Case 5:17-cv-00415-EEF-MLH Document 17 Filed 05/24/17 Page 1 of 9 PageID #: 127
`Case 5:17-cv-OO415-EEF-MLH Document 17 Filed 05/24/17 Page 1 of 9 PagelD #: 127
`
`UNITED STATES DISTRICT COURT
`WESTERN "DISTRICT OF LOUISIANA
`
`SH REVE’PORT DIVISION
`
`
`
`ROCKWELL AUTOMATION, .INC.,
`
`CIVIL ACTION NO. 17-415
`
`VERSUS
`
`'
`
`.
`
`‘
`
`JUDGE ELIZABETH ‘FOOTE
`
`MAGISTRATE JUDGE HORNSBY
`RONALD J. MONTGOMERY, EF-AL.
`
`
`MEMORANDUM ORDER
`
`Before the Court is Defendants’ motion to dismiss. Record Document ‘10. Plaintiff
`Rockwell Automation, Inc. (“Rockwell”) brought this action against Defendants Ronald].
`
`Montgomery (“Montgomery”) and Custom Control & Design, LLC (“Custom Control”)
`
`alleging four claims arising out ofthe .same course of-events. Record Document 51.
`Defendants moved to dismiss all claims under Federal Rule of Civil Procedure 1'2(b)(6)
`
`for failure to state a claim. 'For the reasons discussed .below, ‘Defendants’ motion
`
`[Record Document 10.] is DENIED.
`
`:I. Background
`
`Plaintiff is a corporation that Works in the “development and production of
`
`industrial components and automation products and services.” Record Document 1, p.
`
`5. "Defendant Custom Control is a purchaser of goods and software from Plaintiff,
`
`sometimes directly and sometimes through a'third—party distributor. lgL, p. 8.
`
`Montgomery is an officer of Custom Control. 1; Plaintiff alleges that Defendants
`
`misrepresented Custom Control as a system integrator — a purchaser who adds value ‘to
`
`the product before reselling it — in order to obtain a steep discount on Rockwell’s Toolkit
`
`
`Case 5:17-cv-OO415-EEF-MLH Document 17 Filed 05/24/17 Page 1 of 9 PagelD #: 127
`
`UNITED STATES DISTRICT COURT
`WESTERN "DISTRICT OF LOUISIANA
`
`SH REVE’PORT DIVISION
`
`
`
`ROCKWELL AUTOMATION, .INC.,
`
`CIVIL ACTION NO. 17-415
`
`VERSUS
`
`'
`
`.
`
`‘
`
`JUDGE ELIZABETH ‘FOOTE
`
`MAGISTRATE JUDGE HORNSBY
`RONALD J. MONTGOMERY, EF-AL.
`
`
`MEMORANDUM ORDER
`
`Before the Court is Defendants’ motion to dismiss. Record Document ‘10. Plaintiff
`Rockwell Automation, Inc. (“Rockwell”) brought this action against Defendants Ronald].
`
`Montgomery (“Montgomery”) and Custom Control & Design, LLC (“Custom Control”)
`
`alleging four claims arising out ofthe .same course of-events. Record Document 51.
`Defendants moved to dismiss all claims under Federal Rule of Civil Procedure 1'2(b)(6)
`
`for failure to state a claim. 'For the reasons discussed .below, ‘Defendants’ motion
`
`[Record Document 10.] is DENIED.
`
`:I. Background
`
`Plaintiff is a corporation that Works in the “development and production of
`
`industrial components and automation products and services.” Record Document 1, p.
`
`5. "Defendant Custom Control is a purchaser of goods and software from Plaintiff,
`
`sometimes directly and sometimes through a'third—party distributor. lgL, p. 8.
`
`Montgomery is an officer of Custom Control. 1; Plaintiff alleges that Defendants
`
`misrepresented Custom Control as a system integrator — a purchaser who adds value ‘to
`
`the product before reselling it — in order to obtain a steep discount on Rockwell’s Toolkit
`
`
`
`Case 5:17-cv-00415-EEF-MLH Document 17 Filed 05/24/17 Page 2 of 9 PageID #: 128
`Case 5:17-cv-00415-EEF-MLH Document 17 Filed 05/24/17 Page 2 of 9 PagelD #: 128
`
`software. Record Document 15, p. 8. This software normally sells for $650,000, but is
`
`discounted for system integrators to $50,000. I_d., p. 9. The softwarefs license sets out
`
`the system integrator requirement and also the authorized uses of the software. Record
`
`Document 1, p. '7. Plaintiff also asserts that Defendants got a discount on thousands of
`
`pieces of hardware and resold them at lower prices, .underselling Rockwell’s authorized
`
`distributors .as a result, and causing significant damages to Plaintiff. 1; Custom Control
`
`made some purchases directly from Rockwell and others through a third party
`
`distributor. ld_., p. 8. Plaintiff brings four claims against Defendants on the basis of this
`
`conduct: fraud, unfair trade practices, breach of contract, and copyright infringement.
`
`Record Document 1, pp. 1-2.
`
`:11. Discussion
`
`A. Standard of Review
`
`‘In order to survive 1a motion to dismiss under Rule 1'2(b)(6), .a plaintiff’s
`
`complaint must “state a claim to relief that is plausible on its face.” Ashcroft v. ’Igb'al,
`
`‘556 US. 662, 678 (2009). "A claim has facial plausibility when the plaintiff :pleads
`
`factual content that allows the court to draw the reasonable inference that the
`
`defendant is liable for the misconduct alleged." I_d. at 678. In determining whether‘the
`
`plaintiff has stated a plausible claim, the court must construe the complaint in the light
`
`most favorable to the plaintiff, E In re Great Lakes Dredge & Dock Co. LLC, 624 F.3d
`
`201, 210 (5th Cir. 2010), and accept as true all of the well—pleaded factual allegations in
`
`the complaint. & Bell Atl. Corp. v. 'Twombly, 550 US. 544,555 (2007); In re Katrina
`
`Page 2 of 9
`
`
`
`Case 5:17-cv-00415-EEF-MLH Document 17 Filed 05/24/17 Page 3 of 9 PageID #: 129
`Case 5:17-cv-00415-EEF-MLH Document 17 Filed 05/24/17 Page 3 of 9 PagelD #: 129
`
`Canal Breaches Litig., 495 F.3d .191, 205 ((5th Cir. .2009). However, "[t]hreadbare
`
`recitals of the elements of a cause of action, supported by mere conclusory statements,
`
`do not suffice." lgtfll, 556 US. at 678. 'Thus, the Court does not have to accept as true
`"conclusory allegations, unwarranted factual inferences, or legal conclusions." Plotkin v.
`
`,IP Axess Inc., 407 F.3d 690, 696 (5th Cir. .2005).
`
`
`B. Fraud
`
`Plaintiff alleges that Defendants intentionally misrepresented that Custom Control
`
`was a system integrator in order to receive a discount on software, resulting in
`
`significant loss of income to Plaintiff. Record Document 11, p. 8. Defendants assert that.
`
`Plaintiff has not stated a claim for fraud because there was no contract between the
`
`parties. Record Document 10-1, p. 5. Louisiana recognizes causes of action for fraud
`
`between .parties to .a contract (La. Civ. Code art. .1953) and for delictual fraud, which
`
`.does not require “the existence of a contract. La. Civ. Code .art. 2315;5fi Newport Ltd.
`
`
`v. Sears Roebuck & Co.,-6 F.3d 1058 (5th Cir. 1993) (discussing a plaintiff’s parallel
`
`’ fraud claims under both 'article’1‘953, which “pertains only 'to parties to a contract,” and
`
`article 23.15, under which .a plaintiff “need not prove the existence of a contract"). In
`
`order to recover under article 1953, Plaintiff must show: (1) the existence of a contract,
`
`(2) that Defendants misrepresented the truth with intent to gain an unjust advantage or
`
`to cause Plaintiff to suffer a loss, and (3) that the misrepresentation caused actual or
`
`probable damages to Plaintiff. I_d. at 1067. ‘To recover .under article 2315, Plaintiff must
`
`show: “(1) a misrepresentation of a material fact, (2) made with the intent to deceive,
`
`Page .3 of 9
`
`
`
`Case 5:17-cv-00415-EEF-MLH Document 17 Filed 05/24/17 Page 4 of 9 PageID #: 130
`Case 5:17-cv-OO415-EEF-MLH Document 17 Filed 05/24/17 Page 4 of 9 PagelD #: 130
`
`and (3) causing justifiable reliance with resultant injury.” _I_cL at .1068.
`
`Plaintiff argues that it has adequately-pied both forms of fraud. Plaintiff alleges
`
`that the parties entered into a contract for the sale of the Toolkit software, in the form
`
`of the license agreement, that Defendants intentionally misrepresented that Custom
`
`Control was 'a system integrator in order to obtain a steep discount on the software,
`
`that Plaintiff reasonably relied on that misrepresentation, and that Plaintiff was deprived
`
`of significant income as a result. Record Document '1, p. 13. At this stage, theCourt
`
`must accept 'all of Plaintifffs factual allegations :as true. Plaintiff has alleged sufficient
`
`facts 'to state 'a claim for fraud under both article 1953 and article 23.15. Defendants’
`
`motion to dismiss Plaintiff’s fraud claim is DENIED.
`
`C. Unfair Trade Practices
`
`'Plaintifffs second claim is brought under the Louisiana Unfair'Trade Practices Act
`
`(“LUTPA”). La. R.S. --5.1:.1409(A). This claim centers around Defendants’ alleged
`
`unauthorized resale of Rockwell hardware products. LUTPA provides for private
`
`enforcement actions: “Any person who suffers any ascertainable loss of money or
`
`movable property...as a result of the use or employment :by another person of an unfair
`
`or deceptive method, act, or practice dclared unlawful...may bring an action...to recover
`
`actual damages.”'L¢ Thus, in order to prove a violation of LUTPA, Plaintiff must show:
`
`“(1) an unfair or deceptive trade practice declared unlawful; (2) that impacts 'a
`
`consumer, business competitor or other person to whom the statute grants a private
`
`right of action; (3) which has caused ascertainable loss.” Who Dat Yat LLC v. Who Dat?
`
`Page 4 of 9
`
`
`
`Case 5:17-cv-00415-EEF-MLH Document 17 Filed 05/24/17 Page 5 of 9 PageID #: 131
`Case 5:17-cv-00415-EEF-MLH Document 17 Filed 05/24/17 Page 5 of 9 PagelD #: 131
`
`Inc., 2011 WL 39043 at *3 (ED. .La. .Jan. 4,2011). Defendants argue that Rockwell is
`
`not a proper plaintiff in 'a LUTPA claim because LUTPA allows claims to .be brought only
`:by consumers or business competitor, and Rockwell is neither. This argument ignores
`
`both the plain language of the statute and the interpretation of LUTPA by the Louisiana
`
`Supreme Court. .In Cheramie -Servs., Inc. v. Shell Deepwater'Prod., Inc., a plurality of
`
`the court reasoned that the plain language .of the statue allows “any person" who
`
`suffers an ascertainable loss to bring a private enforcement action for unfair trade
`
`practices, notjust competitors and consumers. 2009-1633 (La. 4/23/10); 35 So. '2d
`
`1053, 1056-157 (“Although business consumers and competitors are included in the
`
`group afforded 'this private right of action, :they are not its exclusive members”); see
`
`fi Frontline Petroleum Training 8315., LLC v. Premier Safety Mgmt., Inc., .2013 WL
`
`6667332, at *4 n. 17 (W.D. La. Dec. .17, 2013) (noting that Cheramie “cur[ed] a split in
`
`the circuits by holding that ‘although business consumers :and competitors are included
`
`in the group afforded this private right of action, they are not its exclusive members");
`
`Corley v. Southeastern Metals Mfg. Co., 2011 WL 3665015, at *4 (W.D. La. AUg. 19,
`
`2011) (“Although the LUTPA was previously interpreted to provide a cause of action
`
`only to consumers or business competitors, the Louisiana Supreme Court recently
`
`clarified that any person who asserts a ‘loss of money .or...property...as a result of...an
`
`unfair or deceptive method, act or practice’ has standing to bring such a claim.”). Thus,
`
`because Rockwell alleges that it suffered ascertainable loss "as a result of unfair'trade
`
`practices, it is a proper plaintiff.
`
`Page '5 of 9
`
`
`
`Case 5:17-cv-00415-EEF-MLH Document 17 Filed 05/24/17 Page 6 of 9 PageID #: 132
`Case 5:17-cv-00415-EEF-MLH Document 17 Filed 05/24/17 Page 6 of 9 PagelD #: 132
`
`4 Defendants also argue that because the products were sold through a distributor,
`
`any alleged misrepresentations made by Defendants would have been made to the
`
`distributor and not to Rockwell, and Rockwell’s claim must therefore'fail. Record
`
`Document 10-1, p. 3. This claim likewise ignores the plain language of the statute.
`
`.LUTPA allows any person who suffered loss “as a result” of unfair or deceptive practices
`
`to recover. La. RS. 51 :1409(VA). Rockwell need only allege that Defendants’ practices
`
`were .unfair or deceptive, that Rockwell was impacted, and that Rocquell suffered loss.
`
`Defendants cite no contrary law on this point.
`
`,LUTPA is broadly written and leaves the courts to determine what constitutesan
`
`unfair trade practice on a case—:by-case basis. Levine v. First Nat. Bank of Commerce,
`
`2006-0394 (La. 12/15/06); 948 So. 2d 1051, 1065; Co_dey, .2011 WL 3665015 .at *4
`
`(“Whether or not a particular conduct constitutes an unfair act or practice is a
`
`determination to be 'made‘by the court in each case”). An unfair or deceptive practice
`
`is one that “offends established public policy and is immoral, unethical, oppressive,
`
`unscrupulous, or substantially injurious” or that “amounts to fraud, deceit, or
`
`misrepresentation.” 5. Gen. Agency, Inc. v. Burns '& Wilcox, Ltd., 2012 WL 3987890 at
`*1 (W.D. La. Sept. 11,2012). Plaintiff alleges that Defendants intentionally
`
`misrepresented Custom Control as a system integrator, a designation entitling it to a
`
`discount on “more than 187,000 Rockwell products” that Custom Control purchased
`
`over the course of more than '7 years, causing loss to Rockwell for sale of those
`
`products at list price. Record Document 1, pp. 8—9, .14. Plaintiff has alleged facts
`
`Page 6 of 9
`
`
`
`Case 5:17-cv-00415-EEF-MLH Document 17 Filed 05/24/17 Page 7 of 9 PageID #: 133
`Case 5:17-cv-OO415-EEF-MLH Document 17 Filed 05/24/17 Page 7 of 9 PagelD #: 133
`
`supporting each element of 'a claim under LUTPA. Defendants’ motion to dismiss the
`
`LUTPA claim must therefore be DENIED.
`
`D. Breach of Contract
`
`Plaintiff alleges that Rockwell and Custom Controlentered into :a contract for'the
`
`purchase of Rockwell’s Toolkit software, and that Defendants breached that contract by
`
`reselling or transferring the license to the software. Record Document 1, 'p. 14, ‘1] 69
`
`C‘Montgomery, on behalf of Custom Control, entered into a contract for the purchase of
`
`Rockwell’s'Too‘lkit.software.”). Defendants respond that"‘[t]here is no allegation of a
`
`contract” between Rockwell and Defendants. Record Document ‘10-:1, p. 6. Plainly, this
`
`is untrue.
`
`'In Louisiana, in order to show breach of contract, a Plaintiff must prove: “(‘1) that
`
`the obligor undertook an obligation to perform; (2) that the obligor failed to perform :the
`
`obligation (the breach); and (3) that the failure to perform resulted in damages to the
`
`obligee." Bayou Mosguito &'-Pest Mgmt., LLC v. Bellsouth 'Telecomm., LLC, 2013 WL
`
`3819864 at *3 (W.D. La. July '23, 2013). Plaintiff 'ailegesthat-‘a contract for the
`
`purchase of Toolkit software exists between the parties in the form of a software
`
`licensing agreement, that Defendants breached that contract by transferring the
`sofMare license in a manner prohibited by the agreement, and that this breach caUsed
`
`damages to Plaintiff because others were allowed to use the .software for free. Record
`
`Document 1, pp. 14-15. Accepting all of Plaintiff’s allegations as true, Plaintiff has
`
`properly alleged a claim for breach of contract. Defendants’ "motion to dismiss the
`
`Page 7of 9
`
`
`
`Case 5:17-cv-00415-EEF-MLH Document 17 Filed 05/24/17 Page 8 of 9 PageID #: 134
`Case 5:17-cv-OO415-EEF-MLH Document 17 Filed 05/24/17 Page 8 of 9 PagelD #: 134
`
`breach of contract claim must therefore be DENIED.
`
`E. Copyright .Infringement
`
`Plaintiff’s final claim against Defendants is copyright infringement. Plaintiff
`
`identifies five copyrights, with their copyright registration numbers, which it says were
`
`infringed by unauthorized downloads of its software using Custom Control’s license.
`
`Record Document 1, pp. 10-11. Defendants argue that Plaintiff fails to state a claim
`
`because it does not allege that Custom Control actually downloaded the software, only
`
`that the downloads were made using a software license issued to Custom Control.
`
`Record Document .‘10—‘1, p. 5.
`
`'To prove copyrightinfringement, a plaintiff must prove: “(1) ownership of 'a valid
`
`copyright, and (2) copying of constituent elements of the work that are original." M
`
`
`
`Media USA' Inc. v. T&S Software Assoc. 'Inc., 852 "F.3d 436, 439 (5th Cir. .2017).
`
`Copyright infringement can “be direct or secondary infringement. The Supreme Court
`has recognized that a party may be liable for secondary infringement through
`
`Contributory infringement — intentionally inducing or encouraging direct infringement by
`
`a third party — or vicarious infringement- profiting from direct infringement of a third
`
`V
`
`party while declining to exercise a right to stop or limit it. Metro-GoldMn-Mayer
`
` Studios Inc. v. Grokster Ltd., 545 US. 913, 930 (2005). Plaintiff alleges that
`
`Defendants engaged in contributory infringement. Record Document 15, p. 18. Plaintiff
`
`alleges that it owns five valid copyrights and that Defendants intentionally induced third
`
`parties to copy the protected material. Plaintiff identifies a list Of specific unauthorized
`
`Page 8 of 9
`
`
`
`Case 5:17-cv-00415-EEF-MLH Document 17 Filed 05/24/17 Page 9 of 9 PageID #: 135
`Case 5:17-cv-OO415-EEF-MLH Document 17 Filed 05/24/17 Page 9 of 9 PagelD #: 135
`
`downloads, made at specified times and dates, using Custom Control’s software license,
`
`by email addresses not associated with Defendants. Record Document 1, pp. 10-111.
`
`Defendants respond that this “incident” is the result of a “computer glitch." Record
`
`Document 10-11, p. 5. This is a factual dispute that the Court cannot resolve at this
`
`stage. Taking :all of Plaintiff’s factual allegations to be true, as the Court must, Plaintiff
`
`has stated a claim for contributory copyright infringement. Defendants’ motion to
`
`dismiss this claim is therefore DENIED.
`
`III. Conclusion
`
`For the reasons discussed above, Defendants’ motion to dismiss is DENIED. ‘This
`
`matter is REFERRED to the Magistrate Judge to conduct a scheduling conference.
`THUS IDONE AND SIGNED in Shreveport, Louisiana, thifgi/ififiay of May,
`
`2017.
`
`Elizabeth Erny
`United States Di
`
`
`
`
`Page .9 of 9
`
`
Accessing this document will incur an additional charge of $.
After purchase, you can access this document again without charge.
Accept $ Charge
Still Working On It
This document is taking longer than usual to download. This can happen if we need to contact the court directly to obtain the document and their servers are running slowly.
Give it another minute or two to complete, and then try the refresh button.
A few More Minutes ... Still Working
It can take up to 5 minutes for us to download a document if the court servers are running slowly.
Thank you for your continued patience.
This document could not be displayed.
We could not find this document within its docket. Please go back to the docket page and check the link. If that does not work, go back to the docket and refresh it to pull the newest information.
Your account does not support viewing this document.
You need a Paid Account to view this document. Click here to change your account type.
Your account does not support viewing this document.
Set your membership
status to view this document.
With a Docket Alarm membership, you'll
get a whole lot more, including:
- Up-to-date information for this case.
- Email alerts whenever there is an update.
- Full text search for other cases.
- Get email alerts whenever a new case matches your search.
One Moment Please
The filing “” is large (MB) and is being downloaded.
Please refresh this page in a few minutes to see if the filing has been downloaded. The filing will also be emailed to you when the download completes.
Your document is on its way!
If you do not receive the document in five minutes, contact support at support@docketalarm.com.
Sealed Document
We are unable to display this document, it may be under a court ordered seal.
If you have proper credentials to access the file, you may proceed directly to the court's system using your government issued username and password.
Access Government Site
