Chemeon Surface Technology, Llc VS Metalast International, Inc, et alMOTION for Summary Judgment for Wendi SemasD. Neb.June 19, 20171 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Michael D. Hoy (NV Bar 2723) HOY CHRISSINGER KIMMEL VALLAS, PC 50 West Liberty Street, Suite 840 Reno, Nevada 89501 775.786.8000 Attorneys for Defendants United States District Court District of Nevada Pursuant to FRCP 56, Wendi Semas moves for summary judgment on all claims against her. This motion is based on the following Memorandum of Points and Authorities, including the Statement of Undisputed Facts, all evidence supporting that Statement of Undisputed Facts, and all other evidence and arguments presented to the Court in support of this motion. Memorandum of Points and Authorities I. Introduction The First Amended Complaint (ECF No. 108, “FAC”) covers 56 pages with 325 paragraphs, and contains 16 claims for relief. These claims mostly aver that “defendants” are responsible for the claims. Only a few of the claims speci^ically target Wendi Semas. CHEMEON SURFACE TECHNOLOGY, LLC, Plaintiff, v. METALAST INTERNATIONAL, INC.; METALAST, INC.; SIERRA DORADO, INC.; DAVID M. SEMAS; GREG D. SEMAS; and WENDI SEMAS-FAURIA, Defendants. Case No. 3:15-cv-00294-MMD-VPC Wendi Semas’s Motion for Summary Judgment And Related Claims Page 1 Case 3:15-cv-00294-MMD-VPC Document 309 Filed 06/19/17 Page 1 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 In this motion, Wendi Semas demonstrates that Plaintiff has no claim against her. She meets her burden of proof by showing either undisputed facts that negate an element of the claim or by alleging the absence of proof to establish an element of the claim. This motion demonstrates that Wendi Semas was an in-house bookkeeper/accountant for Metalast International, LLC (“MI-LLC” or “Company”). In that role, she had no power to approve or disapprove expenditure of company funds. Company management decided how to spend Company funds. Company management set employee compensation, bene^its, and approved expense reimbursements for employees. As the accountant, Wendi Semas had no control over those decisions. The accounting department checked to make certain that expense reports were supported with receipts. Likewise, Wendi Semas also had no power to characterize expenditures for federal income tax reporting. That work was performed by tax accountants in a certi^ied public accounting ^irm. This motion will demonstrate that Chemeon cannot prove any claim in the FAC against Wendi Semas. II. Statement of Undisputed Facts (LR 56-1) 1. In December 1994, Wendi Semas (“Wendi”) began working for Metalast International, LLC (“LLC” or “Company”). From the beginning of her employment through approximately April 1996, her title was “Of^ice Manager.” From April 1996 through May 2000, her title was “Accounting Manager and Investor Relations.” Declaration of Wendi Semas, ¶ 2. 2. Wendi Semas’s employment with Company ended in June 2013. Id., ¶ 3. 3. All Company tax returns were prepared by an outside Certi^ied Public Accounting (“CPA”) ^irm. Id., ¶ 4. Page 2 Case 3:15-cv-00294-MMD-VPC Document 309 Filed 06/19/17 Page 2 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4. Early in the life of the Company, the CPA ^irm also prepared all ^inancial statements. Later in the life of the Company, Wendi Semas “compiled” ^inancial statements, which are management’s presentation of the ^inancial statements. 5. The Company’s Operating Agreement provides: “All ^inancial records shall be maintained and reported consistent with generally acceptable accounting practices.” The term “generally acceptable accounting practices” is not the same thing as “generally accepted accounting principles” or “GAAP,” and is not a term of art in the accounting profession. Id., ¶ 5. 6. Company management was careful to separate accounting functions from management functions. Wendi Semas never had authority to authorize any expenditures of LLC funds. Every Company expenditure to pay or reimburse employees for any expenses were approved by management outside of the accounting department. Id. ¶ 6, 7. 7. Wendi Semas did not create employee expense reports, or make the decision whether to reimburse employees based on those reports. Id. ¶ 7. 8. Wendi Semas never had custody of Company expense reports. Id. ¶ 10. When Wendi Semas’s employment with the Company ended, all expense reports were in the possession, custody and control of the Company, James Proctor (then the receiver for the Company), Dean Meiling, and Madylon Meiling. Id., ¶ 8. 9. Wendi Semas had no power to determine her own compensation, or the compensation for any other employees. She had no role in determining, negotiating, or documenting any employment contracts. Id., ¶ 9. 10. When Wendi Semas’s employment with the Company ended, she did not take any Company property, the Company’s Quickbooks accounting database, or any Company computer, drives, tapes, computer media, or paper ^iles. Id., ¶ 11. Page 3 Case 3:15-cv-00294-MMD-VPC Document 309 Filed 06/19/17 Page 3 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11. Wendi Semas made or oversaw bookkeeping entries for attorney fees and USPTO ^iling fees to maintain intellectual property. But it was not her decision to present these expenditures as Company expenses or assets. Id., ¶ 12. 12. Wendi Semas made certain cost-of-goods-sold computations for bookkeeping purposes. This function required obtaining information necessary to allocate the cost of raw materials to particular products. Wendi Semas never shared any chemical formulae with anybody outside of the Company. Id., ¶ 13. 13. Since her employment with the Company ended, Wendi Semas has not worked for any chemical company or other competitor of Plaintiff Chemeon Surface Technology, LLC (“Chemeon”). Id., ¶ 14. 14. Since her employment with the Company ended, Wendi Semas has not had any contact with any of Company’s customers, distributors, suppliers, or vendors. Id., ¶ 15. 15. Before and after her employment with the Company ended, Wendi Semas was a member of the LLC. In that capacity, she continued to receive Company publications addressed to all Company members. Aside from those communications, after her employment with the Company ended, she had no access to: (a) Company technical information, such as chemical formulae and processes, (b) product pricing, (c) Company’s suppliers and related cost data, (d) Company’s distributors and related commission data, or (e) Company’s customers and related pricing, sales volume, or other information. Id., ¶ 19. 16. Wendi Semas has never disclosed any Company trade secrets to any person outside of the Company. Id., ¶ 17. 17. Since her employment with the Company ended, Wendi Semas has not discussed Company business with any person, aside from her two depositions in this case. Id., ¶ 16. Page 4 Case 3:15-cv-00294-MMD-VPC Document 309 Filed 06/19/17 Page 4 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 18. Wendi Semas has had no role in the conduct of business by Metalast, Inc. or Sierra Dorado, Inc. Id., ¶ 18-20. 19. Wendi Semas does not claim any ownership of or collateral interest in any Metalast trademarks or logo marks identi^ied in the FAC. Id., ¶ 17. 20. Wendi Semas has never sold any products in competition with Chemeon. She has never worked for a company that sells products in competition with Chemeon. She is not an owner, director, manager, or of^icer of any company that sells products or services that compete with Chemeon’s products or services. Id., ¶ 14. Wendi Semas has no intention to compete with Chemeon or to join in the ownership or management of any business that would compete with Chemeon using Chemeon’s claimed common law trademarks. Id., ¶ 14 21. Plaintiff has not alleged that Wendi Semas infringed on any copyright. Wendi Semas has not knowingly copied any Chemeon work. Id., ¶ 22. 22. Plaintiff has not identi^ied any contracts or commercial relationships that were prevented because of Wendi Semas’s alleged interference. Since her dismissal from LLC, Wendi Semas has had no contact with Chemeon’s customers, distributors, or vendors. Id., ¶ 23. 23. Wendi Semas has never said to anybody that she or other defendants own any of Chemeon’s trademarks or other intellectual property. Id., ¶ 17. III. Arguments A. Plaintiff has the burden of production to prove every element of each claim asserted against Wendi Semas. If Plaintiff cannot meet that burden of production, the Court must grant summary judgment. Summary judgment is not a “disfavored procedural shortcut,” but is instead an “integral part” of the Federal Rules of Civil Procedure, which are designed to obtain a just, expeditious, Page 5 Case 3:15-cv-00294-MMD-VPC Document 309 Filed 06/19/17 Page 5 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 and inexpensive resolution of every civil matter. Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 2555, 91 L.Ed.2d 265 (1986). A principal purpose of summary judgment is “to isolate and dispose of factually unsupported claims.” Id. at 323-24, 106 S.Ct. at 2553. This Court recently recognized the respective burdens of proof in a summary judgment proceeding: In determining summary judgment, a court uses a burden-shifting scheme. The moving party must ^irst satisfy its initial burden. “When the party moving for summary judgment would bear the burden of proof at trial, it must come forward with evidence which would entitle it to a directed verdict if the evidence went uncontroverted at trial.” [] In contrast, when the nonmoving party bears the burden of proving the claim or defense, the moving party can meet its burden in two ways: (1) by presenting evidence to negate an essential element of the nonmoving party’s case; or (2) by demonstrating that the nonmoving party failed to make a showing suf^icient to establish an element essential to that party’s case on which that party will bear the burden of proof at trial. [] Luna v. State Farm Mutual Automobile Insurance Co., 2016 WL 1595352 (D. Nev. April 20, 2016). As set forth below, movant Wendi Semas has negated elements of the claims against her, or points out that Plaintiff lacks evidence to prove elements of the claims asserted against her. B. Because Wendi Semas has either negated elements of claims against her, or demonstrated a lack of evidence to support those claims, she is entitled to summary judgment. 1. Misappropriation of trade secrets. The First Claim for Relief alleges misappropriation of trade secrets. In order to prove the claim, Chemeon must establish: (1) a valuable trade secret (as de^ined in NRS 600A.030), (2) misappropriation of the trade secret through the use, disclosure or nondisclosure of use of the trade secret, and (3) that the Page 6 Case 3:15-cv-00294-MMD-VPC Document 309 Filed 06/19/17 Page 6 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 misappropriation was made in breach of an express or implied contract imposing a duty of nondisclosure. Frantz v. Johnson, 116 Nev. 455, 466, 999 P.2d 351, 358 (2000). The FAC does not speci^ically allege that Wendi Semas misappropriated trade secrets, but generally avers, vaguely, that “Defendants” have done so. There is no evidence that Wendi Semas misappropriated any trade secrets. As established in the Undisputed Facts, Wendi Semas never misappropriated any trade secrets. 2. Declaratory Judgment of No Trademark Infringement; Cancellation of the Logo Trademarks. Wendi Semas has never claimed any interest in the ownership or validity of any of the Metalast trademarks. There never was a reason to include her in the Second or Third Claims for Relief. On that basis Wendi Semas is entitled to summary judgment on those claims. 3. Common Law Trademark Infringement. The Fourth Claim alleges that “Defendants” have, without authority, used Chemeon’s common law trademarks. There is no evidence that Wendi Semas has ever competed with Chemeon or otherwise used its alleged markets. 4. Copyright Infringement. The Fifth Claim alleges that “Defendants” have copied Chemeon’s works of authorship. There is no evidence that Wendi Semas has ever infringed on Chemeon’s copyrights. Wendi Semas is entitled to a defense summary judgment on the Fifth Claim in the FAC. 5. Intentional Interference with Prospective Economic Advantage. In order to prevail on the Sixth Claim for Relief, Chemeon must prove: (1) a prospective contractual relationship between Chemeon and a third party; (2) Wendi Semas knew about the relationship; (3) Wendi Semas intended to harm Chemeon by preventing the relationship; (4) Wendi Semas’s interference was not privileged; and (5) Chemeon suffered actual harm as a Page 7 Case 3:15-cv-00294-MMD-VPC Document 309 Filed 06/19/17 Page 7 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 result. Wichinsky v. Mosa, 109 Nev. 84, 88, 849 P.2d 727, 729-30 (1993). The FAC does not allege any particular prospective relationship, and does not specify what Wendi Semas supposedly did to prevent the relationship. There is no evidence that Wendi Semas has done anything to interfere with Chemeon’s prospective economic advantage. It is undisputed that, since termination of her employment, she has not communicated with any Chemeon customers, vendors, suppliers or other parties to contracts or prospective contracts with Chemeon. Wendi Semas is entitled to a defense summary judgment on the Sixth Claim. 6. Unfair Competition. The Seventh Claim alleges that “Defendants” have maintained that they own Chemeon’s intellectual property, and misrepresented the nature, characteristics and qualities of “Defendants’ goods services, and commercial activities,” etc. in violation of 15 USC § 1125(a). No evidence exists to prove that Wendi Semas engaged in any of this alleged conduct. She is entitled to a defense summary judgment on the Seventh Claim. 7. Statutory Deceptive Trade Practices/Consumer Fraud. The Eighth Claim alleges deceptive trade practices and consumer fraud by “Defendants.” Again, no evidence supports this claim against Wendi Semas. 8. Unjust enrichment. In the Ninth Claim for Relief, the FAC alleges that “Defendants” have been enriched by continuing to use its intellectual property, including trade secrets, trademarks, logo marks, and copyrights. As a matter of law, a statutory infringement action, not unjust enrichment, supplants the common law unjust enrichment claim. But the salient point here is that there is no evidence Wendi Semas engaged in any of the alleged infringement. Page 8 Case 3:15-cv-00294-MMD-VPC Document 309 Filed 06/19/17 Page 8 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9. Breach of ^iduciary duties. In the Tenth Claim for Relief, the FAC imagines that Wendi Semas breached her ^iduciary duty to Metalast International, LLC (“MI-LLC”) by: … spending [Company’s] funds on property, such as trademark registrations, that were owned or to be owned by MII or D. Semas; and improperly paying excessive perquisite bene^its, large travel and entertainment expenses, and reimbursements to themselves and others with [Company] funds. FAC, ¶ 277. As set forth above, Wendi Semas never had discretion to characterize the trademark expenditures as licensing expenses versus capitalizing them as an asset. She never had discretion to authorize reimbursement of employee expenses or to otherwise authorize expenditure of company funds. She was the accountant who recorded the result of management decisions. 10. Breach of the Operating Agreement; Bad Faith. The Eleventh Claim for Relief claims the breach of some unspeci^ied provision in the MI-LLC Operating Agreement. The Twelfth Claim alleges an unspeci^ied breach of the implied covenant of good faith and fair dealing. A party can be sued for breach of the implied covenant of good faith and fair dealing when she “deliberately countervenes the intention and spirit of the contract.” Hilton Hotels v. Butch Lewis Productions, 107 Nev. 226, 232, 808 P.2d 919, 922-23 (1991). The FAC is not speci^ic about what Wendi Semas supposedly did or did not do to commit bad faith. The Thirteenth Claim for Relief alleges a “tortious” breach of the covenant of good faith and fair dealing. As a matter of law, the 11th, 12th, and 14th claims fail. The only parties to a limited liability company operating agreement are the members: “Operating Agreement” means any valid agreement of the members as to the affairs of a limited-liability company and the conduct of its business, whether in any tangible or electronic format. Page 9 Case 3:15-cv-00294-MMD-VPC Document 309 Filed 06/19/17 Page 9 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NRS 86.101. Chemeon claims that it has standing to enforce the Operating Agreement as a successor to MI-LLC. But MI-LLC was never a party to the Operating Agreement. See Declaration of Wendi Semas, Exhibit 1. Further, Wendi Semas signed the Operating Agreement in the capacity as a member. She never signed the Operating Agreement as an employee or in any other capacity. The FAC seems to allege that Wendi Semas breached the Operating Agreement in some capacity other than as a member. As a matter of law, Chemeon could never prevail on that theory. 11. Conversion. Conversion is legally de^ined as “a distinct act of dominion wrongfully exerted over another’s personal property in denial of, or inconsistent with his title or right therein or in derogation, exclusion or de^iance of such title or rights.” Evans v. Dean Witter Reynolds, Inc., 116 Nev. 598, 606, 5 P.3d 1043, 1048 (2000). Even though the Fourteenth Claim for Relief is labeled “conversion,” it contains no allegation of dominion over or denial of another’s title to personal property. The claim is simply limited to allegations that Wendi Semas somehow caused MI-LLC to expend funds in a fashion that Chemeon now disapproves. As a matter of law, the allegations are insuf^icient. As a matter of evidence, Chemeon cannot prove a claim for conversion based on Wendi Semas’s execution of her accounting duties. 12. Civil conspiracy. “Actionable civil conspiracy arises where two or more persons undertake some concerted action with the intent to ‘accomplish an unlawful objective for the purposes of harming another,’ and damage results.” Guilfoyle v. Olde Monmouth Stock Transfer Company, Inc., 130 Nev.Adv.Op. 78, 335 P.3d 190, 198 (October 2, 2014). Here, Plaintiff has developed no evidence of any “unlawful objective.” There is no evidence of any agreement between the alleged conspirators (David and Wendi Semas) to harm MI-LLC: Page 10 Case 3:15-cv-00294-MMD-VPC Document 309 Filed 06/19/17 Page 10 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Although direct evidence of an agreement to harm the plaintiff is not required, [Plaintiff] has presented no circumstantial evidence from which to infer an agreement between [the two defendants] to harm [the plaintiff]. Id. Further, the assertion that David and Wendi Semas intended to harm MI-LLC is truly silly. Both were members of MI-LLC. David Semas held more membership interest than any other member, and had lent the company millions of dollars. Wendi Semas repeatedly lent the company her personal funds in order to pay premiums to maintain health insurance for employees. Any claim that she intended to hurt MI-LLC is absurd. Wendi Semas is entitled to defense summary judgment on the Fifteenth Claim for Relief. IV. Conclusions and Request for Relief Chemeon and its principals have been at war with David Semas since April of 2013. They commenced this action knowing that they had already released all claims against David Semas in a March 2015 settlement, and targeted David’s children, Wendi and Greg Semas, to put pressure David. But there never was a plausible case against Wendi Semas. She is entitled to a defense summary judgment. Dated June 19, 2017. HOY CHRISSINGER KIMMEL VALLAS, PC ________________________________________________ Michael D. Hoy Page 11 Case 3:15-cv-00294-MMD-VPC Document 309 Filed 06/19/17 Page 11 of 12 Case 3:15-cv-00294-MMD-VPC Document 309 Filed 06/19/17 Page 12 of 12