Cyberspace Saves an Out-of-State Oil Company

Can an email be directed to a particular state? No, said a Texas court in Enerquest Oil & Gas, LLC v. Antero Resources Corporation. The court questioned “the very premise of the contention that an email can be sent to a particular state”. Emails are not sent to a designated computer or electronic device located at a particular place. Email accounts have no physical address. They are sent into cyberspace, saved onto a server or servers, and opened by the recipient wherever that person might happen to be whether, as the court said, “in Texas, Tennessee or Tibet.”

The background

Enerquest is an LLC organized under Oklahoma law; operates properties in Oklahoma, Texas and other states; is headquartered in Oklahoma; and is registered and conducts business in Texas. It maintains no officers or employees in Texas. Enerquest and Braxton Minerals formed BMI, III, LLC, governed by Delaware law. Its principal place of business is Texas and was organized to acquire and own mineral interests in states other than Texas.

Penn sued Braxton, BMI II and others, including Bauer and Ashburn in Tarrant County. Antero intervened and added Enerquest as a party, alleging trade secret misappropriation and claiming that Bauer and Ashburn stole confidential information and gave it to Enerquest. Antero alleged that Enerquest, through its president, emailed Bauer to acquire and misappropriate the trade secrets and that BM III, with its principal place of business in Texas, was funded by Enerquest, Enerquest later became manager of a related entity BM III and thereby improperly benefited from the misappropriation of Antero’s trade secrets. Enervest said it received the alleged trade secrets in Oklahoma and denied wrongdoing.

Texas law on personal jurisdiction

For a Texas court to obtain personal jurisdiction over a nonresident defendant the long-arm statute must authorize its exercise and the exercise must be consistent with constitutional due process guarantees. There must be “minimum contacts” in which the nonresident defendant purposely avails itself of the privilege of conducting activities within the forum state and invokes the benefits and protections of its laws. There is specific jurisdiction if the nonresident defendant’s contacts with the forum are purposeful and a cause of action arises from or relates to those contacts.

The challenge

Enerquest alleged in a special appearance that the Texas court had no personal jurisdiction over it. Said Enerquest: There was no general jurisdiction because the company was organized under Oklahoma law, and maintains its principal place of business there. There was no specific jurisdiction because none of the actions alleged by Antero arose from activity by Enerquest  hat was intentionally or purposefully directed at the State of Texas, and the damages would be realized in states other than Texas.

The ruling

The trial court overruled Enervest’s special appearance. Enerquest was stuck in Texas with the Oklahoma blues again. But the court of appeals reversed.

Merely because Enerquest was registered to do business in Texas and conducted business there wasn’t enough on its own to establish personal jurisdiction when those acts had no connection to Antero’s claims. The court refused to accept that an email “reaching out” (as Antero put it), requesting information established that the tort of misappropriation was committed in Texas. The president received an email with the alleged trade secrets in Oklahoma.

The court acknowledged occasions when a trade secret thief can reach into Texas. But here, Enerquest’s contacts lacked the substantial connection to Texas and were too attenuated to the disputed acts allegedly committed in Texas to establish personal jurisdiction.

Today’s musical interlude: Galactic –  from New Orleans; maybe not “New Orleans music” you would expect..

Cyberspace Saves an Out-of-State Oil Company syndicated from https://888migrationservicesau.wordpress.com

Author: demogenic

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