4830-5596-3372.6

UNITED STATES DISTRICT COURT 

WESTERN DISTRICT OF TEXAS 

SAN ANTONIO DIVISION 

JONATHAN VILLAREAL, 

individually and derivatively on behalf of

ZROBLACK LLC, 

Plaintiff, 

v.

JOHN SAENZ; MIGUEL VILLAREAL, 

JR.; and GUNN, LEE & CAVE, P.C., 

Defendants. 

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No. 5:20-CV-00571-OG

DEFENDANT JOHN SAENZ’S WRITTEN OBJECTIONS TO 

REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

TO THE HONORABLE CHIEF UNITED STATES DISTRICT JUDGE ORLANDO GARCIA: 

Pursuant to 28 U.S.C. § 636(b)(1) and Federal Rule of Civil Procedure 72(b), Defendant 

John Saenz (“Saenz”) files his Written Objections to the Report and Recommendation of United 

States Magistrate Judge, Dkt. No. 59, and in support thereof, shows as follows. 

BACKGROUND 

The present dispute arises out of a business, ZroBlack, LLC (“ZroBlack”), that was jointly 

founded by Saenz and Plaintiff Jonathan Villareal (“Villareal”). Compl., Dkt. No. 35, at ¶¶20–23. 

Saenz and Villareal were the only two members of ZroBlack, each owning fifty percent. Id. at ¶22. 

After successfully securing a large contract, Saenz and Villareal began to disagree regarding 

ZroBlack. Id. at ¶¶19, 20, 29–31, 43. To resolve their disagreements, Saenz, Villareal, and 

ZroBlack entered into a written release (“Release”). Id. at ¶72–75, 82; Release, Dkt. No. 35-16. 

Pursuant to the Release, Saenz, Villareal, and ZroBlack fully released each other “from all 

claims and demands, known or unknown.” Release, Dkt. No. 35-16, at § 7. Saenz and Villareal also 

signed a Unanimous Written Consent, pursuant to which Saenz “assign[ed] his entire interest in 

ZroBlack LLC to Jonathan Villarreal pursuant to Article VII of the ‘Limited Liability Company 

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Operating Agreement for ZroBlack LLC’ dated January 14, 2019 and applicable laws.” 

Unanimous Written Consent, Dkt. No. 35-17; see also Decl. of J. Villareal, Dkt. No. 35-2, at ¶36. 

Several months after signing the Release and Unanimous Written Consent, Plaintiffs filed 

this lawsuit against Saenz, alleging nine causes of action: (1) misappropriation of trade secrets, (2) 

violation of the Computer Fraud and Abuse Act (“CFAA”), (3) violation of the Anti-Cybersquatting 

Consumer Protection Act (“ACPA”), (4) breach of the Release, (5) breach of fiduciary duties, (6) 

tortious interference with prospective relations, (7) conversion, (8) theft under the Texas Theft 

Liability Act (“TTLA”), and (9) fraud. Compl., Dkt. No. 35, at ¶¶137–99, 232–62. 

On February 4, 2021, Saenz filed his Motion to Dismiss all causes of action against him. Mot. 

to Dismiss, Dkt. No. 41. Saenz also moved for recovery of his attorneys’ fees and costs pursuant 

to the provisions of the TTLA and the Release. Id. at 30; see also TEX. CIV. PRAC. & REM. CODE

§ 134.005(b) (“Each person who prevails in a suit under [the TTLA] shall be awarded court costs 

and reasonable and necessary attorney’s fees.”); Release, Dkt. No. 35-16, at § 11 (“In any action 

or proceeding to enforce rights under this Agreement, the prevailing party will be entitled to 

recover reasonable costs and attorneys’ fees.”). 

On April 13, 2021, the parties argued Saenz’s Motion to Dismiss before United States 

Magistrate Judge Richard B. Farrer. Dkt. No. 55. On May 18, 2021, Judge Farrer issued a Report 

and Recommendation of United States Magistrate Judge (the “Report”). Dkt. No. 59. The Report 

recommends dismissal of the vast majority of Plaintiffs’ claims against Saenz: 

Plaintiffs’ claims against Saenz for violations of the DTSA and TUTSA, breach of 

fiduciary—to the extent such claim is premised on conduct allegedly committed while 

Saenz served as ZroBlack’s CEO—conversion, fraud, breach of contract, tortious 

interference, violations of the Texas Theft Liability Act, CFAA, ACPA—to the extent 

Plaintiffs’ CFAA and ACPA are premised on Saenz’s refusal to return ZroBlack’s 

laptop—and request for declaratory relief should be DISMISSED. 

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Id. at 2 (emphasis in original). However, the Report also recommends that “Plaintiffs’ claims for 

breach of fiduciary duty and for violations of the CFAA and ACPA—in so far as these claims are 

premised on Saenz’s alleged conduct after the parties executed the Release—should remain at issue, 

at least at this juncture.” Id.

For the reasons discussed further below, Saenz respectfully objects to the portions of the 

Report that relate to Plaintiffs’ claims for breach of fiduciary duty and violations of the ACPA. 

Saenz also objects to the Report to the extent that it is silent on Saenz’s request for attorneys’ fees. 

Saenz’s specific objections are as follows: 

1. In recommending that Plaintiffs’ claim for breach of fiduciary duty survive dismissal (in 

part) at this juncture, the Report relies on Texas Business Organization Code § 101.107 

to find that a member of a limited liability company may not withdraw. Thus, the 

Report concludes that Saenz did not relinquish his fiduciary duties to ZroBlack when 

he assigned his interests. However, the Report does not address Texas Business 

Organization Code § 101.205, which explicitly recognizes “a member’s right to 

withdraw from the company” pursuant to a written agreement. When Saenz assigned 

his interest in ZroBlack to Villareal by executing the Unanimous Written Consent, he 

effectively withdrew from ZroBlack pursuant to ZroBlack’s Operating Agreement. 

Therefore, Saenz no longer owed a fiduciary duty to ZroBlack, and Plaintiffs’ claim 

for breach of fiduciary duty should be dismissed. 

2. In recommending that Plaintiffs’ ACPA claim survive dismissal (in part) at this juncture, 

the Report does not consider that Plaintiffs did not allege any facts demonstrating that 

Saenz used the ZroBlack domain with an intent to profit from it. Therefore, Plaintiffs 

failed to allege an essential element of their ACPA claim and dismissal is warranted. 

Additionally, even if Plaintiffs had pleaded facts demonstrating that Saenz used the 

ZroBlack domain with an intent to profit from it, Plaintiffs’ ACPA claim still fails 

because Plaintiffs’ own allegations contradict this claim. 

3. The Report recommends that Saenz prevail on Plaintiffs’ TTLA claim and breach of 

contract claim. Additionally, the Report recommends dismissal of the following claims 

because they “are barred by the Release”: DTSA and TUTSA, breach of fiduciary 

duty—to the extent such claim is predicated on Saenz’s conduct as ZroBlack’s CEO—

conversion, fraud, breach of the Company Agreement, and violations of the Texas 

Theft Liability Act, CFAA, ACPA—to the extent Plaintiffs’ CFAA and ACPA claims 

are premised on Saenz’s refusal to return the laptop—and for declaratory relief. 

However, the Report does not address Saenz’s request for attorneys’ fees pursuant to the 

TTLA and the clear language of the Release. Saenz respectfully requests that the Court 

modify the Report to award Saenz his attorneys’ fees and costs, in an amount to be 

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determined as the Court may direct, pursuant to TEX. CIV. PRAC. & REM. CODE § 

134.005(b) and Section 11 of the Release. 

LEGAL STANDARD 

Parties objecting to a report and recommendation related to a dispositive motion may file 

specific written objections within 14 days of such recommendation. See FED. R. CIV. P. 72(b)(2). 

If timely objections are filed, the District Judge must conduct a de novo review of the matters to 

which the objections were filed, and, following such review, the district court may “accept, reject, 

or modify the recommended disposition; receive further evidence; or return the matter to the 

magistrate judge with instructions.” FED. R. CIV. P. 72(b)(3); see also 28 U.S.C. § 636(b)(1). 

OBJECTIONS AND ARGUMENTS 

Saenz respectfully submits that the Court should: (1) reject the Report’s findings, 

conclusions, and recommendations that deny Saenz’s Motion to Dismiss as to Plaintiffs’ claims 

for breach of fiduciary duty and violations of the ACPA, and (2) modify the Report to award Saenz 

his attorneys’ fees pursuant to the TTLA and the Release. 

I. Plaintiffs’ claim for breach of fiduciary duty should be dismissed because Saenz owed 

no fiduciary duties to ZroBlack once he effectively withdrew pursuant to the 

ZroBlack Operating Agreement. 

Though the Report recommends that Saenz’s Motion to Dismiss be granted as to Plaintiffs’ 

claim for “breach of fiduciary—to the extent such claim is premised on conduct allegedly 

committed while Saenz served as ZroBlack’s CEO,” the Report also recommends that Saenz’s 

Motion to Dismiss be denied as to this claim “in so far as the[] claim[] [is] premised on Saenz’s 

alleged conduct after the parties executed the Release.” Dkt. No. 59 at 2. The Report’s reasoning 

relies on Texas Business Organization Code § 101.107, which states that a “member of a limited 

liability company may not withdraw or be expelled from the company.” Dkt. No. 59 at 14–15. 

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The Report, however, does not address § 101.205, which explicitly recognizes a “member’s 

right to withdraw from the company” pursuant to a written agreement. TEX. BUS. ORGS. CODE § 

101.205. Thus, when both provisions are read together, the Texas Business Organizations Code 

expressly permits a member of a limited liability company to withdraw when permitted to do so 

by contract. Kennebrew v. Harris, 425 S.W.3d 588, 598 n.2 (Tex. App.—Houston [14th Dist.] 

2014, pet. denied). 

When Saenz assigned his interest in ZroBlack to Villareal by executing the Unanimous 

Written Consent, he effectively withdrew from ZroBlack pursuant to the written Operating 

Agreement. See Dkt. No. 35-17 (“RESOLVED, that John Saenz hereby assigns his entire interest 

in ZroBlack LLC to Jonathan Villarreal pursuant to Article VII of the ‘Limited Liability Company 

Operating Agreement for ZroBlack LLC’ dated January 14, 2019 and applicable laws.”); see also

Operating Agreement, Dkt. No. 35-4, at § 7.1–7.3 (permitting a member of ZroBlack “to sell, 

assign, or otherwise dispose of all or part of his or her interest in the Company” and referring to 

such member as an “exiting member”); Compl., Dkt. No. 35, at ¶¶177, 193, 195 (alleging that 

Saenz was “removed from” ZroBlack, that Saenz “may not hold himself out as being affiliated 

with ZroBlack,” and that Saenz “departed [ZroBlack]”); Decl. of J. Villareal, Dkt. No. 35-2, at ¶38 

(noting “the deal for Saenz[] to exit ZroBlack was struck”). 

Therefore, after signing the Unanimous Written Consent, Saenz no longer owed a fiduciary 

duty to ZroBlack. See Kilpatrick v. Kilpatrick, No. 02-12-00206-CV, 2013 Tex. App. LEXIS 9189, 

*11, 16 (Tex. App.—Fort Worth July 25, 2013, pet. denied) (confirming that partners owe no 

fiduciary duties to one another after their relationship ends, aside from duties related to winding 

up the partnership). 

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For these reasons, the Court should reject the Report’s findings, conclusions, and 

recommendations that deny Saenz’s Motion to Dismiss as to Plaintiffs’ claim for breach of 

fiduciary duty. 

II. Plaintiffs’ claim for ACPA violations should be dismissed because Plaintiffs failed to 

allege that Saenz trafficked in or used the ZroBlack domain name. 

The Report recommends denial of Saenz’s Motion to Dismiss Plaintiffs’ ACPA claim to 

the extent the claim is based “on Saenz’s alleged conduct after the parties executed the Release.” 

Dkt. No. 59 at 2. Under the ACPA, the plaintiff must show that the defendant registered, trafficked 

in, or used the domain name at issue. See id. at 17 (citing 15 U.S.C. § 1125(d)(1)(A)). 

As to registering, the Report correctly notes that it is “undisputed that Saenz didn’t possess 

the requisite bad faith when he registered the domain name.” Id. at 18. The Report further explains 

that re-registering a domain name is not actionable. Id. (citing GoPets Ltd. v. Hise, 657 F.3d 1024, 

1031 (9th Cir. 2011)). 

As to trafficking, the Report again correctly notes that “there’s no allegation here that Saenz 

‘trafficked’ the domain name as that term is defined by the ACPA.” Id. (citing 15 U.S.C. § 

1125(d)(1)(E)). 

As to use, the Report first notes that “Plaintiffs’ allegation that Saenz has ‘taken the website 

down,’ Amend. Compl. 93, suggests that Saenz may not be ‘using’ the mark.” Id.

1

 However, the 

Report then finds that “there isn’t a sufficient basis to dismiss Plaintiffs’ ACPA claim at this 

juncture” because “the ACPA doesn’t define the term ‘use’ and Saenz hasn’t briefed the issue.” 

1

 Indeed, Saenz made the same argument in his Motion to Dismiss. Dkt. No. 41 at 19 (“In fact, 

Plaintiff’s allegations that Saenz has ‘taken the website down,’ ‘deleted the email server,’ and 

allegedly destroyed documents completely undercuts Plaintiff’s ACPA claim that Saenz used 

ZroBlack’s domain with an intent to profit from it.”). 

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Id. Respectfully, it is Plaintiffs’ burden to plead facts sufficient to demonstrate that Saenz 

registered, trafficked in, or used the ZroBlack domain. See 15 U.S.C. § 1125(d)(1)(A)(ii); FED. R.

CIV. P. 12(b)(6); FED. R. CIV. P. 8. As demonstrated in the Motion to Dismiss, Dkt. No. 41 at 18-

19, Plaintiffs failed to plead any facts demonstrating that Saenz used ZroBlack’s domain with an 

intent to profit from it, Compl. at ¶178, which warrants dismissal of Plaintiffs’ ACPA claim. 

Plaintiffs did not address this argument in the Response. Dkt. No. 46 at 22–23. 

Additionally, even if Plaintiffs had pleaded facts demonstrating that Saenz used ZroBlack’s 

domain name with an intent to profit from it, Plaintiffs’ ACPA claim still fails because Plaintiffs’ 

own allegations contradict this claim. As demonstrated in the Motion to Dismiss, Dkt. No. 41 at 

19, Plaintiffs’ allegations that Saenz has “taken the website down,” “deleted the email server,” and 

allegedly destroyed documents contradict Plaintiffs’ ACPA claim that Saenz used ZroBlack’s 

domain with an intent to profit from it. The Report also notes that Plaintiffs’ own allegations 

suggest that Saenz may not be “using” the ZroBlack domain. Dkt. No. 59 at 18. 

Where, as here, a plaintiff’s own allegations contradict the plaintiff’s claim, the claim fails 

and should be dismissed. See Marsh v. JPMorgan Chase Bank, Nat’l Ass’n, 888 F. Supp. 2d 805, 

815 (W.D. Tex. 2012) (“Because plaintiffs’ own allegations contradict their breach of contract 

claim, the Court finds the breach of contract claim should be dismissed with prejudice.”). 

Because Plaintiffs failed to plead any facts sufficient to demonstrate that Saenz used the 

ZroBlack domain, Plaintiffs’ ACPA claim should be dismissed. Additionally or alternatively, 

Plaintiffs’ ACPA claim should be dismissed because Plaintiffs’ own allegations contradict the 

claim. 

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III. The Court should modify the Report to award Saenz his attorneys’ fees and costs, in 

an amount to be determined as the Court may direct, pursuant to TEX. CIV. PRAC. &

REM. CODE § 134.005(b) and Section 11 of the Release.2

In his Motion to Dismiss, Saenz sought recovery of his attorneys’ fees and costs pursuant 

to the TTLA. Dkt. No. 41, at 30. The TTLA provides that “[e]ach person who prevails in a suit 

under [the TTLA] shall be awarded court costs and reasonable and necessary attorney’s fees.” 

TEX. CIV. PRAC. & REM. CODE § 134.005(b). The Report recommends dismissal of Plaintiffs’ 

claim under the TTLA. Dkt. No. 59 at 11. 

In his Motion to Dismiss, Saenz also sought recovery of his attorneys’ fees and costs 

pursuant to Section 11 of the Release. Dkt. No. 41, at 30; Release, Dkt. No. 35-16, at § 11 (“In any 

action or proceeding to enforce rights under this Agreement, the prevailing party will be entitled 

to recover reasonable costs and attorneys’ fees.”). The Report recommends dismissal of Plaintiffs’ 

claim that Saenz breached the Release. Id. at 12–13. Additionally, the Report recommends dismissal 

of the following claims because they “are barred by the Release”: DTSA and TUTSA, breach of 

fiduciary duty—to the extent such claim is predicated on Saenz’s conduct as ZroBlack’s CEO—

conversion, fraud, breach of the Company Agreement, and violations of the Texas Theft Liability 

Act, CFAA, ACPA—to the extent Plaintiffs’ CFAA and ACPA claims are premised on Saenz’s 

refusal to return the laptop—and for declaratory relief. Id. at 11. 

Even though the Report recommends that Saenz should prevail on Plaintiffs’ TTLA claim, 

breach of contract claim, and other claims that are barred by the Release, the Report is silent as to 

2

 Pursuant to Local Rule CV-7(j), Saenz reserves the right to file a motion seeking recovery of all 

attorneys’ fees, including those incurred through the time of trial and any post-trial briefing, not 

later than 14 days after entry of judgment. Subject to and consistent with the Court’s forthcoming 

ruling on Saenz’s Motion to Dismiss, however, Saenz also requests recovery of attorneys’ fees and 

costs incurred through the date of the Court’s ruling on the Motion to Dismiss and any related 

briefing. Dkt. No. 41 at 30. 

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Saenz’s request for attorneys’ fees and costs under the TTLA and the Release. Therefore, Saenz 

respectfully requests that the Court modify the Report to award Saenz his attorneys’ fees and costs, 

in an amount to be determined as the Court may direct, pursuant to TEX. CIV. PRAC. & REM. CODE

§ 134.005(b) and Section 11 of the Release. 

CONCLUSION 

WHEREFORE, for the reasons discussed above, Defendant John Saenz respectfully 

requests that the Court: (1) review the findings, conclusions, and recommendations in the Report 

and Recommendation of United States Magistrate Judge, Dkt. No. 59; (2) adopt the Report’s 

recommendations dismissing Plaintiffs’ claims against Saenz for violations of the DTSA and 

TUTSA, breach of fiduciary duties—to the extent such claim is premised on conduct allegedly 

committed while Saenz served as ZroBlack’s CEO—conversion, fraud, breach of contract, tortious 

interference, violations of the Texas Theft Liability Act, CFAA, ACPA—to the extent Plaintiffs’ 

CFAA and ACPA claims are premised on Saenz’s refusal to return ZroBlack’s laptop—and 

request for declaratory relief; (3) overrule the Report’s recommendations as to Plaintiffs’ claims 

for breach of fiduciary duty and for violations of the ACPA—in so far as these claims are premised 

on Saenz’s alleged conduct after the parties executed the Release—and dismiss those claims with 

prejudice; (4) modify the Report to award Saenz his attorneys’ fees and costs, in an amount to be 

determined as the Court may direct, pursuant to Section 11 of the Release and TEX. CIV. PRAC. &

REM. CODE § 134.005(b); and (5) grant to Saenz such other relief to which he is entitled at law or 

in equity. 

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Respectfully submitted this 1st day of June 2021. By: /s/ Ryan J. Sullivan

David A. Vanderhider 

State Bar No. 24070787 

DVanderhider@dykema.com 

Ryan J. Sullivan 

State Bar No. 24102548 

RSullivan@dykema.com 

DYKEMA GOSSETT PLLC 

112 East Pecan St., Suite 1800 

San Antonio, Texas 78205 

(210) 554-5500 – Telephone 

(210) 226-8395 – Facsimile 

Attorneys for John Saenz

CERTIFICATE OF SERVICE 

I hereby certify that a copy of the foregoing was electronically filed with the Court on the 

1st day of June 2021, and electronically served on the date reflected in the ECF system upon all 

parties registered to receive notice pursuant to the Court’s CM/ECF system. 

By: s/ Ryan J. Sullivan 

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