Hess Corporation v. Schlumberger Technology Corporation
Filing
87
MEMORANDUM OPINION AND ORDER denying 77 MOTION to Disqualify Plaintiff's Expert Dennis Read (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)
United States District Court
Southern District of Texas
ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
HESS CORPORATION,
§
§
§
§
§
§
§
§
§
§
Plaintiff,
v.
SCHLUMBERGER TECHNOLOGY
CORPORATION,
Defendant.
December 18, 2018
David J. Bradley, Clerk
CIVIL ACTION NO. H-16-3415
MEMORANDUM OPINION AND ORDER
Plaintiff Hess Corporation ("Hess") sued Defendant Schlumberger
Technology Corporation
( "Schlumberger")
in this
court.
Pending
before the court is Schlumberger Technology Corporation's Motion to
Disqualify Plaintiff's Expert Dennis Read ( "Schlumberger' s Motion to
Disqualify Read")
(Docket Entry No.
77) .
For the reasons stated
below, Schlumberger's Motion to Disqualify Read will be denied.
I.
Factual Backqround 1
This action arose from the sale and subsequent failure of
several Subsurface Safety Valves
Schlumberger.
1
("SSVs")
purchased by Hess from
Dennis Read is a liability expert for Hess on what
See generally Schlumberger's Motion to Disqualify Read, Docket
Entry No. 77, pp. 1-4; Hess Corporation's Opposition to Schlumberger
Technology Corporation's Motion to Disqualify Dennis Read ("Hess's
Opposition to Schlumberger' s Motion to Disqualify Read"), Docket
Entry No. 80, pp. 7-11.
[All page numbers for docket entries in the
record refer to the pagination inserted at the top of the page by
the court's electronic filing system, CM/ECF.]
caused the four Schlumberger ssvs at issue to fail.
Read is an
engineer who worked for an entity acquired by Schlumberger, Cameo
Products and Services, and Schlumberger itself from 1994 to 2010.
While
employed
Confidential
by
Schlumberger,
Information
Agreement"
Agreement") dated January 3, 2000.
states:
Read
signed
a
"Patent
and
("the
Confidentiality
The Confidentiality Agreement
"Employee will not publish or disclose to anyone outside
of [Schlumberger] or its Affiliates, or use in any way other than
in
[Schlumberger's]
business,
any trade secrets or confidential
technical or business information or material of [Schlumberger] or
its
Affiliates
either
during
or
after
employment
with
[Schlumberger] . " 2
During his employment at Schlumberger, Read worked in various
departments, including those charged with developing safety valves
and seals.
litigation.
Read never worked on the exact SSVs at issue in this
While Read acknowledges that he has seen a schematic
of the Metal Spring Energized ("MSE") seals at issue, he never saw
the proprietary manufacturing drawings.
2010 and now owns his own machine shop.
Read left Schlumberger in
Read has not worked on
safety valves since his departure from Schlumberger.
Hess hired Read as an expert to disassemble and test some of
the SSVs at issue.
Read performed lengthy testing on the SSVs
2
See Patent and Confidential Information Agreement [Filed
Under Seal], Exhibit 2 to Hess's Opposition to Schlumberger's
Motion to Disqualify Read, Docket Entry No. 80-2, ~ 1.
-2-
with Schlumberger' s knowledge.
Hess served Read's expert report on
Schlumberger on September 14, 2018.
October
26,
Agreement.
2018,
Schlumberger
During Read's deposition on
produced
the
Confidentiality
Schlumberger now moves to disqualify Read from serving
as an expert for Hess.
II.
Schlumberger
argues
Analysis
that
the
Confidentiality
Agreement
prevents Read from testifying as an expert for Hess in this action.
Hess argues that Read's testimony is based on his general knowledge
of safety valves and not on any confidential information he may
have acquired from Schlumberger during his employment.
The party seeking to disqualify an expert witness bears the
burden of
proving
that
disqualification
is
appropriate.
Koch
Refining Co. v. Jennifer L. Boudreau M/V, 85 F.3d 1178, 1181 (5th
Cir. 1996).
"Federal courts have the inherent power to disqualify
experts, although cases that grant disqualification are rare."
Id.
In determining whether an expert
(internal citations omitted)
should be disqualified based on a conflict of interest, the court
must
consider
( 1)
whether
a
confidential
relationship
existed
between the proposed expert and the moving party and (2) whether
the moving party disclosed confidential information to the proposed
expert
that
is
relevant
to
the
current
litigation.
Id.;
WesternGeco LLC v. Ion Geophysical Corp., Civil Action No. 09-cv1827, 2010 WL 2266610, at *1 (S.D. Tex. June 2, 2010); ACQIS LLC v.
-3-
Appro International, Inc., Case No. 6:09
at *2 (E.D. Tex. July 14, 2010)
A.
cv
148, 2010 WL 11470595,
(citing Koch, 85 F.3d at 1181).
Confidential Relationship
Read is
a
former Schlumberger employee.
Read signed the
Confidentiality Agreement, which mandated that he not disclose any
of Schlumberger's confidential information or trade secrets during
or after his employment with Schlumberger.
The Confidentiality
Agreement imposed upon Read a continuing obligation to preserve
Schlumberger's confidential information that he learned during his
employment with Schlumberger.
fore
existed,
and
continues
A confidential relationship thereto
exist,
between
Read
and
Schlumberger.
B.
Relevancy of Confidential Information to Current Litigation
There
can
information
Schlumberger. 3
be
during
no
dispute
his
that
tenure
Read
learned
developing
confidential
technology
for
The issue is whether Schlumberger can point to any
confidential information relevant to this litigation known to Read.
During his time at Schlumberger Read worked in various departments.
It is undisputed that Read worked in one or more departments that
3
The parties disagree as to whether discoverable, technical
information can be "confidential" within the scope of a nondisclosure agreement.
For purposes of analysis, the court will
assume without deciding that it is possible for technical
information learned by a former employee to be confidential and
fall within the scope of a former employee's non-disclosure
agreement.
-4-
developed or produced safety valves.
Although Read undoubtedly
learned some confidential information about safety valves, he never
worked on the SSVs at issue in this case.
to
Read's only expertise as
the SSVs other than his general knowledge of
the
field
is
knowledge gained from performing tests on the failed SSVs.
The inquiry into whether a
confidential
information relevant
fact-intensive.
former
former-employee-expert received
to the current
litigation is
Courts evaluate the nature and extent of
employee's
relationship
with
his
employer
and
the
what
confidential information the employee may have been exposed to
during his work for the employer.
In ACQIS the plaintiff retained a damages expert who was a
former employee of the defendant.
ACQIS, 2010 WL 11470595, at *1.
The employee has been employed by defendant for over three decades.
Id.
The employee was "intimately involved in
intellectual
property
licensing
practices,
[the defendant's]
as
well
as
the
development of a new intellectual property licensing strategy for
[the defendant]."
Id.
The defendant argued that the vast majority
of the employee's experience would be relevant to the litigation
and
that
inevitable.
disclosure
Id.
at *2.
of
confidential
information
would
be
Despite the defendant's concerns,
the
court refused to disqualify the expert because the defendant failed
to point to particular confidential information disclosed to the
expert relevant to the litigation.
Id.
The court noted that the
employee's broad licensing knowledge was not sufficient to qualify
-5-
as "relevant" to the particular technology at issue in the suit.
See id.
the
Read is similarly positioned to the expert in ACQIS.
defendant
specific
in
ACQIS,
confidential
Schlumberger
information
has
known
failed
to
Read
to
Like
point
that
to
would
disqualify him from serving as an expert in this case. 4
Schlumberger cites cases where other courts found that the
challenged
expert
Electronics
Corp.
should
v.
WG
be
disqualified.
Security
Products,
In
Inc. ,
Sensormatic
Civil
Action
No. 2:04-Cv-167, 2006 WL 5111116 (E.D. Tex. Feb. 9, 2006), the court
concluded that an expert who was a named inventor on one of the
patents-in-suit could not serve as an expert for the opposing party.
Id. at *3.
Sensormatic is distinguishable because Schlumberger has
failed to demonstrate that Read has any confidential or technical
knowledge of the SSVs at issue in this litigation.
In Dyna-Drill Technologies Inc. v. Conforma Clad Inc., Civil
Action No. H-03-05599,
2005 WL 5979403
(S.D. Tex. May 16, 2005),
the defendant sought to disqualify one of the plaintiff's expert
witnesses because he was an employee of the defendant's predecessor
entity.
The court held that the expert was disqualified because he
was "employed for many years by Defendant's predecessor company and
4
In Schlumberger Technology Corporation's Reply in Support of
Motion
to
Disqualify
Plaintiff's
Expert
Dennis
Read
("Schlumberger's Reply"), Schlumberger lists "specific" examples of
confidential information that Read received from Schlumberger. The
list cites Read's general experience of working with safety valves
at Schlumberger, but fails to point to specific confidential
information known to Read relevant to his analysis of the failed
SSVs. See Schlumberger's Reply, Docket Entry No. 82, pp. 8-9.
-6-
was in charge of the commercialization of the alleged trade secret
process
at
issue
in th [e]
case."
Id.
at
*1.
Dyna-Drill
is
distinguishable because other than Read's having viewed a nonproprietary
schematic
of
the
MSE
seals
used
in
the
SSVs,
Schlumberger fails to cite any specific confidential information
known to Read that pertains to the SSVs at issue.
The court in WesternGeco,
plaintiff's
expert,
who
2010 WL 2266610, disqualified the
had
served
as
an
employee
of
the
defendant's predecessor entity, because he directly participated in
developing
dispute.
products
to
the
products
at
issue
in
the
The court noted that the expert's "field of expertise
closely relates to,
the
related
if not encompasses, the technology taught by
patents-in-suit."
Id.
at
*2.
While
the
expert
did not
directly work on the specific inventions at issue in the lawsuit,
the court found that "at this stage in the dispute,
before the
confidential information has been fully disclosed and reviewed by
[the
plaintiff's]
counsel
or
its
experts,
the
Court
lacks
confidence in [the plaintiff's] ability to accurately assess what
knowledge and expertise will be useful in this litigation."
Id.
This case is distinguishable from WesternGeco because Read has
already conducted extensive testing on the failed SSVs and reviewed
various documents produced by both Hess and Schlumberger during
discovery.
Even after conducting extensive discovery, Schlumberger
cannot point to any confidential knowledge possessed by Read that
disqualifies him from analyzing the SSVs.
-7-
Disqualification
turns
on
whether
specific
confidential
information known to Read is relevant to this litigation.
While
Read's general experience with safety valves from his work with
Schlumberger is relevant to this litigation, to disqualify Read,
Schlumberger
must
point
to
specific
confidential
learned by Read that is relevant to the
information
failed SSVs at issue.
Schlumberger has failed to meet this burden.
Accordingly,
Read
will not be disqualified from serving as an expert for Hess.
III.
For
the
reasons
Conclusion
stated
above,
Schlumberger
Technology
Corporation's Motion to Disqualify Plaintiff's Expert Dennis Read
(Docket Entry No. 77) is DENIED.
SIGNED at Houston, Texas, on this 18th day of December, 2018.
SIM LAKE
UNITED STATES DISTRICT JUDGE
-8-
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