United States District Court, E.D. Texas, Sherman Division
PERFORMANCE PULSATION CONTROL, INC.
SIGMA DRILLING TECHNOLOGIES, LLC, INTREPID CONSULTING, LLC, JUSTIN MANLEY, ALLISON MANLEY, WILLIAM GARFIELD, and PAMELA GOEHRING-GARFIELD
MEMORANDUM OPINION AND ORDER
L. MAZZANT, UNITED STATES DISTRICT JUDGE.
before the Court is Defendants Justin Manley
(“Manley”) and Sigma Drilling Technologies,
LLC's (“Sigma”) (collectively
“Defendants”) Second Motion for Leave to File
Counterclaim (Dkt. #128). After reviewing the relevant
pleadings and motion, the Court finds the motion should be
case involves Plaintiff Performance Pulsation Control,
Inc.'s (“PPC”) allegations that Manley, a
former employee, formed a competing company, Sigma, to market
and sell pulsation control products that he developed within
the course of his employment with PPC. Specifically, PPC
claims that Manley misappropriated PPC's trade secrets
and confidential information while acting as the Director of
Sales and Marketing for PPC. As a result, PPC filed suit
seeking declaration that it is the owner of such intellectual
property, as well as injunctive relief and monetary damages
for breach of contract, breach of fiduciary duty,
misappropriation, and unfair competition.
1, 2018, Defendants filed their Second Motion for Leave to
File Counterclaim (Dkt. #128). In their motion, Defendants
seek leave to file a counterclaim for declaratory relief that
Defendants are the rightful owners of the disputed trade
secrets. On May 15, 2018, Plaintiff filed its response (Dkt.
15(a) of the Federal Rules of Civil Procedure provides that a
party may amend its pleading once without seeking leave of
court or the consent of the adverse party at any time before
a responsive pleading is served. Fed.R.Civ.P. 15(a). After a
responsive pleading is served, a party “may amend only
with the opposing party's written consent or the
court's leave.” Id. Rule 15(a) instructs
the court to “freely give leave when justice so
requires.” Id. The rule “evinces a bias
in favor of granting leave to amend.” Jones v.
Robinson Prop. Grp., L.P., 427 F.3d 987, 994 (5th Cir.
2005) (quoting Lyn-Lea Travel Corp. v. Am. Airlines,
Inc., 283 F.3d 282, 286 (5th Cir. 2002)). But leave to
amend “is not automatic.” Matagorda Ventures,
Inc. v. Travelers Lloyds Ins. Co., 203 F.Supp.2d 704,
718 (S.D. Tex. 2000) (citing Dussouy v. Gulf Coast Inv.
Corp., 660 F.2d 594, 598 (5th Cir. 1981)). Whether to
allow amendment “lies within the sound discretion of
the district court.” Little v. Liquid Air
Corp., 952 F.2d 841, 845-46 (5th Cir. 1992). A district
court reviewing a motion to amend pleadings under Rule 15(a)
considers five factors: (1) undue delay; (2) bad faith or
dilatory motive; (3) repeated failure to cure deficiencies by
previous amendments; (4) undue prejudice to the opposing
party; and (5) futility of amendment. Smith v. EMC,
393 F.3d 590, 595 (5th Cir. 2004) (citing Foman v.
Davis, 371 U.S. 178, 182 (1962)).
assert that leave is justified because the declaratory relief
sought resolves matters “that will not otherwise be
resolved as part of PPC's claims in this lawsuit, there
is no substantial reason to deny Defendants' request,
” and granting leave “will not prejudice PPC as
discovery is still ongoing and depositions have yet to be
taken.” (Dkt. #128 at pp. 1-2). Conversely, Plaintiff
avers that leave is unwarranted because
“Defendants' proposed counterclaim against PPC is
futile” and resolution of its claims in its amended
complaint “resolve[s] the concerns made issues in
Defendants' request for declaratory relief.” (Dkt.
#142 at pp. 2, 5).
is within the district court's discretion to deny a
motion to amend if it is futile.” Stripling v.
Jordan Prod. Co., LLC, 234 F.3d 863, 872-73 (5th Cir.
2000). Futility exists when the amended complaint
“fail[s] to state a claim upon which relief could be
granted.” Id. at 873; see also Mason v.
Fremont Inv. & Loan, 671 Fed.Appx. 880, 883 (5th
Cir. 2016). In determining futility, the Court applies
“the same standard of legal sufficiency as applie[d]
under Rule 12(b)(6).” Id. [A] defendant's
declaratory judgment counterclaim must do more than simply
restate its defenses to the plaintiff's cause of
action.” Albritton Properties v. Am. Empire Surplus
Lines, No. 3:04-CV-2531-P, 2005 WL 975423, at*2 (N.D.
Tex. Apr. 25, 2005) (citing BHP Petroleum Co. v.
Millard, 800 S.W.2d 838, 841 (Tex. 1990)). “[A]
motion for declaratory judgment that merely restates a
party's defense is insufficient unless the party can
prove that there are issues of greater ramification to be
resolved.” Hanson Aggregates, Inc. v. Roberts &
Schaefer Co., No. 3:05-cv-1883-P, 2006 WL 2285575, at *3
(N.D. Tex. Aug. 9, 2006).
Plaintiff, in its Second Amended Complaint, seeks a
declaratory judgment that it is the sole owner of the
specific trade secrets made issue in this case (Dkt. #73 at
¶ 74). In Defendants' Answer, they assert as an
affirmative defense that “PPC's claims are barred
because the Defendants independently discovered the alleged
trade secret/and or confidential information at issue.”
(Dkt. #98 at p. 7). Thus, Defendants' defense that
Plaintiff does not own the trade secrets is that Defendants
themselves are the owners. Through their request for
declaratory relief, Defendants seek a judgment that they are
the rightful owners to the specific trade secrets. This is
merely a restatement of Defendants' defense to Plaintiffs
claim that it owns the trade secrets. As such,
Defendants' request is insufficient and their request for
leave to file a counterclaim should be denied.
therefore ORDERED that Defendants'
Second Motion ...