Blue Star Land Services LLC v. Coleman et al
ORDER granting in part and denying in part #34 Motion to Dismiss, as more fully set out. Signed by Honorable David L. Russell on 12/8/17. (jw)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
BLUE STAR LAND SERVICES, LLC,
DEVON ENERGY PRODUCTION
THEO C. COLEMAN, JEFFREY D. MORRIS )
AMARA S. JOHNSON, f/k/a AMARA
SINCLAIR, and ROCK CREEK LAND &
ENERGY COMPANY, LLC,
Case No. CIV-17-931-R
Before the Court is Defendants’ Motion to Dismiss, Doc. 34. Plaintiff Blue Star
Land Services, LLC (“Blue Star”) filed its Complaint and Request for Seizure, Doc. 3,
under the federal Defend Trade Secrets Act of 2016 (“DTSA”), Oklahoma’s Uniform
Trade Secrets Act (“UTSA”), and Oklahoma common law. Following an ex parte seizure
(Doc. 10) of Defendants’ electronic devices and Dropbox account containing potential
trade secret information and a subsequent preliminary injunction (Doc. 25), Defendants
filed this Motion. Considering Plaintiff’s allegations in the light most favorable to it, the
Court grants the Motion in part with respect to Defendant Johnson and denies it with
respect to Defendants Coleman, Morris, and Rock Creek for the following reasons.
According to Plaintiff’s Complaint, this case concerns a contentious business split
and the legitimacy of departing employees’ competitive conduct through their departure.
Defendants Theo Coleman and Jeffrey Morris were the only vice presidents of Blue Star,
a “boutique, full services” firm that provides critical land and regulatory services for large
oil and gas companies such as Devon Energy and Marathon Oil. Doc. 3, at 7 n.1. After five
years as vice presidents, the two left Blue Star in April of 2017 to start a competing
company, Rock Creek Land & Energy Company, LLC (“Rock Creek”).
Blue Star possesses extensive confidential information that helps it compete against
other outside brokers. It maintains rig schedules and section-township-range maps that
details wide-ranging information about their clients’ rigs, leases, and mineral findings. See
Doc, 3-46, at 4–5. Blue Star’s ownership reports, templates, and other work product allow
it to more effectively structure drilling and leasing plans, advise companies, and advocate
on their behalf before regulatory commissions. Id. at 5–13. More important, while Blue
Star has a system for protecting its clients’ confidential information and that of Blue Star
itself, Defendants Coleman and Morris had near complete access to it all.
Blue Star’s founder and president, David Swafford, hired Defendants Coleman and
Morris right out of college. See Doc. 3, at 9. They progressed through the company ladder
before spending five years as vice presidents. Id. Plaintiff believes Defendants first plotted
their exit in 2013, when Coleman created a spreadsheet outlining Blue Star’s financial and
operational information. See Doc. 3, at 10. In 2016, Coleman and Morris demanded equity
positions with Blue Star, after which Swafford entered into profit-sharing agreements in
October entitling Coleman and Morris to 5% each. Id. at 3; see Docs. 3-25, 3-26. Four
months later, Plaintiff claims Coleman began downloading to his personal Dropbox1
account confidential, proprietary, and trade-secret information that would soon help him
launch a competing company. Doc. 3, at 3.
Then in April of 2017, one of Blue Star’s existing clients, LEFCO, approached
Coleman and Morris about a new project. Id. at 11. Considering the opportunity as either
leverage for more equity or business to start a competing company, Coleman continued to
download more confidential information to his personal devices. Id. All told, this included
over 20,000 documents, one of which was a “highly confidential document” comprising
all of the company’s “IP addresses, user names, and passwords for authorized users across
its entire electronic system.” Id. at 13. With most of Blue Star’s recent work product
allegedly in possession, Coleman and Morris demanded from Swafford majority ownership
and control of the company. Id. at 13–14. Swafford declined and the parties agreed to part
Defendants Coleman and Morris then faced a short timeline to build a staff and
clientele to launch their new company, Rock Creek. Still employed by Blue Star, they first
reached out to Defendant Johnson, “the next-highest-ranking individual at Blue Star.”
Doc. 3, at 23. She responded that she needed “at least a couple weeks” to “make some $$”
at Blue Star before leaving for Rock Creek. Id. at 15. Yet, when Johnson gave Swafford
her two-week notice of resignation the following week, she allegedly misrepresented that
Dropbox is a cloud-based file-hosting service that allows account holders and their subscribers to
synchronize work on shared files.
she was leaving Blue Star to get engaged and move with her fiancé to South Carolina or
Florida. Id. at 23. Nonetheless, Johnson stayed on and accessed her new Rock Creek email
the following day from her Blue Star computer. Id. at 25. Next Coleman and Morris
strategized how to approach the rest of Blue Star’s staff, discussing the need for departing
employees to tell Swafford that they approached Defendants initially, not vice versa. Id. at
16. Following various communication with Blue Star employees and independent
contractors, Defendants Coleman and Morris now employ at least nine former Blue Star
staffers at Rock Creek. Id. at 31.
Plaintiff also alleges that Defendants poached various Blue Star clients. Coleman
incorporated Rock Creek on April 21st, 2017, two days before accessing existing Blue Star
contracts with LEFCO and Black Hawk to substitute the party name as “Rock Creek.” Id.
at 17–19. Then on the 24th, Morris and Coleman submitted their resignation letters, to be
effective on the 28th. Id. at 19; Docs. 3-30, 3-33. Morris proceeded to research how to delete
email records, which Plaintiff believes was intended to “delete evidence of their disloyal
actions.” Doc. 3, at 19. Coleman began emailing clients to inform them of their departure
and competing venture. Id. at 20. Similarly, Morris gave clients alternative Blue Star
contacts for future projects, but only connected these “clients with alternative Blue Star
employees who Morris knew or believed already had plans to go to Rock Creek following
Morris and Coleman’s exit.” Id. at 20–21. Later, Morris searched, “is it ethical to delete
work emails” and made various attempts to delete Blue Star emails. Id. at 21–22. The next
morning, when Swafford learned of another employee’s defection to Rock Creek, he
requested that Coleman and Morris leave Blue Star “ASAP.” Id. at 23. Shortly after,
Coleman informed a coworker that Rock Creek was taking Blue Star’s existing “Merge
Project” for LEFCO. Id. at 24. Additionally, Defendants allegedly interfered with existing
and prospective Blue Star contracts with Southwest Energy Partners, Double Eagle, and
Luxe. Id. at 37.
On August 29th, 2017, following an extensive audit by forensic investigator Ernst &
Young (“EY”) of Defendants’ old Blue Star computers and accounts, Plaintiff filed their
Complaint, Doc. 3, alleging:
(1) Violation of the federal Defend Trade Secrets Act, 18 U.S.C. § 1836, et
seq. (all Defendants);
(2) Violation of Oklahoma’s Uniform Trade Secrets Act, 78 Okla. Stat.
§§ 85–94 (all Defendants);
(3) Breach of fiduciary duty (Coleman and Morris);
(4) Breach of the duty of loyalty (Coleman, Morris, and Johnson); and
(5) Tortious interference with existing contract and prospective economic
advantage (all Defendants)
Motion to Dismiss Standard
A complaint may be dismissed upon a motion for “failure to state a claim upon which
relief can be granted.” Fed. R. Civ. P. 12(b)(6). Under Federal Rule of Civil Procedure
8(a)(2), a pleading must contain a ‘short and plain statement of the claim showing that the
pleader is entitled to relief.’” Ashcroft v. Iqbal, 556 U.S. 662, 677–78 (2009). “The pleading
standard Rule 8 announces does not require ‘detailed factual allegations,’ but it demands
more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Id. at 678
(quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Dismissal is proper
“if, viewing the well-pleaded factual allegations in the complaint as true and in the light
most favorable to the non-moving party, the complaint does not contain ‘enough facts to
state a claim to relief that is plausible on its face.’” Macarthur v. San Juan County, 497
F.3d 1057, 1064 (10th Cir. 2007) (quoting Twombly, 550 U.S. at 547); see Iqbal, 556 U.S.
at 676–80. The plaintiff cannot merely give “labels and conclusions, and a formulaic
recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555. Such conclusory
allegations are not entitled to the court’s presumption for the plaintiff. Instead, the plaintiff
must plead facts that at least makes the claims plausible and raise the “right of relief above
the speculative level.” Id. at 558.
Trade Secrets Misappropriation Claims
Plaintiff brings trade secrets claims against all Defendants under both the federal
DTSA and Oklahoma’s UTSA. Before assessing the merits, the Court must first dispose of
Plaintiff’s threshold “law of the case” argument. Plaintiff claims that the “law of the case”
doctrine precludes the Court from considering Defendants’ Motion with regard to
Plaintiff’s misappropriation claims because the Court’s earlier ex parte seizure order
necessarily held that the Complaint satisfied a standard beyond Rule 12(b)(6)’s plausibility
requirements. See Doc. 10. Granted, the Court found “extraordinary circumstances”
justifying an ex parte seizure and that “it clearly appears from specific facts” that Plaintiff
satisfied the DTSA’s eight ex parte seizure order requirements. 18 U.S.C.
§ 1836(b)(2)(A)(i)–(ii). However, an ex parte order, without the presence of opposing
counsel’s advocacy, does not constitute law of the case. Law of the case “has a narrower
meaning in connection with the duty of a judge to adhere to a ruling previously made in
the case by another judge of the same court. . . . [It] requires that the order of the first judge,
unless merely a formal or an ex parte order, shall not be vacated or nullified by a later
judge of the same court.” Munro v. Post, 102 F.2d 686, 688 (2d Cir. 1939) (emphasis
added); see also In re Ford Motor Co., 591 F.3d 406, 414 (5th Cir. 2009) (“By not having
expert testimony, and by relying on ex parte orders obtained without the presence of
opposing counsel, the MDL court again erred.”); Platten v. HG Bermuda Exempted Ltd.,
437 F.3d 118, 130 (1st Cir. 2006). Clearly, the “law of the case” doctrine is not applicable
here. Therefore, the Court must proceed to an independent 12(b)(6) review of Plaintiff’s
A. Federal Trade Secrets Claim
Plaintiff plausibly pleads a violation of the federal DTSA against Defendants
Coleman, Morris, and Rock Creek. The law provides a private cause of action against those
who have misappropriated trade secrets related to a product or service intended for
interstate commerce. See 18 U.S.C. § 1836(b)(1). The term “trade secret” includes:
all forms and types of financial, business, scientific, technical, economic, or
engineering information, including patterns, plans, compilations, program
devices, formulas, designs, prototypes, methods, techniques, processes,
procedures, programs, or codes, whether tangible or intangible, and whether
or how stored, compiled, or memorialized physically, electronically,
graphically, photographically, or in writing if—
(A) the owner thereof has taken reasonable measures to keep such
information secret; and
(B) the information derives independent economic value, actual or potential,
from not being generally known to, and not being readily ascertainable
through proper means by, another person who can obtain economic value
from the disclosure or use of the information
18 U.S.C. § 1839(3). “Misappropriation” in this context includes “acquisition 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.” 18 U.S.C. § 1839(5). The DTSA further defines “improper
means” as “theft, bribery, misrepresentation, breach or inducement of a breach of a duty to
maintain secrecy, or espionage.” 18 U.S.C. § 1839(6)(A). Thus, to show a DTSA violation,
Plaintiff must plausibly plead (1) trade matter, (2) reasonable secrecy, (3) independent
economic value resulting from this secrecy, (4) acquisition of the trade secret, (5) improper
means, (6) culpability, and (7) relation to interstate commerce.2
First, Plaintiff’s Verified Trade Secret Exhibit easily satisfies the trade matter
requirement: Blue Star’s client rig schedules and section-township-range maps plausibly
constitute “business . . . plans” or “compilations.” 18 U.S.C. § 1839(3); see Doc. 3-46, at
4–5. Its ownership reports also appear to be business compilations. See Doc. 3-46, at 5.
Further, given that trade matter can be “memorialized physically . . . or in writing,”
Plaintiff plausibly classifies hundreds of work templates as “processes” or “techniques.”
18 U.S.C. § 1839(3); Doc. 3-46, at 8. Similarly, Blue Star’s confidential client contracts
are plausible “forms [or] types of financial [or] business . . . information,” though
classifying them in one of the DTSA’s more specific categories is difficult. Nonetheless,
The parties seem to assume that Plaintiff must plead damages under both the federal and state trade secrets
statutes. However, every federal court that has held so either preceded the federal DTSA or merely assumed
without reference to the DTSA’s text that it adopts the state UTSA’s damages requirement. See, e.g.,
Ukranian Future Credit Union v. Seikaly, et al., No. 17-CV-11483, 2017 WL 5665960, at *8 (E.D. Mich.
Nov. 27, 2017); Space Data Corp. v. X, No. 16-CV-03260-BLF, 2017 WL 3007078, at *2 (N.D. Cal. July
14, 2017); Phyllis Schlafly Revocable Tr. v. Cori, No. 16-CV-01631-JAR, 2016 WL 6611133, at *2 (E.D.
Mo. Nov. 9, 2016); In re TXCO Res., Inc., 475 B.R. 781, 822–23 (Bankr. W.D. Tex. 2012). While damages
may come into play eventually pursuant to 18 U.S.C. § 1836(b)(3)(B), pleading them is not required at this
stage for a federal misappropriation claim.
when viewed in the aggregate and in the light most favorable to Plaintiff, these contracts
and much of the “Blue Star Operating Information” are physical manifestations of DTSA
“financial” and “business . . . compilations [and] processes.” Doc. 3-46, at 12; 18 U.S.C.
Defendants’ main contention is that Plaintiff is highly over-inclusive in its “trade
secrets” definition. They argue that the Complaint and its exhibited employment contracts
references “Trade-Secret Information” as a shorthand for all client-specific confidential
information, without regard for the DTSA definition. The Complaint’s Dropbox file
listings also include various unrelated and often personal documents. See Doc. 3-4.
However, Plaintiff’s allegedly overbroad definition and failure to cull out irrelevant
documents from a Dropbox log does not nullify the plausibility of all claims.3 To the
contrary, Plaintiff cites various documents that appear to constitute DTSA trade matter.
Second is the question of whether Plaintiff took “reasonable measures to keep such
information secret.” 18 U.S.C. § 1839(3)(A). As this “reasonable” qualification suggests,
“[a]lthough the law requires secrecy, it need not be absolute.” Metallurgical Indus. Inc. v.
Fourtek, Inc., 790 F.2d 1195, 1200 (5th Cir. 1986). Plaintiff lays out various security
measures it took to keep Blue Star and its clients’ information “extremely, closely
guarded.” Doc. 3, at 3; see Docs. 3, at 8; 3-46, at 18–20. They include limiting access to a
need-to-know basis, password-protecting company servers and networks, contractually
It does, however, make for nearly 300 pages of Complaint exhibits—the majority of which have no bearing
on Plaintiff’s claims and should have been filtered out for brevity and privacy purposes. See LCvR7.1(n)
(“Unnecessarily voluminous exhibits, attachments, and appendices to filings should be avoided.”).
binding staffers and third parties for confidentiality, limiting outside-the-office network
access to senior management and three other staffers, and other similar protections. Id.
Defendants dispute this characterization and argue that that much of Plaintiff’s
allegedly “confidential” information is “the same information that virtually every landman
. . . in the business possesses.” Doc. 34, at 16 & n.5. Moreover, Plaintiff has allegedly made
no effort to compel return of this protected information from contractors after a project has
terminated. Id. As to Plaintiff’s allegedly “confidential contracts,” Defendants are correct.
In contrast to Plaintiff’s treatment of other allegedly protected information, it declined to
file its “Amended Master Land Services” contract under seal. See Doc. 3-31. Moreover,
the contract is a clear spinoff of a publicly available online template. See Doc. 34, at 20–
21 (citing http://ocsbbs.com/content/pdf/regulatory/master.pdf). Yet, as to the rest of the
trade matter referenced above, the Court judges the allegations in the light most favorable
to Plaintiff and finds that Plaintiff took reasonable measures to protect secrecy.
Third, the trade matter must “derive independent economic value, actual or
potential, from not being generally known to, and not being readily ascertainable through
proper means by, another person who can obtain economic value from the disclosure or
use of the information.” 18 U.S.C. § 1839(3)(B). Plaintiff alleges that Blue Star’s trade
matter possesses “independent economic value” in the fact that competitors—if unable to
access trade matter like rig schedules, maps, ownership reports, and work templates—lack
Blue Star’s advantage in rig location, leasing, regulatory processes, and other matters.
Rather, competitors lacked this advantage until now, as Rock Creek allegedly functions in
a highly competitive market because of their acquisition and use of such trade matter. One
example from the Complaint illustrates this value further:
Marathon Oil Company Section-Township-Range Map. It shows the
location of the client’s leases for each 640-acre tract. The tracts are colorcoded to show the company’s leasing priorities, i.e., the specific areas where
the company is most interested in buying leases, based upon the client’s
(a) knowledge of already discovered minerals and (b) internal, expert
analysis about the likelihood of return on investment in each particular 640acre tract. With this one map, a competitor would know precisely where to
compete for leases—whether for its own exploration, or to bundle the leases
and then turn the package to the exploration company at a premium.
Docs. 3, at 2–3; 3-46, at 5. See also In re SandRidge Energy, Inc. S’holder Derivative Litig.,
No. CIV-13-102-W, 2014 WL 4716006, at *4–5 (W.D. Okla. Sept. 22, 2014). Thus,
Plaintiff plausibly pleads the “independent economic value” requirement as well.
Fourth, the “acquisition” requirement is rather straightforward.4 18 U.S.C.
§ 1839(5). The Complaint details Defendant Coleman’s step-by-step actions to download
protected information to his Dropbox account before leaving with Defendant Morris to
found Rock Creek. Doc. 3, at 12–13. Specifically, while still at Blue Star, Coleman
“uploaded 20,788 items to his personal Dropbox account. . . . By taking one year of
business email (including all attachments), Coleman copied approximately 90% of Blue
Star’s work product produced over the final year of his employment with Blue Star . . . .”
Id. at 12. It is less clear that Defendant Morris acquired this trade matter, but the Complaint
Defendants improperly attempt to heighten DTSA requirements to include not just acquisition, but use.
See Doc. 34, at 20. Yet, they cite a case that preceded the DTSA’s 2016 passage, Micro Consulting, Inc. v.
Zubeldia, 813 F. Supp. 1514, 1534 (W.D. Okla. 1990). The statute clearly reads that “disclosure or use” is
merely one way to show misappropriation, but it also suffices to show “acquisition of a trade secret of
another by a person . . . .” 18 U.S.C. § 1839(5). Thus, Plaintiff does not have to additionally plead use for
a federal misappropriation claim.
plausibly shows that Morris was aware of Coleman’s acquisition and acted in concert with
his soon-to-be Rock Creek partner during the Dropbox transfer. See Doc. 3, at 13 (“Morris
edited an excel spreadsheet named the ‘TJL Roster’ and uploaded it to a Dropbox folder
apparently shared by both Morris and Coleman, named ‘JT.’”). Therefore, Plaintiff
plausibly shows acquisition.
Fifth, Defendants’ acquisition must have occurred through “improper means,” in
this case through “breach of [the] duty to maintain secrecy.” 18 U.S.C. § 1839(5)–(6)(A).
Defendants rightly note that the contracts between Blue Star and its “independent
contractors” Theo Coleman, Inc., JD Morris Investments, Inc., and Amstar Land Services,
LLC—which include extensive provisions on data protection and keeping proprietary
information in “the strictest confidence”—do not necessarily bind Defendants once
converted to employees. Docs. 3-22; 3-23; 3-24; see Doc. 3, at 9 (“Coleman and Morris
. . . became Blue Star’s only vice-presidents and key employees . . . .”). Regardless,
Defendants’ “Profit Sharing Compensation Agreement” with Blue Star does prohibit
“intentional disclosure of [the] company’s confidential information contrary to [its]
policies.” Docs. 3-25, at 2; 3-26, at 2. The Complaint also delineates various company
policies to maintain such secrecy. See Docs. 3, at 8; 3-46, at 18–20. Thus, Plaintiff plausibly
shows that Defendants acquired trade matter through “improper means,” breaching a duty
to maintain secrecy. 18 U.S.C. § 1839(5).
The sixth DTSA requirement is culpability, that the person who acquires the trade
matter “knows or has reason to know that the trade secret was acquired by improper
means.” 18 U.S.C. § 1839(5). Beyond Defendants Coleman and Morris’s presumed
awareness of Blue Star confidentiality policies as vice presidents, the Complaint shows
that they affirmatively exhibited awareness of this duty to maintain secrecy. Defendant
Morris searched “is it ethical to delete work emails.” Doc. 3, at 21. Defendant Coleman
emailed a client discussing a conflict of interest waiver, “we will never use the proprietary
information from either company to assist in our work for the other.” Doc. 3-36, at 3.
Coleman also sent a company-wide email “remind[ing] everyone to dispose of any
personal or proprietary information in the shred boxes . . . . This includes ownership
reports, title opinions, address lists that include personal information and anything else that
isn’t of public record.” Doc. 3-45, at 1. Despite awareness of Blue Star policies, Defendants
allegedly worked together to knowingly acquire this trade matter.
Lastly, Blue Star’s alleged trade secret information is clearly “related to a product
or service used in, or intended for use in, interstate or foreign commerce.” 18 U.S.C.
§ 1836(b)(1). The information relates to (1) oil intended for use in interstate commerce and
(2) land and regulatory services provided for national oil and gas companies. See Doc. 3,
at 6–7. Thus, the Complaint plausibly meets each of the DTSA’s requirements for a federal
trade secrets misappropriation claim against Defendants Coleman, Morris, and Rock
B. State Trade Secrets
Oklahoma’s UTSA establishes a greater burden to plead a trade secrets
misappropriation claim. “To prove misappropriation of a trade secret, [Plaintiff] must show
(i) the existence of a trade secret, (ii) misappropriation of the secret by defendants, and (iii)
use of the secret to [Plaintiff’s] detriment.” MTG Guarnieri Mfg., Inc. v. Clouatre, 239
P.3d 202, 209 (Okla. Civ. App. 2010); see OUJI-Civ 29.1, MISAPPROPRIATION OF TRADE
SECRETS – ELEMENTS. Although the state “trade secrets” and “misappropriation”
definitions are nearly identical to the DTSA, Plaintiff must additionally show “use” and
“detriment.” Compare 18 U.S.C. § 1839, with 78 Okla. Stat. § 86.
The question of use is a difficult and somewhat speculative one. Defendants
highlight that Plaintiff’s allegations mostly concern Defendants’ potential for use. See, e.g.,
Doc. 3, at 30 (“Rock Creek may be significantly tempted to . . . . [O]ne could create a
[shadow] LLC for the competitive work . . . and thereby shield the true owner . . . in a way
that would mask the improper use of the Trade-Secret Information . . . .”) (emphasis
However, Plaintiff does plead enough to plausibly show that Rock Creek’s very
existence and success thus far evinces Defendants’ use:
[R]everse engineering [the Work Templates] would be practically
impossible. To create these hundreds of forms from scratch—whether from
memory or experience—would, at minimum, take Morris and Coleman more
than many months of day-to-day work, and in reality, could only be done
with the assistance of and reliance upon Blue Star’s Trade-Secret
With these Work Templates and other Trade-Secret Information, a
competitor start-up could compete from day one . . . . Perhaps the above
explains why Coleman and Morris absconded with the material that they
currently deny having taken.
Coleman and Morris apparently put this information to use in their
preparations to compete. The[y] prepared a document named the TJL Roster
. . . . In its final version, it appears to be the document housing Coleman and
Morris’s business plan blueprint for their new company, but it contains Blue
Star’s financial data and employee information.
To Swafford, there is no reasonable doubt that this [spreadsheet] was
Coleman and Morris’s blueprint. Indeed, much of the information comes
from Blue Star documents that Coleman and Morris apparently shared in a
Doc. 3-46, at 10–17. These allegations are indeed somewhat speculative, but finding them
insufficient would place an excessive burden on employers with limited means to
demonstrate actual use pre-discovery. Plaintiff’s use claim is plausible enough to withstand
Plaintiff has also plausibly pled detriment. Oklahoma Uniform Jury Instructions
instruct that misappropriation must be “the direct cause of damages to Plaintiff,” but the
subsequent Comments clarify that “detriment” would suffice. OUJI-Civ 29.1 & cmts.; see
also MTG, 239 P.3d at 209. Oklahoma’s UTSA instructs courts to measure damages from
trade secrets misappropriation by “actual loss,” “unjust enrichment,” or in lieu of these
measurements, “a reasonable royalty for a misappropriator’s unauthorized . . . use of a
trade secret.” 78 Okla. Stat. § 88(A). Further, “[a] flexible approach is applied to the
calculation of damages in a misappropriation of trade secrets case.” In re Mandel, 578 F.
App’x 376, 390 (5th Cir. 2014); see also Computer Assocs. Int’l, Inc. v. Am. Fundware,
Inc., 831 F. Supp. 1516, 1526 (D. Colo. 1993) (“The proper measure of damages for
misappropriation of trade secrets case can be elusive, and courts are encouraged to be
flexible and imaginative.”) (internal quotations omitted).
Plaintiff details various damages from Defendants’ misappropriation, including:
unjust enrichment from their use of Blue Star’s work templates (Doc. 3-46, at 11), actual
damages to the value of Plaintiff’s client information now that various rig schedules and
leasing maps are no longer confidential (id. at 4–5), actual damages to Plaintiff’s market
share and, conversely, unjust enrichment to Defendants from using trade secrets to launch
Rock Creek and compete directly with Blue Star (id. at 11, 13). Plaintiff therefore pleads a
plausible Oklahoma UTSA misappropriation claim against Defendants Coleman, Morris,
and Rock Creek as well.
C. Failure to Plead Misappropriation Against Defendant Johnson
Plaintiff fails to plead factual allegations demonstrating a plausible federal or state
misappropriation of trade secrets claim against Defendant Johnson. Plaintiff alleges, “on
information and belief, that Johnson knew or had reason to know [that other Defendants
acquired, used, or disclosed trade secrets] and engaged in such activity injuring Blue Star.”
Doc. 3, at 34 n.10. Such a conclusory allegation would be sufficient if, like for Defendants
Coleman, Morris, and Rock Creek, Plaintiff offered facts detailing her acquisition, use, or
awareness of the scheme. However, Plaintiff has only pled the following facts regarding
Johnson: She deceived Blue Star to remain on the payroll longer before joining Rock
Creek, accessed her Rock Creek email once while at Blue Star, and deleted Blue Star files
and conversation history. See Doc. 3, at 23, 25–26. In other words, Plaintiff implies that
because Johnson deceptively joined a competitor, she must have known about its
misappropriation of Blue Star’s trade secrets. Liability by association is not enough, nor is
“a formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555.
Therefore, Plaintiff’s misappropriation claims against Defendant Johnson do not “state a
claim to relief that is plausible on its face.” Id. at 547.
Breach of Fiduciary Duty
Plaintiff next claims that Defendants Coleman and Morris breached their fiduciary
duty, which requires showing a (1) fiduciary duty and (2) breach that (3) directly caused
Plaintiff damages. See OUJI 26.1. Oklahoma looks to the Third Restatement of Agency for
the various fiduciary duties that agents owe their principals. See OIJI 27.3 cmts; Third
Restatement of Agency § 801 (“An agent has a fiduciary duty to act loyally for the
principal’s benefit in all matters connected with the agency relationship.”). In the trade
secrets information context, Defendants’ duty is rather simple—“not to use or
communicate confidential information of the principal for the agent’s own purposes or
those of a third party.” Third Restatement of Agency § 8.05(2). The Restatement’s
An agent’s duties concerning confidential information do not end when the
agency relationship terminates. An agent is not free to use or disclose a
principal’s trade secrets or other confidential information whether the agent
retains a physical record of them or retains them in the agent’s memory. If
information is otherwise a trade secret or confidential, the means by which
an agent appropriates it for later use or disclosure should be irrelevant. Feats
of human memory, however commendable and intriguing in many respects,
should not be privileged as instruments of disloyal conduct.
Third Restatement of Agency § 8.05 cmt. c. Plaintiff plausibly claims that (1) Defendants
Coleman and Morris had a “fiduciary or confidential” relationship with Plaintiff as vice
presidents. Krug v. Helmerich & Payne, Inc., 320 P.3d 1012, 1017 (Okla. 2013); see
Restatement of Employment Law § 8.01 TD No 3 (2010) (“Only higher-level employees
such as managers or others in positions of authority or confidence are subject to higher
fiduciary standards distinct from the basic duty of loyalty.”); (2) they breached this duty
by allegedly misappropriating and using trade secrets and other confidential information to
benefit their new competing business; and (3) it directly caused Plaintiff damages. Thus,
Plaintiff pleads a plausible breach of fiduciary duty claim against Defendants Coleman and
Breach of Duty of Loyalty
Plaintiff also claims that Defendants Coleman, Morris, and Johnson breached their
duty of loyalty to Blue Star. The Restatement provides:
(a) An employee breaches the duty of loyalty to the employer if, without the
employer’s consent, the employee while employed with the employer
competes with the employer.
(b) Competition under subsection (a) includes solicitation of business from
the employer’s customers or recruitment of other employees to leave the
employer to work for a potential competitor, but it does not include
reasonable preparation to compete.
[Comment (a)]: Although employees may not compete with a current
employer, they may take reasonable preparatory steps to be in a position to
compete upon terminating the employment relationship . . . , so long as the
preparation is not done on company time or by using company resources
Restatement of Employment Law § 8.04 TD No 3. Oklahoma appears to classify the duty
of loyalty as one of multiple duties owed by fiduciaries to their principals. See, e.g., Graves
v. Johnson, 359 P.3d 1151, 1156 (Okla. Civ. App. Mar. 16, 2015); Sw. Stainless, L.P. v.
Sappington, No. 07-CV-0334-CVE-FHM, 2008 WL 3013548, at *26–27 (N.D. Okla. Aug.
1, 2008) (reversed on other grounds); State ex rel. Oklahoma Bar Ass’n v. Gassaway, 196
P.3d 495, 503 (Okla. 2008). Defendants argue that no case explicitly recognizes this duty
as the basis for a standalone cause of action. However, given the Restatement and available
Oklahoma precedent, the Court will allow Plaintiff to proceed at this stage if it can show a
With respect to Defendants Coleman and Morris, Defendants alleged solicitation of
Blue Star’s employees and clients constitutes a plausible effort to “compete” with their
employer. Defendants rightly note that at-will employees are free to quit whenever and join
a competitor, just as clients are free to take their business elsewhere. However, the Court
must view the facts in the light most favorable to Plaintiff, and Plaintiff pleads that
Defendants actively solicited employees and clients. See Doc. 3, at 15–16, 18, 20–21, 31.
Further, Defendants’ alleged misappropriation was also intended to compete with Blue
Star, and Plaintiff is entitled to plead alternate theories for the same underlying conduct.
Thus, Plaintiff pleads a plausible breach of the duty of loyalty against Defendants Coleman
Turning to Defendant Johnson, her conduct would not constitute a breach of the
duty of loyalty. Plaintiff alleges that before leaving Blue Star to join Rock Creek, Johnson
(1) lied about why she was leaving the company in order to stay on the payroll for two
more weeks (Doc. 3, at 23), (2) accessed her Rock Creek email one time (id. at 25),
(3) deleted Lync conversation history, Microsoft Office emails, and Dropbox files (id. at
26), and (4) “knew or had reason to know [about Blue Star’s misappropriated trade secrets]
and engaged in such activity injuring Blue Star.” (id. at 34 n.10). Lying about why she was
leaving and spending a de minimis time accessing her new email address while “on
company time” does not mean that Johnson “compete[d]” with her employer. Restatement
of Employment Law § 8.04 TD No 3. Plaintiff also fails to allege particular content that, if
Johnson deleted, would constitute a breach of the duty of loyalty. In other words, why is
Johnson’s deletion history anything beyond mere suspicious behavior by an employee
nervous to transition to a competitor? As to Plaintiff’s “knew or had reason to know”
misappropriation allegation, it is simply too conclusory and speculative to constitute a
breach of the duty of loyalty. Thus, Plaintiff’s claim against Defendant Johnson for breach
of the duty of loyalty is dismissed.
Lastly, Plaintiff successfully pleads that Defendants Coleman, Morris, and Rock
Creek tortiously interfered with its existing contracts and prospective economic advantage.
Tortious interference with contract requires:
(1) that the plaintiff had a business or contractual right that was interfered
(2) that the interference was malicious and wrongful, and that such
interference was neither justified, privileged nor excusable; and
(3) that damage was proximately caused as a result of the interference.
Temeron, Inc. v. Ferraro Energy Corp., 861 P.2d 319, 325 (Okla. Civ. App. 1993) (citing
Mac Adjustment, Inc. v. Property Loss Research Bureau, 595 P.2d 427 (Okla. 1979)).
Tortious interference with prospective economic advantage requires:
(1) the existence of a valid business relation or expectancy;
(2) knowledge of the relationship or expectancy on the part of the interferer;
(3) an intentional interference inducing or causing a breach or termination of
the relationship or expectancy; and
(4) resultant damage to the party whose relationship has been disrupted.
Gonzalez v. Sessom, 137 P.3d 1245, 1249 (Okla. Civ. App. 2006).
Plaintiff claims that Defendants interfered with existing contracts and business
expectancies with clients LEFCO, Black Hawk, Southwest Energy Partners, Double Eagle,
and Luxe. See Doc. 3, at 37. For example, allegedly while still employed by Blue Star,
Defendants Coleman and Morris were approached by an agent of LEFCO for a new project.
See id. at 11. After failing to leverage that business into better equity positions at Blue Star,
Coleman and Morris informed Swafford that they planned to take it with them to their new
venture. Id. at 13–14. Coleman then incorporated Rock Creek the following day while still
employed by Blue Star. Id. at 17. By the weekend, Coleman had accessed and reformatted
existing Blue Star contracts with LEFCO and Black Hawk to substitute Rock Creek’s
information. Id. at 18-19. Plaintiff shows emails illustrating how even after Swafford
requested that Coleman and Morris leave Blue Star “ASAP,” Coleman informed staff that
he was taking Blue Star’s existing “Merge Project” for LEFCO to Rock Creek. Id. at 24.
Plaintiff’s extensive allegations concerning misappropriated trade secrets also bear on
Plaintiff’s relevant intent and conduct in poaching these existing and prospective business
opportunities. See Doc. 3-46.
Defendants argue that Plaintiff cannot satisfy a contractual right or expectancy
necessary for tortious interference claims because the contracts for these clients were nonexclusive and could be cancelled at any time without cause following thirty-days notice.
See Doc. 34, at 28 (citing Doc. 3-31). The nature of these contracts is certainly relevant to
Plaintiff’s rights, but Defendants fail to show why these provisions forfeit Plaintiff’s
recovery altogether. After all, Plaintiff maintained active contracts and an offer for a new
contract that—while potentially less valuable given the nature of these non-exclusivity and
short notice provisions—Defendants allegedly poached nonetheless. Therefore, Plaintiff’s
tortious interference claims against Defendants Coleman, Morris, and Rock Creek survive
However, like Plaintiff’s other claims against Defendant Johnson, its tortious
interference claims against her are wholly conclusory. Plaintiff first alleges that Johnson
“tortiously interfered with Blue Star’s valid, existing contracts with LEFCO, Black Hawk,
[et cetera].” Doc. 3, at 37. However, the factual allegations above concerning how
Defendants tortiously interfered only implicate Defendants Coleman, Morris, and Rock
Creek. By contrast, Plaintiff’s claim against Johnson is merely a “the-defendantunlawfully-harmed-me accusation.” Iqbal, 556, U.S. at 678. Plaintiff also alleges that:
In the alternative if necessary, on information and belief, Johnson knew of
Coleman, Morris, and Rock Creek’s plan to tortiously interfere with Blue
Star’s valid, existing contracts with the above-listed clients [and their plan to
tortiously interfere with Blue Star’s prospective economic advantage,] had
the intent to assist them in committing the tortious interference and gave
them assistance or encouragement, and her assistance or encouragement was
a substantial factor in causing the tortious interference with Blue Star’s
existing contracts with the above-listed clients.
Id. at 37–38. These allegations, save for the mention of specific clients, constitute an
insufficient “formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S.
at 555. Thus, Plaintiff has failed to plead a plausible tortious interference claim against
Plaintiff pleads plausible federal and state trade secrets misappropriation claims
against Defendants Coleman, Morris, and Rock Creek; breach of fiduciary duty and the
duty of loyalty claims against Defendants Coleman and Morris; and tortious interference
claims for existing contracts and prospective economic advantage against Defendants
Coleman, Morris, and Rock Creek. However, Plaintiff’s claims against Defendant Johnson
do not meet the 12(b)(6) plausibility standard. Accordingly, the Motion to Dismiss is
GRANTED in part with respect to all claims against Defendant Johnson and DENIED with
respect to all claims against Defendants Coleman, Morris, and Rock Creek.
IT IS SO ORDERED this 8th day of December, 2017.
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