ORDER AND REASONS

SARAH S. VANCE, United States District Judge

I. BACKGROUND

Before this Court is the motion of plaintiff, NewSouth Communications Corporation, for injunctive relief and damages against defendants, Universal Telephone Company, LLC, Chris Fournier, James Huey, and Rebecca Huey. Plaintiff seeks to enjoin defendants from (1) using the trademarks and trade name "Universal Telephone Company" and any derivatives thereof; (2) soliciting plaintiff's employees to work for Universal Telephone Company, LLC; and (3) using or disclosing plaintiff's trade secrets. Plaintiff also seeks damages for trademark infringement, breach of contract, trade secret misappropriation, and unfair trade practices.

On September 6, 2002, the Court granted a temporary restraining order against defendants under Federal Rule of Civil procedure 65(b). specifically, the Court temporarily enjoined Chris Fournier and James Huey from soliciting plaintiff's employees to work for Universal Telephone Company, LLC, and from misappropriating plaintiff's trade secrets and confidential information. The Court also temporarily enjoined Universal Telephone Company, LLC and Rebecca Huey from misappropriating plaintiff's trade secrets and from taking or destroying plaintiff's property. Further, the Court temporarily enjoined all defendants from using plaintiff's trademark and trade name, "Universal Telephone Company," and any derivatives thereof.

On September 20, 2002, the Court held a preliminary injunction hearing consolidated with a trial on the merits. The parties stipulated to offering witness testimony on depositions and affidavits. The Court heard two and one half hours of oral argument from the parties. The proceedings generated a voluminous written record. At the close of the hearing, the Court extended the temporary restraining order for ten days, until October 4, 2002, at 10:00 a.m., to give the Court reasonable time to consider the evidence and additional briefs to be submitted by the parties.

II. FACTS

Universal Telephone Company, Inc. ("UTC-1"), established in 1984, provided PBX and key system telephone systems in the New Orleans and surrounding area. From 1984 to 1997, defendants Chris Fournier and James P. Huey ("J. Huey") were the principal shareholders of UTC-1. ( See Fournier Depo. at 114; J. Huey Depo. at 13.) J. Huey was married to defendant Rebecca Huey ("R. Huey") until June of 1995, when they obtained a divorce and executed a community property settlement. ( See Defs.' Ex. S.) The Hueys remarried in November 1997 and executed a matrimonial agreement which provides that all property acquired before or during their marriage is to be separate property. ( See Defs.' Ex. 5.)

R. Huey worked at UTC-1 with J. Huey and Fournier for thirteen years, largely doing part-time administrative work. ( See R. Huey Depo. at 24-26.) She was not involved in telephone sales or equipment bids. ( See Id. at 30.) When the Hueys remarried in 1997, R. Huey became a "lady of leisure." ( See Id. at 51.)

In July 1997, Fournier and J. Huey sold all of their assets in UTC-1 to Data and Electronic Services, Inc. ("DES"), a telecommunications and data company. ( See Pl.'s Ex. 21.) The Bill of Sale and Assignment included "All of the Seller's right, title and interest in and to all trade names, including 'Universal Telephone Company,' all logos, telephone numbers and directory listings, licenses and permits. . . and goodwill. . . ." ( See Id.) In addition, J. Huey and Fournier entered into Employment Agreements and Non-Competition Agreements with DES. (See Pl.'s Exs. 2-6, 28-34.) As consideration for these agreements, J. Huey and Fournier received $354,375, plus salary, bonus incentives, and stock options in DES. ( See Id.) On September 10, 1997, DES changed its name to UniversalCom, Inc. to expand its image beyond that of a telephone company while maintaining the goodwill and reputation associated with the "Universal" name. ( See J. Huey Depo. at 17-18; Fournier Depo. at 116.)

In July of 2000, NewSouth Communications Corporation ("NewSouth") acquired all of UniversalCom's assets through a merger, including UniversalCom's trade secrets and confidential information, trademarks, trade names, and copyrights. ( See Pl.'s Ex. 26; NewSouth Depo. at 7-8.) On July 10, 2000, NSHI Ventures, LLC closed a stock purchase agreement with NewSouth Holdings, Inc., the parent of NewSouth, in which NSHI Ventures acquired 23% of NewSouth Holdings. (See Defs.' Ex. Q; NewSouth Depo. at 22; Pl.'s Exs. 3, 5, 44.) After the acquisition by NHSI Ventures, the ownership of NewSouth Holdings was NSHI Ventures, 23%; the founders of the company, 38%; and other shareholders, 39%. ( See Pl.'s Ex. 44.) The stock purchase agreement contained the following "Conditions to Closing" clause:

The closing of the acquisition by the Company of UCI [UniversalCom] shall have occurred or shall occur concurrently with the Firm Closing upon substantially the same terms and conditions as those set forth in the UCI Agreement; provided that in no event shall the form and amount of consideration. . . payable by the Company to the stockholders of UCI be less favorable in any material respect to the Company than as set forth in the UCI Agreement.

(Defs.' Ex. Q art. VI § 6.1(a)(ix).) The same Article contained a comprehensive list of conditions precedent to the closing of NSHI Ventures' stock purchase, which did not mention Employment Agreements or NewSouth's closing with UniversalCom. ( See Id. § 6.1(a).)

NSHI Ventures entered into a second stock purchase agreement with NewSouth Holdings on March 1, 2001. As a result of this transaction, NSHI Ventures owned 61.5% of NewSouth Holdings, the founders of the company owned 6%, and the other shareholders owned 32%. (See NewSouth Depo. at 23, 26, 30; Pl.'s Ex. 44.)

The Relevant Agreements

In connection with the UniversalCom/NewSouth merger and on the same day that NSHI Ventures, LLC closed its initial stock purchase agreement, J. Huey and Fournier each entered into a Non- Competition and Confidentiality Agreement, as well as an Employment Agreement with NewSouth. ( See Pl.'s Exs. 2-5.) At this time, J. Huey and Fournier were shareholders of UniversalCom. ( See Pl.'s Exs. 3, 5; NewSouth Depo. at 7-8.)

The September 10, 2000 Non-Competition and Confidentiality Agreements contained several relevant provisions. The first was a trade secrets clause, which provided that for a period of five years from July 10, 2000, J. Huey and Fournier agreed to hold the trade secrets of the company in strictest confidence and not to use or disclose its trade secrets at any time or for any purpose. ( See Pl.'s Exs. 3, 5 § 5(a).) The agreements contained a similar confidential information clause requiring J. Huey and Fournier to hold all "Confidential Information" of the company in strictest confidence and to refrain from using or disclosing such Confidential Information for five years from July 10, 2000. ( See Pl.'s Exs. 3, 5 § 5(b).)

The agreements also prohibited J. Huey and Fournier from soliciting employees of the company:

Shareholder agrees that he shall refrain for a period of two (2) years after the Effective Date, from diverting, soliciting, recruiting or hiring, or attempting to divert, solicit, recruit or hire, directly or by assisting others, any other employee or independent contractor of the Company or its affiliates. .

(Pl.'s Exs. 3, 5 § 5(e).) Lastly, J. Huey and Fournier acknowledged NewSouth's right to injunctive relief if they violated the provisions relating to trade secrets, confidential information, or non-solicitation of employees. (See Pl.'s Exs. 3, 5 § 5(g).)

The Employment Agreements between J. Huey and Fournier and NewSouth also contained relevant clauses. They contained a confidentiality provision that prohibited the defendants from misappropriating or disclosing confidential data during their "employment period," which was defined as July 10, 2000 to July 31, 2002. ( See Pl.'s Exs. 2, 4 §§ 1, 7(c).) Confidential data included "any information, documents or material which is proprietary to Employer, its parent, subsidiaries and affiliates, whether or not owned or developed by Employer, which is not generally known other than by Employer, and which Employee may obtain through any direct or indirect contact with Employer." (Pl.'s Exs. 2, 4 § 7(a).) The agreement listed the following as examples of confidential information:

financial statements and information; customer contact lists, requirements and records; customer pricing and discounts; planning and financial information (including departmental budgets and expenses); business plans and strategies (including plans and strategies devised by Employee to enter new lines of business); sales and marketing plans, techniques and strategies; computer programs. . . and/or source codes; vendor contracts and agreements; internal security codes and passwords; production, programming, engineering and distribution processes or techniques; copyrights and other intellectual property.

( Id.) The defendants' obligations with respect to confidential data were perpetual as to any confidential data that constituted a "trade secret" under applicable law, and, as to all other confidential data, expired on the third anniversary of the termination date. The termination date of the agreement was July 31, 2002. ( See Pl.'s Exs. 2, 4 § 7(c).)

The Employment Agreements also prohibited the defendants from soliciting or hiring away the company's employees:

Employee covenants and agrees that, both during the Employment Period and during the Non-Competition period, Employee shall not hire, solicit or actively take away, or attempt to hire, solicit or take away, any person who either is an employee of Employer with respect to the Business. . . as of the Termination Date or who was an employee of Employer during the twelve (12)-month period immediately preceding the Termination Date, either on Employee's behalf or on behalf of any other individual or entity for employment or activities in any business.

(Pl.'s Exs. 2, 4 § 11.) The Non-Competition period was defined as the lesser of either two years immediately following the termination date (July 31, 2002), if a "change in control" had not occurred, or one year following a change in control. ( See Pl.'s Exs. 2, 4 § 10.) A change in control was defined as

the consummation of a merger, consolidation or other business combination by NewSouth Holdings, Inc. with or into any other entity where the stockholders of NewSouth Holdings, Inc. immediately prior to such transaction in the aggregate cease to own at least 50% of the voting securities of the entity surviving or resulting from such transaction.

(Pl.'s Exs. 2, 4 § 10(d).) The parties dispute whether a change in control occurred by virtue of the stock acquisitions of NSHI Ventures, LLC.

Role of Fournier and J. Huey

Fournier served as District Operations Manager of the systems side of the New Orleans office of UniversalCom and later of NewSouth until March 2002. He served NewSouth as Project Manager and in technical support from March 2002 until August 14, 2002. ( See Fournier Depo. at 13.) J. Huey worked as a salesperson and in public relations for the New Orleans office of UniversalCom, then NewSouth, until July 2002. ( See J. Huey Depo. at 12.)

As a manager, Fournier participated in management discussions concerning such proprietary issues as marketing and sales strategy, sales data, cost analyses, equipment needs, material purchases, and general problem solving. ( See Jefferson Depo. at 13.) NewSouth entrusted J. Huey and Fournier with trade secrets and confidential information, such as marketing analyses, cost analyses, marketing strategies, customer lists, customer information, price lists and financial data. ( See Jefferson Depo. at 13; Lowe Depo. at 20; Pl.'s Exs. 2-5.) Fournier had "manager's access" to computer information consisting of pricing, customer lists, and financial information. ( See Lowe Depo. at 10, 13, 20.) To access this information, Fournier had to log into NewSouth's computer system using a manager's password. ( See Fournier Depo. at 59-61.) Fournier was also able to dial-in remotely to NewSouth's large PBXs and obtain detailed information about customers' databases and telephone systems, as well as technical configuration details of the PBXs. ( See Fournier Depo. at 59, 61; Jefferson Depo. at 22; Lowe Depo. at 10.)

NewSouth took various steps to protect its trade secrets. For example, it required all employees to sign confidentiality agreements ( see Pl.'s Exs. 2-5, 53-65), and to receive and sign an employee handbook, which lists categories of NewSouth's trade secrets. ( See Pl.'s Ex. 24; Walker Depo. at 13-14; Foreman Depo. at 32.) It requires password access to NewSouth's comprehensive TigerPaw customer information database and provides different levels of TigerPaw access to different employees. ( See Lowe Depo. at 7-8, 10.) It limits employees' access to its Great Plains financial database to a need-to-know basis. ( See Id. at 24-25.) It shreds its financial reports so they will not be accidentally circulated. ( See Foreman Depo. at 128-29.)

Use of Trade/service Mark

As noted earlier, after DES acquired UTC-1 in July 1997, it did not use the name Universal Telephone Company. Rather, in September 1997, it changed its name to UniversalCom, which it used until it merged into NewSouth in 2000. In July 2002, NewSouth acquired UniversalCom and operated the business under the name NewSouth. ( See Foreman Depo. at 24.) NewSouth does business in Louisiana, Mississippi, Alabama, South Carolina, and Florida. ( See Pl.'s Exs. 2, 4 § 10(a).) The extent of the evidence of NewSouth's use of the UTC name is de minimis. NewSouth has only used the UTC name on two service vans which are painted with the words "Universal Telephone Company," the mark of UTC-1, and a business telephone number which dials into NewSouth. ( See Pl.'s Ex. 6; Jefferson Depo. at 15; Foreman Depo. at 23, 81- 82; Fournier Depo. at 127.) Plaintiff uses these vans primarily in the New Orleans area, but it has also used them in Lafayette, Baton Rouge, Mississippi, and the panhandle of Florida. ( See Foreman Depo. at 81-82.) According to both NewSouth's Vice President of Systems Operations and its District Operations Manager, NewSouth's upper management had issued orders that these vans be repainted with the name "NewSouth," so that all of NewSouth's vehicles would reflect NewSouth's name. ( See Jefferson Depo. at 15; Foreman Depo. at 23.) The local office failed to do so, and then NewSouth decided to hold off painting the vans in light of this litigation. ( See Jefferson Depo. at 15.) NewSouth's Vice President of Systems Operations stated categorically that "corporate management" wanted "all the vehicles in NewSouth's name." ( See Id.) With the exception of these two old vans, NewSouth's District Operations Manager knows of no instance in which NewSouth has used the UTC name in its business operations. ( See Foreman Depo. at 25-26.) Indeed, NewSouth's Chief Operating Officer did not even know that NewSouth used the UTC name in its business. ( See Dubow Aff. ¶¶ 7, 8.)

The extent of the evidence of NewSouth's use of the name UniversalCom name is also de minimis. NewSouth maintains three or four old service vans painted with the word "UniversalCom," the same mark of UTC-1, and a business telephone number dialing into NewSouth. ( See Pl.'s Ex. 80; Jefferson Depo. at 16; Foreman Depo. at 23; Fournier Depo. at 127.) NewSouth's management had also ordered that these vans be repainted to reflect the NewSouth name, and this had not yet been done for the same reasons the UTC vans had not been repainted. In addition to a website at "www.newsouth.com," NewSouth also maintains a URL address at "www.universalcom.com," which automatically transfers web users to NewSouth's website. ( See Pl.'s Ex. 25.) Lastly, in addition to NewSouth's telephone listings in the NewSouth name, NewSouth has a listing in the 2002 New Orleans and Lafayette Yellow Pages under "UniversalCom," which dials into and is answered "NewSouth." ( See Pl.'s Ex. 27.) NewSouth's District Operations Manager does not know why the Yellow Pages contain this listing. ( See Foreman Depo. at 25.) NewSouth's Vice President of Systems Operations, Joe Jefferson, testified that NewSouth's listing of universalCom in the Yellow Pages was a "screw up." (Jefferson Depo. at 71-72.) There are no other instances in which NewSouth has used the name UniversalCom in its business operations. ( See Foreman Depo. at 24-26.) Indeed, the District Operations Manager said that from the time of the NewSouth merger, the name the company was "pursuing" was NewSouth Communications. ( Id. at 49.) Further, Jefferson testified as follows:

Q: It's never been intended of NewSouth to advertise, promote, or use the names of STT, UniversalCom, or Universal Telephone, right?

Q: From your personal knowledge as the manager of this —

A: I know of no advertising promotion of those names, no.

(Jefferson Depo. at 72.) Moreover, there is no evidence in this case of any sales made by NewSouth under the names UTC or UniversalCom.

Enter Universal Telephone Company, LLC ("UTC-2")

R. Huey and J. Huey did not expect J. Huey's employment agreement, which was due to expire on July 31, 2002, to be renewed. Accordingly, sometime in May 2002, R. Huey and J. Huey began to discuss the idea of R. Huey's starting a new telecommunications company. ( See J. Huey Depo. at 24-25; R. Huey Depo. at 51-52.) J. Huey describes the conversation as follows:

[M]yself and her were discussing the possibility of the things that have happened in the marketplace and the New Orleans area and surrounding areas, of a lot of the companies moving out, and there is a big gap in the communications end of it. Would I be willing to get back into it and do something that I knew best, due to the way the economy was going in the stock market, and communications being our background.

(J. Huey Depo. at 25.) Even though J. Huey was concerned that the telecommunications market was "very unstable," he agreed to support his wife's entry into the telecommunications business. ( See id. at 27-28.) Sometime in late June or early July 2002, R. Huey, J. Huey, and Fournier met as a group at the Huey's home to discuss the prospect of this new company. ( See Fournier Depo. at 26-27.)

On or about June 26, 2002, NewSouth formally advised J. Huey that his employment agreement would not be renewed. ( See J. Huey Depo. at 12.) On July 26, 2002, J. Huey wrote an e-mail to Larry Dubow, Chief Operating Officer of NewSouth, which stated in pertinent part, "As of August 1st I will be employed by a new company Universal Telephone Company LLC; which is being started by my wife Rebecca Talbot Huey. I wanted to inform you of this and wish you well." (Defs.' Post-Trial Mem. Ex. 4.) Mr. Dubow replied, "I wish you and your wife much success with Universal Telephone Company. If your new company has any interest in being a dealer of NSC network services, please let me know and I will personally take care of it." ( Id.) As noted earlier, Dubow admits that he did not even know that NewSouth used the UTC name at all in connection with its business. ( See Dubow Aff. ¶¶ 8, 11.)

On July 31, 2002, the same day that J. Huey and Fournier's Employment Agreements with NewSouth expired, R. Huey formed "Universal Telephone Company, LLC" ("UTC-2"). ( See Pl.'s Ex. 22.) R. Huey capitalized UTC-2 with $25,000 and made an additional $75,000 available to the company. She used funds that she transferred to a bank account in her own name from a joint money marketing account that she held with J. Huey. ( See Def s.' Ex. 6; R. Huey Depo. at 12-14; J. Huey Depo. at 42-45; Fournier Depo. at 70-71). On August 5 or August 8, 2002, Fournier gave NewSouth notice that he would leave the company as of August 31, 2002. ( See Fournier Depo. at 6-7, 108-09.)

On August 9, 2002, R. Huey took out a $250,000 line of credit with the Whitney Bank for UTC-2. ( See R. Huey Depo. at 15.) Fournier (who had given notice but was still working at NewSouth) and J. Huey signed as guarantors on the line of credit, for which they are jointly, severally and solidarily liable. ( See J. Huey Depo. at 43; Pl.'s Exs. 40, 41.) The commercial guarantees signed by R. Huey and J. Huey provide that if the guarantor is married, the guarantor expressly agrees that recourse may be had against both guarantor's separate property and community property for all the guarantor's obligations. ( See Pl.'s Exs. 39, 40.) Although J. Huey explained that he and Fournier guaranteed R. Huey's loan because she had been supportive of him when he was working, he offered no specifics on the type of support she had rendered. Nor was there any indication that Fournier had benefitted from any support from R. Huey in the past. ( See J. Huey Depo. at 45.)

UTC-2 is in the same line of telecommunications business as NewSouth. R. Huey is the sole owner and manager. ( See Defs.' Ex. 4; J. Huey Depo. at 47; Foreman Depo. at 52-54.) J. Huey and Fournier are currently employees, although J. Huey testified that R. Huey plans to allow employees to own stock in the future. ( See Defs.' Ex. 1; J. Huey Depo. at 5, 41; Fournier Depo. at 5; Foreman Depo. at 77.)

R. Huey says that she contacted approximately eight employees of NewSouth about working for UTC-2, and approximately eight employees contacted her after hearing of opportunities at UTC-2. ( See R. Huey Depo. at 62-76.) NewSouth's Director of Systems Sales, Joseph Walker, learned from several NewSouth employees that Fournier approached them to say that "he was restarting Universal Telephone Company and apologized that he would not be able to take them with him." (Walker Depo. at 8-9.)

On or about August 12, 2002, three days after R. Huey, J. Huey, and Fournier secured the Whitney Bank loan for UTC-2 and after both J. Huey and Fournier gave notice of their departures from NewSouth, the Hueys sponsored an evening event at the clubhouse of the condominium where they live. The purpose of the meeting was for NewSouth employees to learn about employment opportunities at UTC-2. ( See R. Huey Depo. at 92-94; J. Huey Depo. at 35-36; Fournier Depo. at 27-29.) J. Huey explained his involvement in the event as follows:

[I]n July there was talk going around. . . . Employees called wondering what was going on, what the consideration was. And yes, there was talk of the company being formulated. There was talk on how would that company best be formed, you know, all the things you do when you establish a business. What kind of market is out there, what kind of products and services you may want to offer, what opportunities there are, those types of things. . . . There were numerous people who were contacting me to try to hire me. . . . When all of these calls were taking place and employees were calling my wife and me, What's going on, and so forth, and I had basically been informed of the appropriate things to do and not to do, we simply said, If anybody is interested in finding out what is going on here, they can come up to my condominium, there is an area in my condominium they call a clubhouse area, . . . if anyone is interested, they are asking questions, ask them to come by and we will make sure we explain to them appropriately what's going on.

(J. Huey Depo. at 33-35.)

The day of the event, Fournier had lunch with Joel Combs, a NewSouth employee and former UTC-1 employee and learned that Combs was worried about possible lay-offs at NewSouth. Fournier told Combs that "he heard some investors were considering starting a new company" and invited Combs to attend the event that evening at the Huey's condominium clubhouse. ( See Combs Aff. ¶ IV.) Combs attended the event, at which J. Huey and Fournier were present. ( See Id.; R. Huey Depo. at 92-94; J. Huey Depo. at 35-36; Fournier Depo. at 27-29.) R. Huey offered Combs a job sometime over the next few weeks, which he accepted. ( See Combs Aff. ¶ X.)

At the event, R. Huey and UTC-2's attorney, Gerard Metzger, pointedly told the NewSouth employees that their former superiors, J. Huey and Fournier, were bound by non-solicitation agreements with NewSouth. ( See J. Huey Depo. at 35-38; Fournier Depo. at 27-28.) Metzger also told the attendees "it would be inappropriate for anyone at this particular point in time to solicit employees. And we want to make it very, very clear that we can't, myself, Mr. Fournier, any of these other people, employees, could not solicit other employees. . . ." ( See J. Huey Depo. at 36.) Mr. Metzger also told the attendees not to take any confidential information, customer lists, invoices, or anything else from NewSouth. ( See Id. at 36.)

Fourteen employees resigned from NewSouth to work for UTC-2 in August and September of 2002. ( See R. Huey Depo. at 9, 62-63.) All of these employees had also worked for J. Huey and Fournier at UTC-1. ( See Fournier Depo. at 22-26.) At least twelve NewSouth employees attended the event at the Huey's, and eleven of these employees later accepted jobs at NewSouth. ( See Id.; J. Huey Depo. at 37-38; Fournier Depo. at 22-26.) Seven of NewSouth's PBX technicians joined UTC-2, at least five of whom attended the Huey's event. ( See R. Huey Depo. at 29-30; J. Huey at 37; Jefferson Depo. at 61, 66-67; Boudreax Aff. ¶ III; Wroblewski Aff. ¶ III.) Every one of these employees had signed a confidentiality and nondisclosure agreement with NewSouth. ( See Pl.'s Exs. 53-65.) UTC-2 did not find it necessary to place any advertisements or use a placement agency to attract its personnel. ( See R. Huey Depo. at 11.) Further, no UTC-2 employees filled out an application for employment with the company. ( See Id. at 15.)

R. Huey testified that she believed that the name Universal Telephone Company had a good reputation in the community and that "it would be a good name to bring back." ( Id. at 42, 30-31, 39, 51, 71.) R. Huey created marketing materials for UTC-2 which contained the phrase, "Back by popular demand." ( See Pl.'s Ex. 1; R. Huey Depo. at 60.) R. Huey informed the employees she solicited that she intended to reestablish UTC. ( See R. Huey Depo. at 72-73.)

R. Huey says that she believed that the name "Universal Telephone Company" was available for use. Her investigation into the availability of the name consisted of consulting with her attorney and learning that the name was not registered with the State of Louisiana. ( See id. at 42-43, 104.) She did not seek the permission of anyone at NewSouth, directly or through J. Huey, to use the name. ( See id. at 29; Pl.'s Ex. 45.)

As the Court has noted earlier, on August 5 or August 8, 2002, Fournier advised NewSouth that he resigned and would leave as of August 31, 2002. ( See Fournier Depo. at 6-7, 108-09.) On August 8, 2002, while at work, Fournier e-mailed electronic files from his office e-mail account to his home e-mail account containing NewSouth's Statement of Income and Operations as of May 15, 2002, and a detailed report on the status of NewSouth's customer collections as of August 5, 2002. ( See Pl.'s Exs. 10.2- 10.5.) Fournier later stated that he did this because he needed to review the documents with Bob Bono, a NewSouth technician, who was to assume Fournier's position as Operations Manager. ( See Fournier Depo. at 73-75.) Bono, however, was on vacation. ( See Walker Aff. ¶ 19.) When he returned, he resigned from NewSouth and also e-mailed himself internal NewSouth documents. ( See id. ¶¶ 20-21.)

Fournier ended his employment on August 14, 2002, which was earlier than he first announced, because "it was getting pretty tense. One too many people told me to watch my back, it looked like they were trying to get information about me to see what was going on." (Fournier Depo. at 6, 108-09.) That afternoon, from 1:55 p.m. until 6:03 p.m., Fournier was logged into NewSouth's computer system. This would have been ample time to run every report in the system. ( See Lowe Depo. at 11, 13, 15-16; Pl.'s Ex. 23.)

The following morning of August 15, 2002, at 5:47 a.m., after Fournier had left the company, he logged into NewSouth's system from home and sent an e-mail from his office e-mail account to his personal e-mail account, which contained a letter from the Chief Operating Officer of Algiers Bank Trust, expressing his dissatisfaction with NewSouth's handling of its contract and collections. ( See Pl.'s Ex. 10.2.) Fournier's explanations which the Court finds incredible, was that he did this because he felt obliged to continue his work on the Algiers account, even though he had terminated his employment with NewSouth at that point. ( See Fournier Depo. at 77-80.)

At 7:46 a.m., Fournier e-mailed himself NewSouth's customer debt collections report as of August 12, 2002. ( See Pl.'s Ex. 10.5; Lowe Depo. at 11; Fournier Depo. at 6-7.) Fournier later stated he did this because, in the course of switching e-mail accounts, he lost the same report he had sent on August 8, 2002, and therefore sent himself the newest one. ( See Fournier Depo. at 94.)

Fournier admitted that a company's internal financial information is confidential information. ( See id. at 46.) He likewise acknowledged that it would be commercially undesirable for his competitors to have access to his customer lists, contact information, types of systems his customers have, amounts his customers pay, and age of his customers' phone systems. ( See id. at 47-49.)

As noted, Bob Bono conducted similar e-mailing activities around the same time as Fournier. Bono returned from a week's vacation on August 13, 2002. That day, he met with NewSouth's Director of Systems Sales to discuss his future with NewSouth. ( See Walker Aff. ¶¶ 19-20.) At this meeting, Bono informed NewSouth that he had been offered a job by R. Huey. ( See id. ¶ 20.) The next day, on August 14, 2002, Bono informed NewSouth by telephone that he resigned and would join UTC-2. ( See id. ¶ 22.) On August 15, 2002 at 12:03 p.m., Bono e-mailed nineteen attachments from his office account to what appears to be his son's account, with the subject heading, "Dad's Stuff," and the statement, "If you get all of this, please download to a floppy. NOW! or you can build me a directory on your P/C and file them there." ( See id. ¶ 21; Pl.'s Exs. 47.1-47.20.) These attachments included templates and documents typically created by NewSouth's project managers to facilitate the management of projects for customers. ( See Walker Aff. ¶¶ 3-4.) The templates of spreadsheets are used to switch a customer's system from an old to a new one and to monitor the progress of the project. ( See id. ¶ 6.) Two of the documents contained customer information. ( See Bono Second Aff. ¶ IX.)

In an affidavit dated September 16, 2002, Bono did not acknowledge taking any NewSouth documents, but asserted instead that R. Huey had told him "to leave any and all NewSouth information or property behind when [he] departed from NewSouth." ( See Bono First Aff. ¶ III.) When the extent of his e-mails was revealed, Bono offered a second affidavit, this time explaining that he thought he was entitled to the documents. ( See Bono Second Aff. ¶¶ VI, VIII.) Bono said that he "believed and still [does] believe that these forms belonged to me and not to NewSouth or any other employers." ( See id. ¶ VII.)

UTC-2 officially began doing business on September 2, 2002. ( See R. Huey Depo. at 107; Fournier Depo. at 9.) Within days of starting operations, UTC-2 had persuaded the Windsor Court Hotel and Whitney National Bank, two of NewSouth's top ten customers, to switch their business to UTC-2. ( See R. Huey Depo. at 18, 30-31, 39; Fournier Depo. at 10, 16; Foreman Depo. at 112-13; Pl.'s Exs. 81-83.) Three former NewSouth technicians who exclusively serviced the Whitney Bank telephone system, "almost like employees of Whitney," now work for UTC-2. (Foreman Aff. ¶ 25; Foreman Depo. at 108, 112-13.) Whitney Bank and Windsor Court were loyal customers of UTC-1, later NewSouth, since 1986 or 1987. ( See Fournier Depo. at 10, 15.) NewSouth's sales records for the New Orleans office show that from 2000 to 2002, NewSouth had sales of about $300,000 to $370,000 per year on its Whitney Bank account and about $30,000 per year on its Windsor Court account. ( See Pl.'s Exs. 81-83.)

In late August 2002, Mitel Networks, a manufacturer of telephone systems, granted a distributorship to UTC-2. It already had a distributorship with NewSouth. ( See Pl.'s Exs. 49-50.) The distributorship was not exclusive, and Mitel insisted that UTC-2 and NewSouth service separate markets. Mitel required, however, that UTC-2 provide special indemnification agreements and a special covenant not to solicit the customer base of NewSouth. ( See Pl.'s Ex. 50.) J. Huey and Fournier provided personal indemnity agreements to Mitel. ( See Pl.'s Ex. 49-50.)

J. Huey began negotiations with another NewSouth customer, Algiers Bank Trust, in early September 2002. ( See J. Huey Depo. at 7-8.) Algiers Bank had written NewSouth a letter expressing dissatisfaction with NewSouth's handling of its contract and collections, which Fournier had e-mailed to himself on August 15, 2002 at 5:47 a.m. See supra.

III. DISCUSSION

A. Legal standard

A district court may grant a preliminary injunction it plaintiff establishes tour factors: (1) a substantial likelihood of success on the merits; (2) a substantial threat that failure to grant the injunction would result in irreparable injury; (3) the threatened injury outweighs any potential harm to the opposing party; and (4) the injunction will not disserve the public interest. See Allied Marketing Group, Inc. v. CDL Marketing, Inc., 878 F.2d 806, 809 (5th Cir. 1989); Ingenix, Inc. v. Lagalante, 2002 U.S. Dist. LEXIS 5795, *18 (E.D. La. 2002) For the court to grant a permanent injunction, a plaintiff must prove actual success on the merits, and the three remaining factors are identical to those that must be proved to obtain a preliminary injunction. See Amoco Product Co. v. Village of Gambell, Alaska, 480 U.S. 531, 546 n. 12 (1987)

Any injunctive relief is considered "an extraordinary and drastic remedy, not to be granted routinely, but only when the movant, by clear showing, carries the burden of persuasion." Ingenix, 2002 U.S. Dist. LEXIS at *18 (citing Carmax Auto Superstores Inc., 177 F.3d 306, 312 (5th Cir. 1999)). Each of the enumerated factors must be considered to determine whether, on balance, they collectively favor granting the injunction. See id. at *19. If the plaintiff fails to carry its burden as to any one of these four factors, injunctive relief cannot be granted. See id. (citing Enterprise International, Inc. v. Corporation Estatal Petrolera Ecautoriana, 762 F.2d 464, 472 (5th Cir. 1985))

B. Infringement of Trademark

The first issue for the Court to determine is whether the name "Universal Telephone Company" is eligible for protection under either the Lanham Act or the common law. Defendants argue that they did not engage in any trademark infringement, either because the name was available or was abandoned by plaintiff. R. Huey says she believed that the name "Universal Telephone Company" was available for use because it was not registered with the State of Louisiana and because her attorney has advised her it was available. ( See R. Huey Depo. at 42-43, 104.) Indeed, the name and mark of "Universal Telephone Company" and "UniversalCom" are not registered by plaintiff under federal or state trademark law. Nonetheless, under the common law, an unregistered mark is eligible for protection if the mark would meet the registration criteria set forth under the Lanham Act. See 15 U.S.C. § 1125 (West 2002); Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 767-78 (1992); Pebble Beach Co. v. Tour 18 I Ltd., et al., 155 F.3d 526, 536 (5th Cir. 1998)

A trademark is defined under the Lanham Act as including "any word, name, symbol, or device or any combination thereof" used by any person "to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown." 15 U.S.C. § 1127. A service mark is defined as "any word, name, symbol, or device, or any combination thereof" used by a person "to identify and distinguish the services of one person, including a unique service, from the services of others and to indicate the source of the services, even if that source is unknown." Id. The same principles generally apply to trade and service marks/names. See 15 U.S.C. § 1053; see also Park 'N Fly, Inc. v. Dollar Park Fly, Inc., 469 U.S. 189, 191 (1989); Gulf Coast Bank v. Gulf Coast Bank Trust Co., 652 So.2d 1306, 1315-16 (La. 1995)

To enjoy trademark protection, the asserted trademark owner cannot be passive but must use the mark to identify its goods or services and to distinguish them from the goods and services of others. Thus, lack of actual use can result in a loss of legal rights to the mark, otherwise known as abandonment. See 15 U.S.C. § 1127; J. THOMAS MCCARTHY, MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION § 17:9 (4th ed.)

A party seeking an injunction for trade or service mark/name infringement must prove (1) the name he seeks to protect is eligible for protection; (2) he is the senior user; (3) there is a likelihood of confusion between his mark and that of the defendant; and (4) the likelihood of confusion will actually cause the plaintiff irreparable injury for which there is no adequate legal remedy. See Union National Bank of Texas, Laredo v. Union National Bank of Texas, Austin, 909 F.2d 839, 844 (5th Cir. 1990). Abandonment is a defense to trademark infringement, on which a defendant bears the ultimate burden of persuasion.

i. Abandonment

Under the Lanham Act, a mark is deemed to be abandoned "when its use has been discontinued with intent not to resume such use." 15 U.S.C. § 1127. Further, "intent not to resume may be inferred from circumstances." Id. And, "nonuse for three consecutive years shall be prima facie evidence of abandonment." Id. The statute requires "bona fide use of [the] mark in the ordinary course of trade, and not made merely to reserve a right in [the] mark." Id. The burden of proof of nonuse with intent not to resume use is on the party claiming abandonment; if that party makes out a prima facie case of abandonment, then the owner of the mark assumes the burden to demonstrate that "circumstances do not justify the inference of intent not to resume use." Del-Rain v. Pelonis USA, Ltd., 2002 U.S. App. LEXIS 1729, *4 (2d cir. 2002); Emergency One, Inc. v. American Fireeagle, 228 F.3d 531, 535-36 (4th Cir. 2000); Exxon Corp. v. Humble Exploration Co., 695 F.2d 96, 99 (5th Cir. 1983). The ultimate burden of persuasion, however, remains on the party challenging the mark. See Emergency One, 228 F.3d at 536 (citing Rivard v. Linville, 133 F.3d 1336, 1449 (Fed. Cir. 1998)).

In Exxon Corporation v. Humble Exploration Corporation, 695 F.2d 96, 99 (5th Cir. 1983), the Fifth Circuit held that a trademark had been abandoned when its use was limited to a few isolated products and invoices. See id. at 100. In that case, from the 1960s through 1972, Humble Oil and Refining Company used its name on all of the company's packaged products and service stations, sometimes accompanied by the trademarks Esso, Enco, or Humble. Company management concluded that use of the three names was confusing, and in late 1972, Humble Oil adopted the name Exxon as its primary brand name and soon thereafter changed the company name to Exxon Company, USA. See id. at 97-98.

In 1972, Humble Oil passed a resolution to continue the use of the Humble name after the changeover to Exxon other than as a primary band name and expressed an intent to protect the Humble name. See id. at 98. It attempted to do so by making limited sales of Exxon packaged products with both the Humble and the Exxon names on the labels. See id. It also formed three corporations — Humble Incorporated, Humble Gas Transmission Company, and Humble Oil and Refining Corporation — which sold Exxon gasoline and diesel fuel to selected customers with the Humble name on the invoices. See id. From 1973 to 1979, these sales totaled $395,814. See id. Beginning in 1977, Exxon sold fifty-five gallon drums with the Exxon and Humble names on the labels. See id.

In 1974, the appellant formed a new company, Humble Exploration Company, asserting that the "Humble" name had been abandoned when Exxon changed its name. See id. at 98-99. When Exxon challenged the use of the Humble name, the Fifth Circuit found that Exxon abandoned the Humble trademark. The Fifth Circuit focused on whether Exxon's limited sales of products with both the Humble and Exxon labels and the much larger bulk sales under Humble invoices constituted "use." See id. at 99. The court concluded that they did not. Even though the Humble mark retained residual goodwill, these uses were not sufficient because the Humble trademark was not used to identify the source of the goods, but only as a secondary name. See id. at 100. No sales were made that depended on the Humble mark as an identification of the source, because purchasers were told that "the selected shipments would bear the Humble name or be accompanied by a Humble invoice but they were the desired Exxon products." Id. The court found that this type of use did not suffice because "the Humble mark did not. . . play the role of a mark." Id. The Court concluded that the Lanham Act does not allow preservation of a mark solely to prevent use by others. See id. at 101.

Other circuits have applied similar reasoning to find abandonment. In Emergency One, Inc. v. American Fireeagle, Ltd., the Fourth Circuit held that a manufacturer of fire trucks had prima facie abandoned its trademark when its remaining use consisted of one recycled fire truck displaying the trademark and the promotion of the name on hats, t-shirts, bags, and nameplates. See 228 F.3d at 537. The owner did not use the mark on its invoices or other documents associated with its sales. See id. The court found that the owner's use was "incidental" and "no more than a token use which, standing alone, is legally insufficient to disprove abandonment." Id. at 535, 537.

In Del-Rain Corp. v. Pelonis USA, Ltd., the Second Circuit held that a trademark owner's sale of 25,000 products bearing a trademark's name was not sufficient to overcome a finding of abandonment, because the purpose of the sale was to phase out the trademark and inventory. See 2002 U.S. App. LEXIS 1729 at *5-6.

The court found that

Del-Rain misconstrues the meaning of 'use' under the Lanham Act. The Act does not protect any use; nor is the quantity of ostensible use. . . necessarily relevant. . . . An effort to dispose of the remaining stock of an abandoned line of merchandise does not constitute a 'bona fide' use. . . in the ordinary course of trade.

The analyses in the foregoing cases compel this Court to conclude that plaintiff has abandoned the Universal Telephone Company and UniversalCom trademarks. First, the Court finds that the defendants have made out a prima facie case that plaintiff abandoned the trade name "Universal Telephone Company" through nonuse for three consecutive years. The evidence reveals that, since the acquisition of UTC-1 by DES in 1997, UniversalCom and NewSouth did not use the trade name "Universal Telephone Company" to identify their products or services. ( See Foreman Depo. at 24-26.) There is no evidence of invoices, office documents, sales, or advertisements in the UTC name by either company in the ordinary course of business.

Not unlike the facts in Emergency One, the extent of plaintiff's use of the UTC name is on two old service vans which are painted with the words "Universal Telephone Company," the mark of UTC-1, and a business telephone number. ( See Pl.'s Ex. 6; Jefferson Depo. at 15; Foreman Depo. at 23, 81-82; Fournier Depo. at 127.) As in Exxon, these vans do not amount to "use" of the UTC name as a trademark for a product or service, because the telephone number on the van is answered "NewSouth;" NewSouth's services are marketed under its own name; and there are no services or goods sold as UTC's. Further, NewSouth's corporate management had ordered the vans repainted with NewSouth's name, which the local office had not done and then decided to refrain from doing for litigation purposes. ( See Jefferson Depo. at 14 17; Foreman Depo. at 23-24; Fournier Depo. at 111-114.)

The at-most token and nontrademark use of the UTC name over the past five years does not qualify to save the mark from abandonment. It is also clear that NewSouth does not intend to resume using the name. Its own corporate managers and officers testified that since NewSouth acquired UniversalCom, NewSouth pursued only the NewSouth name, wanted all its vans to bear that name alone, and did not promote the names UTC or UniversalCom to identify its products. ( See Foreman Depo. at 23, 49; Jefferson Depo. at 15, 72.) Defendants' showing of NewSouth's abandonment is also evidenced by the fact that NewSouth's Chief Operating Officer, Larry Dubow, did not even recognize the UTC name when J. Huey sent him an e-mail stating, "As of August 1st I will be employed by a new company Universal Telephone Company LLC." (Defs.' Post-Trial Mem. Ex. 4.) Further, Dubow did not even know that NewSouth had vehicles in use with the UTC name on them. (See Dubow Aff. ¶ 8.) That NewSouth's Chief Operating Officer did not even identify the UTC name with his own company and was unaware that NewSouth made any use of the UTC name also supports a finding that NewSouth did not intend to resume the use of the UTC name.

Finally, as the Fifth Circuit held in Exxon, the existence of any residual goodwill in the UTC name does not allow NewSouth to "warehouse" the name without making actual use of it. For the foregoing reasons, the Court finds that NewSouth abandoned the UTC name.

Defendants have not made out a prima facie case of three years of nonuse of the UniversalCom name, because NewSouth has only owned the name since July 2000 when it acquired it from UniversalCom, which had used the name. The Lanham Act defines abandonment as discontinuance of use with intent not to resume use. See 15 U.S.C. § 1127. The Act allows a defendant to use proof of three years of consecutive nonuse to shift the burden to the plaintiff to rebut the inference of intent not to resume use. See id. Courts have not interpreted the Act as limiting proof of abandonment to a showing of three consecutive years of nonuse or as standing for the proposition that abandonment is three consecutive years of nonuse. See, e.g., Del-Rain, 2002 U.S. App. LEXIS 1729 at *4; Emergency One, 228 F.3d at 535-36. Even though NewSouth has owned the UniversalCom name for only two years, the Court finds that defendants have proved that NewSouth abandoned that name and did not intend to resume using it. Since NewSouth acquired UniversalCom, it has conducted business under the name NewSouth. There is no evidence that it made any sales under the UniversalCom name. NewSouth's officers and managers testified that the company pursued the NewSouth name and did not promote the UniversalCom name. ( See Foreman Depo. at 49; Jefferson Depo. at 72.) Indeed, management ordered the vans that NewSouth had acquired with the UniversalCom name on them to be repainted. ( See Foreman Depo. at 23; Jefferson Depo. at 15.) That these instructions were not followed as to four vans does not change the company's plans or transform the vans into a trademark use of the UniversalCom name. This follows because the use of the UniversalCom name on the vans, and for that matter as a website URL, did not serve the role of a trademark, which is to identify a product or service marketed under that name. See Exxon, 695 F.2d at 100. Rather, the phone caller and web user are informed that the service being marketed is NewSouth's, not UniversalCom's. Finally, it is true that NewSouth has a listing in the 2002 New Orleans and Lafayette Yellow Pages under "UniversalCom," in addition to its NewSouth listings. ( See Pl.'s Ex. 27.) NewSouth's District Operations Manager does not know why the Yellow Pages contain this listing. ( See Foreman Depo. at 25.) NewSouth's Vice President of Systems Operations, Joe Jefferson, testified that the listing of UniversalCom in the Yellow Pages was a "screw up." (Jefferson Depo. at 71-72.) In any event, the number does not promote anything under the UniversalCom name, because it is answered by NewSouth, and the services promoted are identified as NewSouth's. The Court therefore finds that defendants have proved plaintiff's nonuse of the UniversalCom name with intent not to resume using it in the future.

In sum, plaintiff has abandoned the Universal name and is not entitled to protection when others use it. Thus, the Court's order restraining defendants from using the name Universal Telephone Company is dissolved, and injunctive relief is denied.

ii. Likelihood of Confusion

Even if the plaintiff had not abandoned the names UTC and UniversalCom, the Court finds that plaintiff cannot prove likelihood of confusion, which is an element of a trademark infringement claim. Under the Lanham Act, the basic test for determining protectability of a mark or name is whether use of the mark or name by another person would create a likelihood of confusion as to the source, affiliation, or sponsorship of the goods or services. See 15 U.S.C. § 1125(a); Two Pesos, 505 U.S. at 769-770; Pebble Beach, 155 F.3d at 543; Chevron Chemical Co. v. Voluntary Purchasing Groups, Inc., 659 F.2d 695, 703 (5th Cir. 1981), cert. denied, 457 U.S. 1126 (1982). Thus, plaintiff has to show that the defendants' use of the name "Universal Telephone Company, LLC" creates a likelihood of confusion in the minds of potential consumers as to whether it or NewSouth is the source of those services or whether the two companies are affiliated. See Elvis Presley Enters., Inc. v. Capece, 141 F.3d 188, 193 (5th Cir. 1998)

The Court finds that even if there is no abandonment, there is little likelihood of confusion here. First, the strength of the UTC mark and the UniversalCom mark has been dissipated by nonuse of the marks and the lack of identification of the marks with NewSouth. Further, to the extent NewSouth can be said to advertise these marks, its advertising is so de minimis that it is not likely to be confused with UTC-2's. Indeed, if NewSouth's own Chief Operating Officer did not identify the UTC name with NewSouth, it is unlikely the general public will either. There is also evidence that customers and suppliers were well aware that UTC-2 was not affiliated with NewSouth. The evidence reveals, for example, that Whitney Bank and Windsor Court knew that they were "switching" companies. ( See Foreman Depo. at 96 97; Walker Depo. at 69.) Further, the supplier, Mitel, was not confused that UTC-2 was sponsored by or affiliated with NewSouth, as it required indemnities from UTC-2 against claims by NewSouth. ( See Pl.'s Ex. 50.) Indeed, NewSouth does not sell a simple branded product to unsophisticated consumers, but instead offers complex telephone systems and services under its own name in a commercial market. The evidence that the Hueys and Fournier believed that there was a reservoir of goodwill associated with the old UTC name does not change the Court's conclusion.

In view of the foregoing, the Court concludes that even if defendants had not proved abandonment, the plaintiff would not be able to prove a likelihood of confusion.

C. Solicitation of Employees

i. Employment Agreements

The Employment Agreements between Fournier and NewSouth and between J. Huey and NewSouth provide:

Employee covenants and agrees that, both during the Employment Period and during the Non-Competition period, Employee shall not hire, solicit or actively take away, or attempt to hire, solicit or take away, any person who either is an employee of Employer with respect to the Business. . . as of the Termination Date or who was an employee of Employer during the twelve (12)-month period immediately preceding the Termination Date, either on Employee's behalf or on behalf of any other individual or entity for employment or activities in any business.

(Pl.'s Exs. 2, 4 § 11.) The defendants make the strained argument that, because the non-competition clauses of the employment agreements relating to a competing business and solicitation of customers would likely be void under Louisiana law, see supra n. 7, and these clauses use the same "non-competition period" as the employee solicitation provision, the employee non-solicitation provision is void. The term "non-competition period" is a defined term in the agreement. ( See Pl.'s Exs. 2, 4 § 10(d).) That it is used in two separate provisions, one of which is arguably unenforceable for other reasons, does not contaminate the second provision. Thus, the Court rejects defendants' argument.

The Non-Competition period is defined as the lesser of either two years immediately following the termination date (July 31, 2002) if a "change in control" has not occurred, or one year following a change in control. ( See Pl.'s Exs. 2, 4 § 10.) A change in control is

the consummation of a merger, consolidation or other business combination by NewSouth Holdings, Inc. with or into any other entity where the stockholders of NewSouth Holdings, Inc. immediately prior to such transaction in the aggregate cease to own at least 50% of the voting securities of the entity surviving or resulting from such transaction.

(Pl.'s Exs. 2, 4 § 10(d).)

Delaware law, under which NewSouth is incorporated, defines "merger" and "consolidation" as a transaction involving two or more entities, where the legal existence of one or more entities ceases to exist. See DEL. CODE ANN. § 251 (West 2001). A "business combination" can be a merger or consolidation, or various other transactions involving the corporation or its subsidiary and an interested shareholder. See id. § 203.

On July 10, 2000, the same day that J. Huey and Fournier signed their Employment Agreements with NewSouth, NSHI Ventures, LLC closed its initial stock purchase agreement with NewSouth Holdings, Inc. ( See Defs.' Ex. Q; Pl.'s Exs. 3, 5, 44.) As a result of this stock purchase, NSHI Ventures acquired 23% of NewSouth Holdings. The remaining stock was owned by the founders of the company (38%), and other shareholders (39%). ( See NewSouth Depo. at 22; Pl.'s Ex. 44.)

Defendants argue that this transaction together with a second acquisition by NSHI Ventures nine months later amounted to a change in control. First, defendants' argue that NSHI Ventures was not a shareholder at the time J. Huey and Fournier signed their employment agreements with NewSouth. The defendants argue that J. Huey and Fournier's agreements were a condition precedent to NSHI Ventures' stock purchase. The July 10, 2000 stock purchase agreement contains a Conditions to Closing clause that runs contrary to defendants' argument:

The closing of the acquisition by the Company of UCI [UniversalCom] shall have occurred or shall occur concurrently with the Firm Closing upon substantially the same terms and conditions as those set forth in the UCI Agreement; provided that in no event shall the form and amount of consideration. . . payable by the Company to the stockholders of UCI be less favorable in any material respect to the Company than as set forth in the UCI Agreement.

(Defs.' Ex. Q art. VI § 6.1(a)(ix) (italics added).) The above language makes clear that the closing of NewSouth's acquisition of UniversalCom was to be deemed concurrent with the closing of NSHI Ventures' acquisition of stock in NewSouth Holdings. Further, the same Article contains a comprehensive list of conditions precedent to the closing of NSHI Ventures' stock purchase, which does not mention the Employment Agreements or NewSouth's closing with UniversalCom. ( See id. § 6.1(a).) There is simply no basis for defendants' argument that NSHI Ventures acquired stock in NewSouth Holdings after J. Huey and Fournier signed their Employment Agreements, resulting in a change in control.

In any event, NSHI Ventures did not acquire 50% of the voting securities in this transaction. Defendants therefore fail to meet the second requirement of the Change in Control clause that "the stockholders of NewSouth Holdings, Inc. immediately prior to such transaction in the aggregate cease to own at least 50% of the voting securities of the entity surviving or resulting from such transaction." In the July 2000 transaction, NSHI Ventures acquired only 23% of the voting stock in NewSouth Holdings, and the other stockholders in the aggregate retained 77% of the stock.

Defendants next rely on a second preferred stock purchase by NSHI Ventures on March 1, 2001, in which it purchased another 39% of NewSouth stock. As a result of this transaction, NSHI Ventures owned 61.5% of NewSouth Holdings, the founders owned 6%, and the other shareholders owned 32%. ( See NewSouth Depo. at 30; Pl.'s Ex. 44.) Assuming that this stock purchase constituted a business combination, the Court again finds that defendants have failed to meet the second requirement of the Change in Control clause. As an existing shareholder immediately prior to the stock purchase, NSHI Ventures' acquisition of an additional 39% of NewSouth Holdings' stock did not cause the existing shareholders in the aggregate to cease to own at least 50% of the voting securities of the surviving entity. ( See NewSouth Depo. at 32.) To the contrary, NSHI Ventures' second stock acquisition only altered the proportions of the existing shareholders' aggregate ownership.

Since no change in control occurred, J. Huey and Fournier were bound not to solicit NewSouth employees for two years immediately following the "termination date" of their agreements, or from July 31, 2002. ( See Pl.'s Exs. 2, 4 § 10.)

ii. J. Huey and Fourier's Solicitation

From the time R. Huey established UTC-2 on July 31, 2002, until the time this Court granted a temporary restraining order to NewSouth on September 6, 2002, NewSouth lost fourteen employees to UTC-2, including J. Huey and Fournier. ( See R. Huey Depo. at 9.) Many of these employees were NewSouth's top PBX technicians. ( See Jefferson Depo. at 61, 66-67.)

J. Huey and Fournier state they have not solicited NewSouth's employees to work for UTC-2. It is true there is no evidence that J. Huey or Fournier made actual offers of employment to any NewSouth employee, and R. Huey states that she was responsible for soliciting about eight NewSouth employees and for all offers of employment. ( See R. Huey Depo. at 62-76.) The plaintiff has demonstrated, however, that there is much more to J. Huey and Fournier's involvement in UTC-2's raid on NewSouth's employee base than their protestations to the contrary suggest.

On or about August 12, 2002, the Hueys sponsored an evening event at the clubhouse of the condominium where they live to speak with NewSouth employees about employment opportunities at UTC-2. ( See id. at 92-94; J. Huey Depo. at 35-36; Fournier Depo. at 27-29.) At least twelve NewSouth employees attended the event, and eleven of these employees later accepted jobs at NewSouth. ( See id.; J. Huey Depo. at 37-38; Fournier Depo. at 22-26.) J. Huey and Fournier were present at this event. ( See R. Huey Depo. at 92-94; J. Huey Depo. at 35-36; Fournier Depo. at 27-29.) They had already officially terminated their employment with NewSouth and had personally guaranteed the debt of UTC-2. Fournier had met with the Hueys in early June or late July regarding setting up the new company. ( See Fournier Depo. at 26-27.) For these reasons, the Court concludes that J. Huey and Fournier were already on board with UTC-2 at the time of the event at the Huey's clubhouse. Further, J. Huey and Fournier did not need information about the new company. The only reason for their being at the event was to lend their presence to the recruiting effort with their colleagues and former subordinates, whether they actually offered them jobs or not.

The day of the event, Fournier had lunch with Joel Combs, a NewSouth employee and former UTC-1 employee, and learned that Combs was worried about possible lay-offs at NewSouth. ( See Combs Aff. ¶ IV.) Fournier told Combs that "he heard some investors were considering starting a new company" and invited Combs to attend the event that evening at the Huey's clubhouse, which he did. ( See id. ¶ IV.) R. Huey offered Combs a job sometime over the next few weeks, which he accepted. ( See id. ¶ X.)

J. Huey explained that when he was asked at NewSouth what was afoot about a new company, he invited NewSouth employees who were "interested" to his home to learn about the new company:

When all of these calls were taking place and employees were calling my wife and me, What's going on, and so forth, and I had basically been informed of the appropriate things to do and not to do, we simply said, If anybody is interested in finding out what is going on here, they can come up to my condominium, there is an area in my condominium they call a clubhouse area, . . if anyone is interested, they are asking questions, ask them to come by and we will make sure we explain to them appropriately what's going on.

(J. Huey Depo. at 33-35.)

The Court finds that the conduct of J. Huey and Fournier in sponsoring a recruiting event, inviting NewSouth employees to the event, and lending their presence to the event amounted to solicitation. That R. Huey and UTC-2's attorney, Gerard Metzger, pointedly informed the NewSouth employees that J. Huey and Fournier could not come out and solicit them openly because of their non-solicitation agreements does not alter the Court's conclusion. ( See id. at 35-38; Fournier Depo. at 27-28.) Given the context of the gathering and the events leading up to this event, the Court finds the defendants' efforts to cloak themselves in the appearance of compliance to be woefully transparent.

That J. Huey and Fournier may not have directly extended an offer of employment to a NewSouth employee does not insulate them from liability when their conduct itself clearly demonstrates solicitation. The Court finds that J. Huey and Fournier have violated the nonsolicitation clauses of their agreements with NewSouth and that NewSouth will suffer irreparable injury unless they are enjoined from continuing to do so for the duration of their agreements with NewSouth.

iii. Solicitation by R. Huey and UTC-2

Plaintiff asks the Court to apply a "reverse alter ego" theory to enjoin R. Huey and UTC-2 from soliciting NewSouth employees. Under traditional alter ego analysis, a party seeks to pierce the corporate veil of a corporation to hold its shareholders liable. Here plaintiff seeks to hold UTC-2 and R. Huey liable for the acts of J. Huey and Fournier. Plaintiff's theory is that J. Huey and Fournier are the driving forces behind UTC-2, and R. Huey is a mere figurehead. However, neither J. Huey nor Fournier is a shareholder of UTC-2.

In support of this argument, plaintiff offers mostly non-Louisiana state court decisions in which courts have held an individual liable on the provisions in his or her spouse's contract, when that individual has clearly acted as a vehicle for the spouse to avoid his or her contractual obligations. In the lone Louisiana case cited by plaintiff, the Court of Appeals held that if the defendant's business is a community asset partially owned by the defendant's spouse, the business is subject to the defendant's spouse's non-compete agreement. Muller v. Ramar, Inc., 427 So.2d 625 (La. 5th Cir. Ct. App. 1983). J. Huey is not an owner of UTC-2. Moreover, in accordance with the Louisiana Civil Code, J. Huey and R. Huey established a separate property regime through a matrimonial agreement in 1997, long before UTC-2 existed. ( See Defs.' Ex. 5; LA. CIV. CODE ANN. §§ 2326, 2370 (West 2002).) They do not share any community property. ( See Defs.' Ex. 5.) Accordingly, Muller is distinguishable. Significantly, the Muller court noted that "a careful search of the jurisprudence has revealed no case in which a corporation and its sole shareholder have been adjudged to be the alter ego of individuals who were not shareholders." Muller, 427 So.2d at 628. This Court has also been unable to find binding authority on this issue.

Plaintiff also offers two Louisiana cases in which the courts held that a non-party to an agreement may be enjoined when doing so will prevent interference with a restrictive covenant in a contract. See Four Rivers Gaming, Inc. v. Reliable Amusement Co., 737 So.2d 938 (La. 3d Cir. Ct. App. 1999); Valley Electric Membership Corp. v. Southwestern Electric Power, 550 So.2d 702 (La. 2d Cir. Ct. App. 1989). These cases, however, are not at all analogous. In Four Rivers and Valley Electric, the plaintiff and defendant companies had entered into similar contracts with the same entity, resulting in a dispute as to whose contractual rights were superior and enforceable. The Louisiana Court of Appeals granted injunctive relief in both cases to the superior contracting party, to prevent the other party from interfering with the superior party's rights. See Four Rivers, 737 So.2d at 940-41; Valley Electric, 550 So.2d at 709-10. These facts are entirely inapplicable here.

For all of the foregoing reasons, the Court will not apply a reverse alter ego theory to hold R. Huey and UTC-2 liable for soliciting NewSouth's employees.

D. Trade Secret Misappropriation

The Non-Competition and Confidentiality Agreements between J. Huey and NewSOuth and Fournier and NewSouth contain a trade secrets clause, which provides, "For a period of five (5) years following the Effective Date, Shareholder agrees that he shall hold all Trade Secrets of the Company pertaining or related to the Business in strictest confidence, shall not use or disclose such Trade Secrets at any time or for any purpose." ( See Pl.'s Exs. 3, 5 § 5(a).) The Agreement defines trade secrets by reference to the Louisiana Uniform Trade Secrets Act, LA. REV. STAT. ANN. § 51:1431, et seq. (West 2002)

The Louisiana Uniform Trade Secrets Act ("LUTSA") provides that a "trade secret" is

information, including a formula, pattern, compilation, program, device, method, technique, or process, that

(a) derives independent economic value, actual or potential, from not being generally known to and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use, and

(b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

LA. REV. STAT. ANN. § 51:1431(4). Under LUTSA, the owner of trade secrets makes a reasonable effort to maintain the secrecy of that information when he, for example, limits access to a need-to-know basis and controls access to the items. See id. § 51:1431, Official Comment (f)

"Misappropriation" of a trade secret is

(a) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or

(b) disclosure or use of a trade secret of another without express or implied consent by a person who:

(i) used improper means to acquire knowledge of the trade secret; or

(ii) at the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was:

(aa) derived from or through a person who had utilized improper means to acquire it;

(bb) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or

(cc) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; . . .

Id. § 51:1431(2).

A court may enjoin "actual or threatened misappropriation" of trade secrets. Id. § 51:1432. The Fifth Circuit has held that using or disclosing even one trade secret to a competitor of the employee's former employer may create a substantial threat of irreparable injury. See Union Carbide Corp. v. UGI Corp., 731 F.2d 1186, 1191-92 (5th Cir. 1984) (citing FMC Corp. v. Varco Int'l, Inc., 677 F.2d 500, 503 (5th Cir. 1982)). A court may also award damages if, in addition to proving misappropriation of a trade secret, the plaintiff proves actual loss caused by the misappropriation. See Computer Mgmt. Assistance v. Robert F. deCastro, Inc., 220 F.3d 396, 403 (5th Cir. 2000) (citing Reingold v. Swiftships, Inc., 126 F.3d 645, 648 (5th Cir. 1997)).

The evidence shows that defendant Fournier and Bob Bono engaged in the following acts of trade secret misappropriation:

On August 8, 2002, after Fournier turned in a letter of resignation to NewSouth, stating he would leave on August 31, 2002 ( see Fournier Depo. at 6-7, 108-09), Fournier e-mailed to his home electronic files containing NewSouth's customer debt collections report as of August 5, 2002. ( See Pl.'s Exs. 10.2- 10.5.) This report contained detailed information on the status of collections on the accounts of NewSouth's customers who were identified by name. Fournier later stated that he did this because he needed to review the documents with Bob Bono, who was taking over Fournier's position as Operations Manager. ( See Fournier Depo. at 73-75.) The Court finds this statement incredible because Bono was on vacation, and Bono would himself leave to join UTC-2 as soon as he returned. ( See Walker Aff. ¶¶ 19-22.)

On August 15, 2002 at 5:47 a.m., the morning after Fournier terminated his employment with NewSouth, Fournier logged into NewSouth's system from home and sent an e-mail from his office e-mail account to his personal e-mail account, which contained a letter from the Chief Operating Officer of Algiers Bank Trust, expressing his dissatisfaction with NewSouth's handling of its contract and collections. ( See Pl.'s Ex. 10.2.) Fournier's explanation that he did this because he felt obliged to continue his work on the Algiers account even though he had terminated his employment with NewSouth is not credible. ( See Fournier Depo. at 77-80.)

Also on August 15, 2002 at 7:46 a.m., Fournier e-mailed himself NewSouth's customer debt collections report as of August 12, 2002. ( See Pl.'s Ex. 10.5; Lowe Depo. at 11; Fournier Depo. at 6-7.) Fournier acknowledged that the types of information he accessed were confidential, and he would want to protect these types of information in his own business. ( See Fournier Depo. at 46.)

On August 15, 2002 at 12:03 p.m., having orally resigned from NewSouth on August 14, 2002 ( see Walker Aff. ¶ 22), Bob Bono e-mailed nineteen attachments from his office account to what appears to be his son's account, with the subject heading, "Dad's Stuff," and the statement, "If you get all of this, please download to a floppy. NOW! or you can build me a directory on your P/C and file them there." ( See id. ¶ 21; Pl.'s Exs. 47.1-47.20.) Some of these attached documents were trade secret material. For example, the attachments included templates and documents typically created by NewSouth's project managers to facilitate the management of projects for customers. ( See Walker Aff. ¶ 3-4.) The templates of spreadsheets are used to prepare to switch a customer's system from an old to a new one and to monitor the progress of the project. ( See id. ¶ 6.) Two of the documents contained customer information. ( See Bono Second Aff. ¶ IX.)

The record fully demonstrates that NewSouth made reasonable efforts to maintain the secrecy of these items. First, NewSouth requires all employees to sign confidentiality agreements which included the type of information that was taken. ( See Pl.'s Exs. 2-5, 53-65.) It also requires all employees to receive and sign an employee handbook, which lists categories of NewSouth's trade secrets. ( See Pl.'s Ex. 24; Walker Depo. at 13-14; Foreman Depo. at 32.) Further, Fournier required password access to obtain the information he acquired.

When Fournier, after he was no longer employed by NewSouth, took customer correspondence, as well as a detailed customer collection report, which was not only a partial customer list, but also contained detailed account information, he engaged in "acquisition of a trade secret of another," and he knew or had reason to know that the trade secret was acquired by improper means. LA. REV. STAT. ANN. § 51:1431(2)(a). Fournier had no right to access NewSouth's computer system and internal information after he left NewSouth.

Additionally, because Fournier took the same reports after he left NewSouth that he had e-mailed to his home account on August 8, 2002 after deciding to resign, the Court finds that it is more probable than not that Fournier's purpose in the August 8, 2002 e-mail transaction was misappropriation. The Court likewise finds that Bono acquired NewSouth's trade secrets by improper means when he e-mailed to his son NewSouth's internal technical documents. Finally, the Court finds that the only reasonable conclusion here is that Fournier and Bono intended to use the trade secret information for the benefit of the new company, UTC-2, where they both were planning to work at the time they took the e-mailed material. The Court finds that NewSouth will suffer irreparable injury unless further trade secret misappropriation and use are enjoined and that it is therefore entitled to injunctive relief on this claim.

E. Louisiana Unfair Trade Practices Act

Under the Louisiana Unfair Trade Practices Act ("LUTPA"), "unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful." LA. STAT. REV. ANN. § 51:1405 (West 2002) For injunctive relief, a plaintiff must only show that the trade practice was unlawful. See Camp, Dresser McKee, Inc. v. Steimle Associates, Inc., 652 So.2d 44, 47-48 (La. 5th Cir. Ct. App. 1995) (cited in Oreck Corp. v. Bissell, Inc., 1999 WL 163389, *2 (E.D. La. 1999)). Plaintiff is entitled to injunctive relief under LUTPA because Fournier' s conduct in misappropriating trade secrets is unlawful. However, plaintiff is not entitled to injunctive relief for defendants' violation of their non-solicitation agreements, because their conduct amounted only to a breach of contract. LUTPA does not provide relief for simple breach of contract. See Turner v. Purina Mills, Inc., 989 F.2d 1419, 1422 (5th Cir. 1993) (citing State v. Orkin Exterminating Co., 528 So.2d 198, 202 (La. 4th Cir. Ct. App. 1988)); Clark v. America's Favorite Chicken Co., 916 F. Supp. 586, 593 (E.D. La. 1996)

F. Balancing of Harm

The Court has found actual success on the merits of plaintiff's claims for injunctive relief for solicitation of NewSouth employees and misappropriation of NewSouth's trade secrets. The Court has also determined there is a likelihood of irreparable harm if injunctive relief were denied.

Further, the Court finds that the threatened injury to plaintiff's business if injunctive relief is denied heavily outweighs the threatened injury to defendants if injunctive relief is granted. The defendants may continue to conduct business, hire employees, and expand their operations without soliciting or hiring plaintiff's employees and without misappropriating plaintiff's trade secrets. Plaintiff, however, would certainly suffer if it lost more employees or if its trade secrets were further misappropriated.

G. Public Interest

It is clearly in the public's interest for the courts to provide injunctive relief to preserve contractual obligations and to protect valuable trade secrets.

H. Damages

i. Solicitation of Employees in Breach of Contract

Under the Louisiana Civil Code, damages for breach of contract are measured by "the loss sustained by the obligee and the profit of which he has been deprived." LA. CIV. CODE ANN. art. 1995 (West 2002). Based on the attendance at the August 12, 2002 recruiting event, the evidence reveals that Fournier and J. Huey solicited one or more of NewSouth's top technicians who had serviced Whitney Bank's telephone systems for years. The loss of these employees was a substantial cause of UTC-2's acquisition of the Whitney Bank account. ( See Foreman Aff. ¶ 25; Foreman Depo. at 108, 112-13; Fournier Depo. at 10, 15.) Indeed, these technicians worked almost "like employees" of Whitney Bank and were critical to maintaining the account. There is no evidence that NewSouth would have lost the Whitney Bank account in the absence of this breach of contract. Plaintiff has not made a similar showing that it lost the Windsor Court account due to the defendants' solicitation of employees who were critical to that account.

The clear purpose of NewSouth's non-solicitation provisions was to prevent employees from doing precisely what Fournier and J. Huey managed to do: invade NewSouth's employee base after leaving the company. Thus, Fournier and J. Huey are liable for any loss that would foreseeably result from a breach of these provisions. NewSouth's loss of the Whitney Bank account because the employees who had serviced that account for years were hired away is just such a foreseeable result.

In calculating damages based on NewSouth's loss, the starting point is NewSouth's per annum earnings from the Whitney Bank account. From 2000 to 2002, Whitney Bank yielded NewSouth an average of $300,000 to $370,000 per year. ( See Pl.'s Exs. 81-83.) plaintiff has not offered evidence that either the NewSouth agreement with the Whitney Bank or UTC-2's agreement was for a specified term or of what the cancellation provisions of the agreements are. Nor is there evidence that NewSouth is disabled long-term from competing in the marketplace, particularly in light of the injunctive relief granted. Consequently, an award of damages based on NewSouth's annual sales to the Whitney Bank would be excessive. The Court therefore awards the plaintiff breach of contract damages in the amount of $100,000, which represents four months of services to Whitney.

Plaintiff also asks the Court to award damages in the amount of $21,860, which represents plaintiff's increased payroll costs to retain six employees. ( See Pl.'s Ex. 8.) NewSouth is not entitled to these damages because its employees are free to leave for other employment.

ii. Misappropriation of Trade Secrets

In a trade secrets misappropriation case, a court may award damages if, in addition to proving misappropriation of a trade secret, the plaintiff proves actual loss caused by the misappropriation. See LA. REV. STAT. ANN. § 51:1433; Computer Mgmt. Assistance v. Robert F. deCastro, Inc., 220 F.3d 396, 403 (5th Cir. 2000) (citing Reingold v. Swiftships, Inc., 126 F.3d 645, 648 (5th Cir. 1997)). The court may also award damages for unjust enrichment not taken into account in calculating damages for actual loss. See LA. REV. STAT. ANN. § 51:1433.

There is no evidence that the misappropriation of NewSouth's trade secrets caused NewSouth to lose customers or employees, or to lose the Whitney Bank or Windsor Court accounts. Moreover, the Fifth Circuit has explicitly rejected a res ipsa loquitur approach to assessing trade secret misappropriation damages, under which causation is assumed if a breach and damages are proved. See Taylor Publ'g Co. v. Jostens, Inc., 216 F.3d 465, 487 (5th Cir. 2000) (holding evidence insufficient for awarding damages when defendant acquired confidential information and soon increased his market share while plaintiff lost customers). In this case, which is analogous to Taylor Publishing, plaintiff has not offered proof of causation to link defendants' misappropriation of trade secrets with plaintiff's loss. Thus, the Court declines to award damages for trade secret misappropriation.

iii. LUTPA

LUTPA confers a private right of action on "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 declared unlawful by R.S. 51:1405." LA. REV. STAT. ANN. § 51:1409(A). The Court has determined that plaintiff is entitled to injunctive relief under LUTPA for Fournier's unlawful misappropriation of trade secrets. See supra section III.D. However, as discussed above, there is no evidence in the record that any misappropriation of NewSouth's trade secrets caused NewSouth to lose customers or employees, or to lose the Whitney Bank or Windsor Court accounts. Therefore, plaintiff is not entitled to damages under LUTPA.

iv. Attorney's Fees

The LUTSA allows for attorney's fees if "willful and malicious misappropriation exists." LA. REV. STAT. ANN. § 51:1434. The plaintiff has not met this standard, and the Court will not award attorney's fees.

IV. CONCLUSION

Based on the foregoing reasons, the Court ORDERS the following relief:

1. J. Huey and Chris Fournier are enjoined from soliciting the employees of NewSouth until July 31, 2004.

2. R. Huey, J. Huey, Chris Fournier, and Universal Telephone Company, LLC are enjoined from misappropriating or using trade secrets of NewSouth.

3. The Temporary Restraining Order prohibiting R. Huey, J. Huey, Chris Fournier, and Universal Telephone Company, LLC from using the Universal Telephone Company name or its derivatives is dissolved.

4. J. Huey and Chris Fournier are ordered to pay damages to NewSouth in the amount of $100,000.

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