Court Opinion

ID: 4400845
Source: CourtListenerOpinion
Date Created: 2019-05-28 15:00:22.835937+00
Date Added: 2024-06-11T14:24:15.401643
License: Public Domain

18-1672-cv
eCommision Solutions, LLC v. CTS Holdings Inc.

                                 UNITED STATES COURT OF APPEALS
                                    FOR THE SECOND CIRCUIT

                                        SUMMARY ORDER
Rulings by summary order do not have precedential effect. Citation to a summary order filed
on or after January 1, 2007, is permitted and is governed by Federal Rule of Appellate
Procedure 32.1 and this Court’s Local Rule 32.1.1. When citing a summary order in a
document filed with this Court, a party must cite either the Federal Appendix or an
electronic database (with the notation “summary order”). A party citing a summary order
must serve a copy of it on any party not represented by counsel.

       At a stated term of the United States Court of Appeals for the Second Circuit, held at
the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York,
on the 28th day of May, two thousand nineteen.

PRESENT:           JOHN M. WALKER, JR.,
                   JOSÉ A. CABRANES,
                   PETER W. HALL,
                                Circuit Judges.

ECOMMISSION SOLUTIONS, LLC,

                            Plaintiff-Appellant,                          18-1672-cv

                            v.

CTS HOLDINGS INC. AND CTS SYSTEMS INC.,

                            Defendants-Appellees.*

    *
        The Clerk of Court is respectfully directed to amend the official caption as set forth above.

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FOR PLAINTIFF-APPELLANT:                                   MICHAEL D. ANDERSON (John H. Cayce,
                                                           Jr. and Caleb B. Bulls, on the brief), Kelly
                                                           Hart & Hallman LLP, Fort Worth, TX.

FOR DEFENDANTS-APPELLEES:                                  STUART J. GLICK (Marion Bachrach and
                                                           Vivian M. Arias, on the brief), Thompson &
                                                           Knight LLP, New York, NY.

     Appeal from a judgment of the United States District Court for the Southern District of
New York (Katherine B. Forrest, Judge).

        UPON DUE CONSIDERATION WHEREOF, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the May 2, 2018 judgment of the District Court be and
hereby is AFFIRMED.

         Plaintiff-Appellant eCommission Solutions (“ECS”) appeals from a judgment of the District
Court granting summary judgment on all remaining claims in a lawsuit against Defendants-Appellees
CTS Holdings and CTS Systems (jointly, “CTS”). On March 26, 2015, ECS filed a diversity action
against CTS, seeking damages in connection with CTS’s allegedly unlawful poaching of ECS’s
clients. Although the lawsuit below involved multiple claims and counterclaims (including, inter alia,
breach of contract, defamation, and promissory fraud), only ECS appealed the final judgment, and it
now challenges the grant of summary judgement only with respect to its unfair competition claim.
We assume the parties’ familiarity with the underlying facts, the procedural history of the case, and
the issues on appeal.

         We review de novo a district court’s grant of summary judgment, resolving all ambiguities and
drawing all factual inferences in favor of the non-moving party. ITC Ltd. v. Punchgini, Inc., 482 F.3d
135, 145 (2d Cir. 2007). While the party seeking summary judgment always bears the burden of
demonstrating “the absence of a genuine issue of material fact,” that party may do so by pointing
out that the non-moving party has failed “to make a showing sufficient to establish the existence of
an element essential to that party’s case.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). We are
free to “affirm an appealed decision on any ground which finds support in the record, regardless of
the ground upon which the trial court relied.” McCall v. Pataki, 232 F.3d 321, 323 (2d Cir. 2000)
(internal quotation marks omitted).

        ECS advances three central arguments on appeal. First, ECS argues that the District Court
erred in concluding that, under New York law, a claim for unfair competition requires “wrongful
taking—as opposed to wrongful use.” Br. Appellant 14; see also eCommission Sols., LLC v. CTS Holdings,
Inc., No. 15-CV-2671 (KBF), 2018 WL 2078816, at *6 (S.D.N.Y. May 1, 2018) (“[T]here is no factual
basis to believe CTS did anything fraudulent, deceptive, or abusive to gain that information, which
was readily shared while CTS and ECS worked together.”). Second, ECS argues that the District

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Court overlooked evidence that CTS had in fact obtained confidential ECS information improperly.
Finally, ECS argues that the record supports its claim that CTS’s misappropriation caused ECS’s loss
of business so as to create an issue of “material fact” for trial.

         ECS’s first two arguments may well have merit. We have previously explained that, under
New York law, unfair competition includes not only the misappropriation of physical items, but also
of “a benefit or property right belonging to another.” Telecom Int’l Am., Ltd. v. AT & T Corp., 280
F.3d 175, 197 (2d Cir. 2001). Similarly, the New York Court of Appeals has explained that “courts
have not hesitated to protect customer lists and files as trade secrets” and that the misuse of such
lists may constitute unfair competition. Leo Silfen, Inc. v. Cream, 29 N.Y.2d 387, 392-93 (1972); see also
Milton Abeles, Inc. v. Farmers Pride, Inc., 603 F. Supp. 2d 500, 503 (E.D.N.Y. 2009) (denying summary
judgment on an unfair competition claim where plaintiff “originally supplied defendant with the list
in order to further their joint business interests” and then “converted this confidential list for an
entirely different purpose . . . cutting plaintiff out of the distribution arrangement.”)

         We need not decide these issues, however, as we think ECS’s third argument fails. Under
New York law, “damages” is an essential element of unfair competition claims. See Waste Distillation
Tech., Inc. v. Blasland & Bouck Eng’rs, P.C., 136 A.D.2d 633, 633 (2d Dep’t 1988) (“[T]he absence of
sufficient allegation of special damages mandates the dismissal of the plaintiff’s unfair competition
and prima facie tort causes of action.”) Moreover, such damages must be directly traceable to the acts
of unfair competition. As the New York Court of Appeals has explained, “damages cannot be
remote, contingent or speculative. . . . The standard is not one of mathematical certainty but only
reasonable certainty.” E.J. Brooks Co. v. Cambridge Sec. Seals, 31 N.Y.3d 441 (2018) (internal quotation
marks and citations omitted).

        Here, ECS has presented no admissible evidence to support its claim that CTS’s use of their
pricing and customer list caused their loss of business. In fact, the undisputed evidence all suggests
that other factors—particularly concerns about ECS’s new and untested system—drove customers
to contract with CTS and Dell instead. For example, ECS does not dispute that customer AMEX
expressed “huge concern with being the first [one] on an unproven system”; that customer Atlas
wrote to ECS “to express the frustration of my team while they attempt to work with [ECS] during
your transition . . . I no longer have the confidence you were ready for this change”; and that
customer BTI wrote to ECS that “[w]e are in a complete state of disarray and need a restart and
regroup as to what services we are contracted with.” App’x 1392-96.

        By contrast, ECS’s sole evidence in support of its claim that CTS’s improper use of the price
information caused the transfer of customers consists of a single declaration submitted by a former
AMEX Vice President Jonathan Hamblett. It is undisputed, however, that Hamblett left AMEX
nearly three months before AMEX decided to shift its business from ECS to CTS. App’x 1446; Br.
Appellee 37-38; Br. Appellant 18 (not disputing CTS’s timeline). Moreover, while Hamblett relates
first-hand knowledge regarding Dell’s offer to AMEX, he merely evinces secondary knowledge

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regarding the transition decision. App’x 1324-25 (“It is my understanding that the sole reason that
Amex GBT transitioned its business from ECS to Dell Marketing and CTS was due to the lower
pricing they offered.”)

         To be sure, disputes as to “the weight of the evidence . . . are for the fact-finder to resolve”
and should not be decided at summary judgment. Questions of admissibility, however, “are properly
resolved by the court,” and “[a]s a general rule, the admissibility of evidence on a motion for
summary judgment is subject to the same rules that govern the admissibility of evidence at trial.”
Raskin v. Wyatt Co., 125 F.3d 55, 66 (2d Cir. 1997) (internal quotation marks omitted). Because
Hamblett’s statement regarding the cause of AMEX’s transition from ECS to Dell and CTS appears
to be based on hearsay rather than first-hand knowledge, we need not consider it. As a result, the
only evidence in the record explaining why customers transferred from ECS to CTS is evidence of
ECS’s own failures in providing service. ECS has therefore failed to produce evidence regarding a
crucial element of their case, and summary judgment is appropriate. Celotex, 477 U.S. at 323.

                                           CONCLUSION

       We have reviewed the remaining arguments raised by ECS on appeal and find them to be
without merit. For the foregoing reasons, we AFFIRM the May 2, 2018 judgment of the District
Court.

                                                        FOR THE COURT:
                                                        Catherine O’Hagan Wolfe, Clerk of Court

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