GE's trade secrets to undercut prices is based solely on Moffitt's general business plan for her AmSpec interview. This plan lacks specific trade secret details, with revenue estimates being vague and measured only in millions. Therefore, it is inadequate to substantiate claims of price undercutting, leading to the conclusion that summary judgment is warranted since Plaintiff has not shown a likelihood of trade secret misappropriation.
Additionally, Plaintiff claims its treatment trailers are trade secrets. Defendants contest this assertion, stating that the trailers do not contain proprietary information. The only evidence cited by the Plaintiff regarding the trailers is the ACTNOW Trailer Manual, which, while it contains operational instructions and general safety guidelines, fails to specify any proprietary designs or specifications. The manual includes standard operational procedures and equipment checklists but does not provide detailed trade secret information. As such, Plaintiff's arguments concerning the proprietary nature of the trailers are insufficient to warrant protection.
The Trailer Manual outlines communication protocols for the DFT team, emphasizing the limited use of the reply-all function, attention to spelling and grammar, and the necessity for detailed communication among team members. The Court determines that the Trailer Manual does not qualify as a trade secret, referencing relevant case law which requires a trade secret to demonstrate originality beyond general knowledge. The Plaintiff fails to show that any part of the Manual contains unique information or practices that exceed common industry knowledge, nor does it provide proprietary details on GE's methodologies. Consequently, the Defendants are granted summary judgment on the Plaintiff's misappropriation claims regarding the treatment trailers and related chemical usage.
Regarding the breach of fiduciary duty claim against Moffitt, the Court notes that while a fiduciary relationship exists, the Plaintiff alleges various breaches, such as facilitating supplier arrangements for AmSpec and deceptive conduct regarding her job transition. The Plaintiff's evidence primarily consists of an email chain that starts on Moffitt's last day at GE, suggesting that Moffitt did not act improperly before her departure, as her response occurred after leaving the company. Thus, the Court upholds the Defendants' motion for summary judgment on both the misappropriation of trade secrets and breach of fiduciary duty claims.
Moffitt's lack of participation in an email chain until after her departure from GE indicates only that she was preparing to compete, which is lawful. The case law cited establishes that a fiduciary can prepare for future competition without breaching duties to an employer. Therefore, the claim that Moffitt breached her fiduciary duties by arranging AmSpec supplies while still employed by GE is unfounded.
Additionally, while GE alleges Moffitt set up meetings for AmSpec with GE customers, evidence shows she scheduled a dinner with a Statoil employee for GE's marketing purposes prior to her departure. This does not constitute a breach of fiduciary duty, as it was for GE and not AmSpec.
Regarding allegations of misrepresentation about her new job and intent to compete, Moffitt's supervisor requested information about her future employment, which she did not provide. GE's HR representative and others confirm Moffitt did not disclose plans to compete with GE, instead suggesting her new position would not involve competition. Moffitt's exit form indicated she was not resigning to work for a competitor, and she verbally assured that her new role would not conflict with GE's interests. Furthermore, an email from Moffitt after leaving GE stated she was not in a position to compete in fuels business.
Moffitt informed Iragorri the week prior to her exit from GE that she would be working at AmSpec, specifying her intent to develop an additives product line. During her exit interview, Iragorri remarked that AmSpec was not considered a competitor. Assuming GE's version of events is accurate, a reasonable jury could determine that Moffitt failed to disclose her intention to compete with GE, creating a material fact issue that prevents summary judgment on GE's claim regarding her withholding of information about her post-employment plans.
Additionally, GE alleges Moffitt breached her fiduciary duty by recruiting Christopher Hessong to AmSpec before her separation. It is prohibited for employees to solicit others to leave while still employed. Hessong testified he was unhappy at GE and seeking new employment, having spoken to Moffitt about his situation, although their discussions did not pertain to AmSpec until after her departure. His request for a reference from Moffitt did not indicate solicitation of his departure from GE.
GE contends that an email from Hessong, which referenced an "Operations Lead" position, supports their claim; however, the email's content clarified that he was resigning from that position and reverting to a full-time role, contradicting any suggestion of solicitation by Moffitt. Consequently, the evidence does not substantiate GE's claims of Moffitt breaching her fiduciary duty or conflicting employment obligations, leading to the appropriateness of summary judgment on these claims.
Plaintiff asserts that Moffitt did not inform GE of her intention to compete with the company post-employment, breaching her Employment Agreement. Consequently, summary judgment is denied on this claim concerning Moffitt’s post-GE employment plans. The court grants in part and denies in part the Defendants' motion for summary judgment regarding Moffitt's breach of fiduciary duty and conflicting employment obligations, leaving for trial the issue of whether Moffitt concealed her post-employment intentions.
Defendants also seek summary judgment on allegations of fraud by non-disclosure against Moffitt and AmSpec. Fraud by non-disclosure requires the plaintiff to establish several criteria, including the defendant's duty to disclose material facts and the plaintiff's reliance on the defendant's silence, which resulted in injury. Plaintiff's claim against Moffitt centers on her alleged failure to disclose her post-employment plans. Defendants argue Moffitt had no duty to disclose these plans as an at-will employee, citing relevant case law. However, Plaintiff contends that a fiduciary relationship existed between Moffitt and GE, which created such a duty.
Furthermore, Defendants must correct any prior misleading statements, as a partial disclosure creates an obligation to provide complete information. Moffitt claims she fully disclosed her intentions, but GE disputes this. Therefore, summary judgment is also inappropriate for GE's fraud by non-disclosure claim against Moffitt. As for AmSpec, Plaintiff alleges it failed to inform GE of Moffitt's role at an upcoming event. Defendants argue that no fiduciary relationship existed between AmSpec and GE, which would negate the fraud claim against AmSpec.
GE asserts that while the general relationship between the parties was not fiduciary, the jointly-sponsored 2012 yacht cruise imposed a duty on AmSpec to inform GE of Moffitt's attendance as the head of AmSpec's new additives business. A formal fiduciary relationship requires a joint venture, which necessitates a community of interest, agreements to share profits and losses, and mutual control over the enterprise. The court determines whether a joint venture exists, and in this case, while the cruise co-sponsored by AmSpec, GE, and a third company may demonstrate community interest and control, GE failed to prove any agreement to share losses or profits from the cruise. Without evidence of such agreements, GE's claim of a joint venture—and thus a fiduciary relationship—fails.
Additionally, GE's claim that Moffitt's fraud by nondisclosure should be attributed to AmSpec is undermined by the court's prior summary judgment against GE regarding Moffitt's alleged misconduct while still employed at GE. Consequently, the court declines to attribute any wrongdoing to AmSpec. The defendants also sought summary judgment on GE's constructive fraud claims against Moffitt and AmSpec, which require a breach of a fiduciary duty. Since the court found no fiduciary duty existed between AmSpec and GE, summary judgment is granted on GE's constructive fraud claim against AmSpec. However, a fiduciary relationship did exist between Moffitt and GE, leaving unresolved questions about whether Moffitt breached her duty to disclose her post-employment intentions.
Summary judgment is inappropriate for GE's constructive fraud claim against Moffitt regarding her duty to disclose post-employment plans. The court partially grants and denies the Defendants' motion for summary judgment on fraud claims, granting it for AmSpec and denying it for Moffitt. The Defendants also seek summary judgment on claims of tortious interference with GE's prospective business relationships. To succeed, GE must demonstrate: (1) a reasonable probability of entering a business relationship, (2) an independently tortious act by the defendant that prevented this relationship, (3) the defendant's intent to interfere, and (4) actual harm suffered by GE. GE identifies a November 2012 cargo treatment with Statoil as the basis for its claim, alleging Moffitt violated her Employment Agreement by speaking with a Statoil employee, leading to AmSpec winning the contract. However, there is no evidence of a breach, as GE's supporting testimony is based on second-hand information that does not confirm Moffitt's solicitation of Statoil. Additionally, there is no evidence of GE negotiating for the cargo treatment, undermining the claim of reasonable probability for GE to have secured it absent Defendants' actions. Thus, GE fails to establish the necessary elements for tortious interference.
Defendants' motion for summary judgment regarding Plaintiff's claim for tortious interference with prospective business relationships has been granted. Additionally, Defendants sought summary judgment on Plaintiff's claims against Moffitt for illegal use of confidential information and breach of a common law duty. Moffitt's Employment Agreement included provisions prohibiting the disclosure of GE's confidential information post-employment. Defendants contended that there was no evidence of Moffitt's actual use or disclosure of such information, undermining Plaintiff's claim of breach. Plaintiff argued that AmSpec, prior to hiring Moffitt, lacked knowledge in the additives sector but quickly became profitable after her hiring. However, the court found this argument speculative, as Plaintiff failed to identify any specific confidential information Moffitt allegedly used. Moffitt was entitled to apply her general knowledge and skills in her new role.
Furthermore, Plaintiff alleged that Moffitt’s knowledge of GE employees' capabilities led to their hiring by AmSpec. However, the claim lacked clarity as to how this knowledge constituted confidential information, especially since Moffitt's Employment Agreement defined confidential information as non-public. Plaintiff did not assert that this knowledge was non-public, leading to the dismissal of this claim as well.
Lastly, Defendants moved for summary judgment on Plaintiff's claim that AmSpec tortiously interfered with Moffitt's Employment Agreement, arguing that since Moffitt did not breach her obligations, AmSpec should be exonerated. The court outlined the necessary elements for a tortious interference claim, which include the existence of a contract, intentional interference, proximate causation of damage, and actual damage or loss. In summary, all motions for summary judgment by Defendants regarding these claims have been granted.
Covenants not to compete that are deemed unreasonable restraints of trade are unenforceable on public policy grounds and cannot support a tortious interference claim. In Lazer Spot, Inc. v. Hiring Partners, Inc., the court determined that since Moffitt's non-solicitation provision is an unreasonable restraint, AmSpec cannot be liable for interfering with it. The court granted summary judgment in favor of Moffitt regarding all claims associated with her post-employment obligations, which underlie GE's allegations against AmSpec. The remaining trial issue concerns whether Moffitt properly informed GE about her competing employment before leaving, but GE has not claimed that AmSpec intentionally interfered with this obligation. Without evidence of Moffitt breaching her post-employment obligations, GE cannot establish AmSpec's interference, thus AmSpec is entitled to summary judgment.
Additionally, the court addressed GE's claim for unjust enrichment, clarifying that it is not an independent cause of action but a theory of recovery applicable to other claims where benefits were obtained through fraud or undue advantage. The court granted summary judgment for the defendants on this claim as well.
Finally, the court considered GE's unfair competition claim, which went unaddressed by GE in response to the defendants' motion. Under Texas law, unfair competition encompasses actions contrary to honest business practices. The court granted summary judgment on this claim as well.
To establish a tort for unfair competition, the plaintiff must demonstrate that the defendant engaged in an illegal act that disrupted the plaintiff's business operations. This illegal act does not have to constitute a criminal violation but must be an independent tort. The court has granted summary judgment for AmSpec regarding GE's unfair competition claim, as all independent tort claims against AmSpec have been dismissed. In contrast, while some independent tort claims against Moffitt have been dismissed, one claim remains concerning Moffitt's failure to disclose her post-employment plans, leading to a partial grant of summary judgment against Moffitt.
For the civil conspiracy claim, the essential elements include the involvement of two or more persons, a shared objective, a meeting of the minds, unlawful acts, and resulting damages. If no underlying intentional tort exists, the conspiracy claim fails. The plaintiff's remaining allegations against Moffitt focus on her non-disclosure of post-employment plans. The defendants argue that the plaintiff cannot prove the "meeting of the minds" necessary for conspiracy. Despite the assertion that AmSpec was aware of Moffitt's contractual obligations, the plaintiff has not provided evidence demonstrating such a meeting. The evidence presented indicates Moffitt's lack of communication with GE rather than a coordinated effort with AmSpec. Consequently, the civil conspiracy claim does not survive summary judgment due to insufficient evidence.
Defendants' motion for summary judgment on Plaintiff's civil conspiracy claim is granted. GE seeks summary judgment on all counterclaims from AmSpec and Moffitt, specifically targeting AmSpec's claim of business disparagement. To succeed in a business disparagement claim, a plaintiff must prove four elements: (1) publication of false and disparaging information by the defendant, (2) with malice, (3) without privilege, and (4) resulting in special damages. Unlike defamation, actual malice must be proven, meaning the defendant knew the statements were false or acted with reckless disregard for their truth. Special damages require evidence showing that the disparaging communication significantly deterred third parties from doing business with the plaintiff, leading to a direct financial loss.
GE argues that AmSpec fails to establish the first, second, and fourth elements of its claim. The only special damages cited by AmSpec pertain to lost cargo treatment revenue from sales to Statoil. The Court's evaluation centers on GE's interactions with Statoil, where GE's Kevin Kurtz communicated the ongoing litigation between AmSpec and GE. Kurtz described expressing respect for Moffitt while acknowledging the legal issues. Despite Kaczka's displeasure with the litigation, the Court found that Kurtz's statements were truthful and not disparaging. Kurtz's high-level discussion of the lawsuit, specifically referencing Moffitt's Employment Agreement, was factual, thus failing to support AmSpec’s claim of business disparagement.
AmSpec cannot pursue a business disparagement claim based on true statements, as established in Texas case law. In cases of business disparagement or false advertising, the burden of proof for falsity lies with the plaintiff. AmSpec's allegations hinge on a series of emails from GE's counsel concerning communications with customers about a lawsuit involving Moffitt. The emails included assertions that Moffitt violated her Employment Agreement and advised customers to regard her statements skeptically. However, the court noted that there is no evidence that these statements were communicated to Statoil, as Kurtz, who disseminated the email to his sales team, did not share these statements with anyone from Statoil. Consequently, AmSpec failed to demonstrate that GE published false statements, leading to the granting of GE's motion for summary judgment on AmSpec's business disparagement claim.
Additionally, GE sought summary judgment on AmSpec and Moffitt's tortious interference claims, which alleged that GE interfered with their employment contract by enforcing restrictive covenants it purportedly knew to be unenforceable. To succeed in a tortious interference claim, the plaintiff must prove the existence of a contract, intentional interference, causation of damages, and actual damages. GE contended that AmSpec and Moffitt could not establish the second, third, and fourth elements of their claims.
GE asserts a legal right to enforce restrictive covenants, which it contends justifies its actions against AmSpec and Moffitt. The court focuses only on the issue of damages, concluding that Defendants cannot demonstrate any. Moffitt, still employed by AmSpec without a decrease in salary or benefits, has not suffered injury from tortious interference, as established in KTRK Television, Inc. v. Fowkes. Moffitt's claims of mental anguish damages are also deemed non-recoverable under tortious interference claims, as per Creditwatch, Inc. v. Jackson, which specifies that such damages are not permitted and that tortious interference damages mirror breach of contract damages.
Defendants claim reputational damages, which can only be recovered if they are a reasonable result of the contractual interference, according to Browning-Ferris, Inc. v. Reyna. Although Defendants argue that GE's lawsuit impacted their reputation, they have not sufficiently shown how this reputational damage resulted directly from GE's interference with their employment contract. The lawsuit's potential to complicate Moffitt's job duties does not logically connect to reputational harm. Consequently, GE is entitled to summary judgment on this counterclaim.
Additionally, GE seeks summary judgment on AmSpec's counterclaim for tortious interference with customer contracts, which AmSpec has conceded is appropriate. Thus, GE's motion for summary judgment is granted on both counterclaims.
GE's motion for summary judgment on AmSpec's counterclaim for tortious interference with customer contracts is granted. GE's motions for summary judgment are also granted, while the motions from AmSpec and Moffitt-Johnston are granted in part and denied in part. Although Moffitt signed an Employment Agreement, the illegibility of the date does not affect the case's outcome. Plaintiff suggests AmSpec may be jointly liable for Moffitt's alleged fiduciary breaches, but this claim is not included in the First Amended Complaint, preventing its consideration at this stage. Moffitt and AmSpec attempted to introduce a second act of interference—defamatory comments—only in their response to the motion for summary judgment, which GE objects to as improperly raised. Their counterclaims clearly identify GE's lawsuit as the sole basis for tortious interference, and any new claims introduced at this late stage are not properly before the court. The court declines to consider Moffitt and AmSpec's additional theory of liability.
