Six Dimensions, Inc. v. Perficient, Inc.

• Decision Date: 07 August 2020
• Docket Number: No. 19-20505,19-20505
• Parties: SIX DIMENSIONS, INCORPORATED, Plaintiff - Appellee Cross-Appellant v. PERFICIENT, INCORPORATED, Defendant - Cross-Appellee Lynn M. Brading, Defendant - Appellant Cross-Appellee
• Court: U.S. Court of Appeals — Fifth Circuit

969 F.3d 219

SIX DIMENSIONS, INCORPORATED, Plaintiff - Appellee Cross-Appellant

v. PERFICIENT, INCORPORATED, Defendant - Cross-AppelleeLynn M. Brading, Defendant - Appellant Cross-Appellee

No. 19-20505

United States Court of Appeals, Fifth Circuit.

FILED August 7, 2020

Michael Patrick Doyle, Jeffrey I. Avery, Doyle, L.L.P., Houston, TX, for Plaintiff-Appellee Cross-Appellant.

Patrick S. Richter, Jackson Lewis, P.C., Austin, TX, Adam D. Hirtz, Jackson Lewis, P.C., Saint Louis, MO, Robert D. Shank, Attorney, Jackson Lewis, P.C., Cincinnati, OH, for Defendant - Cross-Appellee Perficient, Incorporated and Defendant - Appellant Cross-Appellee Lynn M. Brading.

Before SOUTHWICK, COSTA, and DUNCAN, Circuit Judges.

LESLIE H. SOUTHWICK, Circuit Judge:

Six Dimensions, Inc., sued former employee Lynn M. Brading and a competitor, Perficient, Inc. The claims were for breach of contracts, unfair competition, and misappropriation of trade secrets. The district court entered summary judgment on liability in favor of Six Dimensions on one of the contract claims but rejected the other. It entered summary judgment in favor of the defendants on the unfair-competition claim. A jury awarded damages to Six Dimensions for the contract breach but rejected its claim for misappropriation of trade secrets. We REVERSE the part of the judgment holding that Brading breached a contract and owed damages to Six Dimensions. We otherwise AFFIRM.

FACTUAL AND PROCEDURAL BACKGROUND

This appeal involves a business dispute arising from a prior employment relationship between Six Dimensions and Brading. Six Dimensions is a digital marketing firm that provides consulting services for information technology. Six Dimensions hired Brading in 2014 as a Corporate Partnership Manager. One of Brading's main duties was to work with software companies, including Adobe, on Six Dimensions’ behalf. As one of Brading's conditions of employment, Six Dimensions required Brading to sign an employment agreement (the "2014 Agreement"). Among the terms of the 2014 Agreement, Brading committed that for two years after Brading left her employment Brading would not "solicit, recruit or hire any employee or consultant of [Six Dimensions] to work for a third party ... or assist any third party, person or entity to solicit, recruit or hire any employee or consultant of" Six Dimensions. Brading also agreed that upon termination of her employment, Brading would "sign and deliver" an agreement titled "Termination Certification," which was attached to the 2014 Agreement as "Exhibit B."

Brading terminated her employment with Six Dimensions on June 10, 2015, and Brading signed the Termination Certification on June 18 (the "2015 Agreement"). That document restated the obligation Brading owed to Six Dimensions, first stated in the 2014 Agreement, that for two years she would not "directly or indirectly solicit, induce, recruit or encourage any of the Company's employees or consultants to terminate their relationship with Company, or attempt to solicit, induce, recruit, encourage or take away employees or consultants of Company, either for [herself] or for any other person or entity."

After resigning from Six Dimensions, Brading began working for Perficient, Inc., another information technology servicing company, as an Adobe Alliance Manager. Despite her just-signed recommitment not to solicit, Brading immediately began a campaign of soliciting Six Dimensions employees to work for Perficient. For example, on August 26, 2015, Brading emailed Aaron Price, who was still employed by Six Dimensions: "We are hiring like crazy. ... Would take the entire crew of developers, architects, PMs etc from 6D if we could!!" After making that implied invitation, she followed with pretense: "But I cannot have this conversation with you because of my non compete." She closed by typing as a separate line — "Wink ;)" — and finally, "I really miss you." Ultimately, Brading convinced seven Six Dimensions employees to work for Perficient, one of whom was Price.

Like Brading, Price signed an employment agreement with Six Dimensions. Price agreed that when his employment with Six Dimensions ended, he would "promptly deliver to 6D all materials of a secret or confidential nature" back to Six Dimensions. Price further agreed that during and indefinitely after his employment with Six Dimensions, he would not "directly or indirectly, divulge, disclose or appropriate to his own use, or to the use of any third party," any of Six Dimensions’ confidential information or trade secrets. Nevertheless, Price testified at trial that he had obtained confidential training materials on a "thumb-drive" before he left Six Dimensions, and that he failed to give the training materials back to the company because he intended to use the information to benefit Perficient. Price further testified, though, that he never delivered the training materials to anyone at Perficient and that he never uploaded the training materials to a Perficient system.

Six Dimensions filed suit on September 5, 2017, in the United States District Court for the Southern District of Texas. The summary judgment rulings we discuss were made when a First Amended Complaint, filed on June 29, 2018, was the operative complaint. In that amended complaint, Six Dimensions claimed that both Brading and Perficient had: (1) tortiously interfered with Six Dimensions’ contracts with employees; (2) tortiously interfered with prospective economic relations; and (3) been unjustly enriched. Six Dimensions’ independent claims against Brading were that Brading had breached her contracts and had violated a California statute on unfair competition. Six Dimensions’ independent claims against Perficient were for unfair competition and for violations of both a Texas statute and a California statute that protected trade secrets.

On October 30, 2018, Six Dimensions moved for summary judgment on its claims for breach of contract. The same day, Brading and Perficient moved for summary judgment on all claims. The district court on December 27 entered summary judgment for Six Dimensions on its claims for breach of contract. The court held that the 2014 Agreement and 2015 Agreement were separate contracts and that both had been breached. With respect to the defendants’ motions, the district court held that the California statute on unfair competition did not apply extraterritorially; therefore, Six Dimensions’ claim under that statute was dismissed. The court denied the rest of the defendants’ summary-judgment motion.

On January 4, 2019, Perficient and Brading moved for reconsideration of the district court's summary judgment on breach of contract. Just over one week later, the district court in a brief order denied the motion. Perficient and Brading persisted and filed a second motion for reconsideration on March 14. On April 8, the district court did reconsider and determined that Six Dimensions’ claim for breach of the 2014 Agreement failed in light of new California authority on the issue. Six Dimensions cross appealed to reverse that conclusion. The district court did not disturb its earlier ruling that Brading had breached the 2015 Agreement. In the same order, the district court allowed the filing of a second amended complaint so that Six Dimensions could increase the amount of claimed damages.

The remaining claims went to trial from June 10 to June 14, 2019. The jury verdict was in the form of written answers to questions. Although the jury found the training materials were trade secrets, it also found that Perficient did not misappropriate them. The jury also found that Perficient had not been unjustly enriched. The final verdict form question began with the district court's instruction that Brading had breached the 2015 Agreement; the jury only had to find the amount of damages the breach caused. The jury awarded $287,702. The district court entered a final judgment based on the verdict.

Brading appealed, and Six Dimensions cross appealed.

DISCUSSION

Brading appeals the district court's grant of summary judgment on Six Dimensions’ claim for breach of contract under the 2015 Agreement. Dimensions cross appeals the district court's summary dismissal of both its claim for breach of contract based on the 2014 Agreement and its claim of unfair competition under California Business and Professionals Code Section 17200. That statute is referred to as the Unfair Competition law or the "UCL." Six Dimensions also challenges the district court's denial of its motion for a new trial on its claim for misappropriation of trade secrets. We first consider Brading's appeal before turning to Six Dimensions’ cross appeal.

We review a district court's grant of summary judgment de novo . Ibarra v. UPS , 695 F.3d 354, 355 (5th Cir. 2012). Summary judgment is appropriate where the movant demonstrates "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). A genuine dispute of material fact exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). When cross motions for summary judgment have been filed, "we review each party's motion independently, viewing the evidence and inferences in the light most favorable to the nonmoving party." Green v. Life Ins. Co. of N. Am. , 754 F.3d 324, 329 (5th Cir. 2014).

I. Breach of contract under the 2015 Agreement

Brading argues the district court erred in granting Six Dimensions’ motion for summary judgment on its claim for breach of contract based on the 2015 Agreement. Brading argues that the 2015 Agreement was not a separate contract but a component of the 2014 Agreement.

We first discuss whether this issue is properly before us. According to Six Dimensions, Brading waived this argument by not presenting it to the district court. Importantly, "the scope of...