SARAH S. VANCE, District Judge.
Before the Court are defendant Oceaneering International, Inc.'s two motions for partial summary judgment on plaintiff Wright's Well Control Services, LLC's various Texas and Louisiana law claims.
The facts and allegations that follow are limited to what is relevant to the two motions before the Court.
WWCS alleges that by the end of 2009 it developed a "hydrate remediation system" that provided a faster, safer, and more cost-effective way to clear hydrates in deepwater environments.
On May 21, 2015, WWCS filed its initial complaint against Oceaneering, pleading patent infringement as well as various claims under Texas and Louisiana state law.
On February 27, 2017, WWCS filed its fourth amended complaint, which is the operative complaint.
Oceaneering now moves for partial summary judgment on certain of these claims. More specifically, Oceaneering argues in its first motion for summary judgment that WWCS's Texas law business disparagement, unfair competition, common law misappropriation, breach of confidential relationship, and tortious interference with prospective business relations claims are barred by the applicable statutes of limitations.
Summary judgment is warranted when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). When assessing whether a dispute as to any material fact exists, the Court considers "all of the evidence in the record but refrain[s] from making credibility determinations or weighing the evidence." Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398-99 (5th Cir. 2008). All reasonable inferences are drawn in favor of the nonmoving party, but "unsupported allegations or affidavits setting forth `ultimate or conclusory facts and conclusions of law' are insufficient to either support or defeat a motion for summary judgment." Galindo v. Precision Am. Corp., 754 F.2d 1212, 1216 (5th Cir. 1985); see also Little, 37 F.3d at 1075. "No genuine dispute of fact exists if the record taken as a whole could not lead a rational trier of fact to find for the non-moving party." EEOC v. Simbaki, Ltd., 767 F.3d 475, 481 (5th Cir. 2014).
If the dispositive issue is one on which the moving party will bear the burden of proof at trial, the moving party "must come forward with evidence which would entitle it to a directed verdict if the evidence went uncontroverted at trial." Int'l Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257, 1264-65 (5th Cir. 1991). The nonmoving party can then defeat the motion by either countering with evidence sufficient to demonstrate the existence of a genuine dispute of material fact, or "showing that the moving party's evidence is so sheer that it may not persuade the reasonable fact-finder to return a verdict in favor of the moving party." Id. at 1265.
If the dispositive issue is one on which the nonmoving party will bear the burden of proof at trial, the moving party may satisfy its burden by merely pointing out that the evidence in the record is insufficient with respect to an essential element of the nonmoving party's claim. See Celotex, 477 U.S. at 325. The burden then shifts to the nonmoving party, who must, by submitting or referring to evidence, set out specific facts showing that a genuine issue exists. See id. at 324. The nonmovant may not rest upon the pleadings, but must identify specific facts that establish a genuine issue for trial. See, e.g., id.; Little, 37 F.3d at 1075 ("Rule 56 mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." (quoting Celotex, 477 U.S. at 322)).
In its motions for partial summary judgment, Oceaneering asserts that WWCS's claims are barred by the applicable statutes of limitations. Oceaneering relies primarily on the January and February 2017 deposition testimony of David Wright, WWCS's sole owner and designated corporate representative under Federal Rule of Civil Procedure 30(b)(6),
At Wright's January deposition, he testified that Christopher Mancini, an Oceaneering employee, made disparaging statements about WWCS.
WWCS alleges that Oceaneering's disparagement caused WWCS to suffer "economic loss."
WWCS's arguments to the contrary are meritless and do not create an issue of fact as to whether the business disparagement claim based on Mancini's comments is time-barred. First, WWCS argues that the discovery rule applies and delays the start of the limitation period. But the discovery rule does not extend the limitations period when the plaintiff has actual knowledge of the defendant's alleged wrongdoing.
Second, WWCS asserts that Oceaneering's "evidence does not prohibit finding other instances of disparagement that occurred" after 2012, and points out that Oceaneering has worked on "many projects" within the two-year statute of limitations.
Under Texas law, tortious interference with prospective business relations has a two-year limitations period. First Nat'l Bank of Eagle Pass v. Levine, 721 S.W.2d 287, 288-89 (Tex. 1986). The claim accrues when "existing negotiations, which are reasonably certain of resulting in a contract, are interfered with such that the negotiations terminate and harm to the plaintiff results." Hill v. Heritage Res., 964 S.W.2d 89, 116 (Tex. App. 1997). WWCS's complaint alleges that Oceaneering interfered with the relationship between BP and WWCS regarding the Thunder Horse project. Oceaneering makes no argument and submits no evidence on when this interference occurred, but WWCS submits the July 11, 2013 BP Letter of Regret informing WWCS that it did not win the Thunder Horse project.
Oceaneering also seeks summary judgment on the Texas law misappropriation-related claims: common law misappropriation, common law misappropriation of trade secrets, breach of confidential relationship, and unfair competition. According to WWCS's complaint, the underlying basis for all of these claims is the theft or misappropriation of WWCS's trade secrets and information related to WWCS's hydrate remediation system.
Although these claims have different limitations periods, each claim accrues either when the misappropriation occurred or when the misappropriated secret is used. See R. Ready Productions, 85 F. Supp. 2d at 693 ("An unfair competition claim for misappropriation of trade secrets accrues and the limitations period commences when the trade secret allegedly misappropriated is actually used."); Stryker Corp., 2012 WL 612534, at *2 ("[A] claim for common law misappropriation begins to accrue when the alleged misappropriation occurred."); Crutcher-Rolfs-Cummings, 540 S.W.2d at 387 (finding breach of confidential relationship claim accrued at time breach first occurred); Comput. Assocs. Int'l., Inc. v. Altai, Inc., 918 S.W.2d 453, 455 (Tex. 1996) ("A cause of action for misappropriation of trade secrets accrues when the trade secret is actually used."). "Use" of a trade secret means "commercial use, by which a person seeks to profit from the use of the secret." Gen. Universal Sys., Inc. v. HAL, Inc., 500 F.3d 444, 450 (5th Cir. 2007). This includes "marketing goods that embody the trade secret, employing the trade secret in manufacturing or production, relying on the trade secret to assist or accelerate research or development, or soliciting customers through the use of information that is a trade secret." Id. at 451 (quoting Restatement (Third) of Unfair Competition §40).
Accordingly, the limitations period began for each of the above claims either when Oceaneering allegedly misappropriated WWCS's trade secrets or when Oceaneering used the misappropriated trade secrets by producing its FRS. WWCS argues that the Texas discovery rule applies to each of the above claims and delays the start of each applicable limitations period. The discovery rule "operates to defer accrual of a cause of action until the plaintiff knows or, by exercising reasonable diligence, should have known of the facts giving rise to the claim." Wagner & Brown, Ltd. v. Horwood, 58 S.W.3d 732, 734 (Tex. 2001). But the rule is "a very limited exception to statutes of limitations," and should be used "only when the nature of plaintiff's injury is both inherently undiscoverable and objectively verifiable." Id. An injury is inherently undiscoverable if it is, "by its nature, unlikely to be discovered within the prescribed limitations period despite due diligence." Id. at 734-35 (citing S.V. v. R.V., 933 S.W.2d 1, 7 (Tex. 1996).
Whether someone, by exercising reasonable diligence, should have known of the facts giving rise to his or her claim is generally a question of fact for the jury. See, e.g., Sw. Energy Prod. Co. v. Berry-Helfand, 491 S.W.3d 699, 722 (Tex. 2016). But summary judgment is appropriate if there is no genuine issue of material fact as to "when the plaintiff discovered, or in the exercise of reasonable diligence should have discovered, the nature of its injury." Vanderpool v. Vanderpool, 442 S.W.3d 756, 761 (Tex. App. 2014); see also Childs v. Haussecker, 974 S.W.2d 31, 44 (Tex. 1998).
Oceaneering disputes the discovery rule's application to WWCS's claims. Because Texas courts apply the discovery rule to trade-secret misappropriation claims, and because all of the above claims arise out of the alleged misappropriation, the Court will apply the rule to these claims. See, e.g., Berry-Helfand, 491 S.W.3d 699, 722 ("Because the discovery rule applies to trade-secret misappropriation claims, however, the limitations period did not begin to run until [plaintiff] knew or should have known of facts that in the exercise of reasonable diligence would have led to discovery of the misappropriation." (citations omitted)); Sisoian v. Int'l Bus. Machines Corp., 2014 WL 4161577, at *4-5 (W.D. Tex. Aug. 18, 2014) (applying discovery rule to other claims arising out of theft of trade secrets). Accordingly, the Court will examine when WWCS either knew or should have known the facts giving rise to its claims.
Oceaneering argues that WWCS either knew or should have known of its claims by January 2012.
The January email and Wright's deposition testimony related to that email establish that Wright should have known of facts giving rise to WWCS's claims by the end of January 2012. As the Texas Supreme Court has recognized, once a plaintiff has been put on notice of the "alleged harm or injury-causing actions, the claimant must exercise reasonable diligence to investigate the suspected harm and file suit, if at all, within the limitations period." Emerald Oil & Gas, 348 S.W.3d at 207 (citations omitted). This knowledge "initiates the accrual of the cause of action . . . , even if the claimant does not know the specific cause of the injury or the full extent of it." Id. at 209; see also Gonzales v. Sw. Olshan Found. Repair Co., LLC, 400 S.W.3d 52, 58 (Tex. 2013). The evidence in the record reveals Wright's knowledge that Oceaneering had some form of subsea separation technology and was competing against WWCS by January 2012. Based on this knowledge, Wright believed that Oceaneering stole "some info on hydrates" from WWCS. Wright's knowledge of Oceaneering's subsea separation technology and his belief that Oceaneering stole this technology from WWCS are "facts that in the exercise of reasonable diligence would lead to the discovery" that Oceaneering misappropriated WWCS's information. Berry-Helfand, 491 S.W.3d at 724.
WWCS's arguments to the contrary do not alter the conclusion that WWCS was put on notice of the alleged misappropriation by January 2012.
Relatedly, WWCS argues that Wright's deposition testimony should be discounted because it was "premature" given the status of discovery.
WWCS cannot use Wright's declaration to erase his earlier deposition testimony. Under Fifth Circuit law, "in situations where the non-movant in a motion for summary judgment submits an affidavit which directly contradicts an earlier deposition and the movant has relied upon and based its motion on the prior deposition, courts may disregard the later affidavit." Hyde v. Stanley Tools, 107 F.Supp.2d 992, 993 (E.D. La. 2000) (citing S.W.S. Erectors, Inc. v. Infax, Inc., 72 F.3d 489, 495 (5th Cir. 1996)). And while a contradictory or inconsistent affidavit can "be admitted if it is accompanied by a reasonable explanation," id., WWCS's attempted explanation does not hold water. Even assuming Oceaneering had yet to turn over discoverable information by the dates of Wright's depositions, the information sought from Wright and relied on by Oceaneering was based on Wright's personal knowledge and pertained to what he knew and believed in the past. None of the information sought by WWCS in discovery would impact what Wright knew and believed in 2012. Nor does WWCS argue that Wright was confused or made a mistake during his deposition. Cf. Kennett-Murray Corp. v. Bone, 622 F.2d 887, 894 (5th Cir. 1980). Accordingly, to the extent that information in Wright's declaration contradicts or is inconsistent with his deposition testimony, the Court will disregard the declaration.
As explained above, Texas common law misappropriation, unfair competition through misappropriation of trade secrets, and breach of confidential relationship claims all have two-year limitations periods. Texas common law misappropriation of trade secrets has a three year statute of limitations from the date the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered. See Tex. Civ. Prac. & Rem. Code § 16.010(a). All of these claims accrued by January 2012, yet WWCS filed suit more than three years later, in May 2015. Accordingly, WWCS's common law misappropriation, unfair competition, breach of confidential relationship, and common law misappropriation of trade secrets claims are time-barred. Oceaneering is entitled summary judgment on these claims.
This leaves WWCS's Louisiana Uniform Trade Secrets Act claim. Under LUTSA, an "action for misappropriation must be bought within three years after the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered." La. Stat. Ann. § 51:1436. Because this claim has a three-year limitations period, Oceaneering is entitled summary judgment on this claim for the same reason it is entitled summary judgment on WWCS's Texas misappropriation-related claims.
For the foregoing reasons, Oceaneering's first motion for summary judgment is GRANTED IN PART and DENIED IN PART, and Oceaneering's second motion is GRANTED. WWCS's claims for business disparagement, common law misappropriation, unfair competition, breach of confidential relationship, Texas common law misappropriation of trade secrets, and Louisiana misappropriation of trade secrets are DISMISSED.