United States District Court, E.D. Texas, Sherman Division
HUAWEI TECHNOLOGIES CO., LTD., and FUTUREWEI TECHNOLOGIES, INC.
YIREN RONNIE HUANG, and CNEX LABS, INC.
MEMORANDUM OPINION AND ORDER
L. MAZZANT UNITED STATES DISTRICT JUDGE
before the Court are Defendants CNEX Labs, Inc. and Yiren
“Ronnie” Huang's Motion to Dismiss for
Improper Venue and for Failure to State a Claim Under Rule
12(b)(6) (Dkt. #14) (“Initial Motion to
Dismiss”), Defendants CNEX Labs, Inc. and Yiren
“Ronnie” Huang's Motion to Dismiss
Plaintiffs' First Amended Complaint for Improper Venue
and for Failure to State a Claim Under Rule 12(b)(6)
(“Motion to Dismiss”) (Dkt. #34), and Defendants
CNEX Labs, Inc. and Yiren Ronnie Huang's Motion for Leave
to Address Issues Raised at the April 2, 2018 Hearing
(“Motion for Leave”) (Dkt. #56). Having
considered the motions and the relevant pleadings, the Court
finds that Defendants' Initial Motion should be denied as
moot, Defendants' Motion to Dismiss as to Defendants'
12(b)(3) argument for improper venue should be denied,
Defendants' 12(b)(6) argument for failure to state a
claim should be granted in part, and Defendants' Motion
for Leave should be granted.
Huawei Technologies Co., Ltd. (“Huawei”) is a
multinational networking and telecommunications equipment and
services company headquartered in China. Plaintiff Futurewei
Technologies, Inc. (“Futurewei”) is a subsidiary
of Huawei with several offices throughout the United States,
including Plano, Texas. In December 2010, Futurewei offered
Yiren “Ronnie” Huang (“Huang”)
employment as a Principal Engineer for its solid-state drive
(“SSD”) storage group, to assist in development
and implementation of Advance Computing Network
(“ACN”), non-volatile memory express
(“NVMe”), and SSD technology. Huang accepted the
offer in January 2011. Huang worked in the Santa Clara office
and was domiciled in Santa Clara County, California. At the
Futurewei new hire orientation, Huang signed an employment
contract (the “Employment Agreement”), which
contained the following forum-selection clause:
(a) Governing Law. This Agreement
will be governed by and construed according to the laws of
the State of Texas without regard to conflicts of law
(b) Exclusive Forum. I hereby
irrevocably agree that the exclusive forum for any suit,
action, or other proceeding arising out of or in any way
related to this Agreement shall be in the state or federal
courts in Texas, and I agree to the exclusive personal
jurisdiction and venue to any court on Collin County Texas.
(Dkt. #34, Exhibit 1 at pp. 21-22). The Employment Agreement
also contained provisions relating to non-disclosure,
non-competition, and non-solicitation.
on Huang's job responsibilities, Plaintiffs contend that
Huang had access to confidential, proprietary, and trade
secret information. On May 31, 2013, Huang ended his
employment with Futurewei. On June 3, 2013, Huang, along with
others, incorporated CNEX Labs, Inc. (“CNEX”), a
Delaware Corporation with its principal place of business in
California. Plaintiffs allege, among other things, that Huang
incorporated CNEX to compete directly with Plaintiffs, Huang
is using Plaintiffs' confidential, proprietary, and trade
secret information to develop and improve SSD technology and
NVMe related technology for CNEX, and further that Huang and
CNEX are improperly soliciting employees away from
Plaintiffs. Additionally, Plaintiffs allege that Huang
started to engage in this behavior informally prior to
leaving Futurewei. Plaintiffs further contend that Huang and
CNEX began filing patent applications in June 2013, using the
information that Huang obtained through his employment with
filed suit in the Eastern District of Texas on December 28,
2017, against Defendants seeking declaratory judgment and
alleging a variety of causes of action including breach of
contract, disclosure and misappropriation of confidential
information and trade secrets, tortious interference with
contract and prospective contracts, conspiracy claims,
Racketeer Influence and Corrupt Organizations Act of 1970
(“RICO”) claims, breach of fiduciary duty, and
unfair competition under Lanham Act and Texas common and
statuary law (Dkt. #1). On the same date, Defendants filed
suit of a similar nature in the Superior Court of California,
County of Santa Clara (Dkt. #34, Exhibit 5 at p.
response to this Complaint, Defendants filed their Initial
Motion to Dismiss on February 2, 2018 (Dkt. #14). Plaintiffs
filed a response (Dkt. #22), but also filed Plaintiffs'
First Amended Complaint (Dkt. #27). In response to the First
Amended Complaint, on March 9, 2018, Defendants filed the
present Motion to Dismiss (Dkt. #34). Plaintiffs filed a
response (Dkt. #42), Defendants filed a reply (Dkt. #46), and
Plaintiffs filed a sur-reply (Dkt. #50). The Court held a
hearing on the Motion to Dismiss on April 2, 2018. After the
hearing, Defendants filed a Motion for Leave to Address
Issues Raised at the April 2, 2018 Hearing (Dkt. #56).
Plaintiffs have not yet filed a response.
Motion to Dismiss for Improper Venue Pursuant to Rule
Rule of Civil Procedure 12(b)(3) allows a party the ability
to move the Court to dismiss an action for “improper
venue.” The Court “must accept as true all
allegations in the complaint and resolve all conflicts in
favor of the plaintiff.” Mayfield v. Sallyport
Global Holdings, Inc., No. 6:16-CV-459, 2014 WL 978685,
at *1 (E.D. Tex. Mar. 5, 2014) (citing Ambraco, Inc. v.
Bossclip, B.V., 570 F.3d 233, 237-38 (5th Cir. 2009)).
In determining whether venue is proper, “the [C]ourt is
permitted to look at evidence in the record beyond those
facts alleged in the complaints and its proper
attachments.” Ambraco, 570 F.3d at 238. If
venue is improper, the Court must dismiss it, “or if it
be in the interest of justice, transfer such case to any
district or division in which it could have been
brought.” 28 U.S.C. § 1406(a); accord
Fed. R. Civ. P. 12(b)(3).
Motion to Dismiss for Failure to State a Claim Pursuant to
Federal Rules of Civil Procedure require that each claim in a
complaint include a “short and plain statement . . .
showing that the pleader is entitled to relief.”
Fed.R.Civ.P. 8(a)(2). Each claim must include enough factual
allegations “to raise a right to relief above the
speculative level.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007).
12(b)(6) motion allows a party to move for dismissal of an
action when the complaint fails to state a claim upon which
relief can be granted. Fed.R.Civ.P. 12(b)(6). When
considering a motion to dismiss under Rule 12(b)(6), the
Court must accept as true all well-pleaded facts in
plaintiff's complaint and view those facts in the light
most favorable to the plaintiff. Bowlby v. City of
Aberdeen, 681 F.3d 215, 219 (5th Cir. 2012). The Court
may consider “the complaint, any documents attached to
the complaint, and any documents attached to the motion to
dismiss that are central to the claim and referenced by the
complaint.” Lone Star Fund V (U.S.), L.P. v.
Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010).
The Court must then determine whether the complaint states a
claim for relief that is plausible on its face.
‘“A claim has facial plausibility when the
plaintiff pleads factual content that allows the [C]ourt to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.'” Gonzalez v.
Kay, 577 F.3d 600, 603 (5th Cir. 2009) (quoting
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
“But where the well-pleaded facts do not permit the
[C]ourt to infer more than the mere possibility of
misconduct, the complaint has alleged-but it has not
‘show[n]'-‘that the pleader is entitled to
relief.'” Iqbal, 556 U.S. at 679
(alteration in original) (quoting Fed.R.Civ.P. 8(a)(2)).
Iqbal, the Supreme Court established a two-step
approach for assessing the sufficiency of a complaint in the
context of a Rule 12(b)(6) motion. First, the Court should
identify and disregard conclusory allegations, for they are
“not entitled to the assumption of truth.”
Id. Second, the Court “consider[s] the factual
allegations in [the complaint] to determine if they plausibly
suggest an entitlement to relief.” Id. at 681.
“This standard ‘simply calls for enough facts to
raise a reasonable expectation that discovery will reveal
evidence of the necessary claims or elements.'”
Morgan v. Hubert, 335 Fed.Appx. 466, 470 (5th Cir.
2009) (citation omitted). This evaluation will “be a
context-specific task that requires the reviewing [C]ourt to
draw on its judicial experience and common sense.”
Iqbal, 556 U.S. at 679.
“[t]o survive a motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its
face.”' Id. at 678 (quoting
Twombly, 550 U.S. at 570).
Federal Rule of Civil Procedure 9(b)
9(b) states, “[i]n alleging fraud or mistake, a party
must state with particularity the circumstances constituting
fraud or mistake. Malice, intent, knowledge, and other
conditions of a person's mind may be alleged
generally.” Fed.R.Civ.P. 9(b).
9(b)'s particularity requirement generally means that the
pleader must set forth the “who, what, when, where, and
how” of the fraud alleged. United States ex rel.
Williams v. Bell Helicopter Textron, Inc., 417 F.3d 450,
453 (5th Cir. 2005). A plaintiff pleading fraud must
“specify the statements contended to be fraudulent,
identify the speaker, state when and where the statements
were made, and explain why the statements were
fraudulent.” Herrmann Holdings Ltd. v. Lucent
Techs. Inc., 302 F.3d 552, 564-65 (5th Cir. 2002). The
goals of Rule 9(b) are to “provide defendants with
fair notice of the plaintiffs' claims, protect
defendants from harm to their reputation and goodwill,
reduce the number of strike suits, and prevent plaintiffs
from filing baseless claims.” United States ex rel.
Grubbs v. Kanneganti, 565 F.3d 180, 190 (5th Cir. 2009)
(citing Melder v. Morris, 27 F.3d 1097, 1100 (5th
Cir. 1994)). Courts are to read Rule 9(b)'s heightened
pleading requirement in conjunction with Rule 8(a)'s
insistence on simple, concise, and direct allegations.
Williams v. WMX Techs., Inc., 112 F.3d 175, 178 (5th
Cir. 1997). However, this requirement “does not
‘reflect a subscription to fact pleading.'”
Grubbs, 565 F.3d at 186. “Claims alleging
violations of the Texas Insurance Code and the DTPA and those
asserting fraud, fraudulent inducement, fraudulent
concealment, and negligent misrepresentation are subject to
the requirements of Rule 9(b).” Frith v. Guardian
Life Ins. Co. of Am., 9 F.Supp.2d 734, 742 (S.D. Tex.
1998); see Berry v. Indianapolis Life Ins. Co., No.
3:08-CV-0248-B, 2010 WL 3422873, at *14 (N.D. Tex. Aug. 26,
2010) (“‘[W]hen the parties have not urged a
separate focus on the negligent misrepresentation claims,
' the Fifth Circuit has found negligent misrepresentation
claims subject to Rule 9(b) in the same manner as fraud
claims.”). Failure to comply with Rule 9(b)'s
requirements authorizes the Court to dismiss the pleadings as
it would for failure to state a claim under Rule 12(b)(6).
United States ex rel. Williams v. McKesson Corp.,
No. 3:12-CV-0371-B, 2014 WL 3353247, at *3 (N.D. Tex. July 9,
2014) (citing Lovelace v. Software Spectrum, Inc.,
78 F.3d 1015, 1017 (5th Cir. 1996)).
ask the Court to dismiss Plaintiffs' claims because the
Eastern District of Texas is not the proper venue for the
case and because Plaintiffs failed to properly state a claim
for which relief can be granted. Plaintiffs assert that venue
is proper and that the First Amended Complaint satisfies
Federal Rules of Civil Procedure 8(a) and 9(b). The Court
addresses each basis for dismissal in turn.
Motion to Dismiss for Improper Venue Pursuant to
argue that the Court should dismiss Plaintiffs' claims
because the Eastern District of Texas is not a proper venue
pursuant to the federal venue statutes and the
forum-selection clause does not make venue proper. Further,
Defendants maintain, that even if the forum-selection clause
made venue proper in the Eastern District of Texas, venue is
still improper because CNEX is not bound by the agreement and
is an indispensable party. The Court first ...