Case Information
United States District Court Southern District of Texas ENTERED IN THE UNITED STATES DISTRICT COURT April 07, 2020 FOR THE SOUTHERN DISTRICT OF TEXAS David J. Bradley, Clerk HOUSTON DIVISION WEATHERFORD INTERNATIONAL, LLC; §
WEATHERFORD WEATHERFORD U.S. L.P.; and §
ARTIFICIAL LIFT §
SYSTEMS LLC, §
§
Plaintiffs, §
§ CIVIL ACTION NO. H-19-4258 V. § § ERIC BINSTOCK; SITEWORKS §
UNLIMITED, INC.; POWDER RIVER §
HYDRAULICS, LLC; and ELITE LIFT §
SOLUTIONS LLC, §
§
Defendants. §
MEMORANDUM OPINION AND ORDER
Plaintiffs, International LLC, Weatherford U.S.
L.P., and Weatherford Artificial Lift Systems LLC ("Weatherford Artificial Lift") (collectively "Weatherford"), assert claims against Eric Binstock, Siteworks Unlimited, Inc. ( "Siteworks"), Powder River Hydraulics, LLC ("Powder River"), and Elite Lift Solutions LLC ("Elite Lift") (collectively "Defendants") for breach of contract, tortious interference with a contract, misappro priation of trade secrets, and breach of fiduciary duty. Pending before the court is Defendants' Motion to Dismiss ( "Motion to Dismiss") (Docket Entry No. 13) . For the reasons stated below, Defendants' Motion to Dismiss will be granted in part and denied in part.
I. Factual and Procedural Background Weatherford is an oilfield services company that provides artificial lift products and services in Colorado, Wyoming, and North Dakota. [1] The artificial lift business includes pile systems, hydraulic lift systems, sucker rods, rod pumps, and progressive cavity pump systems for use in oil wells. [2] Si teworks is a North Dakota corporation that supplied Weatherford with concrete bases for its artificial lift business. [3] As part of that relationship, Weatherford provided Siteworks with what it contends are trade secrets subject to a Supplier Confidentiality Agreement ("NDA") signed in 2016.
Weatherford alleges that Siteworks and its owner, Eric Binstock, conspired with several former employees of Weatherford to use trade secrets subject to the NDA to enter the artificial lift business and compete with Weatherford. [5] To do so, they created
defendants Powder River and Elite Lift - North Dakota limited liability companies owned by Binstock. [6] alleges that 1 2. All page numbers for docket entries in the record No. 1, p. 2 Plaintif f s' Original Complaint ("Complaint") , Docket Entry refer to the pagination inserted at the top of the page by the court's electronic filing system, CM/ECF.
[3] Id. at 7 11 25-26.
[4] Id. at 7-8 11 27-28; NDA, Exhibit 1 to Complaint, Docket Entry No. 1-1, p. 5.
[5] Id. at 10 1 33.
Id. at 3-4 11-12, 11 1 35. Powder River and Elite Lift could not have so quickly been established and begun competing in the artificial lift business without illicit use of Weatherford's confidential information. [7]
Several Weatherford employees resigned and joined Defendants.
Weatherford alleges that these employees conspired to ensure that Weatherford was vulnerable to competition before leaving to join Powder River and Elite Lift and to take Weatherford's customers. [8]
On October 29, 2019, Weatherford filed this action against Defendants alleging breach of contract, tortious interference with a contract, misappropriation of trade secrets, and breach of fiduciary duty and seeking damages and an injunction against them. [9]
On January 6, 2020, Defendants filed their Motion to Dismiss the action for lack of personal jurisdiction, improper venue, and failure to state a claim. [10] responded on February 3, 2020 . [11] replied on February [1] 17, 2020, [2] and Weatherford filed a sur-reply on February 26, 2020.
II. Personal Jurisdiction and Venue Defendants have moved to dismiss for lack of personal jurisdiction and improper venue. [14] Weatherford contends that the court may exercise personal jurisdiction over all Defendants pursuant to a forum selection clause in the NDA that specifies Houston, Texas, as the venue and forum for any disputes related to or arising from the contract. [15] contend that the forum selection clause is unenforceable because it terminated on September 16, 2019, and that it does not bind the non-signatory defendants: Binstock, Powder River, and Elite Lift.
also argues that each defendant has sufficient contacts with Texas to permit exercise of personal jurisdiction even if the forum selection clause does not apply. Defendants also request, in the alternative to dismissal, trans£ er of venue to the District of 1 7 North Dakota.
A. Standard of Review
The court may exercise personal jurisdiction over a nonresident defendant if "(1) the forum state's long-arm statute Motion to Dismiss, Docket Entry No. 13, pp. 17-18. Exhibit 1 to Complaint, Docket [15] Plaintiffs' Response, Docket Entry No. 16, p. 13; see NDA, Entry No. 1-1, p. 4 ll(a) ("Each party agrees that any action or proceeding arising out of or related in any way to this Agreement shall be brought solely in a court of competent jurisdiction sitting in Harris County, Texas, and each irrevocably and unconditionally consents to [its] jurisdiction .").
[16]
Motion to Dismiss, Docket Entry No. 13, pp. 28, 26, 19.
Motion to Dismiss, Docket Entry No. 13, pp. 29, 32, 37.
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,
Since the Texas long-arm statute extends as far as constitutional due process allows, the court considers only the second step of the inquiry. Id.
Federal due process permits personal jurisdiction
over a
nonresident
defendant that has "minimum contacts" with the forum
state, subject to the limit of not offending "traditional
notions
of 'fair play and substantial
justice."' Id. The extent of the
contacts determines
whether the court's jurisdiction
is specific or
general. Lewis v. Fresne,
court has general jurisdiction over a nonresident defendant "'to hear any and all claims'" if that defendant's contacts with the state are so continuous and systematic "as to render [that defendant] essentially at home in the forum." Daimler AG v.
Bauman,
Perforadora
Central, S.A. de C.V.,
2001)).
"In contrast to general, all-purpose
jurisdiction,
specific
jurisdiction
is confined to adjudication
of 'issues deriving from,
or connected with, the very controversy
that establishes
jurisdiction."'
Goodyear,
A court asks "whether there was 'some act by which the defendant
purposefully
avail[ed] itself of the privilege of conducting
activities
within the forum State, thus invoking the benefits and
protections
of its laws.'" Id. at 2854 (quoting Hanson v. Denckla,
Constenla,
S.A.,
Under Rule 12(b) (2), "[w]hen 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.'" Quick Technologies,
Inc. v. Sage Group PLC,
313 F.3d
338, 343-344 (5th Cir. 2002) (quoting Wilson v. Belin,
personal jurisdiction
exists, " [t] he district court may receive
'any-combination
of the recognized
methods of discovery,
' including
affidavits,
interrogatories,
and depositions
to assist in the
jurisdictional
analysis." Little v. SKF Sverige AB, Civil
Action
No. H-13-1760,
B. Analysis
1.Validity of the Forum-Selection Clause The NDA contains a termination clause that sets the termination of the agreement "on the third anniversary of the Effective Date," except for the "obligations set forth in Section 2, and all provisions hereof necessary for the interpretation and enforcement" thereof. Section 2 provides that
Siteworks' contractual duties regarding Weatherford's confidential information continue for five years after the agreement terminates. [19] The effective date of the agreement is September 19, 2016, and this action was instituted on October 29, 2019. [20] argue the forum selection clause terminated with the agreement. [21]
Dispute resolution provisions such as forum-selection clauses typically apply to post-contractual disputes unless the plain language of the contract indicates the parties intended those provisions to expire. Strata Heights International Corp. v.
Petroleo Brasileiro, S.A.,
The court is not persuaded by this argument. The NDA's term
provision states that the "obligations
set forth in Section 2, and
all provisions hereof necessary for the interpretation
and
enforcement
of such obligations,
[23]
shall survive." The provision
that "all provisions"
"necessary for the interpretation
and
in Section also survive means
enforcement"
of the obligations
that the survival clause is not meant as an exclusive list of the
terms that survive termination.
The court therefore cannot assume
the parties intended the forum-selection
clause to expire based on
the survival clause and the maxim that to express one thing is to
exclude others. See Strata Heights,
Absent express intent that the parties intended the forum-selection
clause to expire, the court will apply the general rule that a
forum-selection
clause remains enforceable
as to disputes involving
expired. See id. at *7; Texas Source
a contract that has otherwise
Group. Inc. v. CCH. Inc.,
(enforcing a forum selection clause in an expired contract in an action involving claims arising directly and indirectly from the agreement) . Accordingly, the court concludes it may exercise personal jurisdiction over Si teworks because Si teworks "irrevocably and unconditionally consent[ed] to the jurisdiction." [24]
2. Enforcement Against Non-Signatories Weatherford also seeks enforcement of the forum-selection clause against non-signatory defendants Binstock, Powder River, and Elite Lift. Weatherford argues that Binstock, Powder River, and Elite Lift are bound by the forum-selection clause because Siteworks agreed to the NDA "on behalf of itself and its affiliates and each of their respective employees, officers, directors, shareholders, partners and agents (collectively, the 'Supplier Parties' ) . " [25] contends that Binstock, Powder River, and Elite Lift are affiliates of Siteworks because Binstock is the owner of all three companies.
Non-signatories
may be held to the terms of a forum-selection
clause in certain limited circumstances.
In re Lloyd's Register
North America, Inc.,
[25] Plaintiffs' Response, Docket Entry No. 16, pp. 26-27; NDA, Docket Entry No. 1-1, p. 2 2. Exhibit 1 to Complaint, Plaintiffs' Response, Docket Entry No. 16, pp. 24, 26.
include "(1) incorporation by reference; (2) assumption; (3) agency; (4) alter ego; (5) equitable estoppel, and (6) third-party beneficiary." G.T. Leach Builders, LLC v. Sapphire V.P., LP, 458 S.W.3d 502, 524 (Tex. 2015). Weatherford argues that the enforce ment of the forum selection clause is permissible under (1) the "closely related parties" theory, (2) agency, and (3) alter ego.
Federal courts have permitted enforcement
of forum-selection
clauses against a non-signatory
defendant
who is "' closely related'
to the dispute such that it becomes 'foreseeable'
that it will be
bound." Marano Enterprises
of Kansas v. Z-Teca Restaurants,
L.P.,
Direct Financial Solutions,
LLC, Civil Action No. 3: 11-0109-D,
v. CCH I Inc . , 9 6
Sheldon,
Defendants argue that the court should not follow these decisions, and, alternatively, that under the closely-related party theory Binstock, Powder River, and Elite Lift would not qualify as closely related. [28] cite no case where the theory has been rejected. The court is persuaded that the closely-related parties doctrine applies. alleges and Defendants do not contest that
Binstock is the sole owner of Siteworks,
Powder River, and Elite
Lift. Courts have found that a sole owner and controller
of a
corporation
is closely related to that corporation
for the purposes
of enforcing forum selection clauses. In Hugel v. Corporation
of
Lloyd's the Seventh Circuit affirmed the district court's
finding
that two corporations
and their owner and president
were so closely
related that they were bound by a forum-selection
clause to which
the owner had agreed.
Defendants argue that Binstock' s ownership of the three companies does not suffice to make them closely related to Siteworks. But Weatherford alleges more than mere co-ownership. alleges that Binstock and Siteworks created and used
Powder River and Elite Lift as instrumentalities to circumvent the NDA and to use Weatherford's confidential information to compete with it. [29] Defendants argue that there is no close relationship between Siteworks, Powder River, Elite Lift, and the NDA, but point to no evidence that would suffice to overcome the presumption for the plaintiffs' allegations. [30] present the affidavits of employees of Powder River and Elite Lift, none of which controvert Weatherford's allegation that the two companies have worked closely with Siteworks to take Weatherford's business. Complaint, Docket Entry No. 1, p. 11 11 35-36.
[30] Defendants' Reply, Docket Entry No. 20, p. 17 Declaration of Eric Binstock, Exhibit 1 to Motion to Dismiss, Docket Entry No. 13-1, pp. 2-8; Declaration of Brandon Kadrmas, Exhibit 2 to Motion to Dismiss, Docket Entry No. 13-2, pp. 2-3; Declaration of Ryan Kosmicki, Exhibit 3 to Motion to Dismiss, Docket Entry No. 13-3, pp. 2-5; Declaration of Jesse Jafolla, Exhibit 4 to Motion to Dismiss, Docket Entry No. 13-4, pp. 2-5; Declaration of Jordan Binstock, Exhibit 5 to Motion to Dismiss, Docket Entry No. 13-5, pp. 2-4.
Because Defendants
have not presented evidence that would
controvert
Weatherford's
allegations,
the court must accept that
Binstock, Powder River, and Elite Lift were closely related to
Siteworks,
and that they engaged in conduct closely related to the
NDA.
[32]
See Johnston,
assertion that the court may exercise personal jurisdiction, and filed objections to the declarations. Because, as explained above, Weatherford's pleadings establish personal jurisdiction against Defendants, the court need not consider the declarations. Defendants' objections will therefore be overruled as moot.
Because the court concludes that Defendants are all bound by the NDA's forum-selection clause for Houston, Texas, their motion will be denied as to dismissal for lack of personal jurisdiction.
Likewise, the court will deny Defendants' request for dismissal for improper venue under Rule 12(b) (3) or for transfer of venue under Docket Entry No. 21. See Defendants' Objections to Plaintiffs' Declarations,
28 U.S.C. § 1404(a). See Atlantic Marine Construction Co. Inc. v.
United States District Court for the Western District of Texas, 134 S.Ct. 568, 583 (2013) ("When parties have contracted in advance to litigate disputes in a particular forum, courts should not unnecessarily disrupt the parties' settled expectations . . . [i]n all but the most unusual cases.").
3. Applicability of the Forum-Selection Clause to Count III Defendants contend that the NDA' s forum-selection clause cannot justify jurisdiction over Count III of the Complaint, which alleges tortious interference with employment contracts of employees who left Weatherford to work for Powder River and Elite Lift. Defendants argue that the NDA's forum-selection clause does not apply to this claim because the employment contracts are not related to the NDA between Siteworks and Weatherford.
"The scope of a forum-selection
clause is not limited solely
to claims for breach of the contract that contains it." MaxEn
Capital, LLC v. Sutherland,
Civil Action No. H-08-3590,
WL 936895, at *6 (S.D. Tex. April 3, 2009). A forum-selection
clause can apply to both contract and tort claims. Marinechance
Shipping, Ltd. v. Sebastian,
Although the Fifth Circuit has not articulated a specific test for determining when tort claims fall within the scope of a contract's forum-selection clause, district courts within this circuit have looked to three factors in making this determination: " ( 1) whether the tort claims 'ultimately depend on the existence of a between the parties;' ( 2) whether contractual relationship 'resolution of the claims relates to interpretation of the contract;' and (3) whether the claims 'involv[e] the same operative facts as a parallel claim for breach of contract.'" See, e.g., AlliantGroup, L.P. v. Mols, Civil Action No. H-16-3114, WL 432810, at *7 (S.D. Tex. Jan. 30, 2017).
Forum-selection
clauses that extend only to disputes "arising
out of" a contract are construed narrowly, while clauses extending
to disputes that "relate to" or "are connected with" the contract
are construed broadly. Blueskygreenland
Environmental
Solutions,
LLC v. Rentar Environmental
Solutions, Inc., Civil Action
No. 4:11-01745,
The phrase "arising in connection
with" has been found to reach
"every dispute between the parties having a significant
relationship
to the contract and all disputes having their origin
or genesis in the contract." Simula, Inc. v. Autoliv, Inc., 175
F.3d 716, 721 (9th Cir. 1999); Wellogix, Inc. v. SAP America, Inc.,
The NDA' s forum-selection clause applies to "any action or proceeding arising out of or related in any way to this Agreement." As such, it must be broadly construed and applied to [4] Weatherford's tort claims as long as they have a significant relationship to or originate in the NDA. See Wellogix, 58 NDA, Exhibit 1 to Complaint, Docket Entry No. 1-1, p. 4 , 11 (a) .
F.Supp. 3d at 778. Weatherford alleges tortious interference with its employees' contracts as part of a conspiracy by Siteworks and the other Defendants to obtain and use Weatherford's confidential information and trade secrets in contravention with the NDA. All of Weatherford's claims turn on a shared set of operative facts closely related to the alleged breach of the NDA: whether Weatherford's trade secrets were misappropriated and illegally used Because Count III depends on to establish a competing enterprise.
these same
allegations,
the forum-selection
clause applies. See
iiiTec, Ltd. v. Weatherford
Technology
Holdings,
LLC, Civil Action
No. H-18-1191,
III. Failure to State a Claim Defendants also move for dismissal of several of Weatherford's claims under Rule 12 (b) (6) . contend that (1) only one of the Weatherford plaintiffs has standing to enforce the NDA and that Binstock, Powder River, and Elite Lift cannot be liable for the alleged breach of contract; (2) the tortious interference and breach of fiduciary duty claims either fail as a matter of law or are not plausibly alleged; and (3) Weatherford's requested injunction fails as a matter of law.
A. Standard of Review
The Federal Rules of Civil Procedure permit dismissal when a plaintiff fails to state a claim upon which relief can be granted.
Fed. R. Civ. P. 12(b) (6). A Rule 12(b) (6) motion tests the formal
sufficiency
of the pleadings and is "appropriate
when a defendant
attacks the complaint because it fails to state a legally
cognizable
claim." Ramming v. United States,
State Farm
B. Parties to the NDA-Based Claims
1. Standing of Weatherford Entities
Of the three Weatherford plaintiffs, only Weatherford Artificial Lift signed the NDA on which Counts I and II -breach of contract and tortious interference with the NDA - are premised. therefore argue that only Weatherford Artificial Lift may prosecute these claims.
"To establish standing to sue for a breach of contract, 'the plaintiff must either be in privity of contract with the defendant or be a third-party beneficiary entitled to enforce the contract.'" United Neurology, P.A. v. Hartford Lloyd's Insurance Co., 101 F. Supp. 3d 584, 591-92 (S.D. Tex. 2015) (quoting Allan v.
Nersesova,
Generally, a party to a contract is a signatory party, but the contract may name other parties who have the power to enforce it.
See In re Rubiola,
The NDA defines "Weatherford" to mean "Weatherford Artificial Lift Systems, LLC and its divisions, subsidiaries and affiliates" and then uses the term "Weatherford" throughout to describe the rights and duties under the contract. This language persuades the
court that the parties intended for the Weatherford affiliates to be non-signatory parties to the contract or at least third-party NDA as the basis for each claim); NDA, Exhibit 1 to Complaint, [36] See Complaint, Docket Entry No. 1, pp. 13-15, 23 (citing the Docket Entry No. 1-1, p. 5.
[37] Motion to Dismiss, Docket Entry No. 13, p. 3 8. NDA, Exhibit 1 to Complaint, Docket Entry No. 1-1, p. 1. beneficiaries of the agreement. Defendants do not contest that Weatherford International and Weatherford U.S. are affiliates of Artificial Lift, and, accordingly, the court concludes they have standing as co-plaintiffs on Counts I and II.
2. Breach-of-NDA
Liability for Non-Signatory
Defendants
Defendants contend that the non-signatory
defendants
Binstock, Powder River, and Elite Lift - cannot be liable to
Weatherford's
breach-of-contract
claim (Count
I).
[39]
" ' [A] party
generally must be a party to a contract before it can be held
liable for a breach of the contract.'"
Ibe v. Jones,
While a contract may by its terms empower non-signatory parties or third-party beneficiaries to enforce it against signatory parties, the reverse is typically not true. Contract formation requires "an offer and acceptance and a meeting of the minds," and a party will not be bound without these elements. Ibe, Motion to Dismiss, Docket Entry No. 13, p. 39. Defendants also argue Count VII should be dismissed on the same grounds, but the court will discuss Count VII separately below. See infra Subpart D.
Exhibit 1 to Complaint,
Plaintiffs'
Response, Docket Entry
Docket Entry
2.
No. 1-1, p. 2 No. 16, p. 51; see NDA,
C. Tortious Interference
Weatherford's Complaint alleges multiple counts of tortious interference with: (1) Sitework's NDA with Weatherford (Count II); (2)Weatherford's employment contracts with its former employees (Count III); and (3) Weatherford's contracts with its customers and prospective business relationships (Count IV). Defendants object to the legal sufficiency of these pleaded claims.
1. Binstock's Alleged Interference with the NDA (Count II) contend that Count II's allegation that Binstock tortiously interfered with the NDA fails as a matter of law because Binstock is an agent of Siteworks, who is a party to the contract.
" [A] person must be a stranger to a contract to tortiously
interfere
with it." In re Vesta Insurance
Group, Inc., 192 S.W.3d
759, 761 (Tex. 2006) (internal
quotations
omitted). Accordingly,
agents of a party generally cannot be held liable for interfering
with that party's contractual
relationships
unless the agent acts
outside of the agency's scope. American Medical International,
Inc. v. Giurintano,
Because Binstock is an officer and therefore an agent of Siteworks, he cannot be held liable for interfering with Siteworks' and Weatherford's relationship unless he acted outside the scope of his agency. Weatherford argues that Binstock acted outside of the scope of the agency because misappropriation of trade secrets harmed Siteworks' relationship for the benefit of Powder River and Elite Lift. But Weatherford has not alleged that Siteworks disapproved of Binstock's actions - an impossibility given that Binstock is Siteworks' sole owner. Accordingly, has not alleged that Binstock acted outside the scope of his agency for Siteworks. As Binstock was not a stranger to the NDA because he is Siteworks' agent, Weatherford's remedy for his complained-of conduct is its breach-of-contract claim against his principal, Siteworks. The tortious interference claim against Binstock in Count II fails as a matter of law.
2 Defendants' Alleged Interference with Weatherford's Employees' Employment Contracts (Count III) Count III of the Complaint alleges that the Defendants tortiously interfered with Weatherford's employment contracts with its former employees. [42] alleges that its former employ ees interfered with (1) non-disclosure agreements, (2) agreements not to compete with Weatherford or solicit its customers during the employment, and (3) agreements not to compete with Weatherford or solicit its customers or employees after the end of employment. [43]
Defendants argue that the post-employment agreements of non competition and non-solicitation cannot support a tortious interference claim because they are not enforceable. [44]
contend that such contracts are unenforceable in North Dakota and that North Dakota law governs the contracts because the relevant employees reside in North Dakota, work in North Dakota, and serviced Weatherford's customers mostly in North Dakota.
[42] Complaint, 11 Docket Entry No. 1, pp. 17-18 60-68. [43] Id. at 17 61.
Motion to Dismiss, Docket Entry No. 13, pp. 40-41. & Id. at 40-41 n.10. Defendants provide no evidence to support the factual assertions that would permit the court to conclude North Dakota law applies to the contracts. And the court must take as true Weatherford's allegations that its former employees have been using its confidential information and taking its customers not only in North Dakota but also in Wyoming and Montana. Chauvin, 495 F.3d at 237. Taking these allegations in a light most favorable to Weatherford, the court cannot determine in what state the former employees' contractual and employment duties predominantly occurred. Accordingly, Defendants' Motion to Dismiss will be denied as to the dismissal of Count III.
3. Defendants' Alleged Interference with Weatherford's Customer Contracts (Count IV) Count IV of the Complaint alleges that Defendants tortiously interfered with Weatherford's existing or prospective contracts with 24 of Weatherford's customers. [47] Defendants argue that Weatherford has not pleaded sufficient facts to plausibly support this claim. Specifically, contend that has not sufficiently pleaded (1) the existence of contracts or business relationships likely to lead to contracts in the future or (2)actions by the Defendants that induced the customers to breach their contracts or refrain from entering new ones with Weatherford.
Proximate causation of damages is an element of tortious
interference
with a contract. Prudential
Insurance
Co. of America
v.Financial Review Services, Inc.,
To demonstrate
it the plaintiff must show that the defendant
interfered
by actively persuading
a party to breach a contract or
otherwise causing the contract to be more difficult to fulfill or
of less or no value. Amigo Broadcasting,
LP v. Spanish
Broadcasting System, Inc.,
Weatherford's
Complaint alleges that it had active contracts
and ongoing business relationships
with 24 specific customers
that
were affected by the Defendants'
actions. This establishes
the
existence
of a contract and business relations necessary
to support
a tortious interference
claim. As to the interference
and
causation
elements, Weatherford
relies on its allegations
that the
(1) poached employees who were tasked with servicing
these customers, and (2) utilized Weatherford's
confidential
information
and trade secrets to undercut prices, engage in
targeted solicitation,
and reassure the customers
that Powder River
and Elite Lift offered the same products and services as
Weatherford.
[50]
The court concludes
that these allegations
plausibly
support Defendants'
interferance
with Weatherford's
contracts by
making the contracts more difficult to perform or less valuable,
and interfered with existing business relationships to
Weatherford's
detriment. Rule 8 only requires that the complaint
provide the grounds that entitle the plaintiff to relief, not
"detailed
factual allegations."
Twombly,
D. Breach of Fiduciary Duty {Count VII}
The Complaint alleges that Defendants owed fiduciary duties of good faith, loyalty, candor, and care to Weatherford under the NDA. A fiduciary relationship between the plaintiff and defendant is an element of breach of fiduciary duty. Wellogix, Inc. v.
Accenture, LLP,
[5] °Complaint, Docket Entry No. 1, p. 6 1 11 21, p. 12 38-39. Id. at 23 94-100. argue that this claim must be dismissed because no fiduciary relationship existed between the parties or was created by the NDA. Weatherford argues that the plain language of the contract imposes a formal fiduciary duty of care on Defendants. [52]
The clause in the NDA Weatherford cites states:
[Siteworks] shall maintain and safeguard the confidentiality of all Confidential Information received by it from Weatherford, handling and treating same with at least the same degree of care (and affording it the same protections) it observes and provides for its own trade secrets and confidential events with at least a reasonable information, standard of care. and in all "'A fiduciary relationship exists when the parties are under a duty to act for or give advice for the benefit of another upon matters within the scope of the relationship.'" Wellogix, 788 F.Supp. 2d at 543. "[A] formal fiduciary relationship, 'arises as a matter of law and includes the relationships between attorney and client, principal and agent, partners, and joint venturers.'" Id.
(quoting Stephanz v. Laird,
A non-disclosure
agreement does not typically give rise to a
formal fiduciary
relationship.
See Wellogix,
Smith,
E. Permanent Injunction
Weatherford seeks a permanent injunction that would restrain from competing with Weatherford for the business of 24 companies in Montana, North Dakota, and Wyoming for a year. [55]
Defendants argue this request must be dismissed because it constitutes an unlawful restraint on trade. [56] argues a non-competition injunction is available under the Uniform Trade Secrets Act to nullify any advantage gained by misappropriation of trade secrets.
The Uniform Trade Secrets Act, as adopted by both Texas and North Dakota, allows enjoinment of "[a]ctual or threatened
[54] See Plaintiffs' Response, Docket Entry No. 16, p. 56. [55] Complaint, Docket Entry No. 1, p. 25 1108, pp. 26-28 1108h. Motion to Dismiss, Docket Entry No. 13, pp. 37-38. Plaintiffs' Response, Docket Entry No. 16, pp. 48-49.
misappropriation"
of trade secrets. N.D. Cent. Code § 74-25.1-
02(1); Tex. Civ. Prac. & Rem. Code§ 134A.003(a).
Courts narrowly
tailor such injunctions
to apply only to the use of confidential
or
trade secret information.
See, e.g., Aspen Technology,
Inc. v. M3
Inc.,
v.Davis, Civil Action
No. H-06-2849,
Tex. Dec. 28, 2006)
(" [T)he appropriate
remedy [to misappropriation
of trade secrets] is to enjoin use and disclosure
of those secrets,
not to enjoin work in competition
with the former employer.")
;
Inc., 965 S.W.2d
T-N-T Motorsports,
Inc. v. Hennessey
Motorsports,
18, 25-26 (Tex. App.-Houston
[1st Dist.] 1998, pet. dism'd)
(modifying
a permanent injunction
to more narrowly apply only to
misappropriated
trade secrets). Courts have, however, sometimes
broadly enjoined competition
where a party's access to a market
depended entirely on the use of misappropriated
trade secrets. See
Sharma v. Vinmar International,
Ltd.,
App.-Houston [14th Dist.] 2007, no pet.).
Weatherford's Complaint alleges that Defendants' access to and competition in the artificial lift services sector could only have occurred through their misappropriation of confidential information and trade secrets. [58] Because broad injunctive relief may be Complaint, Docket Entry No. 1, p.11 1 35, p.12 38. available if it is proven that Defendants gained advantaged access to the artificial lift business through misappropriation of trade secrets, the court cannot at this stage decide whether Weatherford's requested injunctive relief is too broad as a matter of law. The court will deny Defendants' motion as to the dismissal of this request for injunctive relief.
IV.Conclusions and Order For the reasons explained above, the court concludes that it has personal jurisdiction over every defendant and is the proper venue for the action. Accordingly, Defendants' Motion to Dismiss (Docket Entry No. 13) under Rules 12 (b) (2) and 12 (b) (3) or to transfer venue is DENIED.
The court concludes that the breach of contract claim may only proceed against the sole signatory defendant, Siteworks; the claim for tortious interference with the NDA cannot proceed against Eric Binstock because he was not a stranger to the contract; and there is no fiduciary relationship between the parties to support a breach of fidcuiary duty claim. Accordingly, the partial Rule 12 (b) (6) Motion to Dismiss is GRANTED as to Count I with respect to Eric Binstock, Powder River Hydraulics, LLC, and Elite Lift Solutions LLC; as to Count II with respect to Eric Binstock; as to Count VII with respect to all Defendants; and is otherwise DENIED. Defendants' Objections to Plaintiffs' Declarations (Docket Entry No. 21) is OVERRULED AS MOOT.
SIGNED at Houston, Texas, on this 7th day of April, 2020. SIM LAKE SENIOR UNITED STATES DISTRICT JUDGE
Notes
[7] Id. at 12 1 39.
[8] Id. at 10 34.
[10] Motion to Dismiss, Docket Entry No. 13, p. 11.
[11] Plaintiffs' Response to Defendants' Motion to Dismiss ("Plaintiffs' Response"), Docket Entry No. 16.
[12] Defendants' Reply in Support of Motion to Dismiss ("Defendants' Reply"), Docket Entry No. 20.
[13] Sur-Reply in Opposition to Defendants' Motion to Dismiss ("Plaintiffs' Sur-Reply"), Docket Entry No 23.
[18] NDA, Exhibit 1 to Complaint, Docket Entry No. 1-1, p. 4 110.
[19] a 11 • Id. t 2 fl
[20] Id. at 1 1 1; Complaint, Docket Entry No. 1.
[21] Motion to Dismiss, Docket Entry No. 13, p. 28.
[27] Plaintiffs' Response, Docket Entry No. 16, pp. 9-10.
[28] Defendants' Reply, Docket Entry No. 20, p. 23.
[35] Motion to Dismiss, Docket Entry No. 13, pp. 27-31.
[41] The "closely related parties" doctrine, discussed supra, applies only in the context of forum-selection clauses and does not bind non-signatories to the contract as a whole.
[46] See Complaint, Docket Entry No. 1, p. 2 , 2, pp. 12-13 ,, 37-38 (defining "the Rockies" as North Dakota, Montana, and Wyoming, and then alleging in detail conduct of its former employees in that region).
[47] Id. at 18-20 '' 69-76.
[48] Motion to Dismiss, Docket Entry No. 13, p. 41.
[49] Motion to Dismiss, Docket Entry No. 13, pp. 41-43.
[52] Plaintiffs' Response, Docket Entry No. 16, p. 56.
[53] NDA, Exhibit 1 to Complaint, Docket Entry No. 1-1, p. 2 § 2 (a) .