United States District Court, S.D. Texas, Houston Division
BHL BORESIGHT, INC., et al. Plaintiffs,
GEO-STEERING SOLUTIONS, INC., et al. Defendants.
OPINION AND ORDER
MELINDA HARMON UNITED STATES DISTRICT JUDGE
in the above-referenced cause are the following
Defendants' Motions to Dismiss: Statoil Gulf Services LLC
(“Statoil”) and Alfonso Zaza's
(“Zaza”), Doc. 230; Geo-Steering Solutions, Inc.
and Geo-Steering Solutions USA, Inc. (collectively,
“GSSI”), Doc. 232; Pleasant Solutions, Doc. 246;
Neil Tice (“Tice”), Doc. 259; Darrell Joy
(“Joy”), Doc. 317; and Byron Molloy
(“Molloy”), Docs. 333, 334. Molloy's Opposed
Motion to Strike Arguments from BHL Boresight's Sur-Reply
is also pending. Doc. 357. After considering the Motions, the
Court denies Molloy's Motion to Strike, and grants in
part and denies in part Defendants' Motions to Dismiss
for the reasons that follow.
the facts of this case have been extensively recited in this
court's prior Opinion and Order, Doc. 140, the Court only
recites what is necessary to understand the context in which
the present motions arose.
parties in this case dispute the source of Defendant
GSSI's geosteering software, Geo-Direct. Plaintiff BHL
contends that Defendants unlawfully used its proprietary
software to develop Geo-Direct. As a result, BHL initiated
this suit against Defendants GSSI and Statoil on March 10,
2015. Doc. 1.
Original Complaint, BHL asserted claims against Statoil and
GSSI for violations of the Computer Fraud and Abuse Act
(“CFAA”), Electronic Communications Privacy Act
(“ECPA”) (Counts I-III), unjust enrichment (Count
V), and civil conspiracy (Count VIII). Id.
¶¶ 28-51, 60-64, 77-80. BHL also alleged
misappropriation of trade secrets (Count IV) and civil theft
(Count VII) against GSSI and breach of contract (Count VI)
against Statoil. Id. ¶¶ 52-59, 65-76. GSSI
responded by asserting counterclaims against BHL for: request
for declaratory judgment of independent creation of the GSSI
software (Count I), request for declaratory judgment that the
GSSI software is an original work (Count II), request for
declaratory judgment that GSSI did not copy BHL's
software in creating GSSI's software (Count III), Lanham
Act violation (Count IV), common law unfair competition
(Count V), state antitrust violation (Count VI), tortious
interference with existing contract (Count VII), and tortious
interference with prospective business relationships (Count
VIII). Doc. 19 at ¶¶ 10-56. The parties filed cross
motions to dismiss and on March 29, 2016, this Court
dismissed BHL's ECPA and unjust enrichment claims and
GSSI's state antitrust, tortious interference with
existing contract, and tortious interference with prospective
business relationships counterclaims without prejudice. Doc.
receiving permission from the Court, BHL filed its First
Amended Complaint (“FAC”) on August 29, 2016, in
which it amended its claims and added additional Defendants
Pleasant Solutions, Joy, Tice, Molloy, and Zaza. Doc. 209-1.
All Defendants responded by filing the pending Motions to
Dismiss. Docs. 230, 232, 246, 259, 317, 334. These Motions
are now ripe for consideration.
Motions to Dismiss for Lack for Personal
Defendants, Molloy and Pleasant Solutions, attack their
inclusion in this suit with their Motions to Dismiss for Lack
of Personal Jurisdiction pursuant to Federal Rule 12(b)(2).
Because jurisdictional matters must be resolved first, the
Court begins with these Motions. See, e.g.,
United States v. Tex. Tech Univ., 171 F.3d 279, 285
n.9 (5th Cir. 1999) (“[C]ourts must . . . decide issues
of personal jurisdiction before ruling on the
Process Clause of the Fourteenth Amendment precludes a
federal court from assuming personal jurisdiction over a
nonresident defendant “unless the defendant has
meaningful ‘contacts, ties, or relations' with the
forum state.” Luv N' Care, Ltd. v. Insta-Mix,
Inc., 438 F.3d 465, 469 (5th Cir. 2006) (citing
Int'l Shoe Co. v. Washington, 326 U.S. 310, 319,
66 S.Ct. 154, 90 L.Ed. 95 (1945)). Such contacts can give
rise to either general or specific jurisdiction. Id.
Where a defendant has “continuous and systematic
general business contacts” with the forum state, the
court may exercise “general” jurisdiction over
any action brought against that defendant. Helicopteros
Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408,
414-15 & n.9, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984).
Where contacts are less pervasive, the court may still
exercise “specific” jurisdiction “in a suit
arising out of or related to the defendant's contacts
with the forum.” Id. at 414 n.8. This case
presents only the question of specific jurisdiction.
Fifth Circuit has reduced the specific-jurisdiction inquiry
into a three-step analysis: “‘(1) whether the
defendant . . . purposely directed its activities toward the
forum state or purposely availed itself of the privileges of
conducting activities there; (2) whether the plaintiff's
cause of action arises out of or results from the
defendant's forum-related contacts; and (3) whether the
exercise of personal jurisdiction is fair and
reasonable.'” Id. (quoting Nuovo
Pignone v. STORMAN ASIA M/V, 310 F.3d 374, 378 (5th Cir.
2002)). “The ‘minimum contacts' inquiry is
fact intensive and no one element is decisive; rather the
touchstone is whether the defendant's conduct shows that
it ‘reasonably anticipates being haled into
court.'” McFadin v. Gerber, 587 F.3d 753,
759 (5th Cir. 2009) (citing Luv N' Care, 438
F.3d at 470). Thus, a defendant may not be haled into a
jurisdiction “solely as a result of ‘random,
' ‘fortuitous, ' or ‘attenuated'
contacts, or of the ‘unilateral activity of another
party or third person.'” Id. (citing
Electrosource, Inc., v. Horizon Battery Techs.,
Ltd., 176 F.3d 867, 871-72 (5th Cir. 1999)).
addition to meeting due-process requirements, a federal
court's exercise of personal jurisdiction must satisfy
the requirements of the forum state's
“long-arm” statute. Clemons v. McNamee,
615 F.3d 374, 378 (5th Cir. 2010) (citing Latshaw v.
Johnston, 167 F.3d 2008, 2011 (5th Cir. 1999)).
Texas's long-arm statute, however, is coextensive with
the Due Process Clause. Id.
faced with a motion to dismiss for lack of personal
jurisdiction, the court may consider admissible affidavits
and other materials. Thompson v. Chrysler Motors
Corp., 755 F.2d 1162, 1165 (5th Cir. 1985). In the
absence of a full and fair evidentiary hearing, however, a
plaintiff need only make a prima facie showing of
jurisdiction through its own affidavits and supporting
material. Cooper v. McDermott Int'l, Inc., 62
F.3d 395, 1995 WL 450209, at *5 (5th Cir. 1995) (unpublished)
(citing Thompson, 755 F.2d at 1165). “Prima
facie” means “[s]ufficient to establish a fact or
raise a presumption unless disproved or rebutted.”
Black's Law Dictionary 1310 (9th ed. 2009).
decide whether a prima facie case exists, [the court] must
accept as true [the plaintiff's] ‘uncontroverted
allegations, and resolve in its favor all conflicts between
the facts contained in the parties' affidavits and other
documentation.'” Nuovo Pignone, 310 F.3d
at 378 (quoting Kelly v. Syria Shell Petroleum Dev.
B.V., 213 F.3d 841, 854 (5th Cir. 2000)). This general
rule of resolving conflicts in favor of the plaintiff only
applies to affidavits and other admissible evidence, however,
not merely allegations. Cooper, 62 F.3d 395 (citing
Fernandez-Montes v. Allied Pilots Assoc, 987 F.2d
278, 284 (5th Cir. 1993)).
law makes clear, the procedural posture of the case is
important; at this early stage, the Court need not decide
whether BHL has proven its contentions, only whether,
resolving conflicts in the affidavits in its favor, it has
made a prima facie case for personal jurisdiction. See
Campbell Pet Co. v. Miale, 542 F.3d 879, 888 (Fed. Cir.
2008). Before the Court may do so, however, it must address a
number of objections to the parties' declarations.
case, both parties submitted materials to support their
positions. BHL objects to Molloy's Declaration and
Pleasant Solutions CEO Thomas Stachura's Affidavit on the
grounds that both contain assertions that are irrelevant,
hearsay, conclusory, have little probative value, and/or go
beyond the issue of personal jurisdiction. Docs. 278, 347.
The Court addresses the objected-to submissions in turn.
BHL argues that the Stachura Declaration should be
disregarded because Stachura lacks personal knowledge about
communications between Pleasant Solutions employees and GSSI,
making his statements about interactions between GSSI and
Pleasant Solutions hearsay. Doc. 278 at 12-13. BHL further
argues that Stachura's Declaration has little probative
value because he is an interested witness offering conclusory
statements. Id. at 14-15.
BHL requests that the Court disregard the Affidavit in its
entirety, BHL only identifies four allegedly problematic
• “Pleasant Solutions has no regular, continuous,
systematic contact with the State of Texas” (Stachura
Aff ¶ 9);
• the GSSI Defendants “did not inform Pleasant
Solutions where it intended to market the software once
Pleasant Solutions completed the development.” (Aff
• “At no time did any employee of Pleasant
Solutions knowingly receive a live demonstration . . .
.” (Aff. ¶ 26); and
• Pleasant Solutions did not “knowingly acquire
any information that was designated, marked or labeled as
confidential and proprietary belonging to BHL or any third
party, nor any information which it could reasonably have
known, based on industry standards, is confidential to third
parties” (Aff ¶ 28).
Court sustains BHL's objections to the first statement,
although it fails to see what strategic advantage BHL gains
thereby. BHL argues that the first statement is a
“conclusory and legalistic argument that is no
substitute for specific facts.” Doc. 278 at 14. The
Court agrees that the statement contains a legal conclusion,
however, Stachura testifies in prior paragraphs that Pleasant
Solutions has no offices; phone numbers or addresses;
employees, officers, directors, agents, or representatives;
or property or security interests in Texas and has never
conducted business in the state. See Doc. 247 at
¶¶ 4-6. In doing so, he provides the proper factual
support for Pleasant Solutions' contention that it lacks
the necessary contact with Texas to support jurisdiction.
Court next finds unpersuasive BHL's argument that the
Affidavit should be disregarded because Stachura is an
interested witness. The cases that BHL cites in support of
this contention are nonbinding and easily distinguishable,
and as Pleasant Solutions astutely points out, “the
individuals who have the personal knowledge necessary to give
affidavits about disputed facts in cases like this simply
happen to be the employees or officers of such
entities.” Doc. 390 at 8-9.
the Court overrules BHL's objection to the last three
statements on hearsay grounds. Nowhere in these three
statements does Stachura aver that he based this knowledge on
what third parties told him. Furthermore, as CEO of the
company, he is certainly capable of making a statement based
on his own personal knowledge and experience regarding the
extent of the relations between the companies. See United
Techs. Corp. v. Mazer, 556 F.3d 1260, 1277 (11th Cir.
2009) (concluding that defendant company's managing
director's statement that the company “at no time .
. . ever assisted Defendant West-Hem in negotiating a price
for the blueprints with Anthony DiLorenzo, and did not
decide, alone or together with anyone, what Defendant
West-Hem should pay Mr. DiLorenzo for those blueprints”
was a factual statement based on personal knowledge, not
renews the hearsay and lack-of-personal-knowledge arguments
it leveled at Stachura's Affidavit against Molloy's
Declaration, but it further argues that a number of
Molloy's statements are conclusory and that, as a whole,
the Declaration is improper because it addresses more than
jurisdictional issues. Doc. 347. BHL points to the following
statement as hearsay: “I learned that Boresight and
Myall Hawkins, Boresight's attorney, contacted my
employer Chinook Consulting Ltd. in Canada, to locate me and
discuss this lawsuit against me. I also learned that Mr.
Hawkins actually visited Chinook in Canada to discuss my role
in this lawsuit.” Doc. 334-1 ¶ 31.
Court agrees with BHL that this statement constitutes
hearsay; however, yet again, BHL's victory is hollow
because this statement is irrelevant to the 12(b)(2)
analysis. Contrary to Molloy's assertion that
“[e]verything in [his] declaration
pertains to the issue of personal jurisdiction” and is
“directly relevant to proving that [he] was merely a
peripheral player, ” Doc. 391 at 11, the Court
fails to see how an alleged visit to Canada by BHL's
counsel has any bearing on whether Molloy himself has the
necessary minimum contacts to sustain personal jurisdiction.
also calls out Molloy's statements regarding his
relationship with Cody Hembreeas conclusory. Doc. 347 at 13-14.
Like Molloy's statements regarding Chinook, however, the
Court does not believe these statements are relevant to the
points to a number of other statements in Molloy's
Declaration that it argues go beyond the scope of personal
jurisdiction and, from there, argues that the entire
Declaration should be disregarded. Id. at 14-16. As
already discussed, the Court agrees that some of Molloy's
statements are of limited relevance in the context of his
12(b)(2) motion. Nevertheless, a number of Molloy's
assertions do indeed go to the heart of the
personal-jurisdiction dispute. Specifically, Molloy's
statements regarding his role within GSSI and his
participation in the development of the GSSI software are
relevant to the question of whether Molloy purposefully
availed himself of the forum such that he should be
anticipated being haled into court here.
just because not all of the statements are relevant to the
12(b)(2) analysis, the Court need not disregard the entire
affidavit. The Court is well-versed in what can and cannot be
considered in the context of Rule 12 motions and rather than
disregard the entire Affidavit, simply disregards the
allegations not relating to personal jurisdiction in its
evaluation of the 12(b)(2) motion.
aside, the Court now turns to the dispositive question
presented by Pleasant Solutions and Molloy's Motions to
Dismiss: whether specific jurisdiction exists.
specific-jurisdiction analysis begins with a determination of
whether the defendant has the requisite “minimum
contacts” with the state. Luv N' Care, 438
F.3d at 469. To make this determination, the Court
“must identify some act whereby [the defendant]
‘purposely availed itself of the privilege of
conducting activities there, thus invoking the benefits and
protections of its laws.'” Id. at 469-70
(quoting Hanson v. Denckla, 357 U.S. 235, 253, 78
S.Ct. 1228, 2 L.Ed.2d 1283 (1958)).
to establish “purposeful availment” for
minimum-contacts analysis is under the stream-of-commerce
theory. Luv N' Care, 438 F.3d at 470. Under this
theory, when a nonresident defendant introduces a product
into the stream of commerce and thereby benefits from the
product's final sale within the forum, he has
purposefully availed himself of the forum. Choice
Healthcare, Inc. v. Kaiser Found. Health Plan, 615 F.3d
364, 374 n.9 (5th Cir. 2010) (collecting cases).
“Generally, parties invoke and courts rely on
stream-of-commerce theory where the defendant does not
intentionally direct its product to a forum, but rather
places the product in the stream of commerce which eventually
brings the product to the forum.” Maxum Indem. Co.
v. BRW Floors, Inc., 5:15-CV-00167-RCL, 2015 WL 5881584,
at *5 (W.D. Tex. Oct. 7, 2015) (citing Nuovo
Pignone, 310 F.3d at 381; Goodyear Dunlop Tires
Operations, S.A. v. Brown, 564 U.S. 915, 926, 131 S.Ct.
2846, 2855, 180 L.Ed.2d 796 (2011)).
are two variations of the stream-of-commerce theory that have
emerged from Supreme Court jurisprudence. Choice
Healthcare, 615 F.3d at 373 & n.7. The Fifth Circuit
has consistently rejected the “stream-of-commerce-plus
theory” in favor of the more relaxed “mere
foreseeability” test. Id. See also In re Chinese
Manufactured Drywall Prods. Liability Litig., 742 F.3d
576, 586 (5th Cir. 2014)). Under this interpretation:
As long as a participant in this process is aware that the
final product is being marketed in the forum State, the
possibility of a lawsuit there cannot come as a surprise. Nor
would the litigation present a burden for which there is not
corresponding benefit. A defendant who has placed goods in
the stream of commerce benefits economically from the retail
sale of the final product in the forum State, and indirectly
benefits from the State's laws that regulate and
facilitate commercial activity. These benefits accrue
regardless of whether that participant directly conducts
business in the forum State or engages in additional conduct
directed toward that State.
Asahi Metal Indus. Co., Ltd. v. Superior Court of
Cal, 480 U.S. 102, 117, 107 S.Ct. 1026, 1033, 94 L.Ed.2d
92 (1987) (Brennan, J., concurring).
BHL argues that Pleasant Solutions developed GSSI's
Geo-Direct software with the knowledge that the software was
based on BHL's product and the end product would be
marketed and sold to Texas oil-and-gas companies. Doc. 278 at