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.
-2-
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.").
-6-
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.
-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,
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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