Accresa Health LLC v. Hint Health Inc.
| Decision Date | 22 May 2020 |
| Docket Number | Civil Action No. 4:18-cv-00536 |
| Court | U.S. District Court — Eastern District of Texas |
| Parties | ACCRESA HEALTH LLC, Plaintiff/Counter-Defendant, v. HINT HEALTH INC. Defendant/Counter-Plaintiff v. TWIN OAKS SOFTWARE DEVELOPMENT INC. Counter-Defendant. |
The above-entitled and numbered civil action was heretofore referred to United States Magistrate Judge Caroline M. Craven pursuant to 28 U.S.C. § 636. The final pretrial conference is scheduled before the undersigned on June 24, 2020. (Dkt. #142). On March 19, 2020, the Magistrate Judge issued a Report and Recommendation regarding proposed findings of fact and recommendations on the following four motions: (1) Counter-Defendant Twin Oaks Software Development, Inc.'s Motion for Summary Judgment as to Counter-Plaintiff Hint Health, Inc.'s Claims (Dkt. #93); (2) Accresa Health LLC's Rule 12(b)(6) or 12(c) Motion to Dismiss Hint's Defamation, Business Disparagement, Lanham Act, Tortious Interference, and Conspiracy Claims (Dkt. #94); (3) Accresa Health LLC's Sealed Motion for Summary Judgment on Hint's Breach of Contract Claim (Dkt. #95); and (4) Accresa Health LLC's Sealed Motion for Summary Judgment on Hint's Defamation, Business Disparagement, Lanham Act, Tortious Interference, and Conspiracy Claims (Dkt. #96).
Plaintiff/Counter-Defendant Accresa Health LLC ("Accresa") filed objections to the Report and Recommendation. Counter-Defendant Twin Oaks Software Development, Inc. ("Twin Oaks") also filed objections to the Report and Recommendation. Defendant/Counter-Plaintiff Hint Health Inc. ("Hint") filed responses to the objections.
Hint also filed an objection to the Report and Recommendation to the extent the Magistrate Judge recommended Hint be precluded from recovering attorneys' fees from Accresa on Hint's breach of contract counterclaims. Accresa filed a response to Hint's objection.
The Court conducts a de novo review of the Magistrate Judge's findings and conclusions.
Factual background
As set forth in the parties' Joint Final Pre-Trial Order, this is an action for breach of contract, fraudulent inducement, fraud, misappropriation of trade secrets, violation of the Lanham Act, tortious interference, defamation, business disparagement, and civil conspiracy. (Dkt. #127 at p. 3). The dispute at issue in this case focuses on three technology companies, Accresa, Hint, and Twin Oaks, that serve the direct primary care ("DPC") industry.
Accresa alleges Hint fraudulently induced Accresa to enter a preferred partnership agreement ("PPA"), breached the PPA, fraudulently induced Accresa to disclose confidential and proprietary information, and misappropriated Accresa's trade secrets. Accresa asserts the following causes of action against Hint: (1) breach of contract, (2) violation of the Texas Uniform Trade Secret Act (TUTSA), (3) violation of the Federal Trade Secrets Act (18 U.S.C. § 1836), (4) tortious interference with existing contract, (5) fraudulent inducement, (6) fraud, and (7) violation of Lanham Act (41U.S.C. § 1125). For the breach of contract, fraudulent inducement, fraud, and misappropriation of trade secret claims, Accresa seeks appropriate injunctive relief, damages, and attorneys' fees.
Hint denies all of Accresa's allegations and claims Accresa breached the PPA, breached Hint's terms of service, defamed and disparaged Hint, and tortiously interfered with Hint's prospective business relations. In Hint's counterclaim, Hint alleges claims for defamation and business disparagement against Accresa. (Dkt. #34). Specifically, Hint alleges, among other things, Accresa repeated the false accusations that Hint's services were derived from trade secrets Hint stole from Accresa (Hint saw Accresa's "underwear"), and further made statements to the effect that Accresa would use its immense resources to wipe out Hint, and that Hint would not survive as a going concern. Id., ¶ 24. Hint also alleges claims for violations of the Lanham Act and tortious interference with existing contract claims against Accresa and Twin Oaks. Id., ¶¶ 33-39. It alleges a tortious interference with prospective relationships claim against Accresa. Id., ¶¶ 40-45. Additionally, Hint alleges a conspiracy claim against Accresa and Twin Oaks. Id., ¶ 71. Hint seeks damages and attorneys' fees.
Accresa denies Hint's allegations. In particular, Accresa denies it has breached the PPA, violated the Lanham Act, defamed or disparaged Hint, tortiously interfered with Hint's prospective business relationships, or engaged in a civil conspiracy with Twin Oaks. Accresa denies Hint's allegations that it acted with malice. Accresa denies it defamed, disparaged, violated the Lanham Act, tortiously interfered, or engaged in a civil conspiracy "because the allegedly tortious conduct underlying those causes of action is statements that are privileged under the judicial proceedings privilege and are statements of truth or unverifiable opinion." (Dkt. #127 at p. 4). Accresa also denies that Hint is entitled to recover any damages, and otherwise disputes the nature and extent ofHint's claim for damages. Accresa also denies that Hint is entitled to attorneys' fees.
Counter-Defendant Twin Oaks also denies Hint's allegations. Twin Oaks denies that Twin Oaks violated the Lanham Act, tortiously interfered with an existing contract, or engaged in a civil conspiracy. Twin Oaks asserts it did not willfully and intentionally interfere with Hint's contract with Accresa or proximately cause Hint damage. Twin Oaks further contends Hint did not suffer any damages as a result of any act of Twin Oaks. Twin Oaks also denies that Hint is entitled to recover any damages, and otherwise disputes the nature and extent of Hint's claim for damages. Twin Oaks also denies that Hint is entitled to attorneys' fees.
Procedural background
Five dispositive motions have recently been filed in this case, four of which the Magistrate Judge considered in her March 19, 2020 Report and Recommendation.1 On December 20, 2019, Accresa filed a Rule 12(b)(6) motion to dismiss or Rule 12(c) motion for judgment on the pleadings regarding Hint's defamation, business disparagement, Lanham Act, tortious interference, and conspiracy claims ("Hint's tort and tort-derivative claims"). (Dkt. #94). That same day, Accresa filed a motion for summary judgment on Hint's defamation, business disparagement, false advertising under the Lanham Act, civil conspiracy, and tortious interference claims. (Dkt. #96). According to Accresa, "[o]nly as it relates to Hint's defamation claim, this Motion for Summary Judgment is in the alternative to Accresa's Motion to Dismiss Hint's Defamation Claim." Id. at p. 1, n. 1. Accresa also filed a separate motion for summary judgment regarding Hint's breach of contract counterclaims. (Dkt. #95).
Twin Oaks filed its own motion for summary judgment regarding the three tort or tort-derivative claims Hint has asserted against it. First, Twin Oaks moves for summary judgment on Hint's cause of action for tortious inference with an existing contract claim, asserting Hint cannot demonstrate that Twin Oaks (1) willfully and intentionally interfered with the contract; (2) the interference proximately caused damage; and (3) that Hint suffered any actual damage or loss as a result of the actions of Twin Oaks. Second, Twin Oaks moves for summary judgment on Hint's Lanham Act claims for unfair competition and false advertising. According to Twin Oaks, Hint lacks prudential standing under the Lanham Act, and even if it does, Hint does not have any evidence that Twin Oaks' actions caused any cognizable injury to Hint. Third, Twin Oaks moves for summary judgment on Plaintiff's conspiracy claim because (1) Hint's tortious inference claim against Twin Oaks fails and (2) Accresa cannot conspire with Twin Oaks to interfere tortiously with its own contract. (Dkt. #93 at pp. 1-2).
On March 19, 2020, the Magistrate Judge issued a 174-page Report and Recommendation ("Report"). (Dkt. #135). After setting forth the summary judgment evidence in detail, the Magistrate Judge recommended Accresa's motion to dismiss Hint's defamation counterclaim (and related counterclaims) be denied. The Magistrate Judge noted she would consider Hint's tort and tort-related claims in the context of Accresa's motion for summary judgment. Report at pp. 59-67.
The Magistrate Judge further recommended Accresa's motion for summary judgment regarding Hint's tort and tort-derivative claims be granted in part and denied in part. Specifically, the Magistrate Judge recommended Accresa's motion for summary judgment regarding Hint's tortious interference with existing contracts counterclaim be granted, but the remainder of the motion be denied. Id. at pp. 67-115. Finding Hint has presented sufficient evidence to create a genuine issueof material fact regarding its defamation, business disparagement, Lanham Act violations, and interference with prospective business relationships counterclaims, the Magistrate Judge recommended all but one of Hint's tort claims survive. Thus, the Magistrate Judge also found without merit Accresa's argument that Hint's civil conspiracy derivative tort claim fails because there is no underlying tort liability. Id. at p. 115.
Turning to Twin Oaks' motion for summary judgment, the Magistrate Judge recommended the motion be granted in part and denied in part. Specifically, the Magistrate Judge recommended Twin Oaks' motion for summary judgment regarding Hint's § 1125(a)(1)(A) Lanham Act claim be granted, but the remainder of the motion be denied. Id. at pp. 115-142.
Finally, the Magistrate Judge recommended Accresa's motion for summary judgment regarding Hint's breach of contract counterclaims be granted in part and denied in part. Specifically, the Magistrate Judge recommended Accresa's motion for summary...
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