Clean Energy v. Trillium Transp. Fuels

Clean Energy, Plaintiff, v. Trillium Transportation Fuels, LLC, Trillium USA Company, LLC, and Love's Travel Stops and Country Stores, Inc., Defendants.

Civil Action No. H-19-244

United States District Court, S.D. Texas

July 6, 2021

REPORT AND RECOMMENDATION

Peter Bary United States Magistrate Judge

Clean Energy sued Trillium Transportation Fuels, LLC, and Trillium USA Company, LLC, (collectively, Trillium) alleging violations of the Defend Trade Secrets Act (DTSA), 18 U.S.C § 1836, and the Computer Fraud and Abuse Act, 18 U.S.C § 1030. (D.E. 1.) Clean Energy amended its complaint with leave of court, adding factual allegations, causes of action, and Love's Travel Stops and Country Stores, Inc. (Love's Travel) as a defendant. (D.E. 118; D.E. 119.) Trillium and Love's Travel filed a motion for summary judgment (D.E. 133), which was referred to the undersigned magistrate judge under 28 U.S.C. § 636(b)(1). The court recommends that the motion be granted.

1. Background

Clean Energy supplies renewable natural gas (RNG), compressed natural gas (CNG), and liquefied natural gas (LNG) for medium and heavy-duty vehicles, designs and builds fueling stations, and provides operation and maintenance (O&M) services for vehicle fleet customer stations. (D.E. 119 ¶ 15.) In its original complaint filed on December 13, 2018, Clean Energy alleged that Trillium induced two of Clean Energy's former employees “to breach their contractual obligations and disclose trade secrets so that Trillium could win competitive bids and divert customers from [Clean Energy].” (D.E. 1 ¶ 1.) The original complaint alleged that Trillium misappropriated Clean Energy's CNG and LNG trade secrets and diverted its CNG and LNG customers. Id. ¶¶ 16-17, 25, 49-54.

On April 30, 2020, Clean Energy sought leave to file an amended complaint, which the court granted. (D.E. 107; D.E. 118; D.E. 119.) The amended complaint added Love's Travel as a defendant and expanded the factual allegations to include misappropriation of trade secrets related to Clean Energy's RNG business. (D.E. 119 ¶¶ 1, 3, 7, 11, 15-18, 23, 27-30, 33-35, 40-41, 56, 72-78.) Clean Energy also added claims of misappropriation of trade secrets in violation of the Texas Uniform Trade Secrets Act (TUTSA), Texas Civil Practice and Remedies Code § 134A, against Trillium; tortious interference with an existing contract against Trillium and Love's Travel; and civil conspiracy against Trillium and Love's Travel for the misappropriation of trade secrets. Id. ¶¶ 83-86, 92-97. In the alternative to the conspiracy claim, Clean Energy alleged that Trillium acted as the alter ego of Love's Travel and conspired with Charles Love to misappropriate Clean Energy's trade secrets. Id. ¶¶ 98-101.

Trillium and Love's Travel filed a motion to dismiss the . amended complaint, to which Clean Energy responded. (D.E. 120; D.E. 124.) The court denied the motion to dismiss on the basis that the issues raised would be better resolved on summary judgment. (D.E. 131 at 2.) Shortly after the report and recommendation issued on the motion to dismiss, Trillium and Love's Travel filed an answer. (D.E. 132.)

At the same time, Trillium and Love's Travel filed a motion for summary judgment, which seeks judgment in favor of Trillium on the RNG claims under the DTSA and TUTSA and in favor of Trillium and Love's Travel on both the tortious interference and the conspiracy claims. (D.E. 133 at 11-19.) Love's Travel also seeks a ruling in its favor on alter ego. Id. at 19. In favor of summary judgment on these claims, Trillium and Love's Travel argue that Clean Energy lacks standing to assert misappropriation of RNG trade secrets, that the causes of action for misappropriation of RNG trade secrets and tortious interference are barred by the applicable statutes of limitations, and that, if summary judgment is granted on those claims, the civil- conspiracy cause of action and the alter-ego theory of recovery must also be dismissed. Id. at 11-19. In response, Clean Energy argues that it has standing to assert the RNG misappropriation claims and that the relation-back doctrine, the fraudulent concealment doctrine, and the discovery rule apply to make the filing of the claims timely. (D.E. 148 at 14-29.)

2. Summary Judgment Standard of Review

“Summary judgment is appropriate only if, viewing the evidence in the light most favorable to the nonmovant, ‘the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.'” Davenport v. Edward D. Jones & Co., 891 F.3d 162, 167 (5th Cir. 2018) (quoting Fed.R.Civ.P. 56(a)). No genuine issue of material fact exists if a rational jury could not find for the nonmoving party based on the complete record. McMichael v. Transocean Offshore Deepwater Drilling, Inc., 934 F.3d 447, 455 (5th Cir. 2019) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)).

“The movant bears the burden of identifying those portions of the record it believes demonstrate the absence of a genuine issue of material fact.” Lincoln Gen. Ins. Co. v. Reyna, 401 F.3d 347, 349 (5th Cir. 2005) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)). If this burden is met, the nonmovant must then “set forth specific facts showing that there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The nonmovant must “go beyond the pleadings, ” using competent summary judgment evidence to cite to “specific facts” showing a genuine issue for trial. Bustos v. Martini Club, Inc., 599 F.3d 458, 468 (5th Cir. 2010) (quoting Celotex Corp., 477 U.S. at 324). The court reviews all evidence and reasonable inferences in the light most favorable to the nonmoving party. Lincoln Gen. Ins. Co., 401 F.3d at 350.

3. Analysis

Trillium and Love's Travel assert two legal challenges to Clean Energy's RNG claims: standing and limitations. The standing argument is that Clean Energy has not asserted its own legal rights but the rights of a third-party entity. This is a prudential, not constitutional, standing argument that does not implicate jurisdictional concerns. See RLB Contracting, Inc. v. Genesis Energy, L.P., Civil Action H-18-3844, 2020 WL 5880918, at *3 (S.D. Tex. Oct. 2, 2020) (stating that prudential standing arguments do not challenge the court's jurisdiction “but the prudential limitation on the [courts'] exercise of that jurisdiction” (alteration in original) (quoting Ensley v. Cody Res., Inc., 171 F.3d 315, 320 (5th Cir. 1999))). Because subject matter jurisdiction is not in question, the court first considers Trillium and Love's Travel's arguments under the applicable statutes of limitations.

Trillium argues that the claim for misappropriation of RNG trade secrets and the claim for tortious interference with its RNG contract with Republic Services are barred by limitations. A claim of trade secret misappropriation requires proof of a trade secret, acquisition through improper means, and use of the trade secret without authorization. 18 U.S.C. § 1839(5X6) (defining misappropriation); Tex. Civ. Prac. & Rem. Code Ann. § 134A.OO2(3)(B) (same); see also M-I L.L.C, v. Q'Max Sols., Inc., Civil Action No. H-18-1099, 2019 WL 3565104, at *3 (S.D. Tex. Aug. 6, 2019) (listing same elements for state and federal misappropriation claims). A claim of tortious interference requires proof of “the existence of a contract subject to interference, an act of interference that was wil[l]ful and intentional, proximately causing plaintiffs damages, with actual damage or loss to plaintiff.” Polyflow, L.L.C, v. Specialty RTP, L.L.C., 993 F.3d 295, 305 (5th Cir. 2021) (quoting Fridl v. Cook, 908 S.W.2d 507, 513 (Tex. App.-El Paso 1995, writ dism'd w.o.j.)).

A misappropriation claim under DTSA “may not be commenced later than 3 years after the date on which the misappropriation with respect to which the action would relate is discovered or by the exercise of reasonable diligence should have been discovered.” 18 U.S.C. § 1836(d). Although TUTSA does not state a limitations period, the Texas Civil Practice and Remedies Code dictates that a misappropriation claim must be brought “not later than three years after the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered.” Tex. Civ. Prac. & Rem. Code Ann. § 16.010(a); see also Sw. Energy Prod. Co. v. Berry-Helfand, 491 S.W.3d 699, 721 (Tex. 2016). The tortious interference claim is subject to a two-year statute of limitations. Nath v. Tex. Children's Hosp., 446 S.W.3d 355, 370 (Tex. 2014); see also Tex. Civ. Prac. & Rem. Code Ann. § 16.003.

Clean Energy does not dispute that these are the applicable limitations periods. Rather, Clean Energy argues that the amended complaint relates back to the date on which the original complaint was filed and that the limitations period is tolled under the fraudulent concealment doctrine and the discovery rule.

A. Relation Back

Federal Rule of Civil Procedure 15(c) allows an amendment to relate back to the date of the original pleading: (1) when the applicable statute of limitations allows relation back; (2) when “the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out... in the original pleading[;]” or (3) when, under certain circumstances, the amendment changes a party or the naming of a party against whom a claim is asserted.

The claims pertaining to the RNG business in the amended complaint are of a completely different species than those related to the CNG and LNG business described in the original complaint. Clean Energy originally described its business as “supplying” actual natural gas for medium- and heavy-duty vehicles. (D.E. 1 ¶ 13.) Clean Energy also...