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Plc Trenching Co., LLC v. Gary Newton

April 6, 2012

PLC TRENCHING CO., LLC, PLAINTIFF,
v.
GARY NEWTON, JR.; CABLE SYS. INSTALLATION LLC; AND CABLE SYS. INSTALLATIONS CORP., DEFENDANTS.



The opinion of the court was delivered by: Hon. Glenn T. Suddaby, United States District Judge

MEMORANDUM-DECISION and ORDER

Currently before the Court, in this misappropriation-of-trade-secrets action, is a motion, filed by PLC Trenching Co., LLC ("Plaintiff") against Gary Newton, Jr., Cable System Installation LLC, and Cable System Installations Corp. ("Defendants"), for an order of civil contempt and the imposition of sanctions, attorney's fees and costs against Defendants. (Dkt. No. 95.) For the reasons set forth below, Plaintiff's motion is granted in part and denied in part.

I. RELEVANT BACKGROUND

Because the parties have demonstrated, in their motion papers and at the Order-to-Show-Cause Hearing dated March 26, 2012 ("Order-to-Show-Cause Hearing"), an adequate understanding of the claims, facts and procedural history of this case, the Court will not recite that information in this Decision and Order, which is intended primarily for the review of the parties.

II. GOVERNING LEGAL STANDARD

Again, because the parties have demonstrated, in their motion papers, an adequate understanding of the legal standard governing a motion for civil contempt, the Court will not recite that standard in this Decision and Order, which is (again) intended primarily for the review of the parties.

III. ANALYSIS

A. Defendants' Use of a Fourth Set of Cup Cutter Segments

Plaintiff argues that Defendants violated the Court's Temporary Restraining Order issued on May 10, 2011 ("TRO"), by failing to turn over a fourth set of cup cutter segments to Plaintiff until December 28, 2011, and by using the fourth set of cup cutter segments after the issuance of (and in violation of) the TRO. (Dkt. No. 95, Attach. 13, at 10-16, 22-24 [Plf.'s Memo. of Law].) As a result, Plaintiff requests that the Court issue sanctions against Defendants in the amount of $750,000 (resulting from the ability to excavate approximately 100,000 feet of trench at a profit of approximately $7.50 per foot of trench--resulting from an estimated 100% profit on the unit price of $7.50 per foot of trench--multiplied by a 100% production benefit), in addition to attorney's fees incurred by Plaintiff for having to file and argue its motion. (Dkt. No. 95, Attach. 13, at 26-27; Dkt. No. 95, Attach. 1, at ¶ 33 [Decl. of Lopata].)

In their papers, and at the Order-to-Show-Cause Hearing, Defendants admit that they used a fourth set of cup cutter segments at its Webberville, Texas, work site after the Court issued the TRO, but argue that the use was inadvertent and limited to that site. (See, e.g., Dkt. No. 106, at 9-10 [Defs.' Opp. Memo. of Law]; Dkt. No. 115 [Defs.' Suppl. Letter-Brief].) As for the amount of sanctions requested by Plaintiff, in their post-hearing papers, Defendants argue that Plaintiff overestimates the financial benefit derived by Defendants from their use of the fourth set of cup cutters at Webberville, asserting that the financial benefit was only $50,000 (resulting from the ability to excavate at most 80,000 feet of trench at a profit of approximately $1.25 per foot of trench--resulting from an estimated 20% profit on the unit price of $6.28 per foot of trench--multiplied by at most a 50% production benefit). (Dkt. No. 115 [Defs.' Suppl. Letter-Brief]; Dkt. No. 116 [Decl. of Singh]; Dkt. No. 117 [Second Decl. of O'Donnell].)*fn1 As for the attorney's fees requested by Plaintiff, at the Order-to-Show-Cause Hearing and in their post-hearing papers, Defendants do not contest attorney's fees to the extent they relate to Plaintiff having to file and argue this aspect of its motion; however, Defendants do contest attorney's fees as they relate to the remaining three aspects of Plaintiff's motion (i.e., spoliation of evidence, the forensic computer examination, and the failure to pay for site-inspection costs). (Dkt. No. 115 [Defs.' Suppl. Letter-Brief].)

In its post-hearing papers, Plaintiff argues that Defendants' late-blossoming evidence of the financial benefit derived by them from their use of the fourth set of cup cutters at Webberville should be given little, if any, weight, because that evidence (1) has deprived Plaintiff of an opportunity to cross-examine Defendants' declarants at the Order-to-Show-Cause Hearing, and (2) is uncorroborated by any documentary evidence (e.g., job reports, contracts or company records). (Dkt. No. 118 [Plf.'s Suppl. Letter-Brief].)

After carefully considering the matter (including the parties' motion papers and their arguments at the Order-to-Show-Cause Hearing), the Court agrees that sanctions and an award of attorney's fees are warranted, for the reasons stated by Plaintiff in its motion papers. (See, e.g., Dkt. No. 95, Attach. 13, at 10-16, 22-24, 26-27 [Plf.'s Memo. of Law].) As for the amount of the sanctions, the Court finds that sanctions in the amount of $406,800 are warranted,*fn2 to be paid as follows: (1) sanctions in the amount of $20,340, to be paid by Defendant Newton to Plaintiff;*fn3 and (2) sanctions in the remaining amount of $386,460, to be paid by the two corporate Defendants (jointly and severally) to Plaintiff. As for the amount of attorney's fees, the Court finds that reasonable attorney's fees and costs are warranted in an amount to be shown by Plaintiff within thirty days (and approved by the Court), to be thereafter paid by the three Defendants (jointly and severally) to Plaintiff, for having to file and argue this aspect of its motion.

The Court notes that it declines Defendants' offer to submit to the Court, for in camera review, "a bid sheet and estimate sheet for the Webberville job, which provides details on the estimates [of a unit price $6.28 per foot of trench and a profit margin of 20%]." (Dkt. No. 116, at ¶¶ 5, 18 [Decl. of Singh].) Setting aside the fact that the relative lack of utility of the bid sheet and estimate sheet in determining the actual profit margin (e.g., as compared to job reports, trenching logs, company financial records, etc.), the time to submit that information was when Defendants submitted their post-hearing letter-brief, or ideally before the Order-to-Show-Cause Hearing (so that Plaintiff could cross-examined Defendants' declarants). Furthermore, Defendants have not shown cause as to why the allegedly "highly confidential" information in those documents could not have been redacted. (Id.)

The Court notes also that the above-described award of sanctions represents what it finds to be the direct injury suffered by Plaintiff, which has been placed at a comparative disadvantage by its "primary competitor" in the marketplace. (See, e.g., Dkt. No. 8, at ΒΆΒΆ 20, 22-24, 36 [Decl. of Critelli]; Dkt. No. 80, at 19 [attaching page "69" of Tr. of Prelim. Injunct. Hrg.].) In the alternative, the above-described award of sanctions ...


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