Baker Hughes Inc. v. Homa

BAKER HUGHES INCORPORATED, et al., Plaintiffs, v. DANIEL S. HOMA, et al., Defendants.

CIVIL ACTION NO. H-11-3757

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION

Date: October 25, 2013

MEMORANDUM AND ORDER

Baker Hughes Incorporated and Baker Hughes Oilfield Operations, Inc. (together, "Baker Hughes") sued two former employees, Daniel S. Homa and Robert W. Harman; their new employer, FCTech, Inc.; and FCTech's affiliated companies, FCT Fiber Cable Technology GmbH ("FCT"), NBG Systems GmbH, and NBG Holding GmbH. (Docket Entry No. 66). Baker Hughes settled its claims against Homa and Harman, and they were dismissed from this lawsuit. (Docket Entry Nos. 94-95). The claims against FCTech have been severed and stayed based on its bankruptcy filing. (Docket Entry No. 97). The remaining defendants are NBG Holding and its subsidiaries, FCT and NBG Systems, all Austrian companies, (together, the "Austrian Defendants"), and Andreas Giannis, a consultant for the Austrian Defendants.

Following hard work on jurisdictional discovery by Baker Hughes, the Austrian Defendants reurged their motion to dismiss for lack of personal jurisdiction and for insufficient service of process. (Docket Entry Nos. 127, 143). Baker Hughes responded, (Docket Entry No. 146), the Austrian Defendants replied, (Docket Entry No. 147), and Baker Hughes surreplied, (Docket Entry No. 148). The court heard argument on the motion to dismiss and ordered each party to submit anadditional brief explaining their primary factual and legal positions in light of the present record. (Docket Entry No. 181). Baker Hughes filed its supplemental brief in support of jurisdiction, (Docket Entry No. 182), and the Austrian Defendants responded, (Docket Entry No. 183).

Based on a careful review of the motions, responses, and replies; the parties' submissions; and the applicable law; this court grants the Austrian Defendants' motion to dismiss for lack of personal jurisdiction. By October 30, 2013, the parties are to file a statement identifying any issues that remain to be resolved, or, if no issues remain, a proposed form of order dismissing the case.

The reasons for this ruling are explained below.

I. Background¹ and Procedural History

Baker Hughes, Inc., is a Delaware corporation and Baker Hughes Oilfield Operations, Inc. is a California corporation. (Docket Entry No. 125 at ¶¶ 1-2). Both have their principal place of business in Houston. Baker Hughes is an oil-field service company. "One of [its] primary goals is to provide technological solutions to the oil and gas industry for the safer and more efficient production of hydrocarbons." (Id. at ¶ 14). One source of such solutions is in fiber-optic sensing technology. (Id.). Although Baker Hughes directs the research and development of that technology from its Houston headquarters, its research and development facility for the technology is in Blacksburg, Virginia. Baker Hughes also manufactures optical fiber and fiber-optic equipment in the Virginia facility. (Id. at ¶ 29).

"CoreBright" is one of the fibers that Baker Hughes researched, developed, and manufactured at the Virginia facility. Developing CoreBright took Baker Hughes "many years ofresearch and tens of millions of dollars in financial investment." (Id. at ¶ 21). Baker Hughes owns patents on CoreBright and the method for manufacturing it. (Id.). Baker Hughes alleges that because of the uniqueness of CoreBright and other fiber-optic sensing technology that it has developed, the trade secrets and confidential and proprietary related to that technology are "highly valuable." (Id. at ¶ 28).² Baker Hughes alleges that it "takes precautions"—restricting access to its research and development facility and to the computer server containing research and development, and requiring employees to sign an agreement restricting the disclosure and use of its trade secrets protect against unauthorized disclosure. (Id. at ¶ 27).

Baker Hughes hired Daniel Homa, a Virginia resident, in October 2004. (Id. at 30). Homa served as an engineer at Baker Hughes's Virginia facility. According to the complaint, Homa

had worked for [Baker Hughes], or a [Baker Hughes] predecessor, for more than ten years and was integrally involved in [Baker Hughes's] fiber optic research and development. Homa is the named inventor on seven issued [Baker Hughes] patents and numerous pending and soon to be pending [Baker Hughes] patent applications. While working for [Baker Hughes], Homa was involved in all areas of optical fiber design, development and manufacture and was thus exposed to virtually all of [Baker Hughes's] trade secrets and confidential and proprietary information regarding [Baker Hughes's] fiber optic technology, including [Baker Hughes's] proprietary CoreBright™ technology.

(Id.).

Baker Hughes hired Robert Harman, a Virginia resident, in May 2008. (Id. at 31). Harman served as the Engineering/Plant Manager of the Virginia facility, which placed him in charge of the facility's operations. According to the complaint, "Harman was exposed not only to [BakerHughes's] fiber optic technology but also to all of [Baker Hughes's] future business plans, business relationships, including with [Baker Hughes's] customers and vendors, price lists, business strategies, and business opportunities in fiber optics." (Id. at ¶ 31).

Baker Hughes alleged that Homa and Harman's responsibilities required their constant interaction with the Baker Hughes headquarters in Houston. In particular, Homa and Harman "reported to and received directions, particularly in the research and development of fiber optics technology, from their supervisors located at [Baker Hughes's] headquarters in Houston, Texas." (Id. at ¶ 32). Additionally, they traveled to Houston to attend meetings with their supervisors. "The objectives of these meetings were to further the development of [Baker Hughes's] trade secrets and confidential and proprietary information related to its fiber optic technology . . . ." (Id.).

In mid-2010, Homa and Harman initiated a business relationship for Baker Hughes with NBG Holding GmbH, FCT Fiber Cable Technology GmbH ("FCT"), and NBG Systems GmbH—the Austrian Defendants. (Id. at ¶ 40). The record shows the following information about these defendants:

• NBG Holding is an Austrian company. Its subsidiaries, with the exception of FCTech, Inc., are companies formed under the laws of Austria or other foreign countries. NBG Holding has only one office, located in Austria. NBG Holding neither markets nor produces goods or services. Aside from hiring a Virginia attorney to assist with forming FCTech, NBG Holding has never "utilized any vendor or supplier" or entered into any contract or business agreement with any person or entity in the United States.

• Karl Bauer is one of NBG Holding's four owners. (Id., Ex. A at ¶ 7). He also serves as NBG Holding's CEO and as one of its managing directors. (Id. at ¶ 2; see also, e.g., Docket Entry No. 98, Ex. 11 at 2 (Bauer's e-mail signature block)).

• FCT is a subsidiary of NBG Holding. NBG Holding owns 80% of FCT's shares, and another Austrian corporation owns the remaining 20%. FCT's only office is located in Austria, where it conducts all of its business. "FCT manufactures fiber in metal tubing ('FIMT') products for sale in geographic markets outside Austria." (DocketEntry No. 84, Ex. A at ¶ 5). Bauer serves as a managing director of FCT. (Id., Ex. A at ¶ 2). Bauer has also identified himself in documents as the CEO of FCT. (Docket Entry No. 125, Ex. C at 4).

• NBG Systems is a subsidiary of NBG Holding. NBG Holding owns 95% of NBG Systems's shares; an Austrian NBG Holding executive owns the remaining 5%. NBG Systems's principal place of business is in Austria. It has no offices in the United States. "NBG [Systems] has a business relationship with FCT to market FCT's FIMT products in geographic markets outside Austria." (Docket Entry No. 84, Ex. A, ¶ 6). Bauer serves as a managing director of NBG Systems. (Id., Ex. A, ¶ 2).

In mid-2010, Homa and Harman contacted FCT "to explore the possibility of FCT making FIMT" for Baker Hughes's CoreBright fiber. (Docket Entry No. 84, Ex. A, ¶ 10; see also Docket Entry No. 125 at ¶ 40). On June 7, 2010, Homa e-mailed another Baker Hughes employee to have FCT set up as a vendor in Baker Hughes's computer system. Homa listed Andreas Giannis, "US & CA Director of Sales" for NBG Systems as the contact with FCT and included Giannis's NBG e-mail address. (Docket Entry No. 98, Ex. 1 at 1).

On June 15, 2010, Baker Hughes Oilfield Operations and FCT entered into a nondisclosure agreement "to review and evaluate the possibility of entering into a business arrangement" in which FCT would provide FIMT to Baker Hughes "for its use in the oil and gas industry." (Docket Entry No. 125, Ex. C at 1). The agreement required Baker Hughes Oilfield Operations and FCT to exchange confidential and proprietary information and had a six-month term. (Id. at 1-3). A vice-president signed the agreement on behalf of Baker Hughes, and Bauer signed the agreement as CEO of FCT. (Id. at 4).

Communications continued between Baker Hughes and FCT. To set FCT up as a vendor, a Baker Hughes employee e-mailed two forms to Giannis, who filled them out and signed them on behalf of NBG Systems. To complete the vendor registration, an NBG Holding employee e-maileda "company report" to Baker Hughes, although it is unclear which company report was sent. (Docket Entry No. 98, Ex. 3). On June 22, Bauer completed Baker Hughes's "Direct Deposit Authorization" form. Bauer listed "NBG Systems" as the legal name of the business. Bauer listed Giannis as the company's contact, identifying his position as Area Sales Manager. Bauer signed the form, above an NBG Systems business stamp, as "Managing Director." (Id., Ex. 5).

In September 2010, a team from FCT visited Baker Hughes's Virginia facility. Representing FCT were Bauer, Giannis, and a third person;...