Labor & Employment Law Daily Wrap Up, CONTRACT CLAIMS—E.D. La.: Employer’s claim survives dismissal despite withdrawal of tortious interference allegations, (Oct 8, 2025)

By Patricia K. Ruiz, J.D.

The court found the claim was not based on solely the same factual allegations as the intentional interference claim.

The federal district court for the Eastern District of Louisiana denied a motion to dismiss by competitors of an employer alleging that a former employee and her new employers violated Louisiana’s Unfair Trade Practices Act (LUTPA). The court found that the plaintiff raised factual allegations in its LUTPA claim distinguishable from the allegations raised in support of its withdrawn tortious interference with contract claim (Sedgwick Claims Management Services, Inc. v. Dodd, No. 2:24-cv-02942-NJB-KWR (E.D. La. Oct. 1, 2025)).

Sedgwick Claims Management Services, Inc., a company providing insurance claims management services and loss-adjusting services in a variety of industries, filed suit against its former employee, Tracey Dodd, Halliwell Engineering Associations, Inc., and McLarens, LLC (defendants, collectively). Dodd had signed a Colleague Agreement with Sedgwick as a condition of her employment. Under the agreement, Dodd agreed to maintain the confidentiality of Sedgwick’s information. The confidentiality agreement also applied to “any parent, subsidiary, or affiliate company, directly or indirectly, controlling or controlled by, or under common control with [Sedgwick].” Subsequently, Dodd resigned, indicating she accepted an offer from Halliwell, a competitor of EFI Global, Sedgwick’s wholly owned subsidiary.

Allegations. Halliwell did not provide environmental claims support and consulting services until after Dodd was hired, and its New Orleans location, where Dodd is based, is the only location where Halliwell offers these services. Halliwell shared a LinkedIn post announcing Dodd’s hire and her role in leading “a new environmental consulting service offering.” Dodd allegedly participated in the solicitation of at least 10 Sedgwick employees to leave and join Halliwell or McLarens, a subsidiary of Halliwell. The employees were allegedly solicited to create an environmental claims support and consulting service line to compete with EFI Global’s. Sedgwick sent a letter to Dodd and a letter to McLarens placing them on notice of Dodd’s contractual obligations under the agreement; however, Dodd continued to solicit additional Sedgwick employees.

Lawsuit. Sedgwick filed suit, bringing claims against Dodd for breach of contract and claims against the other defendants for civil conspiracy to breach a contract, tortious interference with contract, and injunctive relief. The defendants filed motions to dismiss, arguing Louisiana law does not support a tortious interference with contract claim under these circumstances. Sedgwick filed an amended complaint adding claims for violation of Louisiana’s Unfair Trade Practices Act (LUTPA) and conspiracy to violate LUTPA and removing the claim for tortious interference with contract. The defendants again moved to dismiss.

Motion to dismiss. The defendants argue that Sedgwick’s claims under LUTPA should be dismissed because: (1) a LUTPA claim cannot arise from the same factual allegations as a failed tortious interference with contract claim; and (2) the amended complaint failed to identify the confidential information the defendants allegedly possess. Under LUTPA, it is unlawful to engage in “unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.” Louisiana courts determine what is a LUTPA violation on a case-by-case basis, with the Louisiana Supreme Court consistently holding that, in establish a LUTPA claim, a plaintiff must show that “the alleged conduct offends established public policy and is immoral, unethical, oppressive, unscrupulous, or substantially injurious. The range of prohibited practices under LUTPA is extremely narrow, with the statute only prohibiting fraud, misrepresentation, and similar conduct, and not mere negligence. Conduct that offends established public policy is unethical and not necessarily a violation under LUTPA.

The court found the allegations against Dodd set out in the amended complaint plausibly assert a claim under LUTPA. The amended complaint alleges there was a valid employment restricting the use of the employer’s confidential information and the solicitation of its employees. After Dodd’s employment ended, she used the employer’s confidential information to solicit its employees. The crucial elements that distinguish the breach of contract claim and the LUTPA claim against Dodd is the breach of a special relationship of trust and the alleged use of the employer’s confidential information in soliciting Sedgwick’s employees.

The defendants argued the LUTPA claim cannot arise from a failed tortious interference with contract claim. The court noted that the center of the controversy is how to apply LUTPA in conjunction with other causes of action. Some courts have held there is no LUTPA violation unless the plaintiff demonstrates he has another independent cause of action. Other decisions view a violation of state law in the business context as an almost per se violation. Others recognize that LUTPA itself is a separate cause of action existing independently of other causes of action. The court found the latter conclusion is most consistent with the statutory language of LUTPA.

Turning to the amended complaint, the court found that the plaintiff’s LUTPA claim was not based on solely the same factual allegations as the intentional interference claim and that the allegations, taken as true, plausibly establish that the defendants engaged in unfair and unethical competition under LUTPA, making dismissal inappropriate at this stage. The court further found that the plaintiff’s failure to identify the confidential information with particularity does not warrant dismissal. Because the plaintiff plausibly asserted a LUTPA claim, the claim for injunctive relief also survived dismissal.

The Case is No. 2:24-cv-02942-NJB-KWR.

Judge: Brown, N.

Attorneys: Hal D. Ungar (Smoak & Stewart PC) for Sedgwick Claims Management Services, Inc. Ellen Durel George (Liskow & Lewis, APLC) for Tracey Dodd.

Companies: Sedgwick Claims Management Services, Inc.

Cases: ContractClaims TortClaims Procedure LouisianaNews