Walmart, Inc. v. Fintiv, Inc.

WALMART, INC., Appellant v. FINTIV, INC., Appellee

No. 06-20-00071-CV

Court of Appeals of Texas, Sixth District, Texarkana

August 13, 2021

Date Submitted: May 26, 2021

On Appeal from the 71st District Court Harrison County, Texas Trial Court No. 18-1378

Before Morriss, C.J., Burgess and Stevens, JJ.

MEMORANDUM OPINION

SCOTT E. STEVENS, JUSTICE

Fintiv Inc., sued Walmart, Inc., in Harrison County for misappropriation of trade secrets under both the common law and the Texas Uniform Trade Secrets Act (TUTSA). See TEX. CIV. PRAC. &REM. CODE ANN. §§ 134A.002(3), 134A.004. In response, Walmart filed a motion to dismiss and a special appearance and asserted that the trial court lacked jurisdiction because (1) Fintiv's claims were subject to a binding forum selection clause that required suit to be filed in Arkansas, and (2) the trial court lacked specific and general jurisdiction over Walmart. The trial court denied the special appearance.

On appeal, Walmart asks this Court to (1) construe its appeal as a petition for a writ of mandamus and direct the trial court to dismiss the lawsuit based on the forum selection clause and (2) reverse the trial court's denial of its special appearance. Because we find that Walmart (1) waived its special appearance and entered a general appearance and (2) has not provided a sufficient mandamus record, we affirm the trial court's denial of its special appearance, deny the petition for a writ of mandamus, and remand this case to the trial court.

I. Procedural Background

On December 14, 2018, Fintiv^[1] filed its original petition against Walmart alleging common law and TUTSA causes of action for misappropriation of trade secrets. Fintiv alleged that the trial court had personal jurisdiction over Walmart "because it is registered to transact business in Texas, has regularly transacted and continues to regularly transact business in Texas, derives substantial revenue from goods and services provided to Texas residents, and the torts and other purposeful acts and omissions alleged herein occurred in the State of Texas." It also alleged that its action against Walmart arose "from Walmart's infringement and misappropriation of Fintiv's trade secrets and confidential information Fintiv shared with Walmart under a series of binding non-disclosure agreements in the years 2000, 2008, and 2011." The non-disclosure agreements are referred to by the parties as "the 2000 NDA," "the 2008 NDA," and "the 2011 NDA."

In its original petition, Fintiv stressed the importance of the NDAs, citing language in the 2011 NDA that defined "confidential information" and that prohibited Walmart from using or disclosing Fintiv's confidential information. It also alleged that it was only after entering the NDAs that Fintiv "presented a global wireless vision, the origin of MoTEAF^TM, to Walmart" when Walmart was seeking to develop a mobile wallet. The original petition went on to allege several meetings with Walmart in which Fintiv allegedly disclosed its trade secrets, all of which occurred in Arkansas, and none of which were specifically alleged to have occurred in Texas. Fintiv alleged that Walmart used the trade secrets disclosed in the development of its Walmart Pay (WalPay) application.

In response, Walmart filed its a special appearance to object to jurisdiction (Objection to Jurisdiction). In its Objection to Jurisdiction, Walmart alleged that (1) the 2008 NDA contains a mandatory forum selection clause that requires all disputes be resolved in Arkansas, (2) the 2011 NDA requires all disputes be resolved in Delaware, (3) Fintiv's general jurisdiction allegations are not sufficient to establish personal jurisdiction over Walmart, and (4) none of the relevant alleged acts and omissions by Walmart occurred in Texas and there is no substantial connection between the alleged activities and Texas, so specific jurisdiction has not been established. Walmart also filed the affidavit of Daniel Eckert, senior vice president of Walmart Services and Digital Acceleration. Eckert averred, among other things, that (1) all the facts alleged in Walmart's special appearance were true, (2) in 2012 or 2013, Fintiv tried to become engaged in a project called Merchant Customer Exchange (MCX), (3) MCX was a company created by a consortium of United States retailers (including Walmart), (4) Walmart did not use any product or technology developed by MCX, (5) the officers and employees of Walmart identified by Fintiv all resided in states other than Texas, (6) none of the development of WalPay occurred in Texas, and (7) the computers used to process payments made through WalPay are located in Arkansas and Colorado.^[2]

Fintiv filed an opposition to Walmart's Objection to Jurisdiction in which it alleged that, over the course of their relationship, Fintiv and Walmart exchanged multiple NDAs, including the 2008 NDA; that Fintiv hosted a meeting for Walmart in Dallas on August 30, 2010, at which it gave a comprehensive presentation about its proprietary mobile wallet platform; that it met with Walmart again in Dallas on September 16, 2010; and that Walmart has approximately 600 stores, including 393 Supercenters and 160, 970 employees in Texas, advertises on Walmart.com, which reaches Texas residents, and provides the WalPay service to Texas residents.

On September 13, 2019, the trial court held a hearing on Walmart's Objection to Jurisdiction. Walmart made arguments regarding general and specific jurisdiction and the applicability of the forum selection clause contained in the 2008 NDA. Fintiv argued that the 2008 NDA expired in December 2013, that Fintiv had discussions with Walmart after that time, and that the NDA had nothing to do with its TUTSA claims. Fintiv also argued that the court had both specific and general personal jurisdiction over Walmart. After Fintiv put on direct testimony from one of its officers, the trial court recessed the hearing to enable the parties to conduct additional discovery.

After several months, the parties then took the depositions of several of Fintiv's current and former officers. Walmart filed a supplemental brief in support of its special appearance in which it contended that the forum selection clause in the 2008 NDA required suit be filed in Arkansas and that there was no specific or general jurisdiction over Walmart.

Fintiv filed an opposition to Walmart's supplemental brief in which it contended that the testimony of its former and current officers showed that Fintiv disclosed trade secrets to Walmart after 2012 and that Walmart directed Fintiv to MCX. Fintiv argued that the 2008 NDA did not apply to Fintiv's claims because (1) Walmart's misappropriation of trade secrets through its alleged agent MCX was conduct outside the scope of the 2008 NDA, and (2) Fintiv's claims are based on common law and statute and exist even in the absence of the 2008 NDA. It also argued that the trial court had specific jurisdiction over Walmart because of Walmart's purposeful contacts with Texas, pointing to the two 2010 meetings in Dallas, a subsequent meeting with MCX in Dallas, and Walmart's launch of WalPay in Texas (and nationwide). In its reply, Walmart argued that (1) Fintiv could not evade the forum selection clause by artful pleading, (2) Fintiv had not established that MCX was an agent of Walmart, ^[3] and (3) there was no basis for specific or general jurisdiction.

Seven days before the scheduled final hearing on Walmart's Objection to Jurisdiction, Fintiv amended its petition. The amended petition dropped its previous allegation that its misappropriation claims arose from the trade secrets and confidential information Fintiv shared with Walmart under a series of binding non-disclosure agreements in the years 2000, 2008, and 2011. It acknowledged, however, that Fintiv and Walmart entered into a non-disclosure agreement in 2008, which Fintiv alleged expired by its terms in December 2013. The amended petition also alleged that non-party MCX was either the actual or apparent agent of Walmart and included specific allegations regarding meetings with Walmart in Arkansas in 2009 and 2012, and in Dallas in 2010, and with MCX in Dallas in 2012, in which trade secrets and confidential information were disclosed.

Walmart filed another supplemental brief and challenged the sufficiency of the allegations in the amended petition regarding its relationship with MCX and argued that Fintiv cannot avoid dismissal based on the forum selection clause by deleting its prior allegations that it shared its trade secrets under the NDAs and adding the additional allegations regarding MCX.

At the final hearing held on July 29, 2020, Walmart chose to first argue that the lawsuit should be dismissed based on the forum selection clause contained in the 2008 NDA and advised the trial court, "[Walmart is] going to start by talking about the NDAs and the 2008 NDA in particular because [it] think[s] that that NDA -- if you decide that you agree with us, the 2008 NDA applies here, then there's no reason to go to the issues of general and specific jurisdiction." At the conclusion of that portion of its argument, and before addressing specific and general jurisdiction, Walmart again told the trial court, "[I]f you decide that the NDAs apply, you don't have to reach general and specific jurisdiction." Only then did Walmart address general and specific jurisdiction. At the conclusion of the parties' arguments, the trial court took the case under advisement. On August 31, 2020, the trial court denied the special appearance, without stating the basis of its denial.

II. Walmart's Special Appearance A. Standard of Review

"On appeal, we review de novo the trial court's determination to grant or deny a special appearance." Hitachi...