United States District Court, W.D. Oklahoma
BLUE STAR LAND SERVICES, LLC, Plaintiff, and DEVON ENERGY PRODUCTION COMPANY, L.P., Intervenor Plaintiff,
THEO C. COLEMAN, JEFFREY D. MORRIS AMARA S. JOHNSON, f/k/a AMARA SINCLAIR, and ROCK CREEK LAND & ENERGY COMPANY, LLC, Defendants.
L. RUSSELL, UNITED STATES DISTRICT JUDGE.
the Court is Defendants' Motion to Dismiss, Doc. 34.
Plaintiff Blue Star Land Services, LLC (“Blue
Star”) filed its Complaint and Request for Seizure,
Doc. 3, under the federal Defend Trade Secrets Act of 2016
(“DTSA”), Oklahoma's Uniform Trade Secrets
Act (“UTSA”), and Oklahoma common law. Following
an ex parte seizure (Doc. 10) of Defendants' electronic
devices and Dropbox account containing potential trade secret
information and a subsequent preliminary injunction (Doc.
25), Defendants filed this Motion. Considering
Plaintiff's allegations in the light most favorable to
it, the Court grants the Motion in part with respect to
Defendant Johnson and denies it with respect to Defendants
Coleman, Morris, and Rock Creek for the following reasons.
to Plaintiff's Complaint, this case concerns a
contentious business split and the legitimacy of departing
employees' competitive conduct through their departure.
Defendants Theo Coleman and Jeffrey Morris were the only vice
presidents of Blue Star, a “boutique, full
services” firm that provides critical land and
regulatory services for large oil and gas companies such as
Devon Energy and Marathon Oil. Doc. 3, at 7 n.1. After five
years as vice presidents, the two left Blue Star in April of
2017 to start a competing company, Rock Creek Land &
Energy Company, LLC (“Rock Creek”).
Star possesses extensive confidential information that helps
it compete against other outside brokers. It maintains rig
schedules and section-township-range maps that details
wide-ranging information about their clients' rigs,
leases, and mineral findings. See Doc, 3-46, at 4-5.
Blue Star's ownership reports, templates, and other work
product allow it to more effectively structure drilling and
leasing plans, advise companies, and advocate on their behalf
before regulatory commissions. Id. at 5-13. More
important, while Blue Star has a system for protecting its
clients' confidential information and that of Blue Star
itself, Defendants Coleman and Morris had near complete
access to it all.
Star's founder and president, David Swafford, hired
Defendants Coleman and Morris right out of college.
See Doc. 3, at 9. They progressed through the
company ladder before spending five years as vice presidents.
Id. Plaintiff believes Defendants first plotted
their exit in 2013, when Coleman created a spreadsheet
outlining Blue Star's financial and operational
information. See Doc. 3, at 10. In 2016, Coleman and
Morris demanded equity positions with Blue Star, after which
Swafford entered into profit-sharing agreements in October
entitling Coleman and Morris to 5% each. Id. at 3;
see Docs. 3-25, 3-26. Four months later, Plaintiff
claims Coleman began downloading to his personal
Dropboxaccount confidential, proprietary, and
trade-secret information that would soon help him launch a
competing company. Doc. 3, at 3.
April of 2017, one of Blue Star's existing clients,
LEFCO, approached Coleman and Morris about a new project.
Id. at 11. Considering the opportunity as either
leverage for more equity or business to start a competing
company, Coleman continued to download more confidential
information to his personal devices. Id. All told,
this included over 20, 000 documents, one of which was a
“highly confidential document” comprising all of
the company's “IP addresses, user names, and
passwords for authorized users across its entire electronic
system.” Id. at 13. With most of Blue
Star's recent work product allegedly in possession,
Coleman and Morris demanded from Swafford majority ownership
and control of the company. Id. at 13-14. Swafford
declined and the parties agreed to part ways. Id.
Coleman and Morris then faced a short timeline to build a
staff and clientele to launch their new company, Rock Creek.
Still employed by Blue Star, they first reached out to
Defendant Johnson, “the next-highest-ranking
individual at Blue Star.” Doc. 3, at 23. She
responded that she needed “at least a couple
weeks” to “make some $$” at Blue Star
before leaving for Rock Creek. Id. at 15. Yet, when
Johnson gave Swafford her two-week notice of resignation the
following week, she allegedly misrepresented that she was
leaving Blue Star to get engaged and move with her
fiancé to South Carolina or Florida. Id. at
23. Nonetheless, Johnson stayed on and accessed her new Rock
Creek email the following day from her Blue Star computer.
Id. at 25. Next Coleman and Morris strategized how
to approach the rest of Blue Star's staff, discussing the
need for departing employees to tell Swafford that they
approached Defendants initially, not vice versa. Id.
at 16. Following various communication with Blue Star
employees and independent contractors, Defendants Coleman and
Morris now employ at least nine former Blue Star staffers at
Rock Creek. Id. at 31.
also alleges that Defendants poached various Blue Star
clients. Coleman incorporated Rock Creek on April
21st, 2017, two days before accessing existing
Blue Star contracts with LEFCO and Black Hawk to substitute
the party name as “Rock Creek.” Id. at
17-19. Then on the 24th, Morris and Coleman
submitted their resignation letters, to be effective on the
28th. Id. at 19; Docs. 3-30, 3-33. Morris
proceeded to research how to delete email records, which
Plaintiff believes was intended to “delete evidence of
their disloyal actions.” Doc. 3, at 19. Coleman began
emailing clients to inform them of their departure and
competing venture. Id. at 20. Similarly, Morris gave
clients alternative Blue Star contacts for future projects,
but only connected these “clients with alternative Blue
Star employees who Morris knew or believed already had plans
to go to Rock Creek following Morris and Coleman's
exit.” Id. at 20-21. Later, Morris searched,
“is it ethical to delete work emails” and made
various attempts to delete Blue Star emails. Id. at
21-22. The next morning, when Swafford learned of another
employee's defection to Rock Creek, he requested that
Coleman and Morris leave Blue Star “ASAP.”
Id. at 23. Shortly after, Coleman informed a
coworker that Rock Creek was taking Blue Star's existing
“Merge Project” for LEFCO. Id. at 24.
Additionally, Defendants allegedly interfered with existing
and prospective Blue Star contracts with Southwest Energy
Partners, Double Eagle, and Luxe. Id. at 37.
August 29th, 2017, following an extensive audit by
forensic investigator Ernst & Young (“EY”) of
Defendants' old Blue Star computers and accounts,
Plaintiff filed their Complaint, Doc. 3, alleging:
(1) Violation of the federal Defend Trade Secrets Act, 18
U.S.C. § 1836, et seq. (all Defendants);
(2) Violation of Oklahoma's Uniform Trade Secrets Act, 78
Okla. Stat. §§ 85-94 (all Defendants);
(3) Breach of fiduciary duty (Coleman and Morris);
(4) Breach of the duty of loyalty (Coleman, Morris, and
(5) Tortious interference with existing contract and
prospective economic advantage (all Defendants)
Motion to Dismiss Standard
complaint may be dismissed upon a motion for “failure
to state a claim upon which relief can be granted.”
Fed.R.Civ.P. 12(b)(6). Under Federal Rule of Civil Procedure
8(a)(2), a pleading must contain a ‘short and plain
statement of the claim showing that the pleader is entitled
to relief.'” Ashcroft v. Iqbal, 556 U.S.
662, 677-78 (2009). “The pleading standard Rule 8
announces does not require ‘detailed factual
allegations, ' but it demands more than an unadorned,
Id. at 678 (quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007)). Dismissal is proper
“if, viewing the well-pleaded factual allegations in
the complaint as true and in the light most favorable to the
non-moving party, the complaint does not contain
‘enough facts to state a claim to relief that is
plausible on its face.'” Macarthur v. San Juan
County, 497 F.3d 1057, 1064 (10th Cir. 2007) (quoting
Twombly, 550 U.S. at 547); see Iqbal, 556
U.S. at 676-80. The plaintiff cannot merely give
“labels and conclusions, and a formulaic recitation of
the elements of a cause of action.” Twombly,
550 U.S. at 555. Such conclusory allegations are not entitled
to the court's presumption for the plaintiff. Instead,
the plaintiff must plead facts that at least makes the claims
plausible and raise the “right of relief above the
speculative level.” Id. at 558.
Trade Secrets Misappropriation Claims
brings trade secrets claims against all Defendants under both
the federal DTSA and Oklahoma's UTSA. Before assessing
the merits, the Court must first dispose of Plaintiff's
threshold “law of the case” argument. Plaintiff
claims that the “law of the case” doctrine
precludes the Court from considering Defendants' Motion
with regard to Plaintiff's misappropriation claims
because the Court's earlier ex parte seizure order
necessarily held that the Complaint satisfied a standard
beyond Rule 12(b)(6)'s plausibility requirements.
See Doc. 10. Granted, the Court found
“extraordinary circumstances” justifying an ex
parte seizure and that “it clearly appears from
specific facts” that Plaintiff satisfied the DTSA's
eight ex parte seizure order requirements. 18 U.S.C. §
1836(b)(2)(A)(i)-(ii). However, an ex parte order, without
the presence of opposing counsel's advocacy, does not
constitute law of the case. Law of the case “has a
narrower meaning in connection with the duty of a judge to
adhere to a ruling previously made in the case by another
judge of the same court. . . . [It] requires that the order
of the first judge, unless merely a formal or an ex parte
order, shall not be vacated or nullified by a later
judge of the same court.” Munro v. Post, 102
F.2d 686, 688 (2d Cir. 1939) (emphasis added); see also
In re Ford Motor Co., 591 F.3d 406, 414 (5th Cir. 2009)
(“By not having expert testimony, and by relying on
ex parte orders obtained without the presence of
opposing counsel, the MDL court again erred.”);
Platten v. HG Bermuda Exempted Ltd., 437 F.3d 118,
130 (1st Cir. 2006). Clearly, the “law of the
case” doctrine is not applicable here. Therefore, the
Court must proceed to an independent 12(b)(6) review of
Federal Trade Secrets Claim
plausibly pleads a violation of the federal DTSA against
Defendants Coleman, Morris, and Rock Creek. The law provides
a private cause of action against those who have
misappropriated trade secrets related to a product or service
intended for interstate commerce. See 18 U.S.C.
§ 1836(b)(1). The term “trade secret”
all forms and types of financial, business, scientific,
technical, economic, or engineering information, including
patterns, plans, compilations, program devices, formulas,
designs, prototypes, methods, techniques, processes,
procedures, programs, or codes, whether tangible or
intangible, and whether or how stored, compiled, or
memorialized physically, electronically, graphically,
photographically, or in writing if-
(A) the owner thereof has taken reasonable
measures to keep such information secret; and
(B) the information derives independent
economic value, actual or potential, from not being generally
known to, and not being readily ascertainable through proper
means by, another person who can obtain economic value from
the disclosure or use of the information
18 U.S.C. § 1839(3). “Misappropriation” in
this context includes “acquisition of a trade secret of
another by a person who knows or has reason to know that the
trade secret was acquired by improper means.” 18 U.S.C.
§ 1839(5). The DTSA further defines “improper
means” as “theft, bribery, misrepresentation,
breach or inducement of a breach of a duty to maintain
secrecy, or espionage.” 18 U.S.C. § 1839(6)(A).
Thus, to show a DTSA violation, Plaintiff must plausibly
plead (1) trade matter, (2) reasonable secrecy, (3)
independent economic value ...