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National Oil Well Varco, L.P. v. Sadagopan

United States District Court, S.D. Texas, Houston Division

July 11, 2017

NATIONAL OIL WELL VARCO, L.P., Plaintiff,
v.
SADEESH SADAGOPAN, MAJED HAMDAN, and KHALED ZANTOUT, Defendants.

          MEMORANDUM AND OPINION

          Lee H. Rosenthal Chief United States District Judge

         National Oil Well Varco, L.P. alleges that three of its Dubai employees perpetrated a kickback scheme that resulted in significant financial losses. NOV sued Sadeesh Sadagopan, Majed Hamdan, Khaled Zantout, and two Texas-based defendants in Texas state court in 2016. The defendants timely removed on the basis of diversity jurisdiction. (Docket Entry No. 1). NOV dismissed its claims against the Texas defendants, leaving the claims against the three Dubai individuals. (Docket Entry Nos. 7 at 23). These defendants have moved to dismiss, arguing that this court lacks personal jurisdiction over them. In the alternative, they seek dismissal in favor of adjudication in Dubai, invoking forum non conveniens. (Docket Entry No. 45). NOV responded and the defendants replied. (Docket Entry Nos. 53; 60; 63; 66). After a hearing at which the parties presented oral argument, the parties supplemented their briefs on the personal jurisdiction issue. (Docket Entry Nos. 70, 72). Based on the pleadings; the motions, responses, and replies; the arguments of counsel; the record; and the applicable law, the court denies the defendants' motion to dismiss. A scheduling conference is set for July 28, 2017, at 10:00 a.m. The reasons for this ruling are explained below.

         I. Background

         NOV employed Sadeesh Sadagopan, Majed Hamdan, and Khaled Zantout in Dubai for over ten years before firing them in 2016. (Docket Entry No. 7 at ¶¶ 15-17; 36). The defendants had management duties that required them to review and agree to comply with NOV's Business Ethics Policy and Code of Conduct. (Id. at ¶¶18-20). The three allegedly associated closely with a senior NOV officer, referred to in the briefs as “FM, ” who transferred to NOV's Houston office in 2010. (Id. at ¶¶ 2; 21; 24).

         In 2016, NOV received a whistleblower complaint informing it of a potential conflict of interest involving certain NOV employees and NOV equipment leases in the Middle East and North Africa operating regions. (Id. at ¶ 25). NOV investigated and discovered that the lease prices for transactions for heavy equipment with Global Business Supply in 2009 and 2010 were materially higher than other lease prices in the region for the same or similar equipment. (Id. at ¶ 26). NOV had paid Global Business Supply over $1.7 million for leased equipment since 2009 or 2010. (Id.). NOV estimated that the equipment sales value was less than $300, 000 when it was leased. (Id.).

         NOV learned that Mr. Sadagopan had been responsible for negotiating the terms of NOV's lease agreements with Global Business Supply. (Id. at ¶ 28). Later in the investigation, Mr. Sadagopan admitted that he and at least one other NOV employee had financial interests in Global Business Supply. (Id. at ¶ 29). NOV discovered a spreadsheet created by Mr. Sadagopan in which he tracked transactions for revenue and expenses between September 2010 and March 2016. (Id. at ¶ 30). Initials on the spreadsheet referred to FM, Mr. Hamdan, and Mr. Zantout. (Id.). FM admitted to receiving approximately $27, 000 in cash from Mr. Sadagopan. (Id.). NOV believes, based on the spreadsheet, that FM received a total of over $780, 000. (Id. at ¶ 32).

         The evidence submitted and discussed during the hearing on personal jurisdiction shows that Mr. Sadagopan, Mr. Hamdan, and Mr. Zantout met with FM at a dinner in Houston in April 2012. (Docket Entry No. 63-4 at 2). Mr. Sadagopan's spreadsheet indicates a $20, 000 withdrawal five days before this dinner. (Docket Entry No. 53-3 at 2). The defendants do not dispute that this meeting occurred, but they deny that they gave FM cash at this dinner. (Docket Entry No. 72 at 3-4).

         NOV alleges that Mr. Sadagopan, Mr. Hamdan, Mr. Zantout conspired with each other and with a senior NOV officer to defraud NOV and embezzle millions of dollars from it between 2009 and March 2016. (Docket Entry No. 7 at ¶ 1). NOV asserts claims for fraud, fraud by nondisclosure, conspiracy to defraud, breach of contract, breach of fiduciary duty, and aiding and abetting breach of fiduciary duty. (Id.). Before those claims can be considered on the merits, the court must determine whether it has personal jurisdiction over the defendants and whether exercising that jurisdiction would be proper.

         II. Legal Standard

         A. Personal Jurisdiction

         A federal court may exercise personal jurisdiction over a nonresident defendant if the long-arm statute of the forum state confers personal jurisdiction over that defendant and exercising jurisdiction is consistent with due process. See Delgado v. Reef Resort Ltd., 364 F.3d 642, 644 (5th Cir. 2004); Ham v. La Cienega Music Co., 4 F.3d 413, 415 (5th Cir. 1993). Because the Texas long-arm statute confers jurisdiction to the limits of due process, “the two-step inquiry collapses into one federal due process analysis.” Johnston v. Multidata Sys. Int'l Corp., 523 F.3d 602, 609 (5th Cir. 2008).

         Federal due process permits personal jurisdiction over a nonresident defendant with “minimum contacts” with the forum state, if exercising jurisdiction over that defendant does not offend “traditional notions of fair play and substantial justice.” Id. “Minimum contacts” can “give rise to ‘specific' personal jurisdiction” or “to ‘general' personal jurisdiction.” Lewis v. Fresne, 252 F.3d 352, 358 (5th Cir. 2001). A court has general jurisdiction over a nonresident defendant “to hear any and all claims” against him when his contacts with the state are so “‘continuous and systematic' as to render [him] essentially at home in the forum.” Daimler AG v. Bauman, 134 S.Ct. 746, 761 (2014) (quoting Goodyear Dunlop Tires Operations v. Brown, 131 S.Ct. 2846, 2851 (2011)). “The ‘continuous and systematic contacts test is a difficult one to meet, requiring extensive contacts between a defendant and a forum.'” Johnston, 523 F.3d at 609 (quoting Submersible Sys., Inc. v. Perforadora Cent., S.A., 249 F.3d 413, 419 (5th Cir. 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, 131 S.Ct. at 2851 (citation omitted). A court asks “whether there was ‘some act by which the defendant purposefully availed [himself] of the privilege of conducting activities within the forum [s]tate, thus invoking the benefits and protections of its laws.'” Id. at 2854 (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)). Specific jurisdiction exists “when a nonresident defendant has purposefully directed its activities at the forum state and the litigation results from alleged injuries that arise out of or relate to those activities.” Walk Haydel & Assocs., Inc. v. Coastal Power Prod. Co., 517 F.3d 235, 243 (5th Cir. 2008) (internal quotations marks omitted). Though the defendant's contacts with the forum must be more than “random, fortuitous, or attenuated, or of the unilateral activity of another party or third person, ” even “isolated or sporadic contacts” can support specific jurisdiction “so long as the plaintiff's claim relates to or arises out of those contacts.” ITL Int'l, Inc. v. Constenla, S.A., 669 F.3d 493, 498-99 (5th Cir. 2012) (internal quotation marks omitted).

         Under Rule 12(b)(2) of the Federal Rules of Civil Procedure, the “plaintiff bears the burden of establishing a district court's jurisdiction over a non-resident, but it need only make a prima facie case” if the district court does not conduct an evidentiary hearing. Johnston, 523 F.3d at 609 (citing Wilson v. Belin, 20 F.3d 644, 648 (5th Cir. 1994)). In deciding whether personal jurisdiction exists, “the district court may receive ‘any combination of the recognized methods of discovery, ' including affidavits, interrogatories, and depositions to assist it in the jurisdictional analysis.” Little v. SKF Sverige AB, No. 13-1760, 2014 WL 710941, at *3 (S.D. Tex. Feb. 24, 2014) (quoting Walk Haydel, 517 F.3d at 241). “Proof by a preponderance of the evidence is not required.” Johnston, 523 F.3d at 609 (citing Bullion v. Gillespie, 895 F.2d 213, 217 (5th Cir. 1990)). “‘[O]n a motion to dismiss for lack of jurisdiction, uncontroverted allegations in the plaintiff's complaint must be taken as true, and conflicts between the facts contained in the parties' affidavits must be resolved in the plaintiff's favor for purposes of determining whether a prima facie case for personal jurisdiction exists.'” Id. (quoting D.J. Invs., Inc. v. Metzeler Motorcycle Tire Agent Gregg, Inc., 754 F.2d 542, 546 (5th Cir. 1985)). “When the factual differences are found in favor of [a plaintiff] at this motion phase in the litigation . . . [it] has presented a prima facie case for personal jurisdiction.” Id. In short, the “court resolves all conflicts in the evidence in favor of the plaintiff and accepts as true all of the plaintiff's uncontroverted allegations.” Little, 2014 WL 710941, at *3 (citing Johnston, 523 F.3d at 609). Because specific personal jurisdiction is a claim-specific inquiry, a plaintiff bringing multiple claims must establish specific jurisdiction for each claim if the claims “arise out of different forum contacts of the defendant.” Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 274 (5th Cir. 2006).

         B. Forum Non Conveniens

         “The principle of forum non conveniens is simply that a court may resist imposition upon its jurisdiction even when jurisdiction is authorized by the letter of a general venue statute.” Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 507 (1947). “A court's authority to effect foreign transfers through the doctrine of forum non conveniens ‘derives from the court's inherent power, under Article III of the Constitution, to control the administration of the litigation before it and to prevent its process from becoming an instrument of abuse, injustice, or oppression.'” Baumgart v. Fairchild Aircraft Corp., 981 F.2d 824, 828 (5th Cir. 1993) (citation omitted). “When an alternative forum has jurisdiction to hear the case and when trial in the plaintiff's chosen forum would ‘establish . . . oppressiveness and vexation to a defendant . . . out of all proportion to plaintiff's convenience, ' or when the ‘chosen forum [is] inappropriate because of considerations affecting the court's own administrative and legal problems, ' the court may, in exercise of its sound discretion, dismiss the case.'” Kempe v. Ocean Drilling & Exploration Co., 876 F.2d 1138, 1141 (5th Cir. 1989) (quoting Koster v. Lumbermens Mut. Cas. Co., 330 U.S. 518, 524 (1947)).

         “[A] forum non conveniens dismissal must be based on the [court's] finding that, when weighed against plaintiff's choice of forum, the relevant public and private interests strongly favor a specific, adequate and available forum.” Verba-Chemie A.G. v. M/V Getafix, 711 F.2d 1243, 1245 (5th Cir. 1983). The movant “bears the burden of invoking the doctrine and moving to dismiss in favor of a foreign forum.” In re Air Crash Disaster Near New Orleans, La. on July 9, 1982, 821 F.2d 1147, 1164 (5th Cir.1987), overturned on other grounds, 490 U.S. 1032, 109 S.Ct. 1928, 104 L.Ed.2d 400 (1989). “This burden of persuasion runs to all the elements of the forum non conveniens analysis.” Id. The defendants must “demonstrate (1) the existence of an available and adequate alternative forum and (2) that the balance of relevant private and public interest factors favors dismissal.” Vasquez v. Bridgestone/Firestone, Inc., 325 F.3d 665, 671 (5th Cir. 2003). “In addition to the balancing of relevant private interest factors, the court must give ‘the relevant deference' to the plaintiff's choice of forum.” Alpine View Co. v. Atlas Copco AB, 205 F.3d 208, 221-22 (5th Cir. 2000) (quoting In re Air Crash, 821 F.2d at 1165). To meet this relatively high burden, the remaining defendants “must supply the Court with enough information for it to conduct a meaningful inquiry and balance the parties' interests.” Blum v. Gen. Elec. Co., 547 F.Supp.2d 717, 725 (W.D. Tex. 2008) (citing Empresa Lineas Maritimas Argentinas, S.A. v. Schichau-Unterweser, A.G., 955 F.2d 368, 371 (5th Cir. 1992)).

         III. ...


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