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Orion Marine Construction, Inc. v. Coyle

United States District Court, S.D. Texas, Houston Division

October 26, 2017

ORION MARINE CONSTRUCTION, INC., Plaintiff,
v.
MARK COYLE, et al, Defendants.

          OPINION AND ORDER

          MELINDA HARMON, UNITED STATES DISTRICT JUDGE

         Pending in the above-referenced cause are the following motions: (1) Plaintiff‘s Emergency Motion for Contempt, Doc. 26; (2) Plaintiff‘s Emergency Motion to Modify the Consent Preliminary Injunction Order, Doc. 27; (3) Plaintiff‘s Motion for Expedited Hearings, Doc. 28; (4) Defendants‘ Emergency Opposed Motion to Disqualify Experts and for Sanctions Against Plaintiff, Doc. 33; and (5) Plaintiff‘s Opposed Motion for Protective Order and to Quash Defendants‘ Subpoenas Duces Tecum to Plaintiff‘s Non-Party Expert, Doc. 34.

         On March 27, 2017, the parties appeared before this Court for a hearing on the pending motions. After three days of proceedings during which the Court heard extensive testimony, as well as a thorough review of the filings, [1] hearing exhibits, and relevant law, the Court denies Defendants‘ motions and grants Plaintiff‘s motions with the exception of Plaintiff‘s Motion for Expedited Hearings, which is now moot.

         I. Background

         This case arises from Defendant Mark Coyle‘s ("Coyle") alleged misappropriation of trade secrets before and immediately after departing Plaintiff Orion Marine Construction, Inc. ("Orion") to work for a major competitor, Defendants Crosby Dredging, LLC (TX) and Crosby Dredging, LLC‘s (LA) (collectively, "Crosby").

         Coyle‘s employment courtship with Crosby began sometime in September 2016. Doc. 26-2 at 4; Tr. 1-23:7-1-24:11. His initial discussions about employment opportunities with Crosby started with Crosby‘s Dredging Operations Manager, Roland Maturin ("Maturin") on LinkedIn, and soon after Coyle sent his resume to Crosby. Id. Coyle interviewed with Crosby in New Orleans on January 4, 2017, Tr. 1-34:10-15. On January 6, 2017, Coyle sent a draft employment agreement to Crosby, the terms of which awarded him a 1% commission on any projects he brought to Crosby. Ex. 5. That same day, he drafted his resignation letter to Orion. On January 9, Coyle submitted his resignation letter to the company. Tr. 1-38:12-1-39:5.

         During his employment tenure with Orion, Coyle signed acknowledgments of his receipt and certification of compliance with Orion‘s Corporate Ethics and Legal Compliance Policy and Code of Business Conduct and Ethics. Exs. 2, 4. Nevertheless, soon after he began courting Crosby in September, Coyle began forwarding confidential emails regarding bid proposals and other proprietary information to his personal email address. See, e.g., Exs. 11, 12. Coyle continued forwarding confidential e-mails, peaking in December and January, until after his official resignation from Orion. See, e.g., Exs. 8, 16, 17. During the same timeframe, he also downloaded Orion documents to a number of thumb drives, a MyPassport portable hard drive device, a Surface 3 tablet computer device, and a Dropbox account. Doc. 27-1; Tr. 1-140:8-12.

         After discovering Coyle‘s actions, on January 25, 2017, Peter Bulcher ("Bulcher"), Orion‘s Vice President and General Counsel, sent an email to Coyle advising him to "return any and all confidential and or proprietary information . . . taken with you when you left the Company, " and "to the extent such information . . . cannot be physically returned to the Company" to "keep such information confidential." Ex. 21. Coyle did not respond to the letter and engaged counsel instead. Tr. 1-108:7-1-109:5. In spite of Bulcher‘s letter, on February 12, 2017, Coyle proceeded to delete hundreds of the files he had taken. Doc. 26-2 at 12. See also Ex. 30. A few days later, on February 16, Lavigne sent an email to Crosby and Coyle notifying Defendants of the impending lawsuit and advising Coyle that he was obligated to maintain and not destroy documents or email. Doc. 22.

         On February 17, 2017, this Court entered a Temporary Restraining Order ("TRO") enjoining Defendants from destroying or erasing any of Orion‘s business materials or proprietary information and all records or documents relevant to the suit "in any form" and "wherever located." Doc. 12. The terms of the TRO specifically stated that its terms encompassed documents, emails, reports, software, files and electronic data. Id. On February 21, 2017-after the TRO was entered-Coyle proceeded to delete another 128 files. Doc. 26-2 at 12. See also Ex. 30. Then, on March 1, 2017, he deleted a file folder. Doc. 26-2 at 12. See also Ex. 30.

         On March 3, 2017, the Court entered the parties‘ Consent Preliminary Injunction Order ("PIO"). Doc. 21. Under the terms of the PIO, Defendants agreed that they and "their agents, employees, independent contractors, and all persons acting with them" would be enjoined and restrained from:

a. destroying, altering, erasing, secreting, or failing to preserve any and all of Orion‘s business materials, property, proprietary information, confidential information or trade secrets and/or any and all record or documents that may be relevant to this lawsuit; wherever located, and whatever form, including but not limited to any document, email, report, software, files, electronic data, tangible evidence, financial records, and any and all communications between Coyle and any employee, member, investor, or consultant of Crosby Dredging;
b. disclosing, disseminating, or using for its own purpose or any other purpose Orion‘s confidential information and trade secrets, including, but not limited to, all files (and the information contained therein) that Coyle removed from Orion without authorization. For purposes of this order "confidential information and trade secrets" is defined as all files, documents, email, technology, specifications, designs, processes, plans, intellectual property, and other materials or items (regardless of media, written, electronic or otherwise, and whether stored in local or central databases, on personal computers, in files or otherwise) of or developed or conceived by or for Orion. However, this restriction does not apply to any documents or information available in the public domain and was not improperly placed in the public domain by any Defendant;
c. accessing, studying or taking notes regarding Orion‘s confidential information or trade secrets that Coyle removed and/or retained, including all business-related information concerning Orion.

Doc. 21 ¶ 4. The parties also agreed to comply with the Forensic Protocol Agreement ("FPA"), which required Defendants to produce all email accounts and devices (servers, computers, and external storage devices) belonging to or used by Coyle and/or Martech Marine Consulting, LLC within seven days of the entry of the PIO. Id. ¶ 5, p. 21.

         During discussions on the scope of the PIO, Orion‘s counsel, Joseph Lavigne ("Lavigne"), proposed using LCG Discovery Experts, LLC ("LCG") as the forensic examiners. Doc. 40-3. Defendants agreed. See Doc. 21. Thus, the PIO designated LCG as the forensic examiner. Id. at 5. LCG‘s Director of Investigations is Andrew Frisbie ("Frisbie"). Tr. 2-48:25- 2-49:5.

         After the preliminary results indicated that Coyle had downloaded hundreds of Orion‘s files during his courtship with Crosby-and then deleted them after Orion initiated legal action against Defendants-Orion filed its Emergency Motion for Contempt, Doc. 26, Emergency Motion to Modify the Consent Preliminary Injunction Order, Doc. 27, and Motion for Expedited Hearings, Doc. 28. Defendants‘ responded with their Emergency Opposed Motion to Disqualify Experts and for Sanctions Against Plaintiff, Doc. 33. Orion then filed its Opposed Motion for Protective Order and to Quash Defendants‘ Subpoenas Duces Tecum to Plaintiff‘s Non-Party Expert, Doc. 34.

         The hearing on the pending motions began on March 27, 2017 and lasted for three days. During the proceedings, the Court was presented with hundreds of pages of exhibits and heard testimony from Maturin, Coyle, and Frisbie. The Court arrived at its decision for the reasons that follow.

         II. Legal Principles and Analysis

         A. Orion's Motion for Contempt

         District courts possess the inherent authority to enforce their own injunctive decrees. Travelhost, Inc. v. Blandford, 68 F.3d 958, 961 (5th Cir. 1995) (citing Waffenschmidt v. MacKay, 763 F.2d 711, 716 (5th Cir. 1985)). When a party violates a definite and specific order of the court requiring him to perform or refrain from performing a particular act or acts with knowledge of the court‘s order, he commits contempt. SEC v. First Fin. Grp., 659 F.2d 660, 669 (5th Cir. 1981) (citations omitted). Because "contempt is an affront to the court issuing the order, " Waffenschmidt, 763 F.2d at 716, "the willfulness of the contemnor‘s actions" are irrelevant to a finding of contempt, Virgin Mobile USA, LLC v. World MMP Inc., No. 06-cv-2444, 2007 WL 294145, at *2 (S.D. Tex. Jan. 29, 2007).

         "A party moving for civil contempt must demonstrate by clear and convincing evidence: (1) that a valid court order was in effect; (2) that the order required certain conduct by the respondent; and (3) that the respondent failed to comply with the court‘s order." Id. (citing FDIC v. LeGrand, 43 F.3d 163, 170 (5th Cir. 1995)). The clear and convincing evidence standard is higher than the "preponderance of the evidence" standard, common in civil cases, but not as high as "beyond a reasonable doubt." United States v. Rizzo, 539 F.2d 458, 465 (5th Cir. 1976) (citations omitted). In the contempt context, clear and convincing evidence is "that weight of proof which produces in the mind of the trier of fact a firm belief or conviction as to the truth of the allegations sought to be established, evidence so clear, direct and weighty and convincing as to ...


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