Six Dimensions, Incorporated v. Perficient, Incorp ( 2020 )

Case: 19-20505 Document: 00515519433 Page: 1 Date Filed: 08/07/2020
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 19-20505 FILED
August 7, 2020
Lyle W. Cayce
SIX DIMENSIONS, INCORPORATED, Clerk
Plaintiff - Appellee Cross-Appellant
v.
PERFICIENT, INCORPORATED,
Defendant - Cross-Appellee
LYNN M. BRADING,
Defendant - Appellant Cross-Appellee
Appeals from the United States District Court
for the Southern District of Texas
USDC No. 4:17-CV-2680
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
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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
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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.
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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
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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
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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 (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 appellate review on a summary
judgment order is limited to matters presented to the district court.” Keelan v.
Majesco Software, Inc., 407 F.3d 332, 339 (5th Cir. 2005). Therefore, “if a party
fails to assert a legal reason why summary judgment should not be granted,
that ground is waived and cannot be considered or raised on appeal.” Keenan
v. Tejeda, 290 F.3d 252, 262 (5th Cir. 2002) (quotation marks and citation
omitted).
Brading alleges there were three occasions when she made arguments
about the 2015 Agreement, though two of them were only after the district
court granted summary judgment on that agreement. The only one predating
summary judgment was allegedly in her response to Six Dimensions’
summary-judgment motion, where, according to Brading’s current briefing,
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she “treated the 2014 Agreement and the [2015 Agreement] as a single
agreement and urged that California law invalidated the entire agreement.”
Brading concedes that she did not actually mention the 2015 Agreement in
that response but argues that was because Six Dimensions never made it clear
that Six Dimensions was alleging a separate breach of the 2015 Agreement.
In considering Six Dimensions’ motion for summary judgment, the
district court — much more explicitly than Six Dimensions had ever done —
analyzed the two documents as separate agreements and held Brading had
breached both. The district court found the arguments were too late. The court
discussed its local rule that if a party does not “respond to a motion,” that
failure “will be taken as a representation of no opposition.” S.D. TEX. R. 7.4.
Due to that failure, the district court held Six Dimensions’ argument was
uncontested that Brading breached the 2015 Agreement by soliciting Six
Dimensions employees as prohibited by the 2015 Agreement. The critical effect
of this ruling was that it caused the district court to rely on waiver to continue
to hold that the noncompete provisions of the 2015 Agreement were
enforceable, even though the district court would later hold that the same
restrictions were unenforceable in the 2014 Agreement.
Brading’s motion for reconsideration of summary judgment presented
her first arguments about the 2015 Agreement. She renewed the arguments
in a motion to dismiss Six Dimensions’ claim for breach of contract based on
the 2015 Agreement. Both times the arguments about the 2015 Agreement
were found to be too late.
The possible tardiness of Brading’s responses is insignificant if Six
Dimensions’ own arguments did not sufficiently identify what was signed in
2015 as a separate contract. Absent a clear claim or argument, there would be
nothing on the point to which a response was owed. The one reference in the
then-operative complaint when the district court ruled on the parties’ cross
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motions for summary judgment was in Count IV. That count concerned breach
of contract and had 13 paragraphs. Six Dimensions alleged “Brading actively
solicited employees of [Six] Dimensions to leave [Six] Dimensions which direct
solicitation is a breach of the Employment Agreement and Termination
Agreement.” These are what we have called the 2014 Agreement and the 2015
Agreement, respectively. In no other paragraph does Six Dimensions refer to
the Termination Agreement, i.e., the 2015 Agreement.
We next examine Six Dimensions’ summary-judgment motion. Only
twice does the motion suggest Brading signed more than one agreement. Once
is when Six Dimensions argued that “Brading cannot deny that she entered
into contractual agreements” with Six Dimensions, the importance of that
being that the motion referred to the “agreements,” i.e., the plural. The “s”
could have been a typo, but regardless, we conclude the use of the plural was
too minimal as to be sufficient notice of an argument. The clearest but still
minimal notice to Brading was when Six Dimensions argued that Brading was
wrong in arguing that California law applied and invalidated the noncompete
provision:
Defendant argues that Brading was permitted to engage in this
wrongful conduct because the contract that she signed, contained
a provision that is not allowed under California law. Defendant
argues that even though the Amended Complaint does not accuse
Brading of breaching the non-competition portion of the 2014
Agreement [Dkt 10-2], that its presence in the 2014 Agreement
invalidates that agreement. Texas has no such provision. It is
respectfully submitted, as asserted in the Complaint, that the law
of Texas applies and as such, the 2014 Agreement is clearly
breached by Brading’s undisputed conduct in violating both
portions of the 2014 Agreement. Further, there is no non-
competition portion for the Termination Certification signed by
Brading in June of 2015 and as such, under the law of either State,
Brading is responsible for violating the 2015 Agreement.
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Six Dimensions finally made a direct allegation in the final sentence of
this one paragraph, making it the only meaningful reference to a separate
agreement’s having relevance in all the paper and digital filings.
A district court’s holding that an argument has been waived is reviewed
for an abuse of discretion. Davis v. Fort Bend Cnty., 765 F.3d 480, 487 n.1 (5th
Cir. 2014). In considering that discretion, we acknowledge that this ruling
related at least in part to a district court’s management of its docket.
We hold the following is relevant to the exercise of discretion here.
Attorneys must be nimble, alert, diligent, and much else, none more than those
involved in litigation. (Judges need some of the same skills.) In our judgment,
though, the references to a new agreement executed in 2015 do not fairly put
a reasonably attentive attorney on notice when responding. The only useful
effort was in one sentence of one filing. Further, though trial judges must be
allowed discretion in managing their dockets, this close question of notice could
readily have justified allowing reconsideration once Brading’s response was
submitted. Finally, on second reconsideration of the grant of summary
judgment, the district court held that the noncompete provision in the 2014
Agreement was unenforceable under California law.
Once the district court held that the noncompete provision in the 2014
Agreement was unenforceable, the court did not align its prior ruling as to the
2015 Agreement with its new holding. The court made the 2015 noncompete
language enforceable only because Brading failed to respond to the one
sentence about the claim in the summary judgment motion and had thus
indicated “no opposition.”
We conclude that the district court abused its discretion in denying
Brading an opportunity to extend the arguments she had already made about
the 2014 Agreement and have them apply to the 2015 Agreement. “Abuse” is
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the overly harsh term of art; a more accurate description is that the district
court misapplied its discretion. We will consider those arguments now.
Brading has made these arguments: (1) there was no separate agreement
executed in 2015; (2) even if there were separate agreements, interpreting both
together leaves California law as the one that must be applied; and (3) if what
was executed in 2015 was a separate contract, there was no separate
consideration and the agreement was ineffective. We need not respond to each.
The analysis of the enforceability of each noncompete provision, first in the
2014 Agreement and the other in 2015, is identical. The 2015 Agreement was
an exhibit to and was referenced in the 2014 Agreement. The 2014 contract
stated that California law would apply. It has not been argued, and the district
court did not hold, that California law no longer applied in 2015 because of a
change of a party’s residence or place of contract performance or for some other
distinction. California law still applied.
We now turn to the question of enforceability.
II. Breach of contract under the 2014 and 2015 Agreements
On cross appeal, Six Dimensions seeks reversal of the district court’s
order granting Brading’s motion for reconsideration on Six Dimensions’ claim
for breach of contract under the 2014 Agreement. The district court initially
entered partial summary judgment in favor of Six Dimensions after finding
that the nonsolicitation provision in the 2014 Agreement was valid under
California law and holding that it was undisputed that Brading violated that
provision. Brading filed a motion for reconsideration on March 14, 2019,
arguing that a federal district court in California had created an intervening
change in controlling law requiring reconsideration of the district court’s
previous order. See Barker v. Insight Glob., LLC, No. 16-CV-07186, 2019 WL
176260 (N.D. Cal. Jan. 11, 2019). The district court here granted Brading’s
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motion for reconsideration, finding the nonsolicitation provision void “in light
of Barker.” Consequently, “Brading did not breach the 2014 Agreement’s no-
solicitation provision.” It is the same provision in the 2015 Agreement, and
the analysis that follows applies to both.
We “generally review a decision on a motion to alter or amend judgment
for abuse of discretion, although to the extent that it involves a reconsideration
of a question of law, the standard of review is de novo.” Alexander v. Wells
Fargo Bank, 867 F.3d 593, 597 (5th Cir. 2017). Brading quoted Rule 59(e) in
her motion (though she did not cite it), which is for amending a final judgment
“(1) where there has been an intervening change in the controlling law;
(2) where the movant presents newly discovered evidence that was previously
unavailable; or (3) to correct a manifest error of law or fact.” Id.The motion sought reconsideration of an order granting judgment on
fewer than all the claims. Rule 59(e) for revising final judgments does not
apply. Six Dimensions argued that there had not been any intervening change
in controlling law, as the Barker opinion was a federal court’s effort to interpret
state law. Rule 54(b), though, permits “reconsideration of interlocutory orders
and authorizes the district court to ‘revise[] at any time’ ‘any order or other
decision . . . [that] does not end the action.’” Austin v. Kroger Tex., L.P., 864
F.3d 326, 336 (5th Cir. 2017) (quoting FED. R. CIV. P. 54(b)). Rule 54(b) applied
to the motion we are considering. It can be harmless when a district court
grants reconsideration under Rule 59(e)’s more exacting standard when Rule
54(b) should have been applied. Cabral v. Brennan, 853 F.3d 763, 766 (5th Cir.
2017). We review the order under Rule 54(b).
“Under Rule 54(b), the trial court is free to reconsider and reverse its
decision for any reason it deems sufficient, even in the absence of new evidence
or an intervening change in or clarification of the substantive law.” Austin,
864 F.3d at 336 (quotation marks omitted). We consider de novo whether
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California law voids the 2014 and 2015 Agreements’ nonsolicitation provisions.
Alexander, 867 F.3d at 597.
Federal courts applying state law must follow “the final decisions of that
state’s highest court.” Temple v. McCall, 720 F.3d 301, 307 (5th Cir. 2013).
When the state’s highest court has not decided an issue, we make an “Erie
guess” as to how the state supreme court would decide the issue. Id. Our guess
requires that we “defer to intermediate state appellate court decisions, unless
convinced by other persuasive data that the highest court of the state would
decide otherwise.” Id.We examine the closest decision on point from the California Supreme
Court. We consider the least distinguishable case, meaning the one closest on
point, to be a decision in which the plaintiff signed an agreement prohibiting
him from soliciting his employer’s clients (as opposed to fellow employees) for
one year after leaving the employer. Edwards v. Arthur Andersen LLP, 189
P.3d 285, 292 (Cal. 2008). The California Supreme Court applied a statute
that stated, “Except as provided in this chapter, every contract by which
anyone is restrained from engaging in a lawful profession, trade, or business
of any kind is to that extent void.” Id. at 288 (quoting CAL. BUS. & PROF. CODE
§ 16600). The court held that “[S]ection 16600 prohibits employee
noncompetition agreements unless the agreement falls within a statutory
exception.” Id. at 285. “Under the statute’s plain meaning . . . an employer
cannot by contract restrain a former employee from engaging in his or her
profession, trade, or business unless the agreement falls within one of the
exceptions to” Section 16600, even if a mere limitation is “reasonably based.”
Id. at 291. The court found the “agreement restricted [the plaintiff] from
performing work for [the defendant-employer’s] client and therefore restricted
his ability to practice his accounting profession.” Id. at 290. The provision that
barred soliciting of business was void. Id. Significant for us, there also was a
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provision barring solicitation of other employees, but it was not challenged by
the plaintiff and not considered by the Edwards court. Id. at 289 n.4.
Before discussing a later decision, we backtrack to an earlier California
intermediate court opinion holding that a provision prohibiting the defendant-
employee, a former executive officer, from “raiding” the plaintiff’s employees
was not void under Section 16600. Loral Corp. v. Moyes, 219 Cal. Rptr. 836,
843 (Cal. Ct. App. 1985). That court reasoned the provision “does not appear
to be any more of a significant restraint on his engaging in his profession, trade
or business than a restraint on solicitation.” Id.We now come forward to ten years after the Edwards decision and over
thirty years after the Moyes decision. In 2018, an intermediate California court
held that a provision barring solicitation of employees was void under
Section 16600 for two independent reasons. AMN Healthcare, Inc. v. Aya
Healthcare Servs., Inc., 239 Cal. Rptr. 3d 577, 590 (Cal. Ct. App. 2018). One
reason was that the defendants’ actual profession was solicitation of traveling
nurses; that made the bar a prohibition “from engaging in their chosen
profession.” Id. The other reason was that the court “doubt[ed] the continuing
viability of Moyes post-Edwards.” Id. The court explained that Moyes’ “use of
a reasonableness standard in analyzing the nonsolicitation clause there at
issue thus appears to conflict with Edwards’s interpretation of
[S]ection 16600.” Id. at 589.
Edwards has other guidance. The defendant there argued that
Section 16600 embodied prior common law and “embrace[d] the rule of
reasonableness in evaluating competitive restraints.” 189 P.3d at 289. Moyes
seems to be a rule of reason case. The Edwards court, though, held that “the
foregoing authorities suggest [S]ection 16600 embodies the original, strict
common law antipathy toward restraints of trade, while the [S]ection 16601
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and 16602 exceptions incorporated the later common law ‘rule of
reasonableness’ in instances where those exceptions apply.” Id. at 948.
The direction we get from Edwards is that Section 16600 embodies a
“strict antipathy” toward any restraint on trade. Employment agreement
provisions to the contrary, regardless of their reasonableness, are void unless
they fit within a statutory exception to that general rule.
The United States District Court’s reasoning in Barker, on which the
district court here relied, has been followed by several California federal courts
and Delaware’s Court of Chancery, causing them to find similar provisions void
under Section 16600. See Conversion Logic, Inc. v. Measured, Inc., No. 219-
CV-05546, 2019 WL 6828283, at *4 (C.D. Cal. Dec. 13, 2019); WeRide Corp. v.
Kun Huang, 379 F. Supp. 3d 834, 852 (N.D. Cal. 2019), modified in part, No.
5:18-CV-07233, 2019 WL 5722620 (N.D. Cal. Nov. 5, 2019); Nuvasive, Inc. v.
Miles, C.A. No. 2017-0720, 2019 WL 4010814, at *7 (Del. Ch. Aug. 26, 2019).
Six Dimensions makes several arguments, most of which we have
already analyzed. We agree that the restraint on Brading was minimal, but it
was a restraint. Six Dimensions does identify three post-Edwards decisions
by California federal district courts that upheld nonsolicitation provisions.1
These decisions, though, rely on Moyes, and we conclude Moyes must be
abandoned due to Edwards.
Our best Erie guess is that the California Supreme Court would hold
that California’s strict antipathy towards restraint of trade of any kind in
Section 16600 voids the nonsolicitation provision here. We find no reversable
error in the district court’s interpretation of California law.
1 See Sonic Auto., Inc. v. Younis, No. 15-CV-00717, 2015 WL 13344624, at *2 (C.D.
Cal. May 6, 2015); Arthur J. Gallagher & Co. v. Lang, No. C 14-0909, 2014 WL 2195062, at
*4 (N.D. Cal. May 23, 2014); Thomas Weisel Partners LLC v. BNP Paribas, No. C 07-6198,
2010 WL 546497, at *6 (N.D. Cal. Feb. 10, 2010).
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III. Unfair competition
Six Dimensions in its cross appeal argues that the district court erred in
entering summary judgment for Perficient on the California Unfair
Competition Claim under Section 17200 of the UCL. The First Amended
Complaint, though, only asserts the Section 17200 claim against Brading, and
the Second Amended Complaint incorporates its claims by reference.
Regardless, the claim fails for reasons unrelated to which defendant is the
claim’s target.
The district court held that Six Dimensions’ claim failed as a matter of
law because Six Dimensions did “not allege, or cite to any evidence showing,
any misconduct or injuries occurred in California” and the “UCL does not apply
‘where none of the alleged misconduct or injuries occurred in California.’” Six
Dimensions, Inc. v. Perficient, Inc., 356 F. Supp. 3d 640, 648 (S.D. Tex. 2018)
(quoting Figy v. Frito-Lay N. Am., Inc., 67 F. Supp. 3d 1075, 1087 (N.D. Cal.
2014)).
The UCL is a “California consumer protection statute[].” Wilson v. Frito-
Lay N. Am., Inc., 961 F. Supp. 2d 1134, 1144 (N.D. Cal. 2013). It makes
actionable any “unlawful, unfair or fraudulent business act or practice.” CAL.
BUS. & PROF. CODE § 17200. The California Supreme Court has held that there
is a presumption against extraterritorial application of the UCL. Sullivan v.
Oracle Corp., 254 P.3d 237, 248 (Cal. 2011).
Six Dimensions relies on two opinions from California Courts of Appeals
and one federal district court opinion to argue that its claim is entitled to
application of the UCL outside California. Six Dimensions argues there are
three categories of contracting parties to consider when deciding whether the
UCL applies. That understanding of the UCL seems an overstatement, but
the three categories were created by a California court certifying a nationwide
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class: (1) California residents, regardless of where the injury occurred; (2) non-
California residents injured by conduct in California; and (3) non-California
residents injured by conduct outside of California. Norwest Mortg., Inc. v.
Super. Ct., 72 Cal. App. 4th 214, 222 (Cal. Ct. App. 1999). The Norwest court
held that the UCL could not be applied to claims “suffered by non-California
residents, caused by conduct occurring outside of California’s borders, by
defendants whose headquarters and principal places of operations are outside
of California.” Id. at 225. Thus, in the Norwest court’s analysis, the first two
categories can support a UCL claim, but the third cannot. Id. at 222.
Six Dimensions argues that the UCL applies here under an analogy to
the second Norwest category. Six Dimensions urges us to find a connection to
California from the facts that a California choice-of-law provision was in
Brading’s 2014 Agreement, that a Six Dimensions employee based in
California signed the agreement on its behalf, that Six Dimensions was
originally incorporated and headquartered in California, and that Brading
violated California law under the agreement. None of that demonstrates any
conduct in California injuring Six Dimensions. Further, Brading is an Ohio
resident, and at the time of Brading’s breach of contract, Six Dimensions was
incorporated in Nevada and its principal place of business was in New York.
Six Dimensions also relies on opinions holding that a choice-of-law
provision is a sufficient contact for UCL application, but in both of those
decisions, the defendants were California residents. See Schlesinger v. Super.
Ct., No. B224880, 2010 WL 3398844, at *6 (Cal. Ct. App. Aug. 31, 2010); see
also G.P.P., Inc. v. Guardian Prot. Prod., Inc., No. 1:15-CV-00321, 2017 WL
220305, at *30 (E.D. Cal. Jan. 18, 2017), rev’d on other grounds, 788 F. App’x
452 (9th Cir. 2019). No party in the case before us resides in California.
We find no error in the district court’s refusal to apply the UCL.
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IV. Misappropriation of trade secrets
In Six Dimensions’ cross appeal, it argues the district court erred in
denying Six Dimensions’ motion for a new trial on its claim for
misappropriation of trade secrets. District courts may “grant a new trial on all
or some of the issues . . . for any reason for which a new trial has heretofore
been granted in an action at law in federal court.” FED. R. CIV. P. 59(a)(1).
District courts “should not grant a new trial on evidentiary grounds unless the
verdict is against the great weight of the evidence.” Whitehead v. Food Max of
Miss., Inc., 163 F.3d 265, 269 (5th Cir. 1998). Whether a verdict is against the
great weight of the evidence is a question committed to the district court’s
sound discretion. Id. Accordingly, we will affirm the denial of a motion for a
new trial unless the moving party, on appeal, “makes a clear showing of an
absolute absence of evidence to support the jury’s verdict, thus indicating that
the trial court . . . abused its discretion in refusing to find the jury’s verdict
contrary to the great weight of the evidence.” Id. (quotation marks and
emphasis omitted).
The Texas Uniform Trade Secrets Act (“TUTSA”) provides six theories
under which a plaintiff can establish misappropriation of a trade secret. TEX.
CIV. PRAC. & REM. CODE § 134A.002(3). These six theories can be grouped into
two categories: the “acquisition of a trade secret” and the “disclosure or use of
a trade secret.” Id. At trial, the jury was instructed on all six theories, and
returned a defense verdict. Six Dimensions moved for a new trial on its trade-
secret claim, limiting the motion to the “acquisition of the trade secrets.” We
also limit our review to that theory.
To find misappropriation of a trade secret on Six Dimensions’ acquisition
theory, the jury was instructed that it must find Perficient “[a]cquired the
trade secret, and that Perficient Inc. knew or had reason to know that the trade
secret was acquired by improper means.” The jury was further instructed that
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“‘improper means’ include theft; bribery; misrepresentation; breach or
inducement of a breach of a duty to maintain secrecy, to limit use, or to prohibit
discovery of a trade secret; or espionage through electronic or other means.”
The jury instructions did not define “acquired,” and Six Dimensions does not
challenge the jury instructions on appeal.
Six Dimensions’ acquisition theory relies on a documented conversation
between Price and Perficient employee Robert Sumner that was admitted into
evidence as “Plaintiff’s Exhibit 81,” and on Price’s trial testimony. Price began
working for Six Dimensions in 2013. Price signed an offer of employment with
Perficient on October 7, 2015. That same day, Price gave a two-week notice to
Six Dimensions. At some point prior to Price’s termination of employment with
Six Dimensions, Price possessed a thumb-drive — for reasons not explained in
the record — containing Six Dimensions training materials. Price kept the
thumb-drive after his termination of employment in violation of his Six
Dimensions employment agreement.
On October 27, 2015, Price and Sumner discussed the Six Dimensions
training materials. Price told Sumner that Price had Six Dimensions training
materials, and Sumner told Price to “cleanse your materials and upload,”
meaning remove “any 6D references” and upload to a Perficient shared-
document system. Price further explained that he had the “entire AEM
training,” which he described as “VERY deep and thorough, and module
based.” Sumner responded that he “look[ed] forward to seeing the material.”
At trial, Price testified that he kept the Six Dimensions training
materials after leaving Six Dimensions to “benefit Perficient,” and that he
continued to possess the training materials after he began his employment
with Perficient. On cross examination, though, Price clarified that he did
“nothing” with the training materials. Price also testified that he did not
provide the training materials to anyone at Perficient, that no one at Perficient
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ever used the training materials, and that he never cleansed the training
materials or uploaded the training materials to a Perficient document system.
Price also testified on cross examination that shortly after the first
identified conversation he had with Sumner, they again spoke by telephone
regarding the training materials. They “discussed the nature of what [the
training materials] were and what [they] contained.” In that conversation,
Sumner told Price “[l]et’s not use” the training materials. Price testified that
the choice not to use the training materials was based on Perficient’s having a
“robust training already in their partnership with Adobe and the solution
partner portal trainings” that Price believed was “superior.”
The jury found Perficient did not misappropriate the Six Dimensions
training materials on an acquisition theory. Six Dimensions argues here that
its evidence “clearly showed an absolute absence of evidence to support the
jury’s verdict.” Six Dimensions contends Perficient certainly acquired, and
therefore misappropriated, these training materials because Price:
(1) “admitted that he misappropriated the training material when he acquired
the trade secret through improper means,” (2) “continued to possess the trade
secrets while employed by Perficient,” and (3) told Sumner “the contents of the
training material and the ‘nature of what . . . [the trade secrets] were.’” Six
Dimensions also asserts Perficient is liable for Price’s individual tort of
misappropriation through respondeat superior and ratification theories of
liability. We address each of those arguments.
First, Price undoubtedly possessed training materials through improper
means after his termination of employment with Six Dimensions because he
retained the thumb-drive. At that point, Price was not a Perficient employee.
Thus, the jury was entitled to find that Perficient did not misappropriate the
training materials through Price’s individual actions.
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Second, it is undisputed that Price continued to possess the training
materials while he was employed by Perficient. This presents a closer call. Six
Dimensions provides no precedent, though, that as a matter of law, Perficient
misappropriated the training materials when Price improperly acquired them
before he was a Perficient employee and continued to possess them while he
was a Perficient employee. We see no reason for that to be the law. That allows
jurors to credit Price’s trial testimony that he did not provide the training
materials to anyone at Perficient, cleanse the training materials, or upload the
training materials to a Perficient system.
Next, Six Dimensions argues that Perficient acquired the training
materials when Price described them to Sumner. Nevertheless, the training
materials were not entered into evidence and Six Dimensions obtained no
testimony from Price detailing what he told Sumner about them. Without the
training materials in evidence to compare with a more detailed account of the
conversation, the evidence does not compel that Perficient acquired the
training materials through the conversation.
Last, we will not consider Six Dimensions’ respondeat superior and
ratification theories of liability. One reason is that neither legal theory was
alleged in Six Dimensions’ complaint. Another is that the jury was not
instructed on either theory. Six Dimensions’ Rule 59(a) motion for a new trial
was not a proper vehicle “to raise arguments which could, and should, have
been made before the judgment issued” or to “argue a case under a new legal
theory.” Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 344 (5th Cir.
2007). Thus, these theories are not properly before us.
There was not “an absolute absence of evidence to support the jury’s
verdict” that Perficient had not misappropriated these training materials
through acquisition. See Whitehead, 163 F.3d at 269. The district court did
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not abuse its discretion “in refusing to find the jury’s verdict contrary to the
great weight of the evidence.” Id.The judgment is REVERSED in part as to the portion of the judgment
that held Brading breached a contract and awarded damages for the breach to
Six Dimensions. Otherwise, the judgment is AFFIRMED.
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