     Case: 15-11019   Document: 00513967733      Page: 1   Date Filed: 04/25/2017




        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT
                                                                    United States Court of Appeals
                                                                             Fifth Circuit
                                  No. 15-11019                             FILED
                                                                       April 25, 2017
                                                                      Lyle W. Cayce
JACKED UP, L.L.C.,                                                         Clerk

             Plaintiff–Appellant,

v.

SARA LEE CORPORATION; THE J.M. SMUCKER COMPANY,
          Defendants–Appellees.


JACKED UP, L.L.C.,

           Plaintiff–Appellant,

v.

THE J.M. SMUCKER COMPANY,

              Defendant–Appellee.



                Appeals from the United States District Court
                     for the Northern District of Texas


Before PRADO, HIGGINSON, and COSTA, Circuit Judges.
EDWARD C. PRADO, Circuit Judge:
      In September 2011, Jacked Up, L.L.C. (“Jacked Up”) and Sara Lee
Corporation (“Sara Lee”) signed a licensing agreement whereby Sara Lee
would produce and sell energy drinks developed by Jacked Up. Shortly
thereafter, Sara Lee sold its beverage division to the J.M. Smucker Company
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                              No. 15-11019
(“Smucker”). Smucker decided not to assume Sara Lee’s licensing agreement
with Jacked Up, and in November 2011, Sara Lee formally terminated the
agreement. Jacked Up brought suit against Sara Lee, alleging breach of
contract, breach of fiduciary duty, fraud, and fraudulent inducement. Jacked
Up joined claims against Smucker for, among others, tortious interference with
a contract and trade secret misappropriation. The district court granted
summary judgment against Jacked Up on all claims. We AFFIRM in part,
REVERSE in part, and REMAND for further proceedings.
            I. FACTUAL AND PROCEDURAL BACKGROUND
      In 2011, Jacked Up was a small start-up company that sold energy shots
to convenience stores. Sara Lee was a large corporation with multiple well-
established food and beverage brands. Jacked Up’s founder and sole owner, Joe
Schmitz, met some Sara Lee employees at a trade show in early 2011. Schmitz
and the Sara Lee employees discussed creating a Jacked Up line of dispensed
teas, coffees, and cappuccinos. 1 Sara Lee already had an “Infusia” line of
vitamin-infused teas under the Pickwick brand, but these teas were not
marketed as energy drinks and did not sell well. Sara Lee saw a Jacked Up
line of beverages as an opportunity to enter the energy drink market and
“pioneer a brand new dispensed energy beverage category.”
      After several months of negotiations and product development, Jacked
Up agreed to license its brand name and proprietary energy ingredients to Sara
Lee in exchange for royalties. Under the terms of the licensing agreement,
Jacked Up would sell its energy ingredients to Sara Lee and Sara Lee would
then manufacture and sell Jacked Up products. The parties agreed to share
marketing costs. In addition, the agreement called for market testing. The
initial term of the licensing agreement was five years, followed by a three-year


      1  “Dispensed” means that the beverage is distributed using stand-alone equipment
rather than through a fountain machine or in bottles or cans.
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                            No. 15-11019
renewal term. However, the licensing agreement featured a number of
termination clauses triggered by various events and dates.
      One termination provision, Section 14(b), gave either party “the right to
terminate this Agreement if it provides written notice to the other party no
later than 60 days prior to any anniversary of the Effective Date.” Sara Lee
proposed adding this termination provision while the parties were finalizing
the agreement. In an email, Sara Lee referred to this provision as an “annual
Termination clause” affording both parties “the ability to terminate if strategy
changes or market conditions shift, etc.” Jacked Up accepted the added
provision, describing it as “adding limited right for either party to terminate
at anniversary dates of agreement.”
      During negotiations, Sara Lee also requested a change-of-control
termination provision (Section 14(c)). In an email, Sara Lee director of
marketing Greg Immell explained that Sara Lee wanted this provision “in the
event North American Beverage 2 is purchased by a third party company.”
Schmitz testified that this statement led him to question Sara Lee “executives
Mr. Drake and Mr. Immell about any intent to sell the North American
Beverage [Division].” According to Schmitz, these executives represented that
Sara Lee “had no intent to sell the business and that it was not discussing any
sale to any third party. They also represented that [Schmitz] did not need to
be concerned as under no circumstance would [Sara Lee sell] the business and
not include the License Agreement as part of the deal.” Jacked Up and Sara
Lee finalized the licensing agreement around September 28, 2011, with an
effective date of October 1, 2011.
      In early October 2011, shortly after the licensing agreement went into
effect, Sara Lee displayed Jacked Up products at a convenience store trade


      2This division was one of several under the Sara Lee corporate umbrella at the time.
Jacked Up dealt primarily with employees of this division.
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show. According to Schmitz, a Sara Lee worker at the show told him about an
impending sale of the company. Schmitz testified that he again asked Sara Lee
executives—Immell and director of sales Jim Whitaker—whether Sara Lee
was planning a sale. The executives, according to Schmitz, again represented
that Sara Lee was not selling its business.
       On October 24, 2011, Sara Lee publicly announced the sale of its North
American Beverage Division to Smucker; this sale closed in early 2012.
According to Schmitz, Sara Lee asked him to participate in a telephone call
around October 21, 2011. 3 On that call, according to Schmitz, Immell
       stated that [Sara Lee] was selling its coffee business to Smuckers,
       that the License Agreement would not be part of the [sale] to
       Smuckers, that [Sara Lee] was terminating the License Agreement
       immediately at Smuckers’ request, that [Sara Lee] would no longer
       perform any obligations under the agreement, and that [Sara Lee]
       was discontinuing the Jacked Up Energy Iced Teas, Coffees, and
       Cappuccinos.
Schmitz testified that had he known of Sara Lee’s impending sale to Smucker,
he would not have signed the agreement and would not have launched Jacked
Up products at the convenience store trade show.
       Immell recounted the late October telephone call somewhat differently.
According to Immell, he did tell Schmitz that Smucker would not assume the
licensing agreement. 4 But he also indicated that “Sara Lee was interested in
pushing forward with the proposed dispensed energy iced tea product pursuant
to the License Agreement, including by pursuing the required market testing
to see how a Jacked Up branded dispensed energy iced tea would fare in the
marketplace.” Schmitz refused to move forward with market testing, however.




       3 In an earlier declaration, Schmitz stated that this conversation took place on October
26, 2011.
       4 An internal Smucker email dated October 28, 2011, confirms that Smucker did not

plan to assume Sara Lee’s contract with Jacked Up.
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Thus, according to Immell’s account, it was Jacked Up that violated the
agreement first.
      In any event, the deal quickly broke down. An internal Sara Lee email
dated October 26, 2011, suggests that Sara Lee had told Jacked Up by then
that the licensing agreement would not come to fruition. An email from Sara
Lee to Schmitz on November 4, 2011, further states that “Jacked Up Energy
Tea is not part of [the] sale and will be discontinued.” Sara Lee formally
terminated the licensing agreement by letter on November 18, 2011.
      As quickly as the licensing agreement broke down, it wound up in court.
Jacked Up brought a breach of contract claim against Sara Lee in Texas state
court on November 7, 2011—before Sara Lee even sent its formal termination
letter. After Sara Lee removed the case to federal court, Jacked Up added
Smucker as a defendant, claiming that Smucker tortiously interfered with the
licensing agreement. Jacked Up later added claims for breach of fiduciary duty,
fraud, and fraudulent inducement against Sara Lee, as well as a claim for
common law trade secret misappropriation against Smucker. Jacked Up based
this trade secret claim on the allegation that Smucker has used Jacked Up
formulas in its Pickwick-brand iced teas (a brand it purchased from Sara Lee).
      After discovery, all three parties moved for summary judgment. In
connection with these motions, the parties moved to strike certain summary
judgment evidence. Jacked Up also requested a continuance pursuant to
Federal Rule of Civil Procedure 56(d) in response to Smucker’s summary
judgment motion, claiming that Smucker had not yet revealed what formula it
was using in its teas. The district court granted Sara Lee’s and Smucker’s
motions for summary judgment on various grounds, denied the motions to
strike as moot, and denied Jacked Up’s 56(d) request for a continuance. The
district court entered judgment in favor of Sara Lee and Smucker on June 4,
2015. This appeal followed.

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                           No. 15-11019
           II. JURISDICTION AND STANDARD OF REVIEW
      Jacked Up is a limited liability company whose sole member—Joe
Schmitz—is a Texas citizen. Sara Lee is a Maryland corporation with its
principal place of business in Illinois. Smucker is an Ohio corporation with its
principal place of business in Ohio. Therefore, the district court had diversity
jurisdiction under 28 U.S.C. § 1332. This Court has appellate jurisdiction
under 28 U.S.C. § 1291.
      We review de novo a district court’s grant of summary judgment. Sierra
Club, Lone Star Chapter v. Cedar Point Oil Co., 73 F.3d 546, 562 (5th Cir.
1996). The Court must view “the facts and inferences . . . in the light most
favorable to the nonmoving party.” Id. at 562–63. Summary judgment is
appropriate “if the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(a). A genuine dispute of material fact exists if the “evidence is
such that a reasonable jury could return a verdict for the nonmoving party.”
Royal v. CCC & R Tres Arboles, L.L.C., 736 F.3d 396, 400 (5th Cir. 2013)
(quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
Additionally, this Court reviews for abuse of discretion a district court’s denial
of a Rule 56(d) motion for a continuance. Am. Family Life Assurance Co. of
Columbus v. Biles, 714 F.3d 887, 894 (5th Cir. 2013).
                              III. DISCUSSION
      On appeal, Jacked Up argues that issues of fact preclude summary
judgment on its breach of contract, breach of fiduciary duty, fraud, and
fraudulent inducement claims against Sara Lee, as well as its tortious
interference and trade secret claims against Smucker.




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                            No. 15-11019
A.    Claims Against Sara Lee
      1. Breach of Contract
      The district court concluded that Sara Lee terminated the contract in
accordance with Section 14(b)’s plain language. Jacked Up challenges the
district court’s interpretation of Section 14(b), insisting that this provision is
ambiguous. In response, Sara Lee defends the district court’s interpretation of
Section 14(b), and further argues that even if the district court misinterpreted
this termination provision, Jacked Up fails to establish a breach of contract
claim.
          a. Whether the district court misinterpreted the contract
      The contractual provision at issue in this case is Section 14(b) of the
licensing agreement, which states: “Either party shall have the right to
terminate this Agreement if it provides written notice to the other party no
later than 60 days prior to any anniversary of the Effective Date.” The district
court found this provision unambiguous. According to the district court,
Section 14(b) permits at-will termination during a “10-month window every
year.” Because Sara Lee terminated the licensing agreement during one such
window—i.e., more than 60 days before the first anniversary date—the court
held that Sara Lee did not breach the contract.
      Jacked Up provides two alternative interpretations of Section 14(b). In
its principal brief on appeal, Jacked Up argues that the word “anniversary” in
Section 14(b) means the end of the initial five-year term and the end of the
subsequent     three-year      renewal     term.     Jacked     Up     also   offered     this
interpretation before the district court. In its reply brief, Jacked Up argues
that Section 14(b) creates an annual right to opt out of the contract. 5 In other



      5Jacked Up did briefly refer to this interpretation in its principal brief on appeal:
      Barring an interpretation, which Sara Lee never advanced in the District
      Court, that the clause was intended to provide for an annual right for unilateral
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                                  No. 15-11019
words, “if a party gives notice 60 days prior to the anniversary of the Effective
Date, the License Agreement terminates at the end of that calendar year. If
neither party gives notice 60 days prior to the anniversary of the Effective
Date, the License Agreement extends to another year.”
      The parties agree that Illinois law controls the breach of contract claim.
Under Illinois law, “[t]he primary objective in construing a contract is to give
effect to the intent of the parties.” Gallagher v. Lenart, 874 N.E.2d 43, 58 (Ill.
2007). A contract “is to be construed as a whole, giving effect to every provision,
if possible.” Cent. Ill. Light Co. v. Home Ins. Co., 821 N.E.2d 206, 213 (Ill. 2004).
If words in the contract “are clear and unambiguous, they must be given their
plain, ordinary, and popular meaning.” Id. “But if the contract is ambiguous,
‘its construction is then a question of fact, and parol evidence is admissible to
explain and ascertain what the parties intended.’” Curia v. Nelson, 587 F.3d
824, 829 (7th Cir. 2009) (quoting Farm Credit Bank of St. Louis v. Whitlock,
581 N.E.2d 664, 667 (Ill. 1991)). Contractual language is ambiguous if it “is
susceptible to more than one meaning.” Gallagher, 874 N.E.2d at 58. Whether
a contract is ambiguous is a question of law. Quake Constr., Inc. v. Am.
Airlines, Inc., 565 N.E.2d 990, 994 (Ill. 1990).
      As an initial matter, the first interpretation offered by Jacked Up—that
Section 14(b) only permits termination at the ends of the initial and renewal
terms—is     unreasonable.     This    interpretation     ignores    the    clear    and
unambiguous meaning of “anniversary”: “the yearly recurrence of the date of a
past event.” Anniversary, Random House Webster’s Unabridged Dictionary (2d
ed. 2001) (emphasis added). Thus, Section 14(b) unambiguously provides an
annual right of termination.



      termination without cause, the only other “anniversaries” in the Licensing
      Agreement are those described in the testimony of Jacked Up’s principal, Mr.
      Schmitz.
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                              No. 15-11019
      The real interpretive question in this case is when termination is
effective. Sara Lee argues, and the district court held, that termination under
Section 14(b) is effective immediately. Jacked Up’s second interpretation, by
contrast, implies that termination is effective at the end of the year. 6 Both
interpretations have some merit.
      The plain language of Section 14(b) favors Sara Lee’s interpretation.
Section 14(b) simply affords each party “the right to terminate . . . if it provides
written notice.” The provision does not state that termination is effective at
some later date. The provision could have been written differently; for example,
Section 14(b) could read:
      Either party hereto may terminate this Agreement as of the
      anniversary date of this Agreement in any year by mailing written
      notice of its election to do so to the other party sixty (60) or more
      days before the effective date of such termination.
Rockwell Eng’g Co. v. Automatic Timing & Controls Co., 559 F.2d 460, 462 (7th
Cir. 1977) (emphasis added); see also Int’l Adm’rs, Inc. v. Life Ins. Co. of N.
Am., 753 F.2d 1373, 1382 (7th Cir. 1985) (“Either the Policyholder or the
Company may terminate this policy on the first or any subsequent anniversary
of the date of issue by written notice mailed or delivered to the other at least
30 days prior to the effective date of termination.”). In the absence of such
language, it is reasonable to read Section 14(b) as permitting termination as
soon as one party provides written notice to the other.
      But Sara Lee’s interpretation has drawbacks. First, a provision that
permits at-will termination ten months out of the year but not during the 60
days prior to October 1 makes little business sense. See Bd. of Educ. of
Waukegan Cmty. Unit Sch. Dist. No. 60 v. Orbach, 991 N.E.2d 851, 857 (Ill.
App. Ct. 2013) (explaining that “a contract should be construed to avoid absurd


      6 This could mean at the end of the calendar year, as Jacked Up suggests, or on the
anniversary date, October 1.
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                                 No. 15-11019
results”). Second, reading the contract as providing at-will termination would
largely nullify the contract’s other termination provisions in Sections 7 and 14.
See Thompson v. Gordon, 948 N.E.2d 39, 47 (Ill. 2011) (“A court will not
interpret a contract in a manner that would nullify or render provisions
meaningless . . . .”). These other provisions permit termination upon 30, 60, or
90 days’ notice if certain events occur. But if a party can terminate immediately
under Section 14(b), then it need not rely on these other provisions.
       Sara Lee’s weaknesses are Jacked Up’s strengths. Jacked Up’s
interpretation makes business sense: it gives each party an annual opportunity
to opt out of the licensing agreement and gives the other party at least 60 days
to wind down its commitments under the agreement. 7 Moreover, this limited
interpretation does not nullify the contract’s other termination provisions.
Indeed, Jacked Up’s interpretation accords with the plain meaning of the other
termination provisions in the licensing agreement, all of which make
termination effective some period of time after notice is provided.
       On balance, we find Section 14(b) ambiguous because the text is silent
about when termination is effective. Setting aside context, Sara Lee’s
interpretation is more natural than Jacked Up’s. But the text is not so “clear
and unambiguous,” Cent. Ill. Light, 821 N.E.2d at 213, that we must read the
provision as making termination effective immediately. By contrast, Jacked
Up’s interpretation is more reasonable in context, but it does read words into
the contract that are not present. “[C]onstru[ing] the contract as a whole [and]
reading each term in light of the others,” Bank of Am. Nat’l Trust & Sav. Ass’n
v. Schulson, 714 N.E.2d 20, 24 (Ill. App. Ct. 1999), Section 14(b) is susceptible


       7 Sara Lee itself explained the purpose of Section 14(b) in an email dated September
26, 2011: to afford both parties “the ability to terminate if strategy changes or market
conditions shift, etc.” This email also describes Section 14(b) as permitting “[t]ermination
with 60 days notice.” We do not consider this parol evidence in determining whether Section
14(b) is ambiguous, but the district court may consider it on remand.
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                               No. 15-11019
to both Sara Lee’s and Jacked Up’s interpretations. Accordingly, Section 14(b)
is ambiguous, “its construction is . . . a question of fact, and parol evidence is
admissible to explain and ascertain what the parties intended.” Curia, 587
F.3d at 829 (quoting Whitlock, 581 N.E.2d at 667). We reverse the district
court’s conclusion that Section 14(b) unambiguously permitted Sara Lee to
terminate the licensing agreement at will.
          b. Whether Sara Lee breached the contract
      Under Illinois law, a breach of contract claim requires “evidence of
(1) the existence of a contract; (2) [the plaintiff’s] performance under the
contract; (3) the defendants’ breach; and (4) resulting injury from the breach.”
Burrell v. City of Mattoon, 378 F.3d 642, 651 (7th Cir. 2004). Because the
district court interpreted Section 14(b) as permitting at-will termination, it
held that Sara Lee’s termination did not breach the licensing agreement. On
appeal, the parties dispute whether Sara Lee breached the contract even if the
district court’s interpretation is incorrect. The parties appear to agree that the
licensing agreement was a valid contract, but Sara Lee contests the other three
elements of Jacked Up’s breach of contract claim. 8 First, Sara Lee argues that
it did not breach the contract prior to its formal termination on November 18,
2011. Second, Sara Lee argues that Jacked Up failed to perform its end of the
contract by refusing to conduct market testing. In response, Jacked Up argues
that Sara Lee repudiated first, thereby relieving Jacked Up of any further
duties under the contract.
      Both parties can point to evidence in the record supporting their
respective positions on who repudiated first. Specifically, both parties cite to
contrasting accounts of a telephone conversation in late October 2011.
According to Sara Lee’s Greg Immell, he told Schmitz during that conversation


      8  We discuss Jacked Up’s performance and Sara Lee’s breach here, and damages in
Part III.C below.
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that “Sara Lee was interested in pushing forward with the proposed dispensed
energy iced tea product pursuant to the License Agreement.” By contrast,
according to Schmitz, Immell represented that Sara Lee “was terminating the
License Agreement immediately at Smuckers’ request.” Schmitz’s account is
corroborated by an internal Sara Lee email dated October 26, 2011, suggesting
that Immell had told Schmitz that the licensing agreement would be
terminated and that Schmitz “was not too happy.”
      If the district court’s interpretation of Section 14(b) is incorrect, and Sara
Lee did “manifest[] a clear, unequivocal intent not to perform under the
contract when performance [was] due,” then it anticipatorily breached the
contract. Arlington LF, LLC v. Arlington Hosp., Inc., 637 F.3d 706, 713 (7th
Cir. 2011). But if Sara Lee did not repudiate the agreement and Schmitz
refused to conduct market testing, then Jacked Up failed to perform. Because
evidence in the record supports both positions, there are genuine disputes
about whether Sara Lee breached the contract and whether Jacked Up
performed under the contract. Accordingly, we reverse the district court’s grant
of summary judgment in favor of Sara Lee on Jacked Up’s breach of contract
claim.
      2. Breach of Fiduciary Duty
      The district court granted summary judgment on Jacked Up’s breach of
fiduciary duty claim, finding that Sara Lee did not owe any fiduciary duty to
Jacked Up. On appeal, the parties dispute whether there is a fact issue as to
the existence of a fiduciary relationship. See Crim Truck & Tractor Co. v.
Navistar Int’l Transp. Corp., 823 S.W.2d 591, 594 (Tex. 1992) (“The existence
of a confidential relationship is usually a question of fact.”). Jacked Up argues
that its “‘partner’ relationship” with Sara Lee and the non-disclosure
agreement (“NDA”) both parties signed created a fiduciary relationship
between them. Sara Lee argues that the parties dealt with each other at arm’s

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length and notes that neither an NDA nor one party’s subjective trust in the
other suffices to create fiduciary duties. Sara Lee also emphasizes that the
licensing agreement itself disclaims a fiduciary relationship.
       Under Texas law, 9 “[t]he elements of a breach of fiduciary duty claim are:
(1) a fiduciary relationship between the plaintiff and defendant; (2) the
defendant must have breached his fiduciary duty to the plaintiff; and (3) the
defendant’s breach must result in injury to the plaintiff or benefit to the
defendant.” Navigant Consulting, Inc. v. Wilkinson, 508 F.3d 277, 283 (5th Cir.
2007) (quoting Jones v. Blume, 196 S.W.3d 440, 447 (Tex. App.—Dallas 2006,
pet. denied)). “A fiduciary relationship may arise from formal and informal
relationships and may be created by contract.” Lundy v. Masson, 260 S.W.3d
482, 501 (Tex. App.—Houston [14th Dist.] 2008, no pet.). “[A] formal fiduciary
relationship[] ‘arises as a matter of law and includes the relationships between
attorney and client, principal and agent, partners, and joint venturers.’”
Navigant Consulting, 508 F.3d at 283 (quoting Abetter Trucking Co. v. Arizpe,
113 S.W.3d 503, 508 (Tex. App.—Houston [1st Dist.] 2003, no pet.)). An
informal fiduciary relationship, however, “may arise where one person trusts
in and relies upon another, whether the relationship is a moral, social,
domestic, or purely personal one.” Id. (quoting Jones, 196 S.W.3d at 449). In
other words, a fiduciary relationship “exists where a special confidence is
reposed in another who in equity and good conscience is bound to act in good
faith and with due regard to the interests of the one reposing confidence.” Tex.
Bank & Trust Co. v. Moore, 595 S.W.2d 502, 507 (Tex. 1980) (quoting Lappas
v. Barker, 375 S.W.2d 248, 251 (Ky. 1964)).
       But Texas law “does not recognize a fiduciary relationship lightly,”
Lundy, 260 S.W.3d at 501, “especially in the commercial context,” Willis v.


       9The district court held, and the parties agree, that Texas law applies to Jacked Up’s
extra-contractual claims against Sara Lee.
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Donnelly, 199 S.W.3d 262, 278 (Tex. 2006). “To impose an informal fiduciary
duty in a business transaction, the special relationship of trust and confidence
must exist prior to, and apart from, the agreement made the basis of the suit.”
Associated Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 288 (Tex.
1998).
      As Sara Lee notes, licensing agreements generally do not create fiduciary
relationships. See, e.g., Wellogix, Inc. v. Accenture, LLP, 788 F. Supp. 2d 523,
545–46 (S.D. Tex. 2011) (finding that licensing agreement was an arm’s-length
transaction); Hollomon v. O. Mustad & Sons (USA), Inc., 196 F. Supp. 2d 450,
458–59 (E.D. Tex. 2002) (finding that royalty agreement did not create a
fiduciary relationship). Neither do NDAs or other agreements requiring
confidentiality. See, e.g., Anglo-Dutch Petroleum Int’l, Inc. v. Smith, 243
S.W.3d 776, 782 (Tex. App.—Houston [14th Dist.] 2007, pet. denied) (“To the
extent Smith’s position equates a confidentiality agreement to a relationship
of trust and confidence giving rise to a fiduciary duty, he has cited, and we
have found, no authority supporting the notion that confidentiality agreements
can create fiduciary relationships.”); Wellogix, 788 F. Supp. 2d at 546 (finding
that an NDA did not give rise to a fiduciary relationship). Additionally, “mere
subjective trust alone is not enough to transform arm’s-length dealing into a
fiduciary relationship.” Crim Truck, 823 S.W.2d at 595 (quoting Thigpen v.
Locke, 363 S.W.2d 247, 253 (Tex. 1962)).
      Jacked Up suggests that it created a partnership with “dominant
partner” Sara Lee. But the licensing agreement itself makes clear that it “does
not, and shall not, be deemed to make any party hereto the agent, partner,
joint venturer or legal representative of any other party for any purpose
whatsoever.” Furthermore, Jacked Up fails to cite any authority for the
proposition that a dominant party in a commercial transaction, where each
party is represented by counsel, owes fiduciary duties to the weaker party.

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       Jacked Up also argues that “the collaborative effort to develop the
products, the joint marketing efforts, . . . and the promises of a long-term deal
all would permit a reasonable juror to find the existence of a fiduciary
relationship.” Such corporate dealings do not transform an arm’s length
transaction into a fiduciary relationship. See Wellogix, 788 F. Supp. 2d at 545
(“The Mutual Nondisclosure Agreement, the Marketing Alliance Agreement,
[and] the two Teaming Agreements were all agreements between Accenture
and Wellogix to jointly exchange information with each other in order to
develop business opportunities to which both would contribute particular
expertise and from which both would benefit. As such, these agreements are
‘arms-length transactions entered into for the parties’ mutual benefit, and thus
do not establish a basis for a fiduciary relationship.’” (quoting Meyer v. Cathey,
167 S.W.3d 327, 331 (Tex. 2005))).
       In sum, Jacked Up fails to point to sufficient evidence that would support
finding a fiduciary relationship between the parties. Therefore, we affirm the
district court’s grant of summary judgment in favor of Sara Lee on Jacked Up’s
breach of fiduciary duty claim.
       3. Fraud and Fraudulent Inducement
       Jacked Up’s claims for fraud and fraudulent inducement both rely on a
series of alleged misrepresentations. But the district court granted summary
judgment in favor of Sara Lee on these two claims for different reasons. On the
fraud claim, the district court held that Jacked Up pleaded constructive, rather
than common law, 10 fraud. Constructive fraud, like breach of fiduciary duty,
requires the existence of a fiduciary relationship. See Hubbard v. Shankle, 138
S.W.3d 474, 483 (Tex. App.—Fort Worth 2004, pet. denied). Because Sara Lee



        Note that courts sometimes refer to “common law” fraud as “actual” fraud. See, e.g.,
       10

Flanary v. Mills, 150 S.W.3d 785, 795 (Tex. App.—Austin 2004, pet. denied).

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                                 No. 15-11019
did not owe fiduciary duties to Jacked Up, the district court granted summary
judgment in favor of Sara Lee on the fraud claim. On the fraudulent
inducement claim, the district court first found that several alleged
misrepresentations contradicted the terms of the licensing agreement and
therefore cannot support a fraudulent inducement claim as a matter of law.
Second, the district court found that Jacked Up’s reliance on other alleged
misrepresentations was unjustified.
         a. Whether Jacked Up pleaded common law fraud
      On appeal, Jacked Up first challenges the district court’s holding that
Jacked Up pleaded only constructive fraud. Common law fraud and
constructive fraud “are independent causes of action.” Phillips v. United
Heritage Corp., 319 S.W.3d 156, 167 (Tex. App.—Waco 2010, no pet.). The
elements of common law fraud are (1) “a material misrepresentation” that
(2) “was false,” (3) “was either known to be false when made or was asserted
without knowledge of its truth,” (4) “was intended to be acted upon,” (5) “was
relied upon,” and (6) “caused injury.” Zorrilla v. Aypco Constr. II, LLC, 469
S.W.3d 143, 153 (Tex. 2015) (quoting Formosa Plastics Corp. USA v. Presidio
Eng’rs & Contractors, Inc., 960 S.W.2d 41, 47 (Tex. 1998)). Constructive fraud
is “the breach of a legal or equitable duty that the law declares fraudulent
because it violates a fiduciary relationship.” Hubbard, 138 S.W.3d at 483.
      As an initial matter, the district court did err by applying Texas state
law on general and specific allegations. Under federal procedural law, a
plaintiff must “give fair notice in the pleadings of all claims brought against
the defendant.” Homoki v. Conversion Servs., Inc., 717 F.3d 388, 402 (5th Cir.
2013). “So long as a pleading alleges facts upon which relief can be granted,”
however, “it states a claim even if it ‘fails to categorize correctly the legal theory
giving rise to the claim.’” Id. (quoting Dussouy v. Gulf Coast Inv. Corp., 660
F.2d 594, 604 (5th Cir. Nov. 1981)). For example, this Court read the plaintiff’s

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                               No. 15-11019
pleading of an implied warranty claim under California law as a similar claim
under Texas law, noting that “the most natural reading of the [plaintiffs’]
broadly-worded complaint would include some version of that claim under
Texas law.” McManus v. Fleetwood Enters., Inc., 320 F.3d 545, 551 (5th Cir.
2003). However, this Court has also held that “district courts do not abuse their
discretion when they disregard claims or theories of liability not present in the
complaint and raised first in a motion opposing summary judgment.” De
Franceschi v. BAC Home Loans Servicing, L.P., 477 F. App’x 200, 204 (5th Cir.
2012) (unpublished).
      Jacked Up’s fraud claim as articulated in its complaint is consistent with
constructive fraud. Specifically, the complaint refers to Sara Lee as a trusted
vendor and fiduciary that abused its position of trust and “violated the
confidences bestowed upon [it].”
      But the complaint is not clearly inconsistent with common law fraud.
The relevant section is titled “Fraud (Against SL)” and mentions “the
Defendant’s knowing, reckless, and intentional deception.” Moreover, the
allegations made in the fraudulent inducement section of the complaint
support Jacked Up’s common law fraud claim. Thus, “the most natural reading
of [Jacked Up’s] broadly-worded complaint would include” common law fraud.
McManus, 320 F.3d at 551. In addition, Jacked Up’s fraud and fraudulent
inducement arguments are essentially identical both on appeal and in the
summary judgment briefing. Given the ambiguity in Jacked Up’s complaint
and the similarities between Jacked Up’s fraud and fraudulent inducement
arguments, we find that Jacked Up gave “fair notice in the pleadings of all
claims brought against the defendant.” Homoki, 717 F.3d at 402. Therefore,
the district court erred in granting summary judgment on Jacked Up’s fraud
claim on this ground.


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                            No. 15-11019
         b. Whether Jacked Up’s reliance on Sara Lee’s representations
            was justified
      Jacked Up next argues that genuine issues of material fact preclude
summary judgment on its fraud and fraudulent inducement claims. Sara Lee
contends, as the district court held, that Jacked Up’s reliance on Sara Lee’s
alleged misrepresentations was not justifiable.
      “The issue of justifiable reliance is generally a question of fact.” Prize
Energy Res., L.P. v. Cliff Hoskins, Inc., 345 S.W.3d 537, 584 (Tex. App.—San
Antonio 2011, no pet.). But “[i]t is well-established that ‘[t]he recipient of a
fraudulent misrepresentation is not justified in relying upon its truth if he
knows that it is false or its falsity is obvious to him.’” Nat’l Prop. Holdings, L.P.
v. Westergren, 453 S.W.3d 419, 424 (Tex. 2015) (quoting Restatement (Second)
of Torts § 541 (Am. Law. Inst. 1977)). “Moreover, ‘a person may not justifiably
rely on a representation if there are “red flags” indicating such reliance is
unwarranted.’” Grant Thornton LLP v. Prospect High Income Fund, 314
S.W.3d 913, 923 (Tex. 2010) (quoting Lewis v. Bank of Am. NA, 343 F.3d 540,
546 (5th Cir. 2003)).
      On appeal, Jacked Up identifies several misrepresentations by Sara Lee.
As the district court found, some of these representations were clearly
contradicted by the licensing agreement itself. Sara Lee’s representation that
Jacked Up would recoup its development costs several times over was
contradicted by the fact that the licensing agreement merely set out royalty
rates based on net sales. Similarly, Sara Lee’s representation that it would not
terminate the contract was contradicted by the numerous termination
provisions in the contract. Jacked Up could not justifiably rely on these “oral
misrepresentations regarding the contract’s unambiguous terms.” Westergren,
453 S.W.3d at 424.



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                               No. 15-11019
      Jacked Up’s strongest argument for fraud and fraudulent inducement is
based on Sara Lee’s alleged representations that it was not planning to sell its
beverage division. Jacked Up claims it continued to develop products as well
as negotiated and signed the licensing agreement in reliance on these
representations. The district court found that Jacked Up’s reliance on these
representations was unjustifiable because of another representation that Sara
Lee made: that Sara Lee wanted to add the change-of-control termination
provision at Section 14(c) “in the event North American Beverage is purchased
by a third party company.”
      Jacked Up surely knew that Sara Lee might sell its beverage division in
the future. But this fact does not make Sara Lee’s other representation—that
it was not currently planning to sell the company—obviously false. See
Westergren, 453 S.W.3d at 424.
      Whether Sara Lee’s explanation for why it wanted a change-of-control
termination provision constituted a “red flag” is a closer question. Sara Lee
cites several cases where reliance was unjustifiable based on some sort of red
flag. In Grant Thorton, the Texas Supreme Court held that reliance on a
company’s audit reports to purchase the company’s bonds was unjustifiable
after the plaintiff learned that the company “had lost its primary source of
funding.” 314 S.W.3d at 923. This fact was a red flag that contradicted the
rosier picture painted by the earlier audit reports. Id. In Lewis, this Court
examined the plaintiff’s reliance on an oral representation by the defendant
about the tax consequences of a transaction. 343 F.3d at 546–47. Documents
prepared by the defendant in Lewis did not mention the tax consequences of
the transaction or characterize the instruments at issue as tax-deferred. Id. at
547. This Court held that these documents were “a red flag warranting further
investigation of the tax consequences of the loan transaction.” Id. In Skelton v.
Urban Trust Bank, 516 B.R. 396 (N.D. Tex. 2014), a district court addressed

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                                  No. 15-11019
whether a plaintiff justifiably relied on the defendant’s representation that it
possessed a promissory note. The plaintiff in that case was aware of an
affidavit executed by the defendant which indicated that the note was lost. Id.
at 398. The court found that this lost note affidavit was a red flag that rendered
reliance unjustifiable. Id. at 406.
      Sara Lee’s explanation for why it wanted a change-of-control termination
provision was not as much of a red flag as the defendants’ actions in Grant
Thorton, Lewis, and Skelton. Merely suggesting the possibility of selling the
beverage division did not “serve as a warning,” In re Mercer, 246 F.3d 391, 418
(5th Cir. 2001) (quoting William Prosser, Law of Torts § 108 (4th ed. 1971)),
that Sara Lee was actively planning a sale. Even if it were such a warning,
Jacked Up could not have learned the truth with reasonable investigation.
Schmitz did the only thing he could to investigate—he asked Sara Lee
executives whether they currently planned to sell the company. Sara Lee does
not suggest that Jacked Up could have learned of the sale in some other way.
Indeed, the sale was not made public until late October.
      A more comparable case is In re Whittington, 530 B.R. 360 (Bankr. W.D.
Tex. 2014). There, the plaintiff was confronted with a red flag—“a partially
redacted contract with numbers that did not quite add up.” Id. at 385. The
plaintiff asked the defendant “whether he was making side profits on the deal”;
the defendant “lied in response.” Id. The court found that there was nothing
obvious about this lie “that should have triggered further inquiry, nor was
there any reason” to distrust the defendant. Id. Likewise, in this case there
was nothing obviously false about Sara Lee’s representation that it was not
planning to sell its beverage division, nor did Jacked Up have any reason to
distrust Sara Lee.
      At the very least, there is a genuine dispute of fact as to whether Jacked
Up’s reliance on Sara Lee’s representations was justifiable. Therefore, we

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                                  No. 15-11019
reverse the district court’s grant of summary judgment in favor of Sara Lee on
the fraud and fraudulent inducement claims.
B.     Claims Against Smucker
       1. Tortious Interference with a Contract
       The district court granted summary judgment in favor of Smucker on
Jacked Up’s tortious interference claim on the ground that Sara Lee did not
breach the licensing agreement. 11 Jacked Up argues on appeal that genuine
issues of material fact preclude summary judgment on its tortious interference
claim. In response, Smucker first argues that no evidence supports a finding
that Smucker caused Sara Lee to breach the contract. Second, Smucker argues
that its actions were privileged under Illinois law.
       As an initial matter, Jacked Up applies Texas law while Smucker applies
Illinois law to the tortious interference claim. The district court applied Texas
law but did not conduct a choice of law analysis. Although Texas and Illinois
laws are slightly different in this context, the difference is not material.
Accordingly, no choice of law analysis is necessary. See Schneider Nat’l Transp.
v. Ford Motor Co., 280 F.3d 532, 536 (5th Cir. 2002) (“If the laws of the states
do not conflict, then no choice-of-law analysis is necessary.” (quoting W.R.
Grace & Co. v. Cont’l Cas. Co., 896 F.2d 865, 874 (5th Cir. 1990))).
       Under Illinois law, a tortious interference claim has the following
elements: “(1) there was an enforceable contract; (2) the defendant was aware
of that contract; (3) the defendant intentionally and unjustifiably induced a
breach of the contract; (4) breach resulted from the defendant’s wrongful
conduct; and (5) the plaintiff has been damaged.” Marathon Fin. Ins. v. Ford
Motor Co., 591 F.3d 458, 466 (5th Cir. 2009) (citing Smock v. Nolan, 361 F.3d
367, 372 (7th Cir. 2004)). Illinois “[c]ourts will recognize a privilege in


       11Because we find that there is a genuine dispute as to whether Sara Lee breached
the agreement, we cannot affirm the district court on this ground.
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                                 No. 15-11019
intentional interference with contract cases where the defendant was acting to
protect an interest which the law deems to be of equal or greater value than
the plaintiff’s contractual rights.” 12 HPI Health Care Servs., Inc. v. Mt. Vernon
Hosp., Inc., 545 N.E.2d 672, 677 (Ill. 1989). If a defendant’s conduct is
privileged under Illinois law, then “it is the plaintiff’s burden to plead and
prove that the defendant’s conduct was unjustified or malicious.” Williams v.
Shell Oil Co., 18 F.3d 396, 402–03 (7th Cir. 1994).
         Similarly, Texas law requires “(1) an existing contract subject to
interference [and] (2) a willful and intentional act of interference with the
contract[] (3) that proximately caused the plaintiff’s injury[] and (4) caused
actual damages or loss.” Prudential Ins. Co. of Am. v. Fin. Review Servs., Inc.,
29 S.W.3d 74, 77 (Tex. 2000). Privilege or justification is a complete defense to
liability. Sterner v. Marathon Oil Co., 767 S.W.2d 686, 689–90 (Tex. 1989)
(noting that “[t]he party asserting this privilege does not deny the interference
but rather seeks to avoid liability based upon a claimed interest that is being
impaired or destroyed by the plaintiff’s contract”). “A party is privileged” under
Texas law “to interfere with the contractual relations of another if: (1) it acts
in the bona fide exercise of its own rights, or (2) the interfering party has an
equal or superior right in the subject matter to that of the party to the
contract.” Baty v. ProTech Ins. Agency, 63 S.W.3d 841, 857 (Tex. App.—
Houston [14th Dist.] 2001, pet. denied) (citing Prudential Ins., 29 S.W.3d at
80).
         Jacked Up essentially points to two acts of interference by Smucker.
First, Smucker requested that Sara Lee terminate the licensing agreement. If



          Illinois courts sometimes use this same language to determine whether the
         12

defendant’s interference was justified as part of the prima facie case for tortious interference.
See Nation v. Am. Capital, Ltd., 682 F.3d 648, 651 n.2 (7th Cir. 2012) (explaining this
confusion); Roy v. Coyne, 630 N.E.2d 1024, 1035 (Ill. App. Ct. 1994) (quoting this language in
the context of justifiability).
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                               No. 15-11019
this were true, then Jacked Up would seem to have a strong prima facie claim
of tortious interference under either Illinois or Texas law. In support of this act
of interference, Jacked Up points to Schmitz’s declaration, which states that
around October 21, 2011, Sara Lee’s Greg Immell told him on a telephone call
that Sara Lee was “terminating the License Agreement immediately at
Smuckers’ request.” Smucker’s instruction to Sara Lee would be admissible as
an opposing party’s statement. See Fed. R. Evid. 801(d)(2)(D) (a statement is
not hearsay if “offered against an opposing party and . . . made by the party’s
agent or employee on a matter within the scope of that relationship and while
it existed”). But Immell himself was not an employee of Smucker at that time;
thus, his statement relaying Smucker’s instruction appears to be hearsay not
subject to any exception. See Fed. R. Evid. 805 (hearsay within hearsay is only
admissible “if each part of the combined statements conforms with an
exception to the rule”). Moreover, Jacked Up offers no “equivalent
circumstantial guarantees of trustworthiness” to introduce this statement
under the residual exception to the hearsay rule. Fed. R. Evid. 807(a)(1).
Accordingly, Schmitz’s declaration is inadmissible against Smucker to show
that Smucker intentionally caused Sara Lee to terminate the contract.
      Second, Jacked Up argues that Smucker induced Sara Lee to terminate
the contract by opting not to assume the licensing agreement when it
purchased Sara Lee’s beverage division. Smucker argues that its decision was
justified. Specifically, Smucker’s corporate deponent explained that Jacked
Up’s brand was not a good fit with Smucker’s “family-friendly, family-oriented”
image. In an email dated October 28, 2011, a Smucker vice president also
explained that Smucker did not “want this contract as a means to enter the
energy drink business. We will have our hands full successfully integrating the
new [Sara Lee] businesses into our portfolio.” This evidence supports a finding
that Smucker made its decision “based on business considerations,” Marathon

                                        23
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                                 No. 15-11019
Fin. Ins., 591 F.3d at 468 (applying Illinois law), “in the bona fide exercise of
its own rights,” Baty, 63 S.W.3d at 857 (applying Texas law).
      Jacked Up cites no Illinois or Texas case where a defendant unjustifiably
interfered with a plaintiff’s contract merely by purchasing some of a third-
party’s assets and declining to assume the third party’s contract with the
plaintiff. To the contrary, a defendant in Smucker’s position would ordinarily
be justified in assuming some contracts but not others as part of an asset
purchase. Indeed, one court has found that in the context of a tortious
interference claim, Texas law affords a privilege to a party purchasing assets
from a corporation. C.M. Asfahl Agency v. Tensor, Inc., 135 S.W.3d 768, 791–
92 (Tex. App.—Houston [1st Dist.] 2004, no pet.). Because no evidence or case
law supports the finding that Smucker’s actions were unjustified, we affirm
summary judgment in favor of Smucker on the tortious interference claim.
      2. Trade Secret Misappropriation
      The district court held that the Ohio Uniform Trade Secrets Act
(“UTSA”), Ohio Rev. Code § 1333.61–.69, preempts Jacked Up’s common law
trade secret claim, and denied Jacked Up’s Rule 56(d) request for a
continuance. On appeal, Jacked Up argues that Texas law applies and that the
district court abused its discretion by denying its Rule 56(d) request. Smucker
defends the district court’s decision and also argues that Jacked Up has failed
to put forth sufficient evidence in support of a trade secret claim.
      The district court conducted an extensive choice of law analysis and
found that Ohio law governs this claim. Courts “apply the law of the forum
state to determine which state’s law applies.” Mumblow v. Monroe Broad., Inc.,
401 F.3d 616, 620 (5th Cir. 2005). Under the “most significant relationship”
test used by Texas courts,
      The factors to consider in determining the applicable law for a tort
      case such as this are (1) the place where the injury occurred; (2) the
      place where the conduct causing the injury occurred; (3) the
                                       24
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                                 No. 15-11019
      residence, nationality, and place of business of the parties; and
      (4) the place where the relationship, if any, between the parties is
      centered.
In re ENSCO Offshore Int’l Co., 311 S.W.3d 921, 928 (Tex. 2010) (citing
Restatement (Second) of Conflict of Laws § 145 (Am. Law. Inst. 1971)). In trade
secret misappropriation cases, “the place of injury does not play so important
a role”; “[i]nstead, the principal location of the defendant’s conduct is the
contact that will usually be given the greatest weight.” Restatement (Second)
of Conflict of Laws § 145 cmt. f. Thus, in this case, the fact that Smucker
allegedly misappropriated a trade secret in Ohio is more important than the
fact that Jacked Up suffered its injury in Texas. The third factor weighs
equally in favor of Texas and Ohio law because Jacked Up is a Texas citizen
and Smucker is an Ohio citizen. The fourth factor is not particularly applicable
because Jacked Up and Smucker never had any formal relationship. On
balance, we agree with the district court that Ohio has the most significant
contacts with this claim and that no countervailing policy considerations weigh
against this conclusion. Therefore, we apply Ohio law to Jacked Up’s trade
secret claim.
      Ohio’s UTSA provides a remedy for “misappropriation.” Ohio Rev. Code
§ 1333.63. Misappropriation is defined, among other things, as “[a]cquisition
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,” Ohio Rev. Code
§ 1333.61(B)(1), or “use of a trade secret of another without the express or
implied consent of the other person by a person who . . . [u]sed improper means
to acquire knowledge of the trade secret,” Ohio Rev. Code § 1333.61(B)(2).
      Jacked Up fails to put forth evidence showing that Smucker has acquired
or used any trade secret. The core of Jacked Up’s trade secret claim is that
Smucker is using Jacked Up’s formulas for its Pickwick- and Infusia-brand iced
teas. Smucker contends that its four iced tea flavors were developed by Sara
                                      25
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                            No. 15-11019
Lee and mixed by Beverage House, Inc. (“Beverage House”) before Sara Lee
came into contact with Jacked Up. The record supports Smucker’s account. For
example, a declaration by a Beverage House representative states that
Beverage House mixes the same iced tea flavors and the same energy
component (XR16817000) for Smucker as it did for Sara Lee in 2010. This
energy component differs from the one developed by Jacked Up. Additionally,
a recent production batch sheet shows that Beverage House continues to use
the XR16817000 energy component in the Raspberry Infusia Iced Tea.
      Recognizing that it lacks evidence in support of its trade secret claim,
Jacked Up seeks additional time for discovery under Rule 56(d). Rule 56(d)
allows a court to deny a summary judgment motion and extend discovery if the
party opposing summary judgment “shows by affidavit or declaration that, for
specified reasons, it cannot present facts essential to justify its opposition.”
Fed. R. Civ. P. 56(d). “While Rule 56(d) motions for additional discovery are
broadly favored and should be liberally granted, the party filing the motion
must demonstrate how additional discovery will create a genuine issue of
material fact.” Smith v. Reg’l Transit Auth., 827 F.3d 412, 422–23 (5th Cir.
2016) (citations and internal quotation marks omitted). In particular, the party
opposing summary judgment “must ‘set forth a plausible basis for believing
that specified facts, susceptible of collection within a reasonable time frame,
probably exist and indicate how the emergent facts, if adduced, will influence
the outcome of the pending summary judgment motion.’” Biles, 714 F.3d at 894
(quoting Raby v. Livingston, 600 F.3d 552, 561 (5th Cir. 2010)). That party
must also have “diligently pursued discovery.” McKay v. Novartis Pharm.
Corp., 751 F.3d 694, 700 (5th Cir. 2014) (quoting Beattie v. Madison Cty. Sch.
Dist., 254 F.3d 595, 606 (5th Cir. 2001)).
      The district court found that Jacked Up failed to submit an affidavit in
support of its Rule 56(d) motion and failed to show that it diligently pursued

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                              No. 15-11019
discovery. On appeal, Jacked Up argues that it needs “documents regarding
the formulas [Smucker] is using for its new energy tea.” But the record already
reflects that Smucker is using formulas developed by Sara Lee in 2010.
Additionally, Jacked Up does not show that it diligently pursued discovery.
Jacked Up did not move to compel production of these documents during the
discovery period—the first time it sought judicial assistance in obtaining these
documents was in response to Smucker’s summary judgment motion. Under
these circumstances, the district court did not abuse its discretion by denying
Jacked Up’s Rule 56(d) motion for a continuance. Cf. Beattie, 254 F.3d at 606
(affirming denial of Rule 56(d) motion where plaintiff failed to depose certain
defendants during discovery period).
       Because Jacked Up has failed to put forth evidence showing that
Smucker acquired or used any trade secret, we affirm the district court’s grant
of summary judgment in favor of Smucker on the trade secret misappropriation
claim. Additionally, we affirm the district court’s denial of Jacked Up’s Rule
56(d) motion for a continuance.
C.     Whether Jacked Up Can Prove Damages
       Finally, Sara Lee and Smucker urge the Court to affirm summary
judgment on an alternative ground: that Jacked Up’s evidence of lost profits is
speculative. 13 Jacked Up’s evidence of lost profits—an expert report prepared
by EJ Janik (“Janik Report”)—is critical to its claim for damages. Indeed, this
expert report is the only evidence of damages in the record. 14


       13 Although the defendants presented this argument below, the district court disposed
of each claim on other grounds and did not address whether Jacked Up can prove damages.
We may affirm summary judgment on this ground even though the district court did not
address it. See Culbertson v. Lykos, 790 F.3d 608, 627 (5th Cir. 2015).
       14 Jacked Up likely could have claimed reliance damages. See, e.g., Restatement

(Second) of Contracts § 349 (Am. Law. Inst. 1981) (“As an alternative to [expectation
damages], the injured party has a right to damages based on his reliance interest, including
expenditures made in preparation for performance or in performance, less any loss that the
party in breach can prove with reasonable certainty the injured party would have suffered
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                              No. 15-11019
      Sara Lee and Smucker principally argue that Illinois law bars recovery
of lost profits by new businesses. Generally, Illinois “courts consider evidence
of lost profits in a new business too speculative to sustain the burden of proof.”
Tri-G, Inc. v. Burke, Bosselman & Weaver, 856 N.E.2d 389, 407 (Ill. 2006). This
“new business rule” also applies “to new product lines in established businesses
when profits are difficult to measure.” TAS Distrib. Co. v. Cummins Engine
Co., 491 F.3d 625, 633 (7th Cir. 2007). Texas courts apply a similar rule. See
Tex. Instruments, Inc. v. Teletron Energy Mgmt., Inc., 877 S.W.2d 276, 279
(Tex. 1994) (“Profits which are largely speculative, as from an activity
dependent on uncertain or changing market conditions, or on chancy business
opportunities, or on promotion of untested products or entry into unknown or
unviable markets, or on the success of a new and unproven enterprise, cannot
be recovered.”). This rule is not ironclad, however. See, e.g., Tri-G, 856 N.E.2d
at 407–08 (upholding jury’s award of new business’s lost profits based on
comparable profits made by an established business). Indeed, the new business
rule is simply an extension of the general rule that lost profits are only
“recoverable if proved to a reasonable degree of certainty.” TAS Distrib., 491
F.3d at 632; accord Phillips v. Carlton Energy Grp., LLC, 475 S.W.3d 265, 278
(Tex. 2015) (“[L]ost profits can be recovered only when the amount is proved
with reasonable certainty.”).
      The Janik Report calculates lost profits by projecting future sales of
Jacked Up products. These sales figures assume that a certain number of
stores would buy Jacked Up tea, coffee, and cappuccino each year and that each
store would buy a certain number of cases of Jacked Up products. The Janik
Report pulls these assumptions from Sara Lee’s own internal projections.



had the contract been performed.”). Although counsel for Jacked Up stated at oral argument
that Jacked Up does have reliance damages, such damages are not substantiated in the
record or explained in Jacked Up’s briefs.
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                             No. 15-11019
Jacked Up neither explains why these numbers are reasonably certain nor
points to any evidence in the record substantiating them—perhaps partly
because Sara Lee had no contracts with convenience stores to provide Jacked
Up products by the time it terminated the licensing agreement, although 7-
Eleven did pursue such a contract.
      We leave it to the district court to determine whether Jacked Up has put
forth sufficient evidence of damages. The district court may choose to conduct
a Daubert inquiry to determine whether the Janik Report is admissible. See
Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 590 (1993) (suggesting that
Federal Rule of Evidence 702 demands “more than subjective belief or
unsupported speculation”); see also Sportsband Network Recovery Fund, Inc. v.
PGA Tour, Inc., 136 F.3d 1329 (5th Cir. 1998) (unpublished table decision)
(affirming district court’s application of both Daubert and Texas state law to a
lost profits claim). Indeed, Sara Lee and Smucker moved to exclude the Janik
Report, and this motion was still pending when the district court granted
summary judgment. We leave it to the district court to determine whether the
Janik Report is admissible, and if it is admissible, whether it establishes lost
profits with reasonable certainty.
                             IV. CONCLUSION
      For the foregoing reasons, we AFFIRM in part, REVERSE in part, and
REMAND for further proceedings.




                                      29
