Case 3:18-cv-00527-LRH-CSD Document 157 Filed 02/24/22 Page 1 of 25
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`UNITED STATES DISTRICT COURT
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`DISTRICT OF NEVADA
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`* * *
`Case No. 3:18-cv-00527-LRH-WGC
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`ORDER
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`HP TUNERS, LLC,
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` Plaintiff,
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`v.
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`KENNETH CANNATA,
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`Defendant.
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`Before the Court are competing motions for partial summary judgment. The first was filed
`by Plaintiff HP Tuners, LLC (“HPT”) on June 30, 2021. ECF No. 119. The second was filed by
`Defendant Kenneth Cannata (“Cannata”) also on June 30, 2021. ECF No. 124 (128-s).1 The parties
`responded and replied to each motion. In addition, HPT filed a motion to strike (ECF No. 142)
`aspects of Cannata’s motion for partial summary judgment. Cannata filed a response (ECF No.
`147), to which HPT replied (ECF No. 148). For the reasons articulated in this Order, the Court
`now grants in part and denies in part the parties’ motions.
`I.
`BACKGROUND
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`HPT is a Nevada limited liability company founded by Keith Prociuk (“Prociuk”), Chris
`Piastri (“Piastri”), and Cannata on December 31, 2003, with its principal place of business in
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`1 Cannata filed portions of his briefing and attached exhibits under seal. Due to the nature of the sealed material, the
`Court grants the parties’ requests to seal much of the information contained within the briefing (ECF Nos. 111, 127,
`145, 152). While the Court would prefer to keep all the sealed information confidential, some of it is necessary to
`resolve the pending motions. The Court will therefore include some information unredacted in this Order where
`appropriate. The Court recognizes that the parties have privacy interests in the confidential information, but the public
`has even greater interest in the reasoning behind the Court’s Order today. The Court will refer to the sealed pleadings
`with an “-s” designation and, for clarity, will cite to the sealed document for certain citations.
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`Buffalo Grove, Illinois. ECF No. 1 at 4. On or about March 25, 2004, HPT adopted a written
`operating agreement (the “Operating Agreement”), which was signed by all three founding
`members. Based on the Operating Agreement, each member had one-third ownership interest in
`HPT signed on March 25, 2004. Id. The Operating Agreement further stated that it is governed by
`Nevada law. ECF No. 1-1 at 2. Additionally, in March 2008, Cannata, Prociuk, and Piastri entered
`into a Buy Sell Agreement (the “Buy Sell Agreement”) that provided, among other things, ways
`to calculate the purchase price of a member’s interest in HPT as well as actions that required
`unanimous member approval. ECF No. 1-2.
`As far as its business, HPT describes itself as a “niche” company that provides “cost
`effective automotive tuning and data acquisition solutions” for both private car enthusiasts and
`professional shops. Id. HPT designs and manufactures computer hardware and software for tuning
`and calibrating engines and transmissions in automobiles, trucks, ATVs, snowmobiles, and other
`vehicles. Id. A “core function” of the business is to sell interfaces, such as the Multi Point Vehicle
`Inspection (“MPVI”)2, which connect to the onboard computer of a vehicle and allow for
`individuals to use the HPT software and tune their vehicle. Id. HPT also sells “credits,” which HPT
`describes as the license mechanism that customers use to tune their vehicles. Id. The sale and
`distribution of credits via “application keys,” is a fundamental component of HPT’s business. Id.
`at 9. The application keys are generated by the “key generator,” which HPT describes as, “the
`single most valuable piece of intellectual property that [it] possesses.” Id. HPT safeguards its
`confidential and proprietary information through the usage of computer passwords, hard drive
`encryption, firewalls, and rules preventing company employees from copying or transferring any
`of the information. Id. at 6.
`In 2014, Cannata became aware of an individual named Kevin Sykes-Bonnett (“Sykes-
`Bonnett”), who is a principal of Syked ECU Tuning, LLC (“Syked”)—a competitor of HPT. ECF
`No. 128-s at 6. Sykes-Bonnett had information, including software and code relating to Chrysler,
`Jeep, and Dodge vehicles that were not supported by HPT’s software at the time. Id. In early 2015,
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`2 The MPVI is a comprehensive assessment of, among other things, tire wear, remaining engine oil life, brakes, wiper
`blades, glass condition, battery condition, and fluid levels.
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`Cannata reached out to Sykes-Bonnett to discuss purchasing this information from Sykes-Bonnett
`to be used by HPT in expanding its supported vehicle lineup. Id. Cannata delivered a $5,000 check
`to Sykes-Bonnett in March 2015 and received a copy of the technical information that HPT sought.
`Id. at 7.
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`By 2015, disagreements had arisen between Cannata and the other members of HPT.
`During a July 2015 management meeting, Prociuk and Piastri requested that Cannata agree to
`amend the Buy Sell Agreement to increase the threshold for transactions requiring unanimous
`member approval from $100,000 to $200,000 and to exempt transactions relating to hiring and
`compensating employees from such threshold. ECF No. 128-s at 7–8. Around July 20, 2015, each
`member signed an amendment to the Buy Sell Agreement to that effect. Id. In Cannata’s mind,
`this was part of a unilateral plot to terminate him without cause. Id. In January 2016, Prociuk and
`Piastri adopted a written consent as members of HPT through which Cannata’s role in the
`management and control of HPT significantly decreased. Id.
`Afterwards, in or around February 2016, Prociuk and Piastri initiated discussions with
`Cannata about buying him out of his membership interest in HPT. ECF No. 112 at 25, 31, 108.
`After months of negotiations, Prociuk and Piastri agreed to purchase Cannata’s stake in the
`company on October 20, 2016. ECF No. 1-2; ECF No. 112 at 191–205, 213–219. Pursuant to the
`Membership Interest Purchase Agreement (the “Purchase Agreement”), HPT paid Cannata $6.8
`million for his stake in the company, and in return, Cannata agreed to several restrictive covenants.
`ECF No. 1-2. These covenants included returning all of HPT’s proprietary and confidential
`information to HPT and destroying any related information he had in his possession, a prohibition
`on disclosing any confidential information to any third parties, and a non-compete clause. Id. at
`11–13.
`While negotiating his exit from HPT, on March 11, 2016, Cannata entered into a non-
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`disclosure agreement (the “NDA”) with Syked. ECF No. 1 at 7; ECF No. 125 at 9. After entering
`into the NDA, Cannata emailed Syked certain source code files related to HPT’s VCM Suite,
`including, among other things, an administrative version of VCM Suite 2.23, and a USB thumb
`drive that included a copy of HPT’s key generator. ECF No. 128-s at 10. Subsequent to the sale of
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`Cannata’s interest in HPT, Cannata’s wife obtained an ownership interest in Syked in January
`2017. ECF No. 112 at 237, 241-42, 266, 284, 317-19, 334-36, 381-82.
`HPT first learned of Cannata’s alleged misconduct in August 2018 and filed this lawsuit
`thereafter, alleging several causes of actions: (1) breach of fiduciary duty; (2) fraud; (3) violation
`of the Computer Fraud and Abuse Act (18 U.S.C. §1030); (4) violation of the Defend Trade Secrets
`Act (“DTSA”) (18 U.S.C. §1836); (5) violation of the Copyright Act (17 U.S.C. §1201(A)(1)(A));
`(6) a violation of the Nevada Uniform Trade Secrets Act; (7) a violation of the Illinois Trade
`Secrets Act; (8) unfair competition under the Nevada Deceptive Trade Practices Act; (9) unfair
`competition under the Illinois Consumer Fraud and Deceptive Business Practices Act; (10)
`common law breach of contract; (11) tortious interference with prospective contractual or
`economic relations, and (12) conversion. According to HPT, if it had learned or been advised that
`Cannata had shared HPT’s confidential and proprietary information, Cannata would have been
`terminated for cause pursuant to the Buy Sell Agreement and not have paid Cannata more than his
`one-third interest in the book value of HPT. ECF No. 120 at 5. HPT, relying on the report of its
`expert, John R. Bone (“Bone”), presents to the Court its calculations for damages for Cannata’s
`alleged misconduct. ECF No. 130-s at 80–167.
`II.
`LEGAL STANDARD
`Summary judgment is appropriate only when the pleadings, depositions, answers to
`interrogatories, affidavits or declarations, stipulations, admissions, and other materials in the
`record show that “there is no genuine dispute as to any material fact and the movant is entitled to
`judgment as a matter of law.” FED. R. CIV. P. 56(a). In assessing a motion for summary judgment,
`the evidence, together with all inferences that can reasonably be drawn therefrom, must be read in
`the light most favorable to the party opposing the motion. Matsushita Elec. Indus. Co. v. Zenith
`Radio Corp., 475 U.S. 574, 587 (1986); County of Tuolumne v. Sonora Cmty. Hosp., 236 F.3d
`1148, 1154 (9th Cir. 2001).
`The moving party bears the initial burden of informing the court of the basis for its motion,
`along with evidence showing the absence of any genuine issue of material fact. Celotex Corp. v.
`Catrett, 477 U.S. 317, 323 (1986). On those issues for which it bears the burden of proof, the
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`moving party must make a showing that is “sufficient for the court to hold that no reasonable trier
`of fact could find other than for the moving party.” Calderone v. United States, 799 F.2d 254, 259
`(6th Cir. 1986) (quoting W. Schwarzer, Summary Judgment Under the Federal Rules: Defining
`Genuine Issues of Material Fact, 99 F.R.D. 465, 487-88 (1984)); see also Idema v. Dreamworks,
`Inc., 162 F.Supp.2d 1129, 1141 (C.D. Cal. 2001).
`To successfully rebut a motion for summary judgment, the nonmoving party must point to
`facts supported by the record which demonstrate a genuine issue of material fact. Reese v. Jefferson
`Sch. Dist. No. 14J, 208 F.3d 736, 738 (9th Cir. 2000). A “material fact” is a fact “that might affect
`the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
`248 (1986). Where reasonable minds could differ on the material facts at issue, summary judgment
`is not appropriate. See v. Durang, 711 F.2d 141, 143 (9th Cir. 1983). A dispute regarding a material
`fact is considered genuine “if the evidence is such that a reasonable jury could return a verdict for
`the nonmoving party.” Liberty Lobby, 477 U.S. at 248. “The mere existence of a scintilla of
`evidence in support of the [party’s] position [is] insufficient” to establish a genuine dispute; “there
`must be evidence on which the jury could reasonably find for the [party].” Id. at 252.3
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`III. DISCUSSION
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`A. HPT’s motion to strike paragraphs of Cannata’s “Statement of Relevant
`Facts/Procedural Background” contained within his motion for partial summary
`judgment is granted in part and denied in part.
`Before reaching the merits of the parties’ motions for summary judgment, the Court will
`first address HPT’s motion to strike paragraphs contained within Cannata’s motion for partial
`summary judgment. In its motion, HPT asks the Court to exclude multiple paragraphs of Cannata’s
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`3 The parties spend great lengths disputing the applicable legal standard for Cannata’s motion for partial summary
`judgment because he does not bear the burden of persuasion at trial. Compare ECF No. 143 at 6 (“…Cannata’s Motion
`falls considerably short of his requisite burden of demonstrating ‘the absence of any issue of material fact’ warranting
`summary disposition in his favor.”) with ECF No. 150 at 7 (“Cannata’s Motion met his burden by pointing out the
`lack of evidence to support the necessary elements of HPT’s claims, including duty, damages, and intent among
`other.”). Despite HPT’s arguments to the contrary, Cannata has identified the correct legal standard and the Court will
`conduct its analysis accordingly. See Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102 (9th Cir. 2000)
`(“A moving party without the ultimate burden of persuasion at trial … has both the initial burden of production and
`the ultimate burden of persuasion on a motion for summary judgment. … In order to carry its burden of production,
`the moving party must produce either evidence negating an essential element of the nonmoving party’s claim or
`defense or show that the nonmoving party does not have enough evidence of an essential element to carry its ultimate
`burden of persuasion at trial.”).
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`“Statement of Relevant Facts/Procedural Background.” ECF No. 142. More specifically, HPT
`claims that Cannata failed to list material facts related to his motion, and, instead, “alleged
`‘relevant’ facts and procedural background, which are non-material facts regarding non-issues,
`and which do not bear directly on the legal issues raised by the motion.” Id. at 3. These improper
`“relevant” facts, according to HPT, are as follows:
` Paragraphs 1–3: concerning the history and formation of HPT and how the parties
`met.
` Paragraphs 5–7: outlining the Buy Sell Agreement and the respective ownership
`interest of each party.
` Paragraphs 8–16: describing HPT’s business and products.
` Paragraphs 17–34, 37, 38: relating to Cannata’s communications and dealings with
`Kevin Sykes-Bonnett and Cannata’s framing of the circumstances surrounding his
`exit from HPT; specifically, the amendment of the Buy Sell Agreement.
` Paragraphs 39–42: outlining the conduct of Syked and the separate legal action filed
`in Washington.
` Paragraphs 43–47: procedural background relating to discovery issues.
` In response, Cannata contends that the facts contained within his motion for partial
`summary judgment are largely the same as in HPT’s motion, and even if they are not, they are all
`still material to his summary judgment arguments.
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`LR 56-1 provides:
`Motions for summary judgment and responses thereto must include a concise
`statement setting forth each fact material to the disposition of the motion that the
`party claims is or is not genuinely in issue, citing particular portions of any
`pleading, affidavit, deposition, interrogatory, answer, admission, or other evidence
`on which the party relies. The statement of facts will be counted toward the
`applicable page limit in LR 7-3.
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`LR 56-1 (emphasis added). Courts in this district routinely decline to reach the merits of
`arguments made in connection with summary judgment filings that contain no statements of
`undisputed material facts as required by LR 56–1. See, e.g., Joe Hand Promotions, Inc. v. Steak,
`2014 WL 1304723 at *2 (D. Nev. Mar. 31, 2014); Engel v. Siroky, 2014 WL 585769 at *2 (D.
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`Nev. Feb. 14, 2014); Spitzmesser v. Tate Snyder Kimsey Architects, Ltd., 2011 WL 2552606 at *3–
`*4 (D. Nev. June 27, 2011). Moreover, irrelevant factual disputes do not affect the outcome of a
`summary judgment motion. United States of America v. Kapp, 564 F.3d 1103, 1114 (9th Cir. 2008)
`(summary judgment for government in tax case affirmed because disputed facts concerning
`defendant’s discussions with government officials, interactions with IRS attorney’s, and reliance
`on advice of his own counsel were not material, in that they would not entitle defendant to good
`faith defense).
`As recounted in the legal standard above, a “material fact” is a fact “that might affect the
`outcome of the suit under the governing law.” Anderson, 477 U.S. at 248 (emphasis added). So
`here, the inquiry becomes whether or not the disputed paragraphs of factual material in Cannata’s
`motion might affect the outcome of the issues raised in his motion for partial summary judgment.
`Those issues pertain to HPT’s claims of: (1) breach of fiduciary duty; (2) fraud; (3) violation of
`the Computer Fraud and Abuse Act (18 U.S.C. §1030); (4) violation of the Defend Trade Secrets
`Act (18 U.S.C. §1836); (5) violation of the Copyright Act (17 U.S.C. §1201(A)(1)(A)); (6) a
`violation of the Nevada Uniform Trade Secrets Act; and (7) a violation of the Illinois Trade Secrets
`Act.
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`The Court is satisfied that paragraphs 1–3, 5–7, 8–16, 17–19, 23–26, and 37–38 contain
`material facts related to the issues raised by Cannata in his motion for partial summary judgment.
`More specifically, paragraphs 1–3 provide background information regarding the formation of
`HPT and the Operating Agreement. This information is implicated in all of HPT’s claims.
`Paragraphs 5–7 describe the terms of the Buy Sell Agreement which provides objective context
`surrounding Cannata’s departure from HPT. Paragraphs 8–16 contain detailed information
`regarding HPT’s products and are material to some of the claims raised by HPT and disputed by
`Cannata, such as alleged violations of the relevant trade secret statutory schemes. Paragraphs 17–
`19 describe Cannata’s initial introduction, relationship, and agreement with Kevin Sykes-Bonnett,
`which are material to HPT’s claims of breach of fiduciary duty and fraud. Paragraphs 23–26 relate
`to some of Cannata’s arguments surrounding damages as they describe the amendment of the Buy
`Sell Agreement and the implications that had on Cannata’s control of HPT. Paragraphs 37–38 are
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`material as they describe the Purchase Agreement and subsequent payout which bears directly on
`the issue of damages in this case. Accordingly, the Court finds these facts are material to the
`disposition of Cannata’s motion and denies HPT’s motion to strike as it relates to paragraphs 1–3,
`5–7, 8–16, 17–19, 23–26, and 37–38.4
`However, the Court is not satisfied that paragraphs 20–22, 27–32, 39–42, and 43–47
`contain material facts related to the issues raised by Cannata in his motion for partial summary
`judgment. Specifically, paragraphs 20–22, 27–32 describe, in detail, Cannata’s belief that Prociuk
`and Piastri conspired to oust him from HPT. Aside from the argumentative nature of these
`paragraphs, they do not list material facts in relation to HPT’s claims and merely serve to add a
`subjective context to the disposition of the motion. See John Bordynuik Inc. v. JBI, Inc., 2015 WL
`153439, *3 (D. Nev. 2015) (finding that a defendant’s statement of facts was “frequently
`argumentative and in no way distinguish[ed] undisputed fact from disputed contention.”).
`Paragraphs 39–42 describe the wrongful conduct of Syked and HPT’s subsequent lawsuit in the
`Western District of Washington. While that information is helpful insofar as it updates the Court
`regarding a non-party in this case, it does nothing to affect the outcome of the issues raised in his
`motion. Paragraphs 43–47 are largely argumentative, and detail alleged discovery issues that are
`only tangentially related to issues raised in Cannata’s motion. Consequently, the Court finds that
`these facts are immaterial to the disposition of Cannata’s motion and grants HPT’s motion to strike
`as it relates to paragraphs 20–22, 27–32, and 43–47.
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`B. HPT’s motion for partial summary judgment on its first, second, fourth, sixth,
`seventh, tenth, and twelfth causes of action (ECF No. 119) is granted in part and
`denied in part. Cannata’s motion for partial summary judgment on the same
`causes of action (ECF No. 124 (128-s)) is denied.
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`HPT’s motion seeks partial summary judgment on multiple claims based on its belief that
`Cannata admitted to his misconduct during discovery. ECF No. 119 at 2. First, HPT seeks
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`4 If the Court were to deny its motion to strike, HPT requested leave to add additional facts to its response to Cannata’s
`motion for partial summary judgment. The Court will deny this request as all disputed material facts necessary to
`resolve Cannata’s motion for partial summary judgment are obvious from the motion(s) and briefing. See Riggs
`Marketing Inc. v. Mitchell, 993 F.Supp. 1301, 1304 (D. Nev. 1997) (finding compliance with LR 56-1 when all the
`material facts are obvious from the motion and attached evidence). The Court does not deny this request, as argued
`by Cannata, because of page limits imposed by LR 7-3.
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`summary judgment on its first cause of action for Cannata’s alleged breach of fiduciary duty for
`working with, assisting, and providing services for a competitor of HPT while Cannata was an
`owner of HPT. Second, HPT seeks summary judgment on its second cause of action because
`Cannata allegedly defrauded HPT during buyout negotiations for his interest in HPT. Third, HPT
`seeks summary judgment on its fourth, sixth, and seventh causes of action because Cannata
`allegedly misappropriated trade secrets under the relevant statutory schemes. Lastly, HPT seeks
`summary judgment on its tenth and twelfth causes of action because Cannata allegedly breached
`the Purchase Agreement. Cannata, in his motion for partial summary judgment, argues that HPT
`has failed to put forth sufficient evidence demonstrating an absence of material fact as to each
`claim, as well as prove non-speculative damages.
`The Court will address each cause of action raised in HPT’s motion for partial summary
`judgment, and Cannata’s responses and arguments in his own motion for partial summary
`judgment, in turn.
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`1. The Court reserves judgment on HPT’s and Cannata’s motions for partial summary
`judgment on the first cause of action for breach of fiduciary duty.
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`HPT’s first cause of action requests this Court find that Cannata breached his fiduciary
`duty when he, as an owner of HPT, worked with, assisted, and provided services for Syked—a
`competitor of HPT. ECF No. 119. In response, and in his motion for partial summary judgment,
`Cannata argues that: (1) HPT has failed to put forth any evidence that he owed a fiduciary duty;
`(2) HPT cannot establish as a matter of law that Cannata owed a fiduciary duty; and (3) even if a
`fiduciary duty existed, genuine issues of material fact preclude summary judgment. See ECF Nos.
`146; 124 (128-s).
`Under Nevada law, a member or manager of an LLC will be liable for breach of a fiduciary
`duty when: (1) a fiduciary duty exists; (2) the duty is breached, and (3) the breach proximately
`caused the damages alleged. Klein v. Freedom Strategic Partners, LLC, 595 F.Supp.2d 1152, 1162
`(D. Nev. 2009). Unlike many states, Nevada does not impose any statutory fiduciary duties on
`members of LLCs. In re Plyam, 530 B.R. 456, 472 (9th Cir. B.A.P. 2015) (“Unlike California,
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`Nevada does not have a statute equating the fiduciary duties of a manager in a limited liability
`company context to those of a partner in a partnership.”). Instead, Nevada allows the members of
`LLCs to decide whether to impose fiduciary duties on themselves through their operating
`agreement. JPMorgan Chase Bank, N.A. v. KB Home, 632 F.Supp.2d 1013, 1025–26 (D. Nev.
`2009); NEV. REV. STAT. §86.286. This could be by express language in the operating agreement or
`through language that has a similar effect. In Nevada, a “fiduciary relationship is deemed to exist
`when one party is bound to act for the benefit of the other party. Such a relationship imposes a
`duty of utmost good faith.” Giles v. General Motors Acceptance Corp., 494 F.3d 865, 880–81 (9th
`Cir. 2007) (quoting Hoopes v. Hammargren, 725 P.2d 238, 242 (Nev. 1986)). Thus, if Cannata
`owed any fiduciary duty to HPT, such a duty must be stated within the Operating Agreement.
`Citing the “law of the case doctrine,” HPT relies on this Court’s previous ruling on
`Cannata’s motion to dismiss (the “MTD Order”), to establish that a fiduciary duty exists under the
`first prong of the test. Klein, 595 F.Supp.2d. at 1162. In the MTD Order, this Court held that the
`Operating Agreement established a fiduciary duty among the HPT members to, at minimum,
`protect its intellectual property (“IP”). ECF No. 44 at 8.5 The law of the case doctrine provides
`that “‘when a court decides upon a rule of law, that decision should continue to govern the same
`issues in subsequent stages in the same case.’” Askins v. U.S. Dep't of Homeland Sec., 899 F.3d
`1035, 1042 (9th Cir. 2018) (quoting Musacchio v. United States, 577 U.S. 237 (2016)). However,
`the Ninth Circuit has clarified that "[t]he law of the case doctrine does not preclude a court from
`reassessing its own legal rulings in the same case." Id. Rather, it applies where an issue has been
`decided by a higher court or where the court has entered a final decree or judgment. Id. at 1042–
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`5 This Court determined that:
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`After reviewing the operating agreement and relevant caselaw, the Court finds that the operating
`agreement imposed a fiduciary duty upon its members. The operating agreement states, in relevant
`part, as follows:
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`Each member hereby agrees to assist [HPT] in any reasonable manner to obtain for [HPT’s] benefit
`legal protection for the [intellectual property] and will execute, when requested, any lawful
`documents deemed necessary by [HPT] to carry out the purposes of the [intellectual property]
`assignment. Each member will further assist [HPT] in every way to enforce its rights in the
`[intellectual property], testifying in any suit or proceeding involving any of the [intellectual
`property] or by executing any documents deemed necessary by [HPT].
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`43. Neither circumstance is present here, and this Court is free to revisit its previous ruling on the
`MTD Order regarding Cannata’s alleged fiduciary duty.
`Nevertheless, the Court finds no reason to alter the conclusion reached in the MTD Order
`despite Cannata’s repeated arguments to the contrary. The Court, after reviewing the parties’
`arguments and relevant caselaw, still finds that, although Nevada does not impose a fiduciary duty
`on co-members of an LLC, § 4.1 of the Operating Agreement imposed a fiduciary duty on Cannata
`because each member of HPT was required to assist the company “in every way” to enforce its
`rights as it relates to its IP. See ECF No. 44, at 8 (citing ECF No. 1-1, at 5). Cannata, citing a string
`of unpublished, out-of-district cases, argues HPT cannot rely on the MTD Order as evidence of a
`fiduciary duty in his motion for summary judgment because there exist differing legal standards.
`See ECF Nos. 144 at 13; 150 at 8–9. While true, courts routinely reach different conclusions at the
`summary judgment stage than at the motion to dismiss stage, nothing revealed in discovery in this
`case has changed the legal conclusion reached in the MTD Order.6 Accordingly, HPT has
`demonstrated an absence of genuine issue of material fact that Cannata owed a fiduciary duty
`under the Operating Agreement to HPT as it related to its IP. Klein, 595 F.Supp.2d. at 1162.
`Turning to the second prong of breach, HPT argues it met its burden because Cannata has
`“admitted he breached his fiduciary to HPT by not protecting HPT’s highly confidential trade
`secrets and failing to assist (and indeed, hindering) HPT’s ability to protect the same.” ECF No.
`119 at 9. Specifically, HPT points to Cannata’s Amended Answer (ECF No. 114) which contains
`admissions that: (1) Cannata provided Kevin Sykes-Bonnett and/or Syked with a flash drive
`containing confidential information, files, and other materials which were protected property of
`HPT; (2) that Cannata provided to Syked the ability to create “keys” via a proprietary key generator
`program to access HPT’s highly confidential, proprietary software without a license to do so; and
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`6 In his reply, Cannata cites to various cases in support of his claim that parties cannot rely on conclusions reached in
`a prior motion to dismiss order as evidence in their motion for summary judgment. See, e.g., Black v. Correa, No. 07-
`00299, 2008 U.S. Dist. LEXIS 64220, *26-28 (D. Haw. Aug. 18, 2008); Norton v. Arpaio, No. CV-15-00087, 2019
`U.S. Dist. LEXIS 169855, *8 (D. Ariz. Sept. 30, 2019); Manuel v. Malone, No. 7:10-CV-4-FL, 2013 U.S. Dist. LEXIS
`146866, *16–18 (E.D.N.C. Oct. 10, 2013); Pinder v. Skero, 375 F.Supp.3d 725, 736 (S.D. Tex. 2019). However, in
`each case, the court reached that conclusion because the party bringing the motion for summary judgment relied on
`evidence presumed to be true under the motion to dismiss standard. Not where, as here, HPT relies on a legal
`conclusion that remains uncontroverted by evidence revealed in discovery.
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`(3) that Cannata withheld HPT or his (former) co-members the intentional disclosure and
`transmission of the flash drive containing confidential business information and trade secrets.7 As
`evidence, HPT cites to portions of Cannata’s deposition transcript that support these admissions.8
`Cannata maintains that he did not breach his fiduciary duty to HPT because he had a
`subjective belief that he was allowed to share the IP with Sykes-Bonnett. Responding to HPT’s
`citation to the deposition transcripts, Cannata argues that “nowhere in the pages cited does [he]
`state that he owed a fiduciary duty of confidentiality.” ECF No. 150 at 11. As evidence, Cannata
`cites the portions of his deposition transcript in which he stated he was within his rights under the
`Operating Agreement to share the confidential and proprietary information of the company to
`Sykes-Bonnett. ECF No. 144 at 36. Subjective belief aside, the evidence does demonstrate that
`Cannata did share software and technology created and used by HPT with Sykes-Bonnett which
`could constitute breach of his fiduciary duty. However, in his reply to his motion for partial
`summary judgment, Cannata, for the first time, argues that HPT has not shown that the software
`and information shared with Sykes-Bonnett qualifies as HPT’s protectable IP. Specifically, citing
`the Operating Agreement’s definition of “intellectual property” and a snippet of Prociuk’s
`deposition testimony, Cannata maintains that the software he shared with Sykes-Bonnett was an
`updated, non-derivative version of HPT’s software and information. ECF No. 150 at 12–13.
`As noted by Cannata in his briefing, where new evidence is presented in a reply to a motion
`for summary judgment, the district court should not consider the new evidence without giving the
`[non-]movant an opportunity to respond. See Crandall v. Starbucks Corp., 249 F.Supp.3d 1087,
`1104 (N.D. Cal. 2017) (“[C]ourts typically do not consider new evidence first submitted in a reply
`brief because the opposing party has no opportunity to respond to it.”) (citing to Provenz v. Miller,
`102 F.3d 1478, 1483 (9th Cir. 1996)). T