Downhole Technology LLC v. Silver Creek Services Inc. et al

Filing 38

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

ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
DOWNHOLE TECHNOLOGY LLC,

May 08, 2017
David J. Bradley, Clerk

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Plaintiff,
v.

SILVER CREEK SERVICES INC.;
STORMFIELD INNOVATIVE
TECHNOLOGIES, LLC; DANIEL R.
COFFEE; MICHAEL DIDIER;
DILLON W. KUEHL; and CHARLES M.
WILLIAMS,
Defendants.

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CIVIL ACTION NO. H-17-0020

MEMORANDUM OPINION AND ORDER

Pending before
12 (b) ( 2)

the

and 12 (b) ( 6)

court

is

Defendant Daniel

R.

Coffee's

Motion to Dismiss Amended Complaint

and

Supporting Memorandum of Law ("Coffee's Motion to Dismiss") (Docket
Entry No. 26).

For the reasons stated below, the court concludes

that

personal

it

lacks

jurisdiction

over

Coffee.

The

court

therefore does not reach Coffee's 12(b) (6) arguments.
I.

Factual Background

A thorough account of the facts of this case can be found in
an earlier opinion. 1
("Downhole")

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

1

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
from

their work on the

FTSI/Rice Site

to create and market a

competing frac plug ("the ZIP Plug") that infringes on patents held
by Downhole.
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
the

FTSI/Rice

Site,

and/or

[Michael]

through

[Dillon W.] Kuehl, and/or [Charles M.] Williams. " 2
2013 Coffee,
allegedly

formed

ZIP Plugs. 3
President

along with defendants Didier,
Silver

Creek

Services

Didier,

In December of

Kuehl,

Inc.,

and Williams,
which

markets

Coffee is currently the Chief Operating Officer and
of

Silver

"obtained confidential

Creek. 4

Downhole

alleges

information belonging

to

that

Coffee

Downhole

as

a

result of Coffee's employment with FTSI," which he then used "to
facilitate creation of the ZIP Plug for Silver Creek." 5
"and/ or"

2

the

other Defendants

Plaintiff' s

Amended

Coffee

also allegedly induced Kuehl,

Complaint,

Docket

Entry

No.

a

2 01

p. 8 ~ 24.
3

Coffee disputes this, but whether he was involved in Silver
Creek from its inception has no effect on the court's conclusions.
4

Id. at 11

~

34.

5

Id. at 23

~

84.
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former Downhole employee, to violate a Proprietary Information and
Intellectual Property Assignment Agreement (the "Kuehl NDA") . 6
II.

A.

Applicable Law

Standard of Review

Dismissal for lack of personal jurisdiction is governed by
Federal Rule of Civil Procedure 12(b) (2).
moves

to

dismiss

for

lack

of

When a foreign defendant

personal

jurisdiction

under

Rule 12 (b) (2), "the plaintiff 'bears the burden of establishing the
district

court's

jurisdiction

over

the

defendant.'"

Quick

Technologies, Inc. v. Sage Group PLC, 313 F.3d 338, 343 (5th Cir.
2002), cert. denied,
Development LLC,

124 S. Ct.

190 F.3d 333,

66
335

(2003)

(quoting Mink v. AAAA

(5th Cir.

1999)).

"When the

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.
644,

648

making

(quoting Wilson v.

(5th Cir.), cert. denied,

its

determination,

the

115 S. Ct.

district

Belin,

322

20 F. 3d

(1994)).

"In

court may consider the

contents of the record before the court at the time of the motion,
including

'affidavits,

testimony,

or

discovery.'"

6

Id. at 24

any
Id.

~

interrogatories,

combination
at

344

of

the

depositions,

recognized

(quoting Thompson v.

88.
-3-

methods

oral
of

Chrysler Motors

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,
However,

1999) .

allegations,

625

(5th Cir.

the court is not obligated to credit conclusory

even if uncontroverted.

Potomac Electric Power Co.,

Panda Brandywine Corp.

253 F. 3d 865,

869

(5th Cir.

v.

2001).

"Absent any dispute as to the relevant facts, the issue of whether
personal jurisdiction may be exercised over a nonresident defendant
is a

question of

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."
278,

281

(5th Cir.

1997),

Allred v. Moore & Peterson, 117 F.3d
cert.

denied,

118 S.

Ct.

691

(1998).

Moreover, a federal court may only exercise personal jurisdiction
over

a

nonresident

defendant

if

the

exercise

of

personal

jurisdiction comports with the Due Process Clause of the Fourteenth
Amendment.

Id.

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,

587 F.3d

753, 759 (5th Cir. 2009), cert. denied, 131 S. Ct. 68 (2010).
-4-

Since

the Texas long-arm statute extends as far as constitutional due
process allows,
inquiry.

B.

the court considers only the second step of the

Id.

Applicable Law

Due process is satisfied if the

"nonresident defendant has

certain minimum contacts with [the forum] such that the maintenance
of

suit does

not offend

substantial justice.'"
595

(5th Cir.

Washington,
66

S.

Ct.

1999)

Office
154,

'traditional notions of

fair play and

Gardemal v. Westin Hotel Co., 186 F. 3d 588,
(quoting International Shoe Co.

of

Unemployment

158

61 S. Ct. 339, 343 (1940)).

(1945))

Compensation

(quoting

and

Milliken

v.

State of
Placement,

v.

Meyer,

"The 'minimum contacts' inquiry is fact

intensive and no one element is decisive; rather the touchstone is
whether

the

defendant's

conduct

anticipates being haled into court.'"

shows

that

[he]

'reasonably

McFadin, 587 F.3d at 759.

a plaintiff satisfies the due process requirement,

If

a presumption

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
would render

jurisdiction unreasonable."

Burger King Corp.

v.

Rudzewicz, 105 S. Ct. 2174, 2185 (1985).
"There are two types of

'minimum contacts':

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

-5-

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.
County Asphalt.

Inc.,

Gundle Lining Construction Corp. v. Adams

85 F. 3d 201,

205

(5th Cir.

1996)

(citing

Helicopteros Nacionales de Colombia, S. A. v. Hall, 104 S. Ct. 1868,
1872 n.8

(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 defendant,

the forum, and the litigation to determine whether

maintaining the suit offends traditional notions of fair play and
substantial justice."
contact

can

support

"purposefully

avails

Gundle Lining, 85 F. 3d at 205.
specific
itself

jurisdiction
of

the

if

privilege

Even a single
the
of

defendant
conducting

activities within the forum State, thus invoking the benefits and
protections of its laws."
non-resident's

'purposeful

Burger King, 105 S. Ct. at 2183.
availment'

must

be

such

that

"The
the

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)).

7

Downhole does not argue for, and nothing in the record
supports, the court's general jurisdiction over Coffee.
See
Plaintiff's Response in Opposition to Defendant Daniel R. Coffee's
12(b) (2)
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.").
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III.

Analysis

Downhole alleges that personal jurisdiction exists over Coffee
ftbecause he is the Chief Operating Officer and President of Silver
Creek, a Texas corporation." 8
corporation

does

not,

But Coffee's employment by a Texas

alone,

contacts with the forum State.

establish

the

requisite

minimum

See Gustafson v. Provider HealthNet

Services, Inc., 118 S.W.3d 479, 483 (Tex. App.-Dallas 2003)
mere fact

that

[Defendant)

was

employed by a

(ft[T)he

company with its

principal place of business in Texas is not sufficient to establish
the requisite minimum contacts with Texas.")
105 S. Ct. 2174).
Downhole's

(citing Burger King,

For the remaining allegations against Coffee in

Amended

Complaint,

Downhole

does

not

identify

a

connection between the alleged activities and the forum State.
Downhole
initial
occasion,

relies

on

jurisdictional
[he)

Coffee's

affidavit

argument. 9

Coffee

to

supplement

states

that

its

ft[o)n

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

8

p. 11

Plaintiff' s
~ 34.

[his)

Amended

He

further states that

communications with any of

Complaint,

Docket

Entry

the other

No.

20

t

9

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.")
10

Affidavit of Daniel R. Coffee, Exhibit A to Coffee's Motion
to Dismiss, Docket Entry No. 26-1, p. 7.
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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,
prima

facie

factual

case

support,

of

personal

Downhole's

jurisdiction exists." 13
conclusory

a

Without

allegation

does

not

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
directed

toward

Downhole's

TUTSA

Texas

and

claim." 14

involved

the

Downhole

facts

argues

giving
that

if

rise

to

Coffee

communicated with other Defendants located in Texas "to further the
misappropriation of Plaintiff's trade secrets, he knew or should
have known that
Texas." 15

that activity would cause harm to Downhole in

But the court must look "to the defendant's contacts with

12

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).
13

Id. (citing Stelax Industries, Ltd. v. Donahue, Civil Action
No. 03-cv-923, 2004 WL 733844, at *4 (N.D. Tex. Mar. 25, 2004)).
14

Id. at 9.

15

Id. at 10.
-8-

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}}.

Coffee's

alleged contacts with the forum State are too tenuous to support
specific

Coffee

jurisdiction.

Pennsylvania. 17

resides

in Ohio 16

and works

in

The FTSI/Rice Site where he allegedly obtained

Downhole's confidential information was in Pennsylvania. 18

Coffee

states that Silver Creek neither maintains nor solicits customers
in Texas . 19

Downhole alleges no contradictory facts.

The only

basis Downhole offers for exercising personal jurisdiction over
Coffee is,
company.

in effect,

that his alleged actions harmed a

Texas

That is insufficient to support specific jurisdiction.

Downhole

requests

that,

should

personal jurisdiction over Coffee,

the

court

finds

it

lacks

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
justice."

28

u.s.c.

§

1404

(a}.

Downhole

exercise its discretionary powers under

16

§

asks

1404 (a}

the

court

to

to sever the

Coffee Affidavit, Exhibit A to Coffee's Motion to Dismiss,
Docket Entry No. 26-1, pp. 5 , 3.
17

Id. at 8 , 19.

18

Id. a t

19

7

ff
11

17

•

Id. a t 8

ff
II

20

•

-9-

claims against Coffee and transfer them without argument for why
doing so would be for the convenience of parties and witnesses,
several

of

whom

likely would

be

co-defendants

action, or in the interest of justice.
without

prejudice,

leaving

Downhole

in

the

present

Because dismissal will be
free

to

bring

its

claims

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.
IV.
For the

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.

Because the

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.
Complaint
Coffee

are

Coffee's 12(b) (2)

(Docket Entry No.
therefore

26)

DISMISSED

Motion to Dismiss Amended

is GRANTED.
without

The claims against

prejudice

for

lack

of

jurisdiction.
SIGNED at Houston, Texas, on this 8th day of May, 2017.

7

SIM LAKE
UNITED STATES DISTRICT JUDGE

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