Thomas v. Oklahoma Land Holdings LLC et al
Filing
169
ORDER granting in part and denying in part 76 Defendants' Motion for Summary Judgment. Signed by Honorable Timothy D. DeGiusti on 7/27/2020. (mb)
Case 5:17-cv-01036-D Document 169 Filed 07/27/20 Page 1 of 31
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
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OKLAHOMA LAND HOLDINGS, LLC,
Plaintiff,
v.
BMR II, LLC and ANDREW M. ASHBY,
Defendants.
Case No. CIV-17-1036-D
ORDER
Defendants1 BMR II, LLC, and Andrew M. Ashby (collectively “Defendants”) have
filed a Motion for Summary Judgment [Doc. No. 76]. Plaintiff Oklahoma Land Holdings,
LLC (“OLH” or “Plaintiff”), has filed a Response [Doc. Nos. 89, 104] in opposition, to
which Defendants have replied [Doc. No. 111]. Plaintiff subsequently filed a sur-reply
with leave of Court [Doc. No. 116].
Defendants filed a Motion to Strike [Doc. No. 108], asking the Court to strike certain
exhibits attached to Plaintiff’s Response. Plaintiff responded in opposition to the Motion
to Strike [Doc. No. 120], and Defendants replied [Doc. No. 123]. The Motion to Strike
and all related filings will be considered as objections herein. All matters are fully briefed
and at issue.
1
At one point during this litigation, Defendants were designated as Third-Party
Defendants. Plaintiff herein was one of several Defendants also designated as CounterPlaintiffs and Third-Party Plaintiffs. Following the dismissal of several claims and parties,
the case style was modified to reflect the accurate burdens and relationships of the parties.
See Motion to Modify Case Style [Doc. No. 86]; Order [Doc. No. 98]. The references in
this Order reflect the correct relationships and modified case style.
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STANDARD OF DECISION
Summary judgment is proper “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); Universal Underwriters Ins. Co. v. Winton, 818 F.3d 1103, 1105 (10th Cir.
2016). “An issue is ‘genuine’ if there is sufficient evidence on each side so that a rational
trier of fact could resolve the issue either way,” and “[a]n issue of fact is ‘material’ if under
the substantive law it is essential to the proper disposition of the claim.” Adler v. Wal-Mart
Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (citing Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986)).
The Court’s inquiry must be whether the evidence, when viewed “through the prism
of the substantive evidentiary burden,” Anderson, 477 U.S. at 254, “presents a sufficient
disagreement to require submission to a jury or whether it is so one-sided that one party
must prevail as a matter of law.” Id. at 251–52. Although the Court views all facts in the
light most favorable to the nonmoving party at the summary judgment stage, “there is no
issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to
return a verdict for that party.” Id. at 249.
BACKGROUND
The following is meant only as an overview of the case’s factual background. Facts
demarcated as disputed or undisputed will be set forth in the relevant subsections of this
Order, as they pertain to each claim. The dispute at hand concerns oil and gas ventures in
Oklahoma—more precisely, in a region known as the STACK or NW STACK
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encompassed by Woodward, Dewey, and Ellis counties. Defendant Andrew Ashby is an
experienced engineer and president of BMR II.
There is now some dispute about whether Defendants were considering exploratory
drilling projects in the STACK area before May 18, 2017. This is relevant because
sometime in April 2017, Bill Thomas spoke with Danny Schlachter2 and discussed oil and
gas deals. During these discussion, Mr. Schlachter offered to show Mr. Thomas a
presentation Plaintiff OLH had developed with information on a play involving the NW
STACK (the “OLH Presentation”).
On May 2, 2017, the President of OLH, Rodney Moore, sent a Confidentiality
Agreement [Doc. No. 76, Ex. 24] (“Confidentiality Agreement”)3 to Mr. Thomas by email,
and Mr. Thomas signed and returned it that same day. The parties dispute whether and
how the OLH Presentation reached Defendants. By early May 2017, however, there were
meetings involving both Bill Thomas and Defendant Ashby, and Defendant Ashby decided
to start leasing acreage for the NW STACK project, initially using his own money. BMR
2
Danny Schlachter is the president of Schlachter Operating Company, once a Third-Party
Plaintiff to this lawsuit. Mr. Schlachter entered into a joint venture to explore the STACK
area with Danick, an upstart company also working in the energy field. See Response at
9. This joint venture was Oklahoma Land Holdings, LLC, Plaintiff. Id. Bill Thomas is a
Mr. Schlachter’s friend and Defendant Ashby’s business partner.
3
The Confidentiality Agreement contains a Non-Compete provision and a Non-Disclosure
provision. See Confidentiality Agreement at 2–3; see Motion [Doc. No. 76] (“The first [key
provision] is a “confidentiality/non-disclosure” provision. The second is the non-compete
provision.” (citing Undisputed Material Facts Nos. 26, 27)). Mr. Thomas initiated the
instant suit seeking to invalidate the Confidentiality Agreement but has since settled with
Defendants out of court. See Motion at 2. Throughout their papers, the parties refer to the
Confidentiality Agreement as the “NDA.”
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II, at that time, was not yet formed and there is some dispute as to whether Bill Thomas
was to be a part of the entity.
BMR II was eventually formed as a Colorado entity on July 16, 2017, received
funding from investors in September 2017, and was registered to do business in the State
of Oklahoma on March 14, 2018. By April 2018, approximately 68,000 acres in the
relevant area were acquired on BMR II’s behalf, and all such acreage was transferred to
BMR II by assignment that month. BMR II began drilling its first well in June 2018 and
its “proof of concept” drilling program is ongoing.
DISCUSSION
I.
The Court will apply Texas, Oklahoma, and federal law to resolve these
disputes.
The Court’s jurisdiction is predicated upon the complete diversity of the parties,
pursuant to 18 U.S.C. § 1332. The amount in controversy exceeds $75,000.00. “A federal
court sitting in diversity . . . must apply the substantive law of the forum state, including
its choice of law rules.” Otis Elevator Co. v. Midland Red Oak Realty Inc., 483 F.3d 1095,
1101 (10th Cir. 2007). Under Oklahoma law, different choice-of-law rules apply to actions
that sound in tort and those that sound in contract. Bernal v. Charter Cty. Mut. Ins. Co.,
209 P.3d 309, 315 (Okla. 2009).
a) Texas law applies to the contractual disputes.
Oklahoma’s choice-of-law rule for contract actions is bottomed on the terms of
OKLA. STAT. tit. 15 § 162 (2009). Generally, “[t]he law of the state chosen by the parties
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to govern their contractual rights and duties will be applied.” Telex Corp. v. Hamilton, 576
P.2d 767, 768 (Okla. 1978).
Here, the contract at issue provides that the agreement is “governed by the laws of
the State of Texas without regard to conflict of laws principles.” Confidentiality Agreement
[Doc. No. 76], Ex. 24 at 3; see also Motion at 19 n.14. The Court finds no reason to
disregard this provision, and therefore, Texas law governs the resolution of the breach of
contract claim.
b) The choice-of-law analysis as to the remaining claims sounding in tort dictates
that Oklahoma law applies, unless displaced by federal law.
In a tort action, Oklahoma follows the most-significant-relationship approach to
conflict-of-laws issues. Hawk Enter., Inc. v. Cash Am. Int’l, Inc., 282 P.3d 786, 790 (Okla.
Civ. App. 2012) (applying Oklahoma law to resolve a tort claim despite a contractual
provision indicating Texas law would govern disputes). “Oklahoma choice of law rules
require the court to apply the tort law of the state with the most significant relationship to
the occurrence and to the parties.” Childs v. Okla. ex rel. Okla. State Univ., 848 P.2d 571,
578 n.41 (Okla. 1993).
To decide which state’s law to apply, the Court considers the following factors: “(1)
the place where the injury occurred, (2) the place where the conduct causing the injury
occurred, (3) the domicile, residence, nationality, place of incorporation and place of
business of the parties, and (4) the place where the relationship, if any, between the parties
occurred.” Brickner v. Gooden, 525 P.2d 632, 637 (Okla. 1974).
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Where the opposing parties are from different states, as they are here, the third factor
favors neither party. See Hawk, 282 P.3d at 791. The business dealings of the parties,
however, are centered around Oklahoma, and the agreement at issue contemplated that the
obligations under the contract would be performed in Oklahoma. See Confidentiality
Agreement, [Doc. No. 89], Ex.4. Further, the case “involves . . . oil and gas business
ventures in the Anadarko Basin in northwest Oklahoma.”
Confidentiality
Agreement
(“Receiving
Party
is
Motion at 11; see also
interested
in
a
possible
transaction…within the area of [certain counties] in Oklahoma.”).
Some of the conduct causing the alleged injury occurred out of state. But the
allegedly protected information, the consequences of the alleged misappropriation, the land
involved in the dispute, and the projects at issue all involve Oklahoma. See Hawk, 282
P.3d at 791 (“[A]lthough the . . . agreement contemplates that some of the obligations of
the contract will be performed in Texas, the contractual obligation fundamental to Hawk’s
claim is the right to operate. . . within its exclusive Oklahoma City territory.”). For these
reasons, the Court finds that Oklahoma “has the most significant relationship to the
occurrence and the parties” in this case. Brickner, 525 P.2d at 637. The Court therefore
will apply Oklahoma law to the resolution of disputes sounding in tort, to the extent state
law has not been displaced by applicable federal laws.
II.
The objections to certain evidentiary material attached by Plaintiff are
sustained in part and overruled in part.
Defendants contend that Plaintiff has attached certain evidence to its Response
that “was never produced in discovery—even though it was repeatedly requested—as
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well as certain documents that clearly pertain to inadmissible settlement discussions.”
Motion to Strike at 1. Further, they contend Plaintiff presents a “self-serving sham
affidavit . . . that contradicts their own deposition testimony.” Id.
a) The objections as to paragraphs 2,3,14 and Exhibit A of Rodney Moore’s
affidavit, paragraphs 3–5 of Exhibit 1, and paragraphs 9–10 of Exhibit 3 are
sustained in part and overruled in part.
First, Defendants argue that the Court should disregard certain portions of Rodney
Moore’s Affidavit, submitted by Plaintiff as Exhibit 4 to its Response. Id. at 2. They argue
the content of the affidavit directly contradicts Moore’s deposition testimony. Id.
In considering a motion for summary judgment, the district court may disregard an
affidavit that conflicts with the affiant’s prior deposition testimony if the conflicting
affidavit represents “an attempt to create a sham fact issue.” Barber v. Hallmark Cards,
Inc., 74 F.3d 1248 (10th Cir. 1996). The Tenth Circuit has described cases in which an
affidavit raises a sham issue as “unusual.” Law Co. v. Mohawk Const. & Supply Co., 577
F.3d 1164, 1169 (10th Cir. 2009). In determining if an affidavit creates a sham fact issue,
courts consider whether: “(1) the affiant was cross-examined during his earlier testimony;
(2) the affiant had access to the pertinent evidence at the time of his earlier testimony or
whether the affidavit was based on newly discovered evidence; and (3) the earlier
testimony reflects confusion which the affidavit attempts to explain.” Id. (quoting Ralston
v. Smith & Nephew Richards, Inc., 275 F.3d 965, 973 (10th Cir. 2001)).
Contrary to Defendants’ assertions, there is no direct conflict between the affidavit
and the deposition testimony. In his deposition, Moore states the following: “Luis and
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Nick would have worked on creating the actual presentation to give to investors.” Moore
Dep. [Doc. No. 108], Ex. 1 at 11–12. The affidavit states that “[Moore] was personally
involved in the creation of OLH’s confidential information.” Motion to Strike, Ex. 4 ¶ 2.
The line of questioning during Moore’s deposition focused on whether he was involved in
creating the “actual presentation.” Motion to Strike, Ex. 1 at 12–13. The testimony does
not preclude the possibility that Moore was somehow involved in the process; clearly
Moore had enough involvement in the creation of the OLH Presentation to answer the
questions during his deposition. In context, there is no direct and clear conflict between
both statements. Absent conflict between the two, there is no need to analyze whether the
testimony creates a sham issue.
As to Exhibit A, Moore attests to the fact that this exhibit is “a true and correct copy
of BMR II’s presentation slides [] overlaid by those from OLH’s presentation”; there is no
expert opinion being offered on geological similarities between the two materials. To the
extent that Moore analyzes the slides or provides any opinion on the science involved, the
Court will disregard these analyses, as Moore is a lay witness and has testified to not having
any geological background. See Motion, Ex. 1 at 6. These objections are sustained in part
and overruled in part.
As to the Schlachter Affidavit, [Doc. No. 89, Ex.1], the Court again finds there are
no contradictory statements. During his deposition, Schlachter testified that he had nothing
to do with OLH’s unregistered securities offering and its presentation materials. See
Schlachter Dep., Ex.10 at 102:15–103:13. In his Affidavit, Schlachter addresses the
expected value of the land. Schlachter Aff. ¶ 3. There is no directly contradictory
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information and therefore no reason to continue with the analysis. This objection is
overruled.
There is likewise no inconsistency between Castillo’s deposition testimony and
paragraph 10 of the Castillo Affidavit [Doc. No. 89, Ex. 3]. In context, during the
deposition Castillo was reminded of the details he is now attesting to in his affidavit.
Plaintiff fails to respond to Defendants’ contention that paragraph 9 in the Castillo
Affidavit contradicts his testimony, but the Court nevertheless finds there are no
contradictions. Castillo says in his deposition that a “slide deck may have been sent” and
that an updated version was presented during a videoconference. See Motion [Doc. No.
108], Ex. 8 at 76:13–25. In his affidavit, Castillo states that “[w]e had previously sent a
slide deck to them, and it was my understanding that we would be answering questions of
a technical nature.” Castillo Aff. ¶ 9. There is no direct contradiction here, and at the very
most any inconsistency is akin to the notion that “the earlier testimony reflects confusion
which the affidavit attempts to explain.” Law Co. v. Mohawk Const. & Supply Co., 577
F.3d 1164, 1169 (10th Cir. 2009). This objection is overruled.
b) Exhibit B to Exhibit 4 and Moore’s Supporting Statements contained in ¶¶
5–7 of Exhibit 4 are inadmissible under FED. R. CIV. P. 37(c)(1).
Defendants claim the Confidentiality Agreements labeled as Exhibit B to Exhibit 4
[Doc. No. 105-2], should be inadmissible, as they were not produced at any point during
discovery even though they were repeatedly requested. Rule 37 provides that:
A party that without substantial justification fails to disclose
information required by Rule 26(a) or 26(e)(1) [which govern initial
disclosures and required supplements thereof] shall not, unless such failure
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is harmless, be permitted to use as evidence at a trial, at a hearing, or on a
motion any witness or information not so disclosed.
“The determination of whether a Rule 26(a) violation is justified or harmless is
entrusted to the broad discretion of the district court.” Woodworker’s Supply, Inc. v.
Principal Mut. Life Ins. Co., 170 F.3d 985, 993 (10th Cir. 1999). A district court need not
make explicit findings concerning the existence of a substantial justification or the
harmlessness of a failure to disclose. Id. Nevertheless, the following factors should guide
its discretion: (1) the prejudice or surprise to the party against whom the testimony is
offered; (2) the ability of the party to cure the prejudice; (3) the extent to which introducing
such testimony would disrupt the trial; and (4) the moving party’s bad faith or willfulness.
See Smith v. Ford Motor Co., 626 F.2d 784, 797 (10th Cir. 1980).
Both parties agree that the existence of the Confidentiality Agreements was timely
disclosed. See Reply at 3 (“Plaintiff was quick in all of its discovery responses to say it
had asked all third parties to sign [Confidentiality Agreements].”). However, it appears
Plaintiff failed to produce the actual documents, despite repeated requests for it to do so.
The extent to which this delay in production was willful is unclear. Despite Defendants’
contention that Plaintiff’s failure to produce was dilatory, Plaintiff asserts that the
documents were just recently identified. Trial has not yet been set, and as such the delay
in production has caused no disruption. Further the Court would consider any proper
request for Defendants to conduct discovery out-of-time to cure any perceived prejudice
the delay may have caused. This objection is overruled.
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c) Objections as to Exhibits 8, 27, and 28 are sustained in accordance with
FED. R. CIV. P. 56(c)(2) and FED. R. EVID. 408.
Defendants object to Plaintiff including in its exhibits certain correspondence
relating to the parties’ attempts to settle the instant claims. Plaintiff argues the
information—including drafts of an attempted settlement agreement—is meant to illustrate
the relationship of the parties. Response at 8. Defendants deny that Bill Thomas acted as
an agent on their behalf, and Plaintiff contends the exhibits at issue conclusively show Bill
Thomas was negotiating on Defendants’ behalf. Response at 7. Plaintiff does not dispute
that this evidence would ordinarily fall within the scope of Rule 408’s prohibition, but
rather argues that it is being introduced for another, acceptable purpose. The Court
disagrees.
The admission of settlement offers and settlements is generally prohibited under the
Federal Rules of Evidence. See FED. R. EVID. 408. The plain text of Rule 408 permits
evidence of a settlement to be admitted for purposes other than to prove the validity or
amount of a claim. See, e.g., Broadcort Capital Corp. v. Summa Med. Corp., 972 F.2d
1183, 1194 (10th Cir. 1992); see also O’Hearon v. Castleview Hosp., 156 F.3d 1244 (10th
Cir. 1998). The purpose of Rule 408 is to encourage the settlement of disputes. See
Eisenberg v. Univ. of New Mexico, 936 F.2d 1131, 1134 (10th Cir. 1991).
Even where evidence is not barred under Rule 408, courts perform a balancing
analysis under Rule 403 of the Federal Rules of Evidence, “weighing the probative value
of the proffered evidence against its potential for unfair prejudice to the objecting party.”
Sw. Nurseries, LLC v. Florists Mut. Ins., Inc., 266 F. Supp. 2d 1253, 1258 (D. Colo. 2003);
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see also Johnson v. Land O’Lakes, Inc., 181 F.R.D. 388, 393 (N.D. Iowa 1998) (noting
that evidence of settlements may have an “undue tendency to suggest decision on an
improper basis”).
The volume of information submitted—if the purpose is to show that Bill Thomas
was negotiating on Defendants’ behalf—is excessive. All references to these exhibits
within the Motion are about attempts to settle, and not about the relationship of the parties.
There are no references to Exhibits 27 or 28 anywhere in the Motion, and without any
context, the Court cannot discern why the otherwise inadmissible materials were included.
The Court therefore sustains Defendants’ objections as to Exhibits 8, 27, and 28, finding
that the materials fall within the prohibition of Rule 408, and to the extent that they do not,
that the probative value of the evidence in explaining the relationship of the parties is
outweighed by the potential for unfair prejudice. See Sw. Nurseries, 226 F. Supp. 2d at
1258 (applying FED. R. EVID. 403 in a similar context); cf. EEOC v. Gear Petroleum, Inc.,
948 F.2d 1542, 1546 (10th Cir. 1991) (“[T]he risks of prejudice and confusion entailed in
receiving settlement evidence are such that often . . . the underlying policy of Rule 408
require[s] exclusion even when a permissible purpose can be discerned”).
d) Defendants’ Motion to Exclude [Doc. No. 74] and Motion to Strike [Doc.
No. 81] were previously granted, and the relevant expert reports will not be
considered.
In a previous Order, the Court granted Defendants’ Motion to Exclude Testimony
of Jon Stromberg [Doc. No. 74]. The Court also granted Defendants’ Motion to Strike
[Doc. No. 81] Jon Stromberg’s Amended Expert Report. Accordingly, these reports will
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not be considered.
III.
Damages
Defendants contend that Plaintiff has failed to demonstrate any damages in this case.
Motion [Doc. No. 111] at 15. They argue that without Stromberg’s report, there is no
evidence of lost profits. Id. Defendants further argue there is no expert who can testify as
to damages. Id. at 45.
In a misappropriation claim, as an alternative to actual loss damages, damages may
be measured by the imposition of liability for a reasonable royalty for a misappropriator’s
unauthorized disclosure or use of the trade secrets. Blue Star Land Servs., LLC v. Coleman,
No. CIV-17-931-R, 2017 WL 6210901, at *7 (W.D. Okla. Dec. 8, 2017) (quoting OKLA.
STAT. ANN. tit. 78 § 88(A)). Damages can include both the actual loss caused by
misappropriation and the unjust enrichment caused by misappropriation. The reasonable
royalty is generally used in the absence of proof of a defendant’s profit and a plaintiff’s
loss. Uniform Am. Biomedical Grp., Inc. v. Techtrol, Inc., 374 P.3d 820, 826 (Okla. 2016)
(quoting OKLA. STAT. ANN. tit. 78, § 86 (West)). “A flexible approach is applied to the
calculation of damages in a misappropriation of trade secrets case.” Coleman, 2017 WL
6210901, at *7 (citing Computer Assocs. Int’l, Inc. v. Am. Fundware, Inc., 831 F. Supp.
1516, 1526 (D. Colo. 1993)).
Plaintiff here proffers minimally sufficient evidence to survive summary judgment
as to damages. There is testimony that Defendants’ actions caused harm to Plaintiff, that
the information conveyed an advantage to competitors, and that damages may be measured
using recognized industry norms. See Expert Designations [Doc. No. 81-3]; Moore Aff. ¶
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13–14; Schlachter Aff. ¶ 3.
IV.
The Confidentiality Agreement is unreasonable as a matter of law and the
Court cannot reform the contract’s material terms.
Plaintiff asserts a breach of contract claim. See Third-Party Complaint [Doc. No.
19] at 14.4 Defendants argue, inter alia, that the Confidentiality Agreement constitutes an
unreasonable and unenforceable restraint on trade as a matter of law. Motion at 22.
Further, they argue, there is no way for the Court to reform the contract to make it
reasonable, rendering it unenforceable. Id. at 22–24. Plaintiff counters that the threecounty boundary described by the Confidentiality Agreement is reasonable. Response
[Doc. No. 89], at 26. Although it concedes the area covered is large, if the described
boundaries were any smaller, Plaintiff argues it would have essentially revealed the
targeted drilling location by tendering the Confidentiality Agreement. Id.
Under Texas law, the hallmark of enforceability is whether a covenant not to
compete is reasonable. See Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d
644, 655 (Tex. 2006) (citing TEX. BUS. & COM. CODE § 15.50(a)). The enforceability of
the covenant should not be decided on “overly technical disputes.” Sheshunoff, 209 S.W.3d
at 655. “Rather, the statute’s core inquiry is whether the covenant ‘contains limitations as
4
Plaintiff filed its Counterclaim and Third-Party Complaint [Doc. No. 19] and
subsequently filed a second document entitled “Counterclaim and Third-Party Complaint.”
See [Doc. No. 23]. The Court sua sponte had the second pleading stricken, as “the parties
did not seek leave of Court to file the amended pleadings.” See [Doc. No. 26]. Plaintiff did
not subsequently seek leave of Court, nor was an amended pleading filed after the Court
issued its order. The operative pleading, therefore, is the original Counterclaim and ThirdParty Complaint [Doc. No. 19].
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to time, geographical area, and scope of activity to be restrained that are reasonable and do
not impose a greater restraint than is necessary to protect the goodwill or other business
interest of the promisee.’” Id. (quoting TEX. BUS. & COM. CODE § 15.50(a)); accord Marsh
USA Inc. v. Cook, 354 S.W.3d 764, 777 (Tex. 2011)
Whether a covenant is a reasonable restraint on trade is a question of law for the
Court. Emmons v. Stewart Glass & Mirror, Inc., No. 09-95-119-CV, 1996 WL 27935, at
*3 (Tex. App.—Beaumont Jan. 25, 1996, no writ); John R. Ray & Sons, Inc. v. Stroman,
923 S.W.2d 80, 85 (Tex. App.—Houston [14th Dist.] 1996, writ denied); see also Peat
Marwick Main & Co. v. Haass, 818 S.W.2d 381, 386–88 (Tex. 1991) (determining
reasonableness is a question of law). A restraint is unreasonable if it is broader than
necessary to protect the legitimate interests of the business. DeSantis v. Wackenhut Corp.,
793 S.W.2d 670, 682–84 (Tex. 1990) (“[T]he restraint created by the agreement must not
be greater than necessary to protect promisee’s legitimate interest.”).
The Confidentiality Agreement at issue here denotes the following as protected from
competition: “Oil and gas lease(s) and minerals within the area of Woodward, Dewey, and
Ellis Counties, Oklahoma comprising up to 120,000 net acres of land [hereinafter “AMI
Boundary”].” Motion, Ex. 28 at 3.
In a deposition, Plaintiff admits that this clause’s “ambiguity was on purpose,” and
that a person signing it “[would have no idea] what area we’re focusing on.” Motion, Ex.
76 at 139: 8–25. Plaintiff testified that the clause was “not designating a specific area,”
and intended to cover “a much larger area than [120,000 acres] . . . it could be twice that
size, it could be four times that size, I don’t know the answer.” Id. at 144:1–15.
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Plaintiff argues that the geographical area requirement applies only to employment
cases, where employees are prohibited from looking for work within a given area. But the
law applies this reasoning with equal force in cases outside of the employment context.
See PEG Bandwidth TX, LLC v. Texhoma Fiber, LLC, 299 F. Supp. 3d 836, 846 (E.D. Tex.
2018) (disagreeing with the argument that these requirements do not apply outside of the
employment context). The definitions of “trade,” “commerce,” and “goods” in the relevant
statute provide support for the same conclusions. See TEX. BUS. & COM. CODE ANN. §
15.03 (West) (nowhere limiting the applicability of the law to the employment context and
defining “goods” as “any property, tangible or intangible, real, personal, or mixed, and any
article, commodity, or other thing of value, including insurance.”).
Where Texas courts have found the requirements of the Texas Covenants Not to
Compete Act inapplicable, cases have involved restraints on “using a single parcel of real
property,” Rolling Lands Investments, L.C. v. Nw. Airport Management, L.P., 111 S.W.3d
187 (Tex. App—Texarkana 2003, pet. denied), or “a restraint on the use of fiber optic
cables at the specific locations.” PEG Bandwidth TX, 299 F. Supp. 3d at 846 (quoting a
contract that specifically stated it was not barring competition).
The Confidentiality Agreement specifically prohibits certain competitive conduct
within a specified geographical area—the acquisition of an interest or competition for
control of any land or acreage within the AMI boundary. It is not simply limiting the
specific use of the land. The agreement must therefore comply with the requirements of
the Texas Covenants Not to Compete Act. See CBIF Ltd. P’ship v. TGI Friday’s Inc., No.
05-15-00157-CV, 2017 WL 1455407, at *14 (Tex. App.—Dallas Apr. 21, 2017) (applying
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the standard set forth in TEX. BUS. & COM. CODE ANN § 15.50 to an agreement containing
a geographical area limitation); cf. Ehler v. B.T. Suppenas Ltd., 74 S.W.3d 515, 520–21
(Tex. App.—Amarillo 2002, no pet.) (discussing the application of the rules governing
non-compete agreements on contracts involving real property).
To be reasonable, the competition restriction must contain a reasonable territorial
limitation. Plaintiff concedes the boundaries implicated by the language in the agreement
are ambiguous. At the very least, the geographical restraint encompasses an unspecified
120,000-acre space within an area comprising over 2,000,000 acres. Plaintiff, however,
contends it could be up to four times that size. It is unclear if the acreage is contiguous.
Perhaps, as Plaintiff suggests, it encompasses all land within the three counties. See
Motion, Ex. 27 at 129:8–25; 139:1–25;141:3–25.
Certainly, that a geographic restraint is included, and likewise that it is broad, is not
dispositive. See AmeriPath, Inc. v. Hebert, 447 S.W.3d 319, 335 (Tex. App.—Dallas 2014,
no pet.); accord Gehrke v. Merritt Hawkins & Assocs., LLC, No. 05-18-01160-CV, 2020
WL 400175, at *4 (Tex. App. Jan. 23, 2020). Plaintiff contends that if the AMI were any
smaller, it would be tantamount to disclosing the targeted drilling area simply by tendering
the NDA. But the Court is skeptical that the information could not have otherwise been
protected, perhaps by incorporating by reference the presentation materials that would be
accessible only after the Confidentiality Agreement was signed. Further, OLH owned only
1,000 acres in Ellis County, with no promise of being able to acquire more. Motion at 23.
This is analogous to having an employment non-compete covenant ban an entire region or
group of clients, though the employee had no previous contact with them. Texas courts
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find such limitations unreasonable. See, e.g., Peat Marwick Main & Co. v. Haass, 818
S.W.2d 381, 386–87 (Tex. 1991) (finding a provision was unreasonable because it applied
to customers and territory with which the employer had not had actual contact); see also
Hardy v. Mann Frankfort Stein & Lipp Advisors, Inc., 263 S.W.3d 232, 250 (Tex. App.—
Houston 2007, pet. granted); General Devices, Inc. v. Bacon, 888 S.W.2d 497, 504 (Tex.
App.—Dallas 1994, no writ).
Further, in Cobb v. Caye Publishing Group, Inc., an appellate court dissolved a
portion of a trial court’s temporary injunction and modified the relevant geographical area
by further limiting it in scope. At issue in that case was whether the geographical limitation
could include areas “where Caye Publishing intended to distribute publications at some
point in the future.” 322 S.W.3d 780, 784 (Tex. App. 2010). In Cobb, the trial court stated
in its temporary injunction order that without an injunction:
Cobb would damage Caye Publishing’s interests by displacing its exclusive
right to use its research and be the first to enter markets “targeted by” Caye
Publishing, thus usurping Caye Publishing’s opportunity to fill the limited
market void, and by capturing customer goodwill that would otherwise be
winnable by Caye Publishing as the first and sole entrant into the targeted
markets.
Caye Publishing had made “more than a cursory inquiry” into publishing in Parker
County. Id. The Cobb court could not locate a case in which a geographical limitation
including areas where an employer did not currently operate but had targeted for future
potential expansion, standing alone, was reasonable. Further, evidence presented at the
temporary injunction hearing established that Caye Publishing had nothing more than a
potential business interest in Parker County. The appellate court found the trial court had
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abused its discretion in including areas of future potential business interest. Publ’g Grp.,
Inc., 322 S.W.3d at 785; accord GTG Automation, Inc. v. Harris, No. 11-16-00317-CV,
2018 WL 5624206, at *4 (Tex. App. Oct. 31, 2018) (citing favorably to Cobb and agreeing
with its reasoning on areas “targeted for future potential expansion”).
Like in Cobb, the geographical scope of OLH’s Confidentiality Agreement seeks to
protect potential business interests not directly tied to a materialized or concrete business
interest OLH held. The ambiguity in the geographic limitation, paired with its large scope,
make it unreasonable under Texas law.
Nevertheless, an unreasonable geographical limitation does not, ipso facto, render a
covenant not to compete void and unenforceable.
Cobb, 322 S.W.3d at 784; see
Weatherford Oil Tool Co. v. Campbell, 340 S.W.2d 950, 952 (Tex. 1960); see also Lewis
v. Krueger, Hutchinson & Overton Clinic, 269 S.W.2d 798, 799 (Tex. 1954) ( “Merely
because a limit has not been fixed for the duration of the restraint, the agreement will not
be struck down but will be enforceable for such period of time as would appear to be
reasonable under the circumstances.”).
The court may reform the covenant to the extent necessary. Cobb, 322 S.W.3d at
784.
In fact, the law requires a court to reform a non-compete agreement if it is
unreasonably broad in scope. TEX. BUS. & COMM. CODE § 15.51(c). A court, however,
“may neither rewrite the parties’ contract nor add to its language.” Am. Mfrs. Mut. Ins. Co.
v. Schaefer, 124 S.W.3d 154, 162 (Tex. 2003); see also Dahlberg v. Holden, 238 S.W.2d
699, 701 (Tex. 1951) (stating that courts “have no right to interpolate or to eliminate terms
of material legal consequence in order to uphold” a contract) (quoting 13 C.J. CONTRACTS
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§ 496 (1917)). Nor may courts “consider only the parts favoring one party and disregard
the remainder.” City of Keller v. Wilson, 168 S.W.3d 802, 811 (Tex. 2005). Instead, the
contract must be construed “as a whole,” and “to determine what purposes the parties had
in mind at the time they signed.” Kirby Lake Dev., Ltd. v. Clear Lake City Water Auth.,
320 S.W.3d 829, 841 (Tex. 2010); accord Fischer v. CTMI, LLC, 479 S.W.3d 231, 239
(Tex. 2016).
A contract need only be definite and certain as to those terms that are “material and
essential” to the parties’ agreement. Radford v. McNeny, 104 S.W.2d 472, 475 (Tex. 1937).
Other courts have held that, under Texas law, material and essential terms are those that
parties would reasonably regard as “vitally important ingredient[s]” of their bargain. See
Neeley v. Bankers Tr. Co., 757 F.2d 621, 628 (5th Cir. 1985) (applying Texas law); see
also Gen. Metal Fabricating Corp. v. Stergiou, 438 S.W.3d 737, 744 (Tex. App.—Houston
[1st Dist.] 2014, no pet.); Potcinske v. McDonald Prop. Invs., Ltd., 245 S.W.3d 526, 531
(Tex. App.—Houston [1st Dist.] 2007, no pet.).
The Court is mindful that an unreasonable geographical limitation alone does not
render the Confidentiality Agreement unenforceable. The Court, however, can find no
principled way to provide a reasonable alternative to the unreasonable restraint. The AMI
is repeatedly referenced throughout the Confidentiality Agreement. The Court finds the
AMI to be a material term not reasonably susceptible to the interpretation proposed. The
interpretation of every provision of the Confidentiality Agreement is affected by the
definition of AMI. This leaves no way to sever the provision and salvage the contract. Cf.
Hanks v. GAB Bus. Servs., Inc., 644 S.W.2d 707, 708 (Tex. 1982) (enforcing a promisee’s
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obligation to pay a final installment payment because that provision of the contract was
independent of the promisor’s covenant not to compete).
The Court finds the geographical limitation in the Confidentiality Agreement
unreasonable, and unable to reform it, concludes that the Confidentiality Agreement is
unenforceable. Therefore, Plaintiff’s breach of contract claim fails as a matter of law.
V.
Without a valid contract, Plaintiff’s tortious interference claim against
Defendants fails as a matter of law.
Count 3 of Plaintiff’s pleading is a tortious interference claim. See Third-Party
Complaint [Doc. No. 19] at 23. This claim against Defendants is based on them having
allegedly “interfered with the [Confidentiality Agreement] by inducing Bill Thomas to
breach the agreement, and/or by acting in concert with him knowing that the result of his
actions would result in a breach of the [Confidentiality Agreement].” Third-Party
Complaint at 13 ⁋ 71. In accordance with the choice-of-law analysis, supra, Oklahoma
law applies here.
Oklahoma recognizes a tortious interference claim with a contractual or business
relationship if the plaintiff can prove “(1) the interference was with an existing contractual
or business right; (2) such interference was malicious and wrongful; (3) the interference
was neither justified, privileged nor excusable; and (4) the interference proximately caused
damage.” Berry & Berry Acquisitions, LLC v. BFN Properties, LLC, 416 P.3d 1061 (Okla.
2018).
Having held the Confidentiality Agreement unenforceable, Plaintiff cannot
establish an element of its tortious interference claim, which thereby fails as a matter of
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law. See Wilspec Techs., Inc. v. DunAn Holding Grp., Co., 204 P.3d 69, 73 (Okla. 2009)
(finding that in any tortious interference claim, “the inducer either prevents or hinders the
performance of a valid contract to which it is not a party”) (emphasis added); see also
Ellison v. An-Son Corp., 751 P.2d 1102, 1106 (Okla. 1987) (“The right to recover for the
unlawful interference with the performance of a contract presupposes the existence of a
valid enforceable contract.”).
VI.
The trade secret misappropriation claims cannot be decided as a matter of
law.
Plaintiff asserts two trade secret misappropriation claims against Defendants. It
alleges violations of the Defend Trade Secrets Act (“DTSA”) in Count 1, and violations of
the Uniform Trade Secrets Act, as adopted by Oklahoma and codified in OKLA. STAT. tit.
78 §§ 85–94 (2001) (“OUTSA”), in Count 2. In its Response, Plaintiff disputes or
otherwise objects to almost every relevant fact Defendants represent as undisputed in their
Motion. See Response [Doc. No. 89] at 12–14. The parties agree, for the most part, on the
experts’ qualifications. See Response at 17. The Court will therefore layout the evidence
supporting relevant facts, in the context of its analysis below.
a) Violations of the OUTSA
Oklahoma adopted the Uniform Trade Secrets Act, OKLA. STAT. tit. 78 §§ 85–94
(2001) (“OUTSA”). To prove misappropriation of a trade secret under the OUTSA,
Plaintiff must show: (1) the existence of a trade secret; (2) misappropriation of the secret
by Defendants; and (3) use of the secret to Plaintiff’s detriment. See MTG Guarnieri Mfg.,
Inc. v. Clouatre, 596 P.3d 202, 209 (Okla. 2010).
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i. Existence of a Trade Secret
First, the parties dispute whether a trade secret exists. The OUTSA sets forth the
definition of a trade secret in Oklahoma; in addition, the Oklahoma Supreme Court has
adopted additional relevant factors. Amoco Production Co. v. Lindley, 609 P.2d 733 (Okla.
1980). The OUTSA, OKLA. STAT. tit. 78 § 86, defines a trade secret as:
[I]nformation, including a formula, pattern, compilation, program, device, method,
technique or process, that: a. derives independent economic value, actual or
potential, from not being generally known to, and not being readily ascertainable
by proper means by, other persons who can obtain economic value from its
disclosure or use, and b. is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.
The additional factors are: (1) the extent to which the information is known outside
of the business; (2) the extent to which the information is known by employees and others
involved in the business; (3) the extent of measures taken by the business to guard the
secrecy of the information; (4) the value of the information to the business and to
competitors; (5) the amount of effort or money expended by the business in developing the
information; and (6) the ease or difficulty with which the information could be properly
acquired or duplicated by others. See Lindley, 609 P.2d 7at 743. Whether information
qualifies as a trade secret is a question of fact. See Central Plastics Co. v. Goodson, 537
P.2d 330, 333–35 (Okla. 1975).
Defendants argue that the information in the OLH Presentation was publicly
available and readily ascertainable.
Certainly, it appears some of the underlying
information used to develop the presentation was publicly available. See Motion, Ex. 29
211:1–25, 212:1–6. But the fact that some of the information was available to the public
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is not dispositive. See Iofina, Inc. v. Khalev, No. CIV-14-1328-M, 2016 WL 5794793, at
*2 (W.D. Okla. Oct. 4, 2016) (analyzing the OUTSA and noting that “[a] trade secret can
exist in a combination of characteristics and components each of which, by itself, is in the
public domain, but the unified process, design and operation of which, in unique
combination, affords a competitive advantage and is a protectable secret” (quoting Hertz
v. Luzenac Grp., 576 F.3d 1103, 1108 (10th Cir. 2009) (applying a similar Colorado law));
see also Retiree, Inc. v. Anspach, 660 F. App’x 582, 588 (10th Cir. 2016) (applying a
similar Kansas law).
It arguably took cumulative technical, geological, and other
knowledge to compile the presentation. Plaintiff submits affidavits addressing the
qualifications of those who worked on the presentation, along with evidence that shows
these qualifications were important to developing the OLH Presentation. See Response
[Doc. No. 104, Ex.15], at 2; Eucker Dep. 16:23–25; 17:01-07 (“And so how important is
it for a geologist to have particular knowledge of a particular basin…Oh, it’s—it’s
paramount.”). This disputes whether the OLH Presentation was as readily accessible as
Defendants assert.
The evidence introduces a fact issue as to whether the OLH Presentation had any
value to Defendants; Defendants’ movement to invest in the NW STACK suggests it may
have been. For example, there is some indication that Defendants had previously targeted
the area, as there exists an email from Defendant Ashby mentioning “STACK” as a topic
of conversation before he had access to the OLH Presentation. See Motion, Ex.13 at 1.
But Plaintiff contends—and the evidence does not directly refute—that Defendants had not
performed a detailed study on the area before making the large purchase, nor is it clear that
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they had any specialized, recent knowledge about the area covered in the OLH
Presentation. See Response, Ex. 19 at 14:11–17:23. Defendant Ashby was present during
a call with OLH and Luis Castillo when relevant information was discussed. Response,
Ex. 14. Soon after Defendants gained access to the OLH Presentation, it appears there was
a significant change in position. Defendants counter that a vague news report indicated
other companies in the area had invested money into this region. But this alone cannot
conclusively show the OLH Presentation’s information was of no value and unprotectable
as a trade secret. Cf. Goodson, 537 P.2d at 333–35 (discussing information that does and
does not constitute a trade secret under Oklahoma law).
What Plaintiff seeks to protect is the “compilation of information,” used by a
business to obtain economic advantage. See Goodson, 537 P.2d at 333 (stating that a “trade
secret is a formula, pattern, device or compilation of information”). There is evidence that
could lead to the conclusion that Plaintiff took reasonable steps to protect this information.
Plaintiff issued NDAs to those who attended the meeting. See, e.g., Motion, Ex. 15 at
61:20–25. Although these may have been poorly drafted, the poor drafting itself was
admittedly done to protect the information at hand, and Defendants were aware Plaintiff
sought to protect the information. See Motion, Ex. 76 at 139: 8–25; see also Clouatre, 239
P.3d 202, 213 (Okla. 2010) (finding that where it was disputed that the defendants signed
an agreement, there was nevertheless knowledge that the information was to be kept
confidential). That some people received agreements and others did not may weigh for or
against the ultimate finding of a trade secret, however, that analysis is best left for the finder
of fact.
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ii. Misappropriation of the Alleged Trade Secret
Misappropriation is defined, in this context, as “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,” and as “disclosure or use of a trade secret of another without express
or implied consent by a person who: at the time of disclosure or use, knew or had reason
to know that his knowledge of the trade secret was . . . derived from or through a person
who owed a duty to the person seeking relief to maintain its secrecy or limit its use.” OKLA.
STAT. tit. 78 § 86(2)(c) (2001); Clouatre, 239 P.3d at 212.
As illustrated by the short time frame between the meeting with OLH and the
development of Defendant Ashby’s “corridor map, [] buy area map, and his focus,” and
Defendant BMR II’s “plan and execution of BMR II’s leasing and proof-of-concept drilling
program,” there are disputed facts as to whether the information was valuable to
competitors and, hence, to Plaintiff itself. See Sur-Reply at 10. There is also a genuine
dispute as to whether misappropriation took place. See Response, Ex. 20 at 1, 1 (email
from Bill Thomas to Andrew Ashby stating “[t]old him no, not interested in their AMI
area”); see Reply at 4; see also Black, 584 F.2d at 952 (citing to Oklahoma cases and
allowing for “facts and circumstances, when viewed in their totality, [to] permit the
inference that there was [] misappropriation.”). Defendant Ashby was allegedly aware that
a Confidentiality Agreement was in place and commented on it being poorly drafted,
refusing to sign it. Motion, Ex. 9, Ashby Dep. 31:18–32:20. There is sufficient competing
evidence, viewed in the light most favorable to the non-movant, to create a genuine issue
of material fact.
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iii. Damages
Plaintiff argues that, under the OUTSA, monetary damages or restitution are
appropriate remedies, and that a reasonable royalty may be awarded to compensate for the
misappropriation of a trade secret. See Response at 40. As analyzed supra, there is
sufficient evidence in the record to preclude summary judgment as to whether the
information was used to Plaintiff’s detriment.
In light of the current record, the Court cannot conclude the moving party is entitled
to judgment as a matter of law. The state law claim for violations of the OUTSA is
minimally sufficient to survive summary judgment.
b) Violations of the DTSA
The DTSA 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). A DTSA violation involves: (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. See Coleman, 2017 WL 6210901, at *4. There is substantial overlap
between the state and federal legal standards for trade secret misappropriation claims. See
ATS Grp., LLC v. Legacy Tank & Indus. Servs. LLC, 407 F. Supp. 3d 1186, 1200 (W.D.
Okla. 2019) (“Furthermore,[] the OUTSA largely mimics the DTSA as to the definition of
trade secret.”). Whether a trade secret exists for purposes of the DTSA is a question of fact.
ATS Grp., 407 F. Supp. 3d at 1186 (“The question of whether certain information
constitutes a trade secret under [the DTSA] ordinarily is best resolved by a fact finder.”).
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The analysis above, outlining how fact issues preclude a finding as a matter of law on the
existence of a trade secret and the plausible value of the secret apply with equal force.
Under the DTSA, misappropriation” 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). “Although the state ‘trade secrets’ and
‘misappropriation’ definitions are nearly identical to the DTSA, [an OUTSA] [p]laintiff
must additionally show ‘use’ and ‘detriment.’” Video Gaming Techs., Inc. v. Castle Hill
Studios LLC, No. 17-CV-454-GKF-JFJ, 2018 WL 3437083, at *7 (N.D. Okla. July 17,
2018) (quoting Blue Star Land Servs., LLC v. Coleman, No. CIV-17-931-R, 2017 WL
6210901, at *7 (W.D. Okla. Dec. 8, 2017)).
The Court concluded, supra, factual issues preclude granting summary judgment on
misappropriation under the OUTSA. The same analysis leads to the conclusion that
Defendants’ DTSA claims survive summary judgment as well.5 Therefore, summary
judgment on Plaintiff’s DTSA claim is denied.
VII.
The civil conspiracy claims fail as a matter of law.
Finally, Plaintiff argues that the civil conspiracy claim is not intended to serve as a
separate cause of action, but rather, is meant to “attribute the acts of one conspirator to the
other.” Response at 38. Plaintiff argues the underlying wrong is that Defendants conspired
5
Although not addressed in the analysis of the state law claim, the interstate commerce
nexus element is undisputed.
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with Bill Thomas to misappropriate its trade secrets. Id.
It is well settled that “[c]ivil conspiracy itself does not create liability.” Roberson
v. PaineWebber, Inc., 998 P.2d 193, 201 (Okla. 1999). Rather, “[t]o be liable the
conspirators must pursue an independently unlawful purpose or use an independently
unlawful means.” Id.; Zagorski v. McAdam, No. CIV-13-1209-D, 2014 WL 2982669, at
*6 (W.D. Okla. July 1, 2014) (applying Oklahoma law).
Under Oklahoma law, to state a claim for civil conspiracy, a plaintiff must plead the
following elements: 1) a combination of two or more persons; 2) an object to be
accomplished; 3) a meeting of the minds on the object or course of action; 4) one or more
unlawful overt acts; and 5) damages as a proximate result thereof. See Gaylord
Entertainment Co. v. Thompson, 958 P.2d 128, 148 (Okla. 1998); accord Hitch
Enterprises, Inc. v. Cimarex Energy Co., 859 F. Supp. 2d 1249, 1268 (W.D. Okla. 2012).
The Supreme Court of Oklahoma has said that “unlike its criminal counterpart, civil
conspiracy itself does not create liability.” Brock v. Thompson, 948 P.2d 279, 294 (Okla.
1997).
In Gaedeke Holdings VII v. Baker the Tenth Circuit affirmed a district court’s
decision in Gaedeke Holdings VII v. Mills, finding that the OUTSA displaced a civil
conspiracy claim under Oklahoma law. 683 F. App’x 677, 680 (10th Cir. 2017). In Mills,
the defendants argued that the OUTSA had displaced the plaintiff’s common-law claims
for conspiracy, conversion, and unjust enrichment. See Gaedeke Holdings VII, Ltd. v.
Mills, No. CIV-11-649-M, 2014 WL 347629, at *3 (W.D. Okla. Jan. 30, 2014). The
defendants in Mills argued that this statute required the district court to dismiss the
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plaintiff’s three common-law claims. Id. The district court agreed with the defendants that
the plaintiff’s common-law claims were unavailable because “the Uniform Trade Secrets
Act bars common law claims . . . that are based entirely on factual allegations of
misappropriation of trade secrets.” Id. The district court concluded that the plaintiff could
not pursue its conspiracy claims, because those claims depended on the same facts alleged
to support the claim for misappropriation of trade secrets, and the Tenth Circuit agreed.
See Baker, 683 F. App’x at 680.
Indeed, the OUTSA “displaces conflicting tort, restitutionary, and other law of [the]
state providing civil remedies for misappropriation of a trade secret.” OKLA. STAT. tit. 78,
§ 92(A) (2001). As the district court in Mills noted, courts in the states which have adopted
the Uniform Trade Secrets Act have held that the Act bars common law claims based
entirely on factual allegations of misappropriation of trade secrets. See Mills, 2014 WL
347629, at *3 (collecting cases).
Plaintiff argues that conspiracy is not meant here as a separate claim, but rather only
to “[enlarge] the pool of potential defendants from whom a plaintiff may recover for an
underlying tort.” Brock, 948 P.2d at 294. The Court can locate no guidance on point from
the Oklahoma courts, and Plaintiff points to none, citing only to decisions out of California.
The Court concludes that, because Plaintiff’s conspiracy claims are based upon
Defendants’ alleged misappropriation of trade secrets, these claims are displaced by the
OUTSA.
Accordingly, Defendants are entitled to judgment as a matter of law on Plaintiff’s
civil conspiracy claims.
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CONCLUSION
For the reasons detailed herein, Plaintiff’s breach of contract, tortious interference,
and civil conspiracy claims fail as a matter of law. A minimally sufficient showing of
genuine disputes of material facts preclude summary judgment on Plaintiff’s claims of
trade secret misappropriation brought under the Defend Trade Secrets Act, 18 U.S.C. §
1839(4), and the Oklahoma Uniform Trade Secrets Act, OKLA. STAT. tit. 78 § 85, et seq.
IT IS THEREFORE ORDERED that Defendants’ Motion for Summary
Judgment [Doc. No. 76] is GRANTED IN PART and DENIED IN PART.
IT IS SO ORDERED this 27th day of July, 2020.
31
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