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Gordon v. Mathieson

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

June 25, 2018

ANTON GORDON, Plaintiff,


          Lee H. Rosenthal Chief United States District Judge

         I. Background

         Anton Gordon sued Baker Hughes Oilfield Operations, Inc. in July 2016, in Texas state court. (Docket Entry No. 1, ¶ 1). Gordon asserted state-law claims for race discrimination and retaliation under Texas Labor Code §21.001, and misappropriation of trade secrets under the Texas Uniform Trade Secrets Act, Tex. Civ. Prac. & Rem. Code § 134A.002. (Docket Entry No. 1-4, ¶ 6). On January 11, 2018, the state court granted Baker Hughes's motion to compel arbitration and granted Gordon's motion to amend his petition. Id.

         Gordon's second amended petition omitted Baker Hughes as a defendant and brought a misappropriation-of-trade-secrets claim under the Texas Uniform Trade Secrets Act against Derek Mathieson, William D. Marsh, Alan Crain, Martin S. Craighead, Jay Martin, Belgacem Chariag, Mario Ruscev, and Maria Borras. All of the defendants are or were Baker Hughes employees. (Docket Entry No. l-ll, ¶¶2-9, 18).

         Baker Hughes hired Gordon in April 2013 as a senior market research analyst. (Docket Entry No. 1-11 at ¶ 13). Gordon alleged that:

• he had independently developed a thesis for forecasting oil prices that was useful to Baker Hughes and was a basis for Gordon's employment, id., ¶¶ 14-17;
• during his employment, he provided Baker Hughes with multiple forecasts, including forecasts of oil prices, outlooks for oil rig counts, and opinions on the factors driving oil prices, id, ¶¶ 18-33;
• the forecasts were shared with Mathieson, Marsh, Crain, Craighead, Martin, Chariag, Ruscev, and Borras, without Gordon's consent, id.;
• the forecasts were trade secrets under the Texas Uniform Trade Secrets Act, id., ¶ 22;
• he provided certain Baker Hughes employees with the forecasts based on representations that the company would use them to determine whether to promote him, but instead the defendants used the forecasts "to make millions of dollars worth of trades" for personal gain, through insider trading, id., ¶¶ 19, 20, 21, 29, 41; and
• Mathieson, Ruscev, Marsh, Crain, Martin, Craighead, and Borras each used Gordon's trade-secrets (the forecasts), obtained through improper means (the misrepresentation as to the reason for getting the information), to commit unlawful insider trading, id., ¶¶ 30-35, 42, 44.

         In April 2018, the defendants removed to federal court. (Docket Entry No. 1). The defendants argue that this court has federal subject-matter jurisdiction because resolving Gordon's state-law misappropriation claim requires the court to determine whether the defendants used the allegedly misappropriated information for unlawful insider trading under the Securities Exchange Act of 1934 and Rule 10b-5. Id., ¶¶ 6, 7. Gordon moved to remand, the defendants responded, and Gordon replied. (Docket Entry Nos. 4, 8, 9).

         Based on the pleadings; the motion, response, and reply; the record; the applicable law; and the arguments counsel presented, Gordon's motion to remand is granted. The reasons for this ruling are set out below.

         II. The Legal Standard for Federal-Question Removal Jurisdiction

         "Under th[e] 'well-pleaded complaint' rule, a federal court, has original or removal jurisdiction only if a federal question appears on the face of the plaintiffs well-pleaded complaint." Bernhardv. Whitney Nat'l Bank, 523 F.3d 546, 551 (5th Cir. 2008). "A federal question exists only where a well-pleaded complaint establishes either that federal law creates the cause of action or that the plaintiffs right to relief necessarily depends on resolution of a substantial question of federal law." Bd. of Comm 'rs v. Tenn. Gas Pipeline Co., 850 F.3d 714, 721 (5th Cir. 2017) (quoting Singh v. Duane Morris LIP, 538 F.3d 334, 337-38 (5th Cir. 2008)).

         Although removal of "a case pleading only state-law claims" is appropriate if "the vindication of a right under state law necessarily turn[s] on some construction of federal law," Bernhard, 523 F.3d at 551 (quoting Franchise Tax Bd. v. Const. Laborers Vacation Trust, 463 U.S. 1, 9 (1983)), "[o]nly in a 'special and small category of cases' will federal jurisdiction exist when state law creates the cause of action. Bd. of Comm 'rs, 850 F.3d at 721 (quoting Gunn v. Minton, 568 U.S. 251, 258 (2013)). "That limited category of federal jurisdiction only exists" if the Grable test is met. Bd. of Comm 'rs, 850 F.3d at 721-22 (quoting Singh, 538 F.3d at 338). "That is, federal jurisdiction over a state law claim will lie if a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress." Gunn, 568 U.S. 251 at 258 (quoting Grable & Sons Metal Prods, v. Darue Eng'g & Mfg., 545 U.S. 308, 313-14 (2005)).

         III. Analysis

         Gordon makes two arguments for remand: first, that the removal was not timely; and second, and more importantly, that his petition does not require the court to decide a federal issue in order to resolve any state-law claim. (Docket Entry No. 4, at 3). The defendants respond that their notice of removal was timely filed, and that Gordon's state-law misappropriation claim requires determining whether insider trading occurred, a federal question sufficient for jurisdiction. (Docket Entry No. 8, at 1, 16).

         A. Removal was Timely

         A notice of removal must "be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading." 28 U.S.C. § 1446(b). "[A] named defendant's time to remove is triggered by simultaneous service of the summons and complaint, or receipt of the complaint, 'through service or otherwise,' after and apart from service of the summons, but not by mere receipt of the complaint ...

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