United States District Court, S.D. Texas, Houston Division
DYNAENERGETICS GMBH & CO. KG, and DYNAENERGETICS US, INC., Plaintiffs,
HUNTING TITAN, INC., and HUNTING ENERGY SERVICES, INC., Defendants.
Rosenthal Chief United States District Judge
GmbH & Co. KG and DynaEnergetics US, Inc.
(DynaEnergetics), sued Hunting Titan, Inc. and Hunting Energy
Services, LLC (Hunting), alleging that Hunting had obtained
and used DynaEnergetics's confidential information
relating to the DS Trinity System, an 8-inch perforating gun
used in the oil and gas industry. (Docket Entry No. 1).
DynaEnergetics asserted trade-secret misappropriation under
Texas and federal law; tortious interference with contract,
conversion of confidential information, and unfair
competition under Texas law; and moved for a preliminary
injunction. (Id.; Docket Entry No. 22). Hunting
counterclaimed for unfair competition by misappropriation,
alleging that it was DynaEnergetics that had misappropriated
Hunting's technology. (Docket Entry No. 47).
DynaEnergetics now moves to dismiss the counterclaim on two
grounds: failure to state a claim and federal preemption.
(Docket Entry No. 51). Hunting responded, and DynaEnergetics
replied. (Docket Entry Nos. 55, 61).
on the amended complaint and the counterclaim, the motion and
response, and the applicable law, the court grants
DynaEnergetics's motion to dismiss the counterclaim, with
prejudice because it is preempted under federal law. The
reasons for this ruling are set out below.
and Hunting develop and manufacture technology for the oil
and gas industry. In early 2019, the two companies announced
new perforating systems, each with short-length guns, within
one week of each other. (Docket Entry No. 43 at ¶¶
53, 64). DynaEnergetics sued Hunting, and Hunting
counterclaimed. (Docket Entry Nos. 1, 47).
alleges that it developed the H-2 Perforating System
“[t]hrough extensive time, labor, skill, and
money.” (Docket Entry No. 47 at ¶ 160). In its
response to DynaEnergetics's motion to dismiss the
counterclaim, Hunting explains that in July 2017, it began to
develop a system with an “ultra-short perforating gun,
” a “3-shot cluster, ” and a “modular
detonator.” (Docket Entry No. 55 at 4). Hunting filed a
patent application for its invention no later than February
2018. (Docket Entry No. 47 at ¶ 160).
Hunting alleges that this application included most of the
features that DynaEnergetics alleges are its own trade
secrets or confidential information. (Id.).
alleges that on March 6, 2018, an employee of EOG Resources,
a DynaEnergetics customer, “became aware” of the
H-2 System. (Id. at ¶ 161). That employee, Jon
Holt, allegedly told PerfX Wireline Services, a field
operator and user of perforating systems, about the system
and its short-length guns. (Id. at ¶¶
161-162). Hunting alleges that PerfX then approached Hunting
about purchasing the system in order to bid on, and use the
system in, an EOG project. (Id. at ¶ 162).
Hunting informed PerfX that the H-2 System was not yet
available. (Id. at ¶ 163). Hunting alleges that
either PerfX or another source told EOG that the H-2 System
was not yet commercially available. (Id. at ¶
164). EOG then met with DynaEnergetics, described the
features of the H-2 System, and asked DynaEnergetics to copy
the features into its technology, which it did. (Id.
at ¶¶ 164-165). Hunting alleges that DynaEnergetics
gained a “special advantage” by using this
information without the expense Hunting incurred in
developing it, putting Hunting at a competitive disadvantage.
(Id. at ¶ 169).
The Legal Standard
12(b)(6) allows dismissal if a plaintiff fails “to
state a claim upon which relief can be granted.”
Fed.R.Civ.P. 12(b)(6). Rule 12(b)(6) must be read in
conjunction with Rule 8(a), which requires “a short and
plain statement of the claim showing that the pleader is
entitled to relief.” Fed.R.Civ.P. 8(a)(2). Claims may
be dismissed under Rule 12(b)(6) on the basis of a
dispositive issue of law, including federal preemption. A
complaint may also be dismissed if the complaint does not
contain “enough facts to state a claim to relief that
is plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). Rule 8 “does
not require ‘detailed factual allegations,' but it
demands more than an unadorned,
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
Twombly, 550 U.S. at 555). “A claim has facial
plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”
Id. (citing Twombly, 550 U.S. at 556).
“The plausibility standard is not akin to a
‘probability requirement,' but it asks for more
than a sheer possibility that a defendant has acted
unlawfully.” Id. (citing Twombly, 550
U.S. at 556).
court should generally give a plaintiff at least one chance
to amend under Rule 15(a) before dismissing the action with
prejudice for factual pleading insufficiency, unless it is
clear that to do so would be futile. See Pervasive
Software Inc. v. Lexware GmbH & Co. KG, 688 F.3d
214, 232 (5th Cir. 2012); Carroll v. Fort James
Corp., 470 F.3d 1171, 1175 (5th Cir. 2006) (“[Rule
15(a)] evinces a bias in favor of granting leave to
amend.” (quotation omitted)); Great Plains Tr. Co.
v. Morgan Stanley Dean Witter & Co., 313 F.3d 305,
329 (5th Cir. 2002). “Whether leave to amend should be
granted is entrusted to the sound discretion of the district
court.” Pervasive Software, 688 F.3d at 232
considering a motion to dismiss for failure to state a claim,
the court is to consider “the contents of the
pleadings, including attachments.” Collins v.
Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir.
2000). Documents attached to a motion to dismiss are
“considered part of the pleadings if they are referred
to in the plaintiff's complaint and are central to [the]
claim.” Id. at 498-99 (quoting Venture
Assocs. Corp. v. Zenith Data Sys. Corp., 987 F.2d 429,
431 (7th Cir. 1993)). The court may also “take judicial
notice of matters of public record.” Norris v.
Hearst Tr., 500 F.3d 454, 461 n.9 (5th Cir. 2007)
a Rule 12(b)(6) motion, a district court generally must limit
itself to the contents of the pleadings, including
attachments.” Brand Coupon Network, L.L.C. v.
Catalina Mktg. Corp., 748 F.3d 631, 635 (5th Cir. 2014)
(quotation omitted). “The court may also consider
documents attached to either a motion to dismiss or an
opposition to that motion when the documents are referred to
in the pleadings and are central to a plaintiff's
claims.” Id.; see, e.g., In re
Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th
Cir. 2007) (“[B]ecause the defendants attached the
contracts to their motions to dismiss, the contracts were
referred to in the complaints, and the contracts are central
to the plaintiffs' claims, we may consider the terms of
the contracts in assessing the motions to dismiss.”). A
district court errs by considering evidence “outside
the pleadings-and not referred to therein-without converting
the motion to dismiss into a motion for summary
judgment.” Brand Coupon, 748 F.3d at 635;
see also Katrina Canal Breaches, 495 F.3d at 205
(“Generally, in deciding a motion to dismiss for
failure to state a claim, if matters outside the pleading are
presented to and not excluded by the court, the motion shall
be treated as one for summary judgment.” (quotation
omitted)); Isquith for and on Behalf of Isquith v. Middle
S. Utils., Inc., 847 F.2d 186, 196 (5th Cir. 1988)
(“[W]hen non-pleading materials are filed with a motion
to dismiss, . . . a district court has complete discretion
under the Federal Rules of Civil Procedure to either accept
the exhibits submitted or not, as it sees fit.”).
argues that Hunting has recited the elements of a claim for
unfair competition by misappropriation, but failed to allege
necessary factual support. (Docket Entry No. 51 at 5).
Hunting responds that it provided specific allegations ...