DeWolff Boberg & Associates Inc v. Pethick

IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

DEWOLFF, BOBERG & §

ASSOCIATES, INC., §

§

Plaintiff, §

§

v. § Civil Action No. 3:20-CV-3649-L

§

JUSTIN PETHICK and THE §

RANDALL POWERS COMPANY, §

§

Defendants. §

MEMORANDUM OPINION AND ORDER

Before the court is Defendant Justin Pethick’s Motion for Partial Dismissal and Motion for

More Definite Statement (Doc. 98), filed November 16, 20221; and Defendant The Randall

Powers Company’s Motion for Partial Dismissal and Motion for More Definite Statement (Doc.

109), filed January 3, 2022. For the reasons herein explained, the court grants in part and denies

in part Defendants’ respective motions (Docs. 98, 109).

I. Factual and Procedural Background

DeWolff, Boberg & Associates, Inc. (“Plaintiff” or “DeWolff”) originally brought this

action against former employee Justin Pethick (“Mr. Pethick”) in the 401st Judicial District Court,

Collin County, Texas, on June 10, 2020, for breach of contract and fiduciary duty. Mr. Pethick

removed the case to federal court on July 9, 2020. On October 23, 2020, Plaintiff filed a First

Amended Complaint (Doc. 22) in which it again asserts causes of action against Mr. Pethick for

breach of contract and breach of fiduciary duty, and it also asserts a cause of action for unjust

enrichment.1 On November 12, 2020, Mr. Pethick filed his Answer (Doc. 25) to the First Amended

Complaint. At his request, the case was then transferred on December 16, 2020, from the Eastern

District of Texas, Sherman Division, to the Northern District of Texas, Dallas Division.

Several months later, on November 2, 2021, the court granted Plaintiff’s request to join as

a defendant The Randall Powers Company (“Powers”), Mr. Pethick’s new employer, and directed

the clerk of the court to file Plaintiff’s Second Amended Complaint (Doc. 95).2 Plaintiff’s Second

Amended Complaint includes nine counts:

• Count 1: breach of contract (against Mr. Pethick)

• Count 2: breach of fiduciary duty (against Mr. Pethick)

• Count 3: misappropriation of trade secrets (against both Defendants)

• Count 4: aiding and abetting breach of fiduciary duties (against Powers)

• Count 5: aiding and abetting misappropriation of trade secrets (against Powers)

• Count 6: tortious interference with existing contract (against Powers)

• Count 7: tortious interference with prospective relations (against both Defendants)

• Count 8: conspiracy (against both defendants)

• Count 9: unjust enrichment (against both defendants)

While the Second Amended Complaint includes more causes of action, the allegations in the

Second Complaint supporting the claims against Mr. Pethick are largely the same as those included

in the First Amended Complaint to which he filed an Answer.

DeWolff alleges that it is a global management consulting company headquartered in

Dallas, Texas, that has provided cross-industry management consulting services to companies

since 1987. All of the claims asserted by DeWolff stem from its allegation that Mr. Pethick not

1 As this and other district courts have previously explained, unjust enrichment is not a separate cause of action. See

Chapman v. Commonwealth Land Title Ins. Co., 814 F. Supp. 2d 716, 725 (N.D. Tex. 2011) (“Texas courts of appeals

have consistently held that unjust enrichment is not an independent cause of action but instead a theory of upon an

action for restitution may rest.”) (internal citations omitted); see also Dallas Cnty., Tex. v. MERSCORP, Inc., 2013

WL 5903300, at *9 (N.D. Tex. Nov. 4, 2013) (“Unjust enrichment is not an independent cause of action under Texas

law.”), aff’d, 791 F.3d 545, 558 (5th Cir. 2015). The court, nevertheless, refers herein to Plaintiff’s request to recover

for unjust enrichment as a claim or cause of action consistent with Plaintiff’s pleadings and the parties’ briefs on

Defendants’ motions, as doing so does not affect the resolution of Defendants’ motions.

2 The court refers to Mr. Pethick and Powers collectively as “Defendants.”

only began working in the same sales position for Powers while he was still employed by DeWolff,

but that he also began actively calling and soliciting DeWolff clients on behalf of Powers. Plaintiff

alleges that such conduct violated the fiduciary duties he owed DeWolff, as well as the

nonsolicitation, nondisclosure, and noncompetition clauses in the Non-Disclosure Agreement

(“NDA”) and Employee Service and Non-Competition Agreement (“Employment Agreement”)

that he signed when he joined DeWolff in October 2018. In addition, DeWolff alleges that Mr.

Pethick disclosed and used confidential information pertaining to DeWolff’s business and clients

for his own benefit and that of Powers, and, in doing so, misappropriated DeWolff’s trade secrets

and committed other various torts.

Plaintiff alleges that Powers and DeWolff are direct competitors, and that “Powers was

founded by a former [DeWolff] employee, Randall Powers, to compete with [DeWolff] by

providing the same services pursuant to the same business model that [DeWolff] had developed

for decades prior.” Pl.’s Second Am. Compl. ¶ 18. For this and other reasons, Plaintiff asserts that

Powers was well aware of Mr. Pethick’s conduct, knew that his conduct violated his contractual

and fiduciary obligations to DeWolff, and actively participated in the alleged tortious conduct and

misappropriation of DeWolff’s confidential information and trade secrets for its own benefit.

In response to Plaintiff’s Second Amended Complaint, Mr. Pethick and Powers both filed

motions to dismiss and motions for more definite statements, pursuant to Federal Rules of Civil

Procedure 12(b)(6) and 12(e),

II. Motions for More Definite Statements—Rule 12(e)

In their respective motions for more definite statements, Defendants contend that Plaintiff

should be required to provide a more definite statement and allege in more detail its claim for

alleged misappropriation of trade secrets.

Rule 8(a)(2) of the Federal Rules of Civil Procedure requires a pleading to contain “a short

and plain statement of the claim showing that the pleader is entitled to relief.” Rule 8 only requires

“notice” pleading. Accordingly, it is not necessary that the pleader set forth each and every factual

allegation supporting a claim. The “short and plain statement,” however, must contain sufficient

allegations of fact “that will give the defendant fair notice of what the plaintiff’s claim is and the

grounds upon which it rests.” Leatherman v. Tarrant Cnty. Narcotics Intel. & Coordination Unit,

507 U.S. 163, 168 (1993) (internal quotation marks and citation omitted).

“If a complaint is ambiguous or does not contain sufficient information to allow a

responsive pleading to be framed, the proper remedy is a motion for a more definite statement

under Rule 12(e).” Beanel v. Freeport–McMoran, Inc., 197 F.3d 161, 164 (5th Cir. 1999) (citation

omitted). A motion for a more definite statement under Rule 12(e), however, should be granted to

clarify the complaint only when the complaint is so unintelligible that the court cannot “make out

one or more potentially viable legal theories,” and is “so vague or ambiguous that the opposing

party cannot respond, even with a simple denial, in good faith or without prejudice to itself.” Sefton

v. Jew, 204 F.R.D. 104, 106 (W.D. Tex. 2000). When a respondent complains of matters that could

be answered or developed through discovery, a motion for more definite statement is not warranted

because Rule 12(e) is not a substitute for discovery. Valdez v. Celerity Logistics, Inc., 999 F. Supp.

2d 936, 946 (N.D. Tex. 2014) (citations omitted); Arista Records, LLC v. Greubel, 453 F. Supp.

2d 961, 972 (N.D. Tex. 2006) (citing Mitchell v. E–Z Way Towers, Inc., 269 F.2d 126, 132 (5th

Cir. 1959) (holding that Rule 12(e) is not to be used as a substitute for discovery)).

Here, Defendants contend that Plaintiff’s allegations regarding confidential “customer

information and data” do not provide them with adequate notice to understand the bases for the

trade secrets claim asserted against them. For the same reason, Defendants both note in their

respective motions their intention to file a separate Motion to Identify Trade Secrets and

subsequently filed a joint Motion for Order Requiring Pre-Discovery Identification of Trade

Secrets (Doc. 111).

The court denied this joint motion by Defendants (Doc. 125) on April 28, 2022, reasoning

that the sufficiency of Plaintiff’s pleadings regarding this claim and any related discovery issues

are better suited for resolution in the context of Defendants’ motions to dismiss for failure to state

a claim or for a more definite statement under Federal Rule of Civil Procedure 12 and the normal

discovery process. Doc. 125 at 3. After reviewing Defendants’ motions for more definite

statement, the court similarly determines that their concerns regarding the bases for Plaintiff’s

trade secret claim can be addressed through the normal discovery process, as the allegations in

Plaintiff’s Second Amended Complaint are not so unintelligible, vague, or ambiguous that

Defendants cannot respond. Instead, Defendants were able to file quite detailed motions to dismiss

under Rule 12(b)(6) in response to this and Plaintiff’s other claims. The court, therefore, denies

Defendants’ Motions for More Definite Statement.

III. Motions to Dismiss—Rule 12(b)(6)

A. Rule 12(b)(6) Legal Standard

To defeat a motion to dismiss filed pursuant to Rule 12(b)(6) of the Federal Rules of Civil

Procedure, a plaintiff must plead “enough facts to state a claim to relief that is plausible on its

face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007); Reliable Consultants, Inc. v.

Earle, 517 F.3d 738, 742 (5th Cir. 2008); Guidry v. American Pub. Life Ins. Co., 512 F.3d 177,

180 (5th Cir. 2007). A claim meets the plausibility test “when the plaintiff pleads factual content

that allows the court to draw the reasonable inference that the defendant is liable for the misconduct

alleged. The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more

than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662,

678 (2009) (internal citations omitted). While a complaint need not contain detailed factual

allegations, it must set forth “more than labels and conclusions, and a formulaic recitation of the

elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (citation omitted). The

“[f]actual allegations of [a complaint] must be enough to raise a right to relief above the speculative

level . . . on the assumption that all the allegations in the complaint are true (even if doubtful in

fact).” Id. (quotation marks, citations, and footnote omitted). When the allegations of the pleading

do not allow the court to infer more than the mere possibility of wrongdoing, they fall short of

showing that the pleader is entitled to relief. Iqbal, 556 U.S. at 679.

In reviewing a Rule 12(b)(6) motion, the court must accept all well-pleaded facts in the

complaint as true and view them in the light most favorable to the plaintiff. Sonnier v. State Farm

Mutual Auto. Ins. Co., 509 F.3d 673, 675 (5th Cir. 2007); Martin K. Eby Constr. Co. v. Dallas

Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004); Baker v. Putnal, 75 F.3d 190, 196 (5th Cir.

1996). In ruling on such a motion, the court cannot look beyond the pleadings. Id.; Spivey v.

Robertson, 197 F.3d 772, 774 (5th Cir. 1999). The pleadings include the complaint and any

documents attached to it. Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir.

2000). Likewise, “‘[d]ocuments that a defendant attaches to a motion to dismiss are considered

part of the pleadings if they are referred to in the plaintiff’s complaint and are central to [the

plaintiff’s] claims.’” Id. (quoting Venture Assocs. Corp. v. Zenith Data Sys. Corp., 987 F.2d 429,

431 (7th Cir. 1993)). In this regard, a document that is part of the record but not referred to in a

plaintiff’s complaint and not attached to a motion to dismiss may not be considered by the court

in ruling on a 12(b)(6) motion. Gines v. D.R. Horton, Inc., 699 F.3d 812, 820 & n.9 (5th Cir. 2012)

(citation omitted). Further, it is well-established and ‘“clearly proper in deciding a 12(b)(6) motion

[that a court may] take judicial notice of matters of public record.”’ Funk v. Stryker Corp., 631

F.3d 777, 783 (5th Cir. 2011) (quoting Norris v. Hearst Trust, 500 F.3d 454, 461 n.9 (5th Cir.

2007) (citing Cinel v. Connick, 15 F.3d 1338, 1343 n.6 (5th Cir. 1994)).

The ultimate question in a Rule 12(b)(6) motion is whether the complaint states a valid

claim when it is viewed in the light most favorable to the plaintiff. Great Plains Trust Co. v.

Morgan Stanley Dean Witter, 313 F.3d 305, 312 (5th Cir. 2002). While well-pleaded facts of a

complaint are to be accepted as true, legal conclusions are not “entitled to the assumption of truth.”

Iqbal, 556 U.S. at 679 (citation omitted). Further, a court is not to strain to find inferences

favorable to the plaintiff and is not to accept conclusory allegations, unwarranted deductions, or

legal conclusions. R2 Invs. LDC v. Phillips, 401 F.3d 638, 642 (5th Cir. 2005) (citations omitted).

The court does not evaluate the plaintiff’s likelihood of success; instead, it only determines

whether the plaintiff has pleaded a legally cognizable claim. United States ex rel. Riley v. St.

Luke’s Episcopal Hosp., 355 F.3d 370, 376 (5th Cir. 2004). Stated another way, when a court

deals with a Rule 12(b)(6) motion, its task is to test the sufficiency of the allegations contained in

the pleadings to determine whether they are adequate enough to state a claim upon which relief

can be granted. Mann v. Adams Realty Co., 556 F.2d 288, 293 (5th Cir. 1977); Doe v. Hillsboro

Indep. Sch. Dist., 81 F.3d 1395, 1401 (5th Cir. 1996), rev’d on other grounds, 113 F.3d 1412 (5th

Cir. 1997) (en banc). Accordingly, denial of a 12(b)(6) motion has no bearing on whether a

plaintiff ultimately establishes the necessary proof to prevail on a claim that withstands a 12(b)(6)

challenge. Adams, 556 F.2d at 293.

B. Powers’ Motion to Dismiss

1. Preemption (Counts 4, 5, 7, 8, 9)

Powers contends that Plaintiff’s claims for aiding and abetting breach of fiduciary duties

(Count 4), aiding and abetting misappropriation of trade secrets (Count 5), tortious interference

with prospective relations (Count 7), conspiracy (Count 8), and unjust enrichment (Count 9) should

be dismissed as preempted by the Texas Uniform Trade Secrets Act (“TUTSA”) to the extent they

are based on the misappropriation of information that qualifies as a trade secret.

Plaintiff responds that its pleadings identify the information at issue as “confidential and

proprietary information” rather than “trade secret information.” Pl.’s Resp. 14. Plaintiff, therefore,

contends that, “[t]o the extent that such information is not found to be a trade secret, then TUTSA

should not apply, and [it] should be permitted to pursue its common law tort claims” in the

alternative. Id. Plaintiff similarly asserts that, even if a claim is based in part on the alleged

misappropriation of trade secrets, the claim is not preempted if there are sufficient facts to support

the claim on other grounds. For this reason, Plaintiff contends that none of its challenged claims

is preempted by TUTSA even if they are based in part on alleged misappropriation of trade secrets.

TUTSA became effective in 2013 and governs claims for trade secret misappropriation in

Texas. See Tex. Civ. Prac. & Rem. Code §§ 134A.001, et seq. “The elements of a TUTSA claim

are: (1) ownership of a trade secret; (2) misappropriation of the trade secret; and (3) an injury, if

the plaintiff is seeking damages.” Retail Servs. WIS Corp. v. Crossmark, Inc., No. 05-20-00937-

CV, 2021 WL 1747033, at *8 (Tex. App.—Dallas May 4, 2021, pet. denied), reh’g denied (June

18, 2021) (citing EJ Madison, LLC v. Pro-Tech Diesel, Inc., 594 S.W.3d 632, 643-44 (Tex. App.—

El Paso 2019, no pet.) (citing Tex. Civ. Prac. & Rem. Code §§ 134A.002(1), (3), (6), 134A.004(a)).

“Actual and unauthorized use of trade secrets” is required “to prevail on a misappropriation claim.”

Eagle Oil & Gas Co. v. Shale Expl., LLC, 549 S.W.3d 256, 273 (Tex. App.—Houston [1st Dist.]

2018, pet. dism’d) (citing Southwestern Energy Prod. Co. v. Berry-Helfand, 491 S.W.3d 699, 721

(Tex. 2016)). “In the context of trade secret cases, use means commercial use for the purpose of

profit, including use likely to injure the secret’s owner, enrich the defendant, or aid the defendant

in its own research and development.” Id. (citing Southwestern Energy Prod. Co., 491 S.W.3d at

722); see also General Universal Sys., Inc. v. HAL, Inc., 500 F.3d 444, 450-51 (5th Cir. 2007)

(“[A]ny exploitation of the trade secret that is likely to result in injury to the trade secret owner or

enrichment to the defendant is a ‘use’”).

TUTSA defines “misappropriation” as:

(A) acquisition of a trade secret of another by a person who knows or has reason to know

that the trade secret was acquired by improper means; or

(B) disclosure or use of a trade secret of another without express or implied consent by a

person who:

(i) used improper means to acquire knowledge of the trade secret;

(ii) at the time of disclosure or use, knew or had reason to know that the person’s

knowledge of the trade secret was:

(a) derived from or through a person who used improper means to acquire

the trade secret;

(b) acquired under circumstances giving rise to a duty to maintain the

secrecy of or limit the use of the trade secret; or

(c) derived from or through a person who owed a duty to the person seeking

relief to maintain the secrecy of or limit the use of the trade secret . . . ;

(iii) before a material change of the position of the person, knew or had reason to

know that the trade secret was a trade secret and that knowledge of the trade secret

had been acquired by accident or mistake.

Tex. Civ. Prac. & Rem. Code § 134A.002(3). TUTSA defines “trade secret” as any type of

information that the owner has taken reasonable measures to keep secret and which derives

economic value, potential or actual, from not being generally known to others who can obtain

economic value from the disclosure or use. Id. § 134A.002(6). “Improper means” includes “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.” Id.

§ 134A.002(2).

TUTSA “displaces conflicting tort, restitutionary, and other law of [Texas] providing civil

remedies for misappropriation of a trade secret,” but it “does not affect: (1) contractual remedies,

whether or not based upon misappropriation of a trade secret; [or] (2) other civil remedies that are

not based upon misappropriation of a trade secret[.]” Tex. Civ. Prac. & Rem. Code § 134A.007.

“District courts in the Fifth Circuit have fairly consistently applied the rule that TUTSA preempts

a claim for conspiracy unless the plaintiff can show the claim is based on facts unrelated to the

trade secret misappropriation.” Vest Safety Med. Servs., LLC v. Arbor Envtl., LLC, No. 4:20-CV-

0812, 2022 WL 2812195, at *3 (S.D. Tex. June 17, 2022) (citing cases), report and

recommendation adopted, No. 4:20-CV-0812, 2022 WL 2806544 (S.D. Tex. July 18, 2022); see

Trueblue, Inc. v. DeRuby, 3:18-CV-0192-M, 2018 WL 1784523, at *2 (N.D. Tex. Apr. 13, 2018)

(“Courts interpreting the nearly identical provision of the Uniform Trade Secrets Act have

uniformly held that a claim is not preempted if the plaintiff is able to show the claim is based on

facts unrelated to the misappropriation of the trade secret.”) (citations omitted).

Plaintiff advises in its response to Powers’ Motion to Dismiss that it is “withdrawing its

claim for aiding and abetting misappropriation of trade secrets” against Powers. Pl.’s Resp. 6 n.1.

Accordingly, this claim (Count 5) is no longer before the court and will be dismissed with

prejudice.

Regardless of the labels used by Plaintiff in its pleadings to describe the information at

issue, its claims and theories of relief based on conspiracy (Count 8) and unjust enrichment (9) are

premised entirely on the alleged misappropriation of DeWolff’s trade secrets and the type of

confidential information that qualifies as trade secrets under TUTSA. These claims are, therefore,

preempted.

DeWolff’s claim against Powers for aiding and abetting Mr. Pethick’s breaches of fiduciary

duties (Count 4) is preempted in part to the extent it is based on: (1) the misappropriation of

DeWolff’s “secret and confidential information relating to [its] business and clientele”; (2) the

utilization and disclosure of DeWolff’s “confidential information relating to [its] business and

clientele . . . to steal away [DeWolff]’s clients and prospective clients” for the benefit of Mr.

Pethick and Powers; and (3) the “unlawful misappropriation of [DeWolff’s] confidential client

information, and unlawful solicitation of [DeWolff’s] clients” through the use of that information.

Pl.’s Second Am. Compl. ¶¶ 45-47, 62.

The claim for aiding and abetting the breach of fiduciary duties, however, is not preempted

to the extent it is based on: (1) Mr. Pethick accepting employment with and simultaneously

performing the same job duties for Powers during his employment with DeWolff or his failure to

disclose such arrangement to DeWolff; or (2) the “usurping corporate opportunities from

[DeWolff],” unless the usurping of corporate opportunities is based solely on the allegation that

Defendants used DeWolff’s confidential client information in an effort to solicit and steal for

themselves the business opportunity with DeWolff client Triumph. Id. ¶¶ 46-47, 78.

DeWolff’s claim against Powers for tortious interference with prospective relations (Count

7) is likewise preempted to the extent it is based on the allegation that Defendants used DeWolff’s

confidential client information to reschedule meetings with Triumph to steal for themselves this

business opportunity. Id. ¶ 78. The claim is not preempted, however, to the extent it is based on

the allegation that the meeting with Triumph was rescheduled and deleted from DeWolff’s records

while Pethick was employed simultaneously for DeWolff and Powers such that Defendants are

alleged to have tortiously interfered with DeWolff’s prospective business relationship with

Triumph or other clients. Id. ¶¶ 78-81.

Accordingly, for the reasons explained, DeWolff’s claims and theories of relief against

Powers based on conspiracy (Count 8) and unjust enrichment (9) are preempted by TUTSA,

whereas DeWolff’s claims against Powers for aiding and abetting breaches of fiduciary duties

(Count 4) and tortious interference with prospective relations (Count 7) are only preempted in part.

2. Aiding and Abetting (Counts 4 and 5)

Powers contends that Plaintiff’s claims for aiding and abetting Mr. Pethick’s breach of

fiduciary duties (Count 4) and aiding and abetting misappropriation of trade secrets (Count 5) both

fail to state a claim upon which relief can be granted. For support, Powers cites Taylor v. Rothstein

Kass & Company, PLLC, No. 3:19-CV-1594-D, 2020 WL 554583, at *5 (N.D. Tex. Feb. 4, 2020),

for the proposition that “the Fifth Circuit has held that no claim for aiding and abetting exists in

Texas.” Powers’ Mot. 6.

As indicated, Plaintiff has withdrawn its claim against Powers for aiding and abetting the

misappropriation of trade secrets (Count 5). The court, therefore, only addresses Powers’

argument as to Plaintiff’s claim for aiding and abetting the breach of fiduciary duties (Count 4).

Regarding this claim, Plaintiff asserts that state and federal courts in Texas have regularly

recognized causes of action for aiding and abetting breaches of fiduciary duties. One of the cases

cited by Plaintiff is Meadows v. Hartford Life Insurance Company, 492 F.3d 634 (5th Cir. 2007),

which states as follows regarding a claim for knowing participation in a breach of fiduciary duty:

Under Texas law, “where a third party knowingly participates in the breach

of duty of a fiduciary, such third party becomes a joint tortfeasor with the fiduciary

and is liable as such.” Kinzbach Tool Co. v. Corbett–Wallace Corp., 138 Tex. 565,

160 S.W.2d 509, 514 (1942). To establish a claim for knowing participation in a

breach of fiduciary duty, a plaintiff must assert: (1) the existence of a fiduciary

relationship; (2) that the third party knew of the fiduciary relationship; and (3) that

the third party was aware that it was participating in the breach of that fiduciary

relationship. See Cox Tex. Newspapers, L.P. v. Wootten, 59 S.W.3d 717, 721-22

(Tex. App.[—Austin 2001, pet. denied]) (citing Kinzbach Tool, 160 S.W.2d at

514).

Id. at 639.

Powers replies that Plaintiff’s argument ignores binding Fifth Circuit authority. Powers’

Reply 1 (citing Midwestern Cattle Mktg., L.L.C. v. Legend Bank, N.A., 800 F. App’x 239, 249-50

(5th Cir. 2020)). Powers contends that Plaintiff ignores numerous other cases in which courts have

declined to recognize an independent claim for aiding and abetting breach of fiduciary duty.

Powers also contends that, except for one case cited by Plaintiff, the cases it relies on are more

recent than those relied on by Plaintiff. For support, Powers again cites Taylor, but this time for

the additional proposition that the Texas Supreme Court has not expressly decided whether Texas

recognizes a cause of action for aiding and abetting. Powers also cites other Fifth Circuit cases to

support its argument that no claim for aiding and abetting exists in Texas. Powers’ Reply 2 (citing

DePuy Orthopaedics, Inc., Pinnacle Hip Implant Prod. Liab. Litig., 888 F.3d 753, 781-82 (5th Cir.

2018) (citing Johnson v. Sawyer, 47 F.3d 716, 729 (5th Cir. 1995)). Finally, Powers argues that

Plaintiff’s reliance on the 1942 Texas Supreme Court case Kinzbach Tool Company is misplaced

because the Texas Supreme Court in First United Pentecostal Church of Beaumont v. Parker, 514

S.W.3d 214, 224 (Tex. 2017), “stated unequivocally that it has never adopted such a claim.”

Powers’ Reply 2.

While the court in First United Pentecostal Church of Beaumont began by noting that it

had “never expressly decided whether Texas recognizes a cause of action for aiding and abetting,”

it assumed without deciding that such a claim existed for purposes of deciding that appeal since

the issue was not briefed by the parties. 514 S.W.3d at 224. The Texas Supreme Court,

nevertheless, rejected the plaintiff’s argument that its pleadings regarding the defendant’s knowing

participation in a breach of fiduciary duty were sufficient to put the defense on notice that it was

asserting an unpleaded aiding and abetting claim. Id. at 224-25. From this, the court disagrees

with Plaintiff’s suggestion, based on this and other cases, that a claim under Texas law for knowing

participation in a breach of fiduciary duty is necessarily synonymous with one for aiding and

abetting breaches of fiduciary duty.

The court, nevertheless, determines that First United Pentecostal Church of Beaumont and

the other cases relied on by Powers are distinguishable because Plaintiff has not asserted a

“distinct” or stand-alone claim for aiding and abetting. Moreover, even assuming as Powers

contends that Texas has yet to recognize a claim for aiding and abetting in the breach of fiduciary

duty context, the allegations in the Second Amended Complaint are sufficient to put Powers on

notice that Plaintiff is asserting a claim for knowingly participating in Mr. Pethick’s alleged

breaches of fiduciary duty. This is so even though Count 4 is titled “Aiding and Abetting Breach

of Fiduciary Duties.” Pl.’s Second Am. Compl. 15. As Plaintiff’s pleadings satisfy the elements

for a claim of knowing participation in a breach of fiduciary duty, dismissal of Count 4 is not

appropriate at this juncture.

3. Tortious Interference With Existing Contract (Count 6)

Plaintiff’s claim for tortious interference with an existing contract is based on its allegation

that Powers intentionally interfered with DeWolff’s contracts with Mr. Pethick. Powers contends

that Plaintiff’s pleadings fail to state a claim on this basis because DeWolff’s agreements with Mr.

Pethick are unenforceable as a matter of law, regardless of whether the court applies Delaware

law, as provided in the choice of law provisions, or Texas law. In this regard, Powers asserts that

the noncompete restrictions are unreasonably overbroad in that they are not limited to customers

with whom Mr. Pethick dealt during his employment, and they prohibit him from working for a

competitor in any capacity. Powers asserts that the nonsolicitation provisions are similarly

overbroad and unreasonable because they prohibit Mr. Pethick from soliciting all clients and

prospects in DeWolff’s database even if he or anyone else at DeWolff never had contact with them.

Powers contends that the restrictive covenants are overly broad and unenforceable for another

reason—because they do not contain any geographic limitation.

Plaintiff disagrees with Powers’ interpretation of the agreements and responds that the

limitations that Powers focuses on in its Motion to Dismiss are reasonable or can be given a

reasonable meaning. Plaintiff asserts that the nonsolicitation provisions precluded Mr. Pethick

“from soliciting those clients that [DeWolff] either provided ‘productive utilization services’

during [Mr.] Pethick’s brief employment, or which [DeWolff] developed a specific productivity,

sales, or marketing strategy during [Mr.] Pethick’s employment to provide such services.” Pl.’s

Resp. 9. Plaintiff, therefore, contends that the allegations in its Second Amended Complaint are:

sufficient to give rise to a reasonable interpretation that [Mr.] Pethick was

prohibited from soliciting (i) those clients for whom [DeWolff] performed a project

over the seventeen-month period of [Mr.] Pethick’s employment (October 2018

through May 2020); and (ii) those clients that [Mr.] Pethick assisted in developing

a specific productivity, sales, or marketing strategy in order for [DeWolff] to

perform a project for them.

Id. (emphasis added).

Plaintiff asserts that the noncompetition provisions are likewise reasonable in scope, as

they are tailored narrowly to “specifically affect only those companies that provide the same

service (‘productive utilization services’) as [DeWolff] to the same clients that [Mr.] Pethick

interacted with or which [DeWolff] otherwise performed a project during [Mr.] Pethick’s tenure.”

Id. Plaintiff further asserts that the noncompetition provisions do not preclude Mr. Pethick from

obtaining employment in the entire management consulting industry; rather, he was:

free to accept employment at any of the thousands of management consulting firms

that do not perform the same type of “productive utilization services” that

[DeWolff] and a small group of direct competitors, including Powers, perform.

And, to the extent that [Mr.] Pethick is restrained from working at [DeWolff’s]

direct competitors, such restriction only lasts for one year after his termination.

Id. at 10. Plaintiff contends: “At a minimum, . . . determination as to the reasonableness of the

[noncompete and nonsolicitation] restraints . . . require[s] discovery and the development and

consideration of evidence, which is inappropriate at the dismissal stage.” Id. at 11.

Neither Powers nor Plaintiff argues that the noncompete or nonsolicitation provisions are

ambiguous, and the court determines that they are not ambiguous such that they can be construed

as a matter of law applying general principals of contract interpretation. See Wabash Life Ins. Co.

v. Garner, 732 F. Supp. 692, 695 (N.D. Tex. 1989) (concluding that the adoption of Section 15.50

of the Texas Commerce Code as to the enforceability of restrictive covenants did not displace the

longstanding rules of contractual interpretation under Texas law). As the parties both agree that

Texas law applies, the court’s analysis will also apply Texas law.

In D’Onofrio v. Vacation Publications, Incorporated, 888 F.3d 197 (5th Cir. 2018), the

Fifth Circuit explained as follows regarding the law applicable to covenants not to compete under

Texas law:

Under Texas law, covenants not to compete that “extend[ ] to clients with

whom the employee had no dealings during [her] [or his] employment” or amount

to industry-wide exclusions are “overbroad and unreasonable.” Gallagher

Healthcare Ins. Servs. v. Vogelsang, 312 S.W.3d 640, 654 (Tex. App.—Houston

[1st Dist.] 2009, pet. denied) (quoting John R. Ray & Sons, Inc. v. Stroman, 923

S.W.2d 80, 85 (Tex. App.—Houston [14th Dist.] 1996, writ denied)). Similarly, the

absence of a geographical restriction will generally render a covenant not to

compete unreasonable. See Peat Marwick Main & Co. [v. Haass, 818 S.W.2d 381,

387 (Tex. 1991)] (stating that a restrictive covenant “must not restrain [a former

employee’s] activities into a territory into which his former work has not taken

him[.]”).

Id. at 211-12; see also Peat Marwick Main & Co., 818 S.W.2d at 387 (applying same standard to

restrictive nonsolicitation covenants).

Here, because the provisions at issue are unambiguous, the reasonableness of the restrictive

covenants turns not on the interpretation that Plaintiff now attempts to assign to the covenants in

its pleadings or its responsive brief, which adds language not included in the agreements, but rather

on the language used in the agreements themselves. For the reasons urged by Powers, the court

agrees that the restrictive covenants are overly broad and unenforceable as written, but it

determines that dismissal of Plaintiff’s claim for tortious interference with an existing contract is

premature.

As pointed out by Plaintiff and the Fifth Circuit in D’Onofrio, “Section 15.51 of the Texas

Business and Commerce Code requires courts to reform covenants found to be unreasonable as to

time, geographical area, or scope of activity.” D’Onofrio, 888 F.3d at 212 (citing Tex. Bus. &

Com. Code § 15.51(c)). Plaintiff raised the issue of reformation in response to the motions to

dismiss filed by both Defendants, and Defendants contest whether reformation is moot or can save

Plaintiff’s tortious interference claim. The factual and legal bases for the parties’ respective

positions, however, are not adequately briefed with references to legal authority and the pleadings

as required by this District’s Local Civil Rules.3 See L.R. 7.1(d). Accordingly, the court does not

decide here whether or how the covenants can or should be reformed, or the effect, if any, of

3 For example, Mr. Pethick argues in his reply in support of his motion to dismiss Plaintiff’s breach of contract claim

that, because the covenants in the agreements expired on May 15, 2021, the issue of reformation is moot. He cites

authority for support, but he does not explain the factual basis for his assertion that the covenants expired on this date

in relation to Plaintiff’s 48-page pleading, which includes the documents attached to the Second Amended Complaint.

Moreover, as herein explained, this is an issue that Mr. Pethick could have, and should have, raised before filing his

Answer to Plaintiff’s First Amended Complaint.

reformation on Plaintiff’s ability to recover against either Defendant. It, instead, reserves the

resolution of this issue for summary judgment, that is, if the parties raise the issue of reformation

again and point the court to relevant legal authority, evidence, and information necessary to rule

on the issue.

4. Tortious Interference with Prospective Relations (Count 7)

Powers contends that Plaintiff has failed to state a claim for tortious interference with

prospective business relations under Texas law because it has not identified all clients that

Defendants solicited or all of the potential business relationships for which Defendants allegedly

interfered. In other words, Powers argues that, “because Plaintiff has failed to identify [all] alleged

prospective business relationships, it has failed to state a claim under Texas law,” which makes

clear that a general allegation that the defendant has interfered with a prospective business

relationship is insufficient. Powers’ Mot. 14 (citations omitted). For support, Powers relies on a

number of unpublished district court cases out of the Southern and Northern Districts of Texas.4

To state a claim for tortious interference with prospective business relations, a plaintiff

must allege facts that show:

(1) there was a reasonable probability that the plaintiff would have entered into a

business relationship with a third party; (2) the defendant either acted with a

conscious desire to prevent the relationship from occurring or knew the interference

was certain or substantially certain to occur as a result of the conduct; (3) the

defendant’s conduct was independently tortious or unlawful; (4) the interference

proximately caused the plaintiff injury; and (5) the plaintiff suffered actual damage

or loss as a result.

WickFire, LLC v. Laura Woodruff; TriMax Media, LLC, 989 F.3d 343, 356 (5th Cir. 2021)

(quoting Coinmach Corp. v. Aspenwood Apartment Corp., 417 S.W.3d 909, 923 (Tex. 2013)). In

4 Powers also cites one published case out of the Southern District of Texas—Rimkus Consulting Group, Incorporated

v. Cammarata, 688 F. Supp. 2d 598, 676 (S.D. Tex. 2010)—which is likewise not binding precedent on the

undersigned.

addition, for tortious interference with an existing business relationship claim, the defendant’s

conduct must have resulted in “some obligatory provision of a contract having been breached.”

Wickfire, 989 F.3d at 354 (citations omitted). To plausibly allege a tortious interference with

prospective business relationship claim, there must be “a reasonable probability that the plaintiff

would have entered into a business relationship with a third party” and “the defendant’s conduct

was independently tortious or unlawful.” Id. at 356 (quoting Coinmach Corp., 417 S.W.3d at 923).

Plaintiff contends, and the court agrees, that its allegations regarding its existing and

potential business relationship with Triumph suffice at this stage to state a claim under Texas law

for tortious interference with prospective business relations. To the extent that Plaintiff intends to

rely on other relationships, this can be ferreted out during discovery. Accordingly, Powers is not

entitled to dismissal of this claim.

5. Conspiracy

Having determined that Plaintiff’s conspiracy claim is preempted, the court need not

address Powers’ alternative contention that Plaintiff’s pleadings are insufficient to state a claim

for relief based on conspiracy.

C. Mr. Pethick’s Motion to Dismiss

Mr. Pethick contends that TUTSA preempts Plaintiff’s claims for breach of fiduciary duty

(Count 2), tortious interference with prospective business relations (Count 7), conspiracy (Count

8), and unjust enrichment (Count 9). In addition, he contends that Plaintiff’s pleadings are

insufficient to state valid claims for breach of contract (Count 1), tortious interference with

prospective business relations (Count 7), and conspiracy (Count 8).

Federal Rule of Civil Procedure 12(b) requires that a motion asserting failure to state a

claim upon which relief can be granted under Rule 12(b)(6) or any of the other Rule 12(b) defenses

“must be made before filing a responsive pleading.” Fed. R. Civ. P. 12(b). As noted, Mr. Pethick

previously filed his Answer (Doc. 25) to Plaintiff’s First Amended Complaint on November 12,

2020. Although Plaintiff was subsequently allowed to amend its pleadings, the allegations with

respect to its claims against Mr. Pethick for breach of contract, breach of fiduciary duty, and unjust

enrichment in the First Amended and Second Amended Complaints are substantially the same or

identical with the only difference being the addition of allegations against Powers. Accordingly,

Mr. Pethick’s motion as to these claims (Counts 1, 2, 9) is untimely under Rule 12(b) and will be

denied for this reason. Mr. Pethick’s contentions regarding the remaining claims (Counts 7 and 8)

are substantially like those asserted in Powers’ Motion to Dismiss. The court’s ruling as to these

claims is, therefore, the same.

IV. Conclusion

For the reasons discussed, Defendants’ Motions for More Definite Statement as to

Plaintiff’s claim for misappropriation of trade secrets are denied and their Motions to Dismiss are

granted in part and denied in part as follows:

Powers’ Motion to Dismiss (Doc. 109) is granted with respect to Plaintiff’s claims and

theories of relief based on conspiracy (Count 8) and unjust enrichment (9) as preempted by

TUTSA. Powers’ Motion to Dismiss as to Plaintiff’s claim for aiding and abetting

misappropriation of trade secrets is also granted, as this claim was withdrawn (Count 5) by

Plaintiff. Pl.’s Resp. 6 n.1. Accordingly, Plaintiff’s claims against Powers for aiding and abetting

misappropriation of trade secrets (Count 5), conspiracy (Count 8), and unjust enrichment (9) are

dismissed with prejudice. Powers’ Motion to Dismiss is denied in all other respects, except to

the extent that the court determined that Plaintiff’s claims for aiding and abetting breaches of

fiduciary duty (Count 4) and tortious interference with prospective relations (Count 7) are based

in part on the misappropriation of a trade secret and thus preempted in part.

Mr. Pethick’s Motion to Dismiss (Doc. 98) is granted with respect to Plaintiff's claim for

conspiracy (Count 8) because it is preempted by TUTSA, and this claim against him is dismissed

with prejudice. His Motion to Dismiss is denied in all other respects, except to the extent that the

court determined that Plaintiff’s claims for tortious interference with prospective relations (Count

7) is based in part on the misappropriation of a trade secret and thus preempted in part.

It is so ordered this 29th day of September, 2022.

“Sam A. Lindsay “4

United States District Judge

Memorandum Opinion and Order — Page 21