Windsor v. Olson

• Decision Date: 10 May 2019
• Docket Number: Civil Action No. 3:16-CV-934-L
• Parties: DENNIS WINDSOR, Plaintiff, v. JEFF OLSON and NERIUM INTERNATIONAL, LLC, Defendants.
• Court: U.S. District Court — Northern District of Texas

DENNIS WINDSOR, Plaintiff,
v.
JEFF OLSON and NERIUM INTERNATIONAL, LLC, Defendants.

Civil Action No. 3:16-CV-934-L

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF TEXAS DALLAS DIVISION

May 10, 2019

MEMORANDUM OPINION AND ORDER

Before the court are Plaintiff's Motion for Summary Judgment Against Defendant Nerium International, LLC's Counter[c]laims (Doc. 115), filed January 18, 2019; Defendant Nerium International, LLC's Brief in Support of its Response to Plaintiff's Motion for Summary Judgment Against Nerium's Counterclaims (Doc. 127), filed February 8, 2019; Plaintiff's Reply to Defendant Nerium International, LLC's Response to Plaintiff's Motion [for] Summary Judgment on Nerium's Counterclaims (Doc. 136), filed February 22, 2019; Defendants' Motion for Partial Summary Judgment (Doc. 110), filed January 18, 2019; Plaintiff's Memorandum in Support of its Response to Defendants' Motion for Partial Summary Judgment (Doc. 130), filed February 8, 2019; and Defendants' Reply in Support of Motion for Partial Summary Judgment (Doc. 135), filed February 22, 2019.

After carefully considering the motions, briefs, record, and applicable law, the court grants Defendants' Motion for Partial Summary Judgment (Doc. 130) and grants in part and denies in part Plaintiff's Motion for Summary Judgment Against Defendant Nerium International, LLC's Counter[c]laims (Doc. 115). Specifically, the court grants Defendants' motion for partial summary judgment as to Plaintiff's federal and state law claims. The court denies Plaintiff's

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motion for summary judgment with respect to Nerium's counterclaims under the Defend Trades Secret Act ("DTSA") and Texas Uniform Trade Secrets Act ("TUTSA"); its state common law claims for breaches of fiduciary duty and duty of loyalty, and conversion; and declaratory judgment of no copyright infringement and invalidity. The court grants Plaintiff's motion for summary judgment with respect to Nerium's counterclaim for declaratory judgment that it has copyright ownership in the alleged works and denies it with respect to Nerium's counterclaim for declaratory judgment of no copyright infringement, copyright invalidity, and implied license.

I. Factual and Procedural History

Plaintiff Dennis Windsor ("Windsor" or "Plaintiff") filed this action against Defendants Nerium International, LLC ("Nerium") and its sole manager and CEO, Jeff Olson ("Olson") (collectively, "Defendants") on April 5, 2016, alleging state law claims and a federal copyright claim that arise from Windsor's participation in the development of Nerium, a multi-level marketing company that sells anti-aging and wellness products. Plaintiff's Third Amended Complaint ("Third Amended Complaint") specifically asserts claims against Defendants for copyright infringement, breach of contract, fraudulent inducement, promissory estoppel, unjust enrichment, and it also seeks declaratory and injunctive relief related to those claims.

The operative, undisputed facts are as follows: Sometime in 2009, Olson recruited Windsor to join him in developing a network marketing company that would later become Nerium. Nerium launched commercial operations and began selling products on August 29, 2011. During the development phase, Windsor worked as an independent contractor and, after Nerium launched, he became an employee and held the position of Nerium's first president. He was terminated on March 30, 2016.

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According to Windsor, Olson recruited him to develop the company by offering three terms related to Windsor's future compensation upon Nerium's official launch: (1) a commission rate that would correspond with a "top" position, later referred to within Nerium as "The Marketing Group Three Star National Marketing Director - ID 10006"; (2) a 15% royalty on all back-office subscription fees generated; (3) and a five percent equity ownership in Nerium with distributions. Pl.'s Third Am. Compl., Doc. 19, ¶ 22; Pl.'s Resp., Doc. 130 at 37. In exchange, Windsor would assist Olson in designing, running, and promoting the company. Windsor and Olson never memorialized these alleged terms into a written agreement. Windsor contends that Defendants have failed to pay him the compensation pursuant to these alleged terms and, therefore, breached their alleged oral agreement. Pl.'s Third Am. Compl, Doc. 19, ¶ 23.

Windsor further contends that, during the approximate two-year development of Nerium, he "worked essentially by himself" designing, building, and launching Nerium, during which time he created marketing material, a business model, and a compensation structure for its salesforce. Pl.'s Third Am. Compl., Doc. 19, ¶ 8; Pl.'s Resp., Doc. 130 at 12. Windsor contends that he has a copyright in the documents he created during this period and that Nerium is currently infringing by using exact copies and derivatives of those works without his permission. Pl.'s Third Am. Compl., Doc. 19, ¶ 27.

Windsor's Third Amended Complaint, filed July 27, 2016, lists ten specific works as the basis for his copyright infringement claim. On January 11, 2019, Windsor filed a motion for leave to file a fourth amended complaint that removed eight¹ of these works from his copyright

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infringement claim on the basis that he had not received formal registration for them from the United States Copyright Office. The court denied Windsor's motion because he failed to move under the applicable procedural rule and, moreover, good cause did not exist for the court to grant his request at this stage of the now three-year-old litigation.

Defendants now moves for judgment as a matter of law with respect to all of Windsor's state common law claims on the basis that they are barred by the statute of limitations and also should be dismissed on the merits; moves for judgment as a matter of law on the merits of Windsor's copyright infringement claim; and moves for judgment as a matter of law on Windsor's claim for declaratory relief on the basis that it is duplicative of his copyright and contract claims in that it seeks resolution of matters that will be resolved as part of the determination of those claims.

Windsor moves for a judgment as a matter of law on Nerium's counterclaims, which assert counterclaims under the Defend Trade Secrets Act ("DTSA"); Texas Uniform Trade Secrets Act ("TUTSA"); declaratory judgments of copyright ownership, no copyright infringement, copyright invalidity, and implied license; and state law common law claims for breaches of fiduciary duty and duty of loyalty, and conversion.

II. Summary Judgment Standard

Summary judgment shall be granted when the record shows that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986); Ragas v. Tennessee Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998). A dispute regarding a material fact is "genuine" if the evidence is such that a reasonable jury could return a verdict in favor of the nonmoving party.

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Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When ruling on a motion for summary judgment, the court is required to view all facts and inferences in the light most favorable to the nonmoving party and resolve all disputed facts in favor of the nonmoving party. Boudreaux v. Swift Transp. Co., Inc., 402 F.3d 536, 540 (5th Cir. 2005). Further, a court "may not make credibility determinations or weigh the evidence" in ruling on a motion for summary judgment. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000); Anderson, 477 U.S. at 254-55.

Once the moving party has made an initial showing that there is no evidence to support the nonmoving party's case, the party opposing the motion must come forward with competent summary judgment evidence of the existence of a genuine dispute of material fact. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 586 (1986). On the other hand, "if the movant bears the burden of proof on an issue, either because he is the plaintiff or as a defendant he is asserting an affirmative defense, he must establish beyond peradventure all of the essential elements of the claim or defense to warrant judgment in his favor." Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986) (emphasis in original). "[When] the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no 'genuine [dispute] for trial.'" Matsushita, 475 U.S. at 587. (citation omitted). Mere conclusory allegations are not competent summary judgment evidence, and thus are insufficient to defeat a motion for summary judgment. Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir. 1996). Unsubstantiated assertions, improbable inferences, and unsupported speculation are not competent summary judgment evidence. See Forsyth v. Barr, 19 F.3d 1527, 1533 (5th Cir. 1994).

The party opposing summary judgment is required to identify specific evidence in the record and to articulate the precise manner in which that evidence supports his or her claim. Ragas,

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136 F.3d at 458. Rule 56 does not impose a duty on the court to "sift through the record in search of evidence" to support the nonmovant's opposition to the motion for summary judgment. Id.; see also Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 915-16 & n.7 (5th Cir. 1992). "Only disputes over facts that might affect the outcome of the suit under the governing laws will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 248. Disputed fact issues that are "irrelevant and unnecessary" will not be considered by a court in ruling on a summary judgment motion. Id. If the nonmoving party fails to make a showing sufficient to establish the existence of an element essential to its case and on which it will bear the burden of proof at trial, summary judgment must be granted. Celotex, 477 U.S. at 322-23.

III. Analysis

A. Windsor's Copyright...