Control Technology & Solutions, LLC v. Omni Energy Partners, LLC, et al.

Summary

The United States District Court for the Eastern District of Missouri addresses cross-motions for summary judgment and a motion to exclude two defense experts in a dispute involving alleged trade-secret misappropriation, unfair competition, breach of loyalty, unjust enrichment, conspiracy, and related claims. The court grants Plaintiff’s motion to exclude the defense experts under Federal Rule of Civil Procedure 37(c)(1), but denies both parties’ summary-judgment motions because Plaintiff’s briefing was insufficient on several claims and genuine disputes of material fact remained on the trade-secret claim. The action concerns former employees’ creation of Omni Energy Partners and their alleged use of Control Technology & Solutions materials and business opportunities.

Holdings

1. Defendants' failure to provide the required expert reports was not substantially justified or harmless, so the default exclusion sanction under Rule 37(c)(1) applied and the testimony of Douglas Sparr and David Weiner was excluded.
2. CTS was not entitled to partial summary judgment on its trade-secret misappropriation, unfair competition, unjust-enrichment, duty-of-loyalty, or conspiracy claims.
3. Summary judgment was denied because genuine disputes remained concerning whether the identified CTS materials were trade secrets and whether defendants misappropriated them.
4. Summary judgment was denied because a reasonable jury could find actual or probable deception from defendants' presentation of CTS-related accomplishments and use of reports and pictures from CTS-managed projects.
5. Summary judgment was denied because the record could support a finding that defendants were unjustly enriched by competing with CTS while still employed and because factual disputes prevented a determination that the claim was preempted by MUTSA.
6. A plaintiff need not identify an existing contract or formal obligation to establish a valid business expectancy under Missouri law; a probable future relationship and reasonable expectancy of financial benefit may suffice, including in a competitive public-bid setting.
7. Employees may plan and prepare to compete after leaving employment, but they breach the duty of loyalty when they go beyond preparation and engage in direct competition while still employed.
8. Summary judgment was denied on the civil-conspiracy claim because defendants' argument depended on obtaining summary judgment on the underlying tort claims, which the court rejected.
9. Summary judgment was denied on CTS's request for injunctive relief because disputes concerning trade-secret misappropriation and unfair competition remained, and the availability of damages did not categorically establish an adequate remedy at law.

Questions Presented

1. Whether defendants' failure to provide expert reports required exclusion of their experts under Federal Rule of Civil Procedure 37(c)(1).
2. Whether CTS was entitled to partial summary judgment on its claims for trade-secret misappropriation under MUTSA, unfair competition, unjust enrichment, breach of the duty of loyalty, and conspiracy.
3. Whether genuine disputes of material fact required denial of defendants' motion for summary judgment on CTS's claims for trade-secret misappropriation, unfair competition, unjust enrichment, tortious interference with a business expectancy, breach of the duty of loyalty, conspiracy, and injunctive relief.
4. Whether CTS could establish a valid business expectancy despite the public-bidding process and the absence of existing contracts.
5. Whether employees' conduct constituted competition exceeding permissible planning and preparation for a post-employment competing business.

Disposition

other