Downhole Technology LLC v. Silver Creek Services Inc. et al
MEMORANDUM OPINION AND ORDER granting 26 MOTION to Dismiss 20 Amended Complaint pursuant to 12(B)(2) and 12(B)(6). The claims against Defendant Daniel R. Coffee are dismissed without prejudice for lack of jurisdiction. (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)
United States District Court
Southern District of Texas
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
DOWNHOLE TECHNOLOGY LLC,
May 08, 2017
David J. Bradley, Clerk
SILVER CREEK SERVICES INC.;
TECHNOLOGIES, LLC; DANIEL R.
COFFEE; MICHAEL DIDIER;
DILLON W. KUEHL; and CHARLES M.
CIVIL ACTION NO. H-17-0020
MEMORANDUM OPINION AND ORDER
12 (b) ( 2)
and 12 (b) ( 6)
Motion to Dismiss Amended Complaint
Supporting Memorandum of Law ("Coffee's Motion to Dismiss") (Docket
Entry No. 26).
For the reasons stated below, the court concludes
therefore does not reach Coffee's 12(b) (6) arguments.
A thorough account of the facts of this case can be found in
an earlier opinion. 1
In short, plaintiff Downhole Technology LLC
manufactures and deploys frac plugs,
some of which
were sold to customers FTS International Services, LLC ( "FTSI") and
Rice Energy for use at a site in the Marcellus Shale region of
Memorandum Opinion and Order, Docket Entry No. 36, pp. 2-4.
Pennsylvania (the "FTSI/Rice Site").
The defendants were involved
in various aspects of the installation.
Downhole alleges that the
defendants used confidential information and trade secrets gained
their work on the
to create and market a
competing frac plug ("the ZIP Plug") that infringes on patents held
Defendant Daniel R. Coffee is a resident of Ohio and former
employee of FTSI.
Downhole alleges that Coffee "learned detailed
information about the Downhole frac plugs from his involvement at
[Dillon W.] Kuehl, and/or [Charles M.] Williams. " 2
ZIP Plugs. 3
along with defendants Didier,
In December of
Coffee is currently the Chief Operating Officer and
result of Coffee's employment with FTSI," which he then used "to
facilitate creation of the ZIP Plug for Silver Creek." 5
also allegedly induced Kuehl,
p. 8 ~ 24.
Coffee disputes this, but whether he was involved in Silver
Creek from its inception has no effect on the court's conclusions.
Id. at 11
Id. at 23
former Downhole employee, to violate a Proprietary Information and
Intellectual Property Assignment Agreement (the "Kuehl NDA") . 6
Standard of Review
Dismissal for lack of personal jurisdiction is governed by
Federal Rule of Civil Procedure 12(b) (2).
When a foreign defendant
Rule 12 (b) (2), "the plaintiff 'bears the burden of establishing the
Technologies, Inc. v. Sage Group PLC, 313 F.3d 338, 343 (5th Cir.
2002), cert. denied,
124 S. Ct.
190 F.3d 333,
(quoting Mink v. AAAA
district court rules on a motion to dismiss for lack of personal
jurisdiction 'without an evidentiary hearing,
the plaintiff may
bear his burden by presenting a prima facie case that personal
jurisdiction is proper."' Id.
(quoting Wilson v.
(5th Cir.), cert. denied,
115 S. Ct.
20 F. 3d
court may consider the
contents of the record before the court at the time of the motion,
Id. at 24
(quoting Thompson v.
Corp., 755 F.2d 1162, 1165 (5th Cir. 1985)).
The court must accept
as true the uncontroverted allegations in the plaintiff's complaint
and must resolve in favor of the plaintiff any factual conflicts.
Guidry v. United States Tobacco Co., 188 F.3d 619,
the court is not obligated to credit conclusory
even if uncontroverted.
Potomac Electric Power Co.,
Panda Brandywine Corp.
253 F. 3d 865,
"Absent any dispute as to the relevant facts, the issue of whether
personal jurisdiction may be exercised over a nonresident defendant
law to be determined
by th [e C] ourt."
Ruston Gas Turbines, Inc. v. Donaldson Co., Inc., 9 F.3d 415, 418
(5th Cir. 1993).
"A federal district court sitting in diversity may exercise
personal jurisdiction only to the extent permitted a state court
under applicable state law."
Allred v. Moore & Peterson, 117 F.3d
Moreover, a federal court may only exercise personal jurisdiction
jurisdiction comports with the Due Process Clause of the Fourteenth
Thus, the court may exercise personal jurisdiction
over a nonresident defendant if
" ( 1)
the forum state's long-arm
statute confers personal jurisdiction over that defendant; and (2)
the exercise of personal jurisdiction comports with the Due Process
Clause of the Fourteenth Amendment."
McFadin v. Gerber,
753, 759 (5th Cir. 2009), cert. denied, 131 S. Ct. 68 (2010).
the Texas long-arm statute extends as far as constitutional due
the court considers only the second step of the
Due process is satisfied if the
"nonresident defendant has
certain minimum contacts with [the forum] such that the maintenance
'traditional notions of
fair play and
Gardemal v. Westin Hotel Co., 186 F. 3d 588,
(quoting International Shoe Co.
61 S. Ct. 339, 343 (1940)).
"The 'minimum contacts' inquiry is fact
intensive and no one element is decisive; rather the touchstone is
anticipates being haled into court.'"
McFadin, 587 F.3d at 759.
a plaintiff satisfies the due process requirement,
arises that jurisdiction is reasonable, and the burden of proof and
persuasion shifts to the defendant opposing jurisdiction to present
"a compelling case that the presence of some other considerations
Burger King Corp.
Rudzewicz, 105 S. Ct. 2174, 2185 (1985).
"There are two types of
those that give
rise to specific personal jurisdiction and those that give rise to
general personal jurisdiction."
Lewis v. Fresne, 252 F.3d 352, 358
This case involves specific jurisdiction. 7 A court
(5th Cir. 2001).
may exercise specific jurisdiction when the nonresident defendant's
contacts with the forum state arise from, or are directly related
to, the cause of action.
Gundle Lining Construction Corp. v. Adams
85 F. 3d 201,
Helicopteros Nacionales de Colombia, S. A. v. Hall, 104 S. Ct. 1868,
(1984); and Quick Technologies,
313 F.3d 338, 344 (5th Cir. 2002)).
Inc. v. Sage Group PLC,
To determine whether specific
jurisdiction exists, a court must "examine the relationship among
the forum, and the litigation to determine whether
maintaining the suit offends traditional notions of fair play and
Gundle Lining, 85 F. 3d at 205.
Even a single
activities within the forum State, thus invoking the benefits and
protections of its laws."
Burger King, 105 S. Ct. at 2183.
defendant 'should reasonably anticipate being haled into court' in
the forum state."
Ruston Gas Turbines, Inc. v. Donaldson Co., Inc.,
9 F.3d 415, 419 (5th Cir. 1993)
v. Woodson, 100
(citing World-Wide Volkswagen Corp.
s. Ct. 559 (1980)).
Downhole does not argue for, and nothing in the record
supports, the court's general jurisdiction over Coffee.
Plaintiff's Response in Opposition to Defendant Daniel R. Coffee's
and 12(b) (6)
Motion to Dismiss Amended Complaint
("Response"), Docket Entry No. 35, p. 5 ("This Court has specific
personal jurisdiction over Defendant Daniel R. Coffee.").
Downhole alleges that personal jurisdiction exists over Coffee
ftbecause he is the Chief Operating Officer and President of Silver
Creek, a Texas corporation." 8
But Coffee's employment by a Texas
contacts with the forum State.
See Gustafson v. Provider HealthNet
Services, Inc., 118 S.W.3d 479, 483 (Tex. App.-Dallas 2003)
employed by a
company with its
principal place of business in Texas is not sufficient to establish
the requisite minimum contacts with Texas.")
105 S. Ct. 2174).
(citing Burger King,
For the remaining allegations against Coffee in
connection between the alleged activities and the forum State.
traveled to Texas to visit FTSI' s office in Fort
Worth, Texas and attend a conference but the majority of [his) work
with FTSI was done in Pennsylvania. " 10
ft [t) he majority of
further states that
communications with any of
Plaintiff's Response, Docket Entry No. 35, p. 8. ("By his
Motion, Mr. Coffee revealed facts that were unavailable to
Plaintiff during the pleading stage, and exemplify why this Court
has personal jurisdiction over him.")
Affidavit of Daniel R. Coffee, Exhibit A to Coffee's Motion
to Dismiss, Docket Entry No. 26-1, p. 7.
Defendants in this lawsuit were made while [he] was in Pennsylvania
or Ohio." 11
From these statements Downhole reaches the unsupported
conclusion that some of Coffee's discussions while in Texas must
have involved the alleged misappropriation, 12 arguing that "when a
defendant travels to the forum state to learn the trade secrets of
Plaintiff and to discuss plans involving those trade secrets,
jurisdiction exists." 13
constitute a prima facie case for personal jurisdiction.
Downhole also argues that it has made a prima facie case for
personal jurisdiction over Coffee because his communications "were
communicated with other Defendants located in Texas "to further the
misappropriation of Plaintiff's trade secrets, he knew or should
have known that
that activity would cause harm to Downhole in
But the court must look "to the defendant's contacts with
Plaintiff' s Response, Docket Entry No. 3 5, p. 8. (citing
Coffee Affidavit, Exhibit A to Coffee's Motion to Dismiss, Docket
Entry No. 26-1, p. 7).
Id. (citing Stelax Industries, Ltd. v. Donahue, Civil Action
No. 03-cv-923, 2004 WL 733844, at *4 (N.D. Tex. Mar. 25, 2004)).
Id. at 9.
Id. at 10.
the forum State itself, not the defendant's contacts with persons
who reside there."
Walden v. Fiore, 134 S. Ct. 1115, 1122 (2014}
(citing International Shoe, 66 S. Ct. 154, 160 (1945}}.
alleged contacts with the forum State are too tenuous to support
in Ohio 16
The FTSI/Rice Site where he allegedly obtained
Downhole's confidential information was in Pennsylvania. 18
states that Silver Creek neither maintains nor solicits customers
in Texas . 19
Downhole alleges no contradictory facts.
basis Downhole offers for exercising personal jurisdiction over
that his alleged actions harmed a
That is insufficient to support specific jurisdiction.
personal jurisdiction over Coffee,
the court either transfer the
case or permit Downhole to amend its complaint.
The court has
discretion to transfer a civil action to another district in which
it may have been brought or to which all parties have consented
"[f]or the convenience of parties and witnesses, in the interest of
exercise its discretionary powers under
to sever the
Coffee Affidavit, Exhibit A to Coffee's Motion to Dismiss,
Docket Entry No. 26-1, pp. 5 , 3.
Id. at 8 , 19.
Id. a t
Id. a t 8
claims against Coffee and transfer them without argument for why
doing so would be for the convenience of parties and witnesses,
action, or in the interest of justice.
Because dismissal will be
against Coffee in another forum, the court concludes that dismissal
is appropriate here.
And because Downhole has identified no facts
that would support the court's personal jurisdiction over Coffee,
amendment would be futile.
Conclusion and Order
reasons explained above,
the court concludes that
Downhole has failed to present a prima facie case for the court's
personal jurisdiction over defendant Daniel R. Coffee.
court concludes that a transfer would not be in the interest of
justice and that amendment of Downhole's complaint would be futile,
Defendant Daniel R.
Coffee's 12(b) (2)
(Docket Entry No.
Motion to Dismiss Amended
The claims against
SIGNED at Houston, Texas, on this 8th day of May, 2017.
UNITED STATES DISTRICT JUDGE
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