BKL Holdings v. Globe Life Inc.

660 F.Supp.3d 602

BKL HOLDINGS, INC. d/b/a License Coach, Plaintiff, v. GLOBE LIFE INC., et al., Defendants.

Civil Action No. 4:22-cv-00170

United States District Court, E.D. Texas, Sherman Division

Signed March 9, 2023

Richard Wellington Winn, Friedman & Feiger, LLP, Dallas, TX, Anthony L. Vitullo, Fee, Smith, Sharp & Vitullo, LLP, Dallas, TX, Anthony Leonard Vitullo, The Vitullo Law Firm, Dallas, TX, for Plaintiff.

Albert Giang, Jeffrey Hammer, King & Spalding LLP, Los Angeles, CA, Mandie

Michele Cash, King & Spalding LLP, Houston, TX, Adam Lee Gray, King & Spalding LLP, Austin, TX, for Defendants Globe Life Inc., American Income Life Insurance Company, Liberty National Life Insurance Company, Family Heritage Life Insurance Company of America.

Ann Marie Arcadi, John Michael Farrell, Seema Tendolkar, Arcadi Jackson, LLP, Dallas, TX, for Defendants David Zophin, James "Bo" E. Gentile, Jr.

MEMORANDUM OPINION AND ORDER

AMOS L. MAZZANT, UNITED STATES DISTRICT JUDGE

Pending before the Court are Defendants Globe Life Inc., American Income Life Insurance Company, Liberty National Insurance Company, and Family Heritage Life Insurance Company of America's Motion to Dismiss Plaintiff's Original Petition (Dkt. #22) and Defendants James "Bo" E. Gentile, Jr. and David Zophin's Joinder and Motion to Dismiss Plaintiff's Original Petition (Dkt. #23). Having considered the motions, the responses, and the applicable law, the Court finds that the motions should be GRANTED in part and DENIED in part.

BACKGROUND

Plaintiff BKL Holdings, Inc. d/b/a License Coach provides testing and training materials to prospective insurance agents preparing for licensing exams (Dkt. #4 ¶ 13). Defendant Globe Life, Inc. is a holding company for insurance companies, including Defendants American Income Life Insurance Company, Liberty National Insurance Company, and Family Heritage Life Insurance Company of America (with Globe Life, collectively the "Globe Life Defendants") (Dkt. #4 ¶ 12). Defendants James "Bo" E. Gentile, Jr. and David Zophin (collectively, the "Individual Defendants") are executives employed by the Globe Life Defendants (Dkt. #4 ¶¶ 7-8).¹

I. Factual Background

In 2017, Defendants allegedly approached Plaintiff regarding an opportunity to provide licensing exam-preparation materials for all of Globe Life's prospective new agents (Dkt. #4 ¶¶ 21-22). Before that time, Plaintiff worked with several Globe Life affiliates as an approved pre-licensing vendor (Dkt. #4 ¶ 16). Plaintiff contends that it attained considerable success with Globe Life affiliates by offering comprehensive exam-preparation materials more affordably than similar materials offered by its competitors, namely non-party Xcel Testing Solutions, LLC ("Xcel Testing") (Dkt. #4 ¶¶ 16-19).

According to Plaintiff, in April 2017, Defendant James "Bo" E. Gentile, Jr. requested that Plaintiff prepare a presentation on its systems and the "key differentiators" between Plaintiff and its competitors (Dkt. #4 ¶ 21). Plaintiff obliged Defendant Gentile's request and sent a presentation to Defendant Gentile in an email with a notice stating that the email's attachments "may contain confidential information" and that the email should be destroyed if received "in error" (Dkt. #4 ¶ 21). Plaintiff further alleges that, following its initial presentation to Defendant Gentile, it submitted a more comprehensive proposal to Defendants in response to a request for proposal to bid for all of Globe Life's testing and training business (Dkt. #4 ¶ 22-23). This proposal—which was sent with the same confidentiality notice that accompanied Plaintiff's original presentation to Defendant Gentile—allegedly included a trove of Plaintiff's "proprietary and confidential strategic information," such as information on its software platform, systems, customers, prospective customers, and pricing (Dkt. #4 ¶¶ 22-24). After receiving this proposal, Defendants allegedly ceased all communication with Plaintiff (Dkt. #4 ¶ 26).

A short time later, the confidential and proprietary information contained in Plaintiff's proposal to Globe Life allegedly appeared in Xcel Testing's marketing materials (Dkt. #4 ¶ 27). According to Plaintiff, the Individual Defendants had a hidden ownership stake in Xcel Testing and had provided Xcel Testing with Plaintiff's confidential and proprietary information as part of a larger "bribery and kickback scheme" (Dkt. #4 ¶¶ 27-30). Under this purported scheme, Defendants forced Globe Life agents to require prospective new recruits to purchase testing and training materials from Xcel Testing at an inflated cost of $149, $30 of which was kept by Xcel Testing with the remainder kicked back to Defendants (Dkt. #4 ¶ 30).

Plaintiff contends that it first learned of this scheme on March 3, 2020, when it received a copy of a complaint filed against Xcel Testing in New Jersey state court that disclosed a complete list of Xcel Testing's owners (Dkt. #4 ¶ 29). Among the individuals and entities named in the New Jersey complaint were Defendant Gentile's mother-in-law and a holding company that is allegedly owned and controlled by Defendant Zophin (Dkt. #4 ¶ 29).

II. Procedural History

On March 2, 2022, Plaintiff filed this case in the 429th Judicial District Court in Collin County, Texas, asserting causes of action for (1) breach of fiduciary duty, (2) misappropriation of trade secrets under the Texas Uniform Trade Secrets Act ("TUTSA"), (3) fraud, and (4) conspiracy (Dkt. #4). On March 3, 2022, Defendants removed the case to this Court on diversity grounds under 28 U.S.C. §§ 1332, 1441, and 1446 (Dkt. #1 at p. 1).

On June 27, 2022, the Globe Life Defendants moved to dismiss Plaintiff's complaint under Federal Rule of Civil Procedure 12(b)(6) (Dkt. #22). On the same day, the Individual Defendants filed their own motion to dismiss, which joined and supplemented the arguments raised by the Globe Life Defendants (Dkt. #23). Plaintiff responded to both motions on August 11, 2022 (Dkt. #24; Dkt. #25). On September 8, 2022, the Globe Life Defendants and the Individual Defendants filed their respective replies (Dkt. #26; Dkt. #27).

LEGAL STANDARD

The Federal Rules of Civil Procedure require that each claim in a complaint include a "short and plain statement . . . showing that the pleader is entitled to relief." FED. R. CIV. P. 8(a)(2). Each claim must include enough factual allegations "to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

A Rule 12(b)(6) motion allows a party to move for dismissal of an action when the complaint fails to state a claim upon which relief can be granted. FED. R. CIV. P. 12(b)(6). When considering a motion to dismiss under Rule 12(b)(6), the court must accept as true all well-pleaded facts in the plaintiff's complaint and view those facts in the light most favorable to the plaintiff. Richardson v. Axion Logistics, L.L.C., 780 F.3d 304, 304-05 (5th Cir. 2015). The court may consider "the complaint, any documents attached to the complaint, and any documents attached to the motion to dismiss that are central to the claim and referenced by the complaint." Allen v. Vertafore, Inc., 28 F.4th 613, 616 (5th Cir. 2022). The court must then determine whether the complaint states a claim for relief that is plausible on its face. Swindol v. Aurora Flight Scis. Corp., 832 F.3d 492, 494 (5th Cir. 2016).

"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." Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)). "But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not 'show[n]'—'that the pleader is entitled to relief.' " Iqbal, 556 U.S. at 679, 129 S.Ct. 1937 (quoting FED. R. CIV. P. 8(a)(2)).

In Iqbal, the Supreme Court established a two-step approach for assessing the sufficiency of a complaint in the context of a Rule 12(b)(6) motion. First, the court should identify and disregard conclusory allegations, for they are "not entitled to the assumption of truth." Iqbal, 556 U.S. at 664, 129 S.Ct. 1937. Second, the court "consider[s] the factual allegations in [the complaint] to determine if they plausibly suggest an entitlement to relief." Id. "This standard 'simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary claims or elements.' " Morgan v. Hubert, 335 F. App'x 466, 470 (5th Cir. 2009) (internal citations omitted). This evaluation will "be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679, 129 S.Ct. 1937.

Thus, "[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face." Id. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955).

ANALYSIS

Defendants move to dismiss Plaintiff's claims in their entirety. Defendants argue that Plaintiff's claim for misappropriation under TUTSA is inadequately pleaded and barred by the statute of limitations (Dkt. #22 at pp. 16-22). Likewise, Defendants contend that Plaintiff's common law claims for breach of fiduciary duty, fraud, and conspiracy are preempted by TUTSA, inadequately pleaded, and barred by the statute of limitations (Dkt. #22). The Court will first address the issue of preemption under TUTSA before turning to Plaintiff's claim for misappropriation of trade secrets.

I. TUTSA Preemption

Defendants argue that Plaintiff's common law tort claims are preempted by TUTSA (Dkt. #22 at p. 22). TUTSA's preemption provision provides that the statute "displaces conflicting tort, restitutionary, and...