Johnson, et al. v. Vincent, et al.

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Lake Charles Rubber and Gasket Co., L.L.C. ("Lake") and its sole owner, Vesta Balay Johnston (collectively, Plaintiffs), and Gulf Coast Rubber and Gasket, L.L.C. ("Gulf') and Bryan Vincent (collectively, Defendants), both appealed certain court of appeal rulings. Defendants asserted the court of appeal failed to correctly apply the manifest error standard of review in reversing the district court's findings that certain Lake information in Gulf's possession did not constitute "trade secrets" or that their misappropriation was not otherwise a violation of the Louisiana Unfair Trade Secrets Act ("LUTSA"). They further argued the court of appeal erred in increasing the damages award from $700,000 to $19,574,884, i.e., a multiple of nearly 28, where ample evidence in the record supported the district court's judgment as to damages. Plaintiffs argued the court of appeal erred on rehearing by eliminating the treble damages applied to its award for unjust enrichment and dismissing Johnston's claim for diminution in value of her ownership interest in Lake. The Louisiana Supreme Court reversed the court of appeal in part as to its finding that Lake's parts numbering system and descriptions constituted a trade secret under LUTSA. Furthermore, the Court reversed the court of appeal as to the increase in the amount of lost profit damages. The case was remanded to the district court for a recalculation of lost profit damages giving consideration to the violations of LUTSA related to Gulf's misappropriation of Lake's customer lists and inventory usage history with respect to the Sasol customer contract. The Court affirmed in all other respects and remanded for further proceedings.

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FOR IMMEDIATE NEWS RELEASE NEWS RELEASE #009 FROM: CLERK OF SUPREME COURT OF LOUISIANA The Opinions handed down on the 15th day of February, 2023 are as follows: BY Crichton, J.: 2021-C-01196 C/W 2021-C-01207 VESTA HALAY JOHNSTON, ET AL. VS. SUSAN HALAY VINCENT, ET AL. (Parish of Calcasieu) REVERSED IN PART. AFFIRMED IN PART. REMANDED FOR FURTHER PROCEEDINGS IN ACCORDANCE HERE WITH. SEE OPINION. Weimer, C.J., dissents in part, concurs in part and assigns reasons and concurs in the dissent in part by Crain, J. Hughes, J., dissents in part and assigns reasons. Crain, J., dissents in part and assigns reasons. 1 SUPREME COURT OF LOUISIANA No. 2021-C-01196 VESTA HALAY JOHNSTON, ET AL. vs. SUSAN HALAY VINCENT, ET AL. On Writ of Certiorari to the Court of Appeal, Third Circuit, Parish of Calcasieu CRICHTON, J. In this consolidated matter, Lake Charles Rubber and Gasket Co., L.L.C. ("Lake") and its sole owner, Vesta Balay Johnston (together with Lake, the "Plaintiffs"), and Gulf Coast Rubber and Gasket, L.L.C. ("Gulf') and Bryan Vincent (together with Gulf, the "Defendants"), both appeal certain rulings of the court of appeal. Specifically, Defendants assert that the court of appeal failed to correctly apply the manifest error standard of review in reversing the district court's findings that certain Lake information in Gulf's possession did not constitute "trade secrets" or that their misappropriation was not otherwise a violation of the Louisiana Unfair Trade Secrets Act, La. R.S. 51:1431, et seq. ("LUTSA"). They further argue that the court of appeal erred in increasing the damages award from $700,000 to $19,574,884, i.e., a multiple of nearly 28, where ample evidence in the record supports the district court's judgment as to damages. For their part, Plaintiffs argue the court of appeal erred on rehearing by eliminating the treble damages applied to its award for unjust enrichment and dismissing Vesta Johnston's claim for diminution in value of her ownership interest in Lake. For the reasons set forth herein, we reverse the court of appeal in part as to its finding that Lake's parts numbering system and descriptions constituted a trade secret under LUTSA. We further reverse the court of appeal as to the increase in the SUPREME COURT OF LOUISIANA No. 2021-C-01196 VESTA HALAY JOHNSTON, ET AL. VS. SUSAN HALAY VINCENT, ET AL. On Writ of Certiorari to the Court of Appeal, Third Circuit, Parish of Calcasieu WEIMER, C.J., dissenting in part. For the following reasons, I find that the district court did not manifestly err in implicitly finding that Lake’s customer lists did not constitute a trade secret under the Louisiana Unfair Trade Secrets Act. Because of Lake’s loss of “key personnel (the majority of its outside and inside sales force),”1 many of whom joined Gulf’s workforce, I believe that the record contains reasonable support for the district court’s apparent finding that the customer lists were confined to information that was readily ascertainable due to the limited Lake Charles market via the collective memories of the majority of the sales force and/or outside resources such as a telephone book, the internet, and social media. The record shows that over the years, Bryan Vincent and his team gained: considerable knowledge about the rubber and gasket business – that Bryan Vincent himself was one of the leading experts in the industry nationally. The Gulf personnel had strong relationships with key customers who were loyal to Gulf’s team and had the requisite skills to open and operate a competitive business in short time. Johnston v. Vincent, 21-1196 (La. 1/--/23), slip op. p. 31. Accordingly, I would reverse the court of appeal’s finding that Lake’s customer lists were trade secrets under LUTSA.2 1 2 Johnston v. Vincent, 21-1196 (La. 1/--/23), slip op. p. 30. I also concur in the dissent in part by Justice Crain. SUPREME COURT OF LOillSIANA No. 2021-C-01196 VESTA BALAY JOHNSTON, ET AL. vs. SUSAN BALAY VINCENT, ET AL. On Writ of Certiorari to the Court of Appeal, Third Circuit, Parish of Calcasieu Hughes, J., dissents in part. I dissent in part for the reasons assigned by Weimer, C.J., and Crain, J. February 14, 2023 SUPREME COURT OF LOUISIANA No. 2021-C-01196 VESTA HALAY JOHNSTON, ET AL. VS. SUSAN HALAY VINCENT, ET AL. On Writ of Certiorari to the Court of Appeal, Third Circuit, Parish of Calcasieu Crain, J., dissents in part and assigns reasons: I would reinstate the trial court’s decision as I believe no manifest error occurred. I agree that the numbering system was not a trade secret under LUTSA. However, I disagree that the customer list was a trade secret. Lake’s profits were largely from a few large customers as testified to by Vincent. That means that the largest number of customers on the customer list did not generate the largest profits for Lake. Additionally, nearly all of Lake’s outside and inside sales team left to work for Gulf. They knew their customers, and it is not unreasonable that they also knew the volume of sales to their customers. It was not manifestly erroneous for the trial court to decline to find a LUTSA violation relating to the customer list. I dissent on this issue. Regarding damages, I would reinstate the trial court’s lost profits award. The trial court rejected the opinions of plaintiffs’ forensic accountant and relied more on defendants’ economic expert. There was no manifest error in that choice. I also would not make an independent award for unjust enrichment, and would not require treble damages on the amount awarded for lost profits. I agree with the trial court, any violation after notice from the Attorney General was attributable to the preservation order agreed to by both the plaintiffs and the defendants. Gulf 1 should not suffer punitive damages for not asking the court for relief from the order the plaintiffs agreed to. I dissent in part. 2

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