Venable’s dynamic Entertainment and Media Group is pleased to launch Close-Ups, a blog aimed at providing insider commentary on legal and business issues, trends, and headlines in Hollywood and beyond. As a reader of our All About Advertising Law blog, you recognize the value of timely legal analysis and commentary on the issues surrounding your business. The team of writers and editors producing Close-Ups embraces the same innovative and creative approach to their analysis of the entertainment and media industries as they do to their counseling of major studios, agencies, talent, management, and more. Read the inaugural edition and subscribe to Close-Ups at www.closeupsblog.com.
In Town of Flower Mound v. Eagle Ridge Operating LLC, an operator’s injunction against enforcement of a local ordinance was dissolved. EagleRidge operates gas wells in the Flower Mound. A Town ordinance prohibits work on gas wells (other than drilling) at times other than between 7 a.m. and 7 a.m. Monday through Friday and certain times on Saturday.
EagleRidge tried to avoid enforcement of the ordinance by:
requesting a variance,
appealing the Town staff’s determination that the ordinance applied to collection of produced water,
appealing the Town staff’s determination that Texas Transportation Code Chapter 621 did not prevent the Town from restricting wastewater hauling, and
- Seeking a determination from the Town that the ordinance was preempted by Natural Resources Code §81.0523 (think Denton fracking ban).
All of the requests were denied by the Town and its agencies. EagleRidge sued and the trial court enjoined the Town from enforcing ordinances that have the intent or effect of restricting hours in which EagleRidge and its contractors could haul produced water.
Upon further review …
The court of appeals dissolved the inunction, holding the trial court had no subject matter jurisdiction over the dispute because the ordinance is penal in nature. (A violation is considered “unlawful” and is punishable by fine.)
The wrong the ordinance protects against involves the violation of public rights and duties that affect the whole community, considered as a community (rather than infringements of private civil rights belonging to individuals, considered as individuals). In support, the court cited the stated premise of the ordinance: “ … natural gas drilling and production operations involve or otherwise impact the town’s environment, infrastructure[,] and related public health, welfare[,] and safety matters[.]”
The reversal was also for reasons that trial lawyers are used to seeing:
- Allegations of injury to an interest in real property must have proof. Evidence of increased disposal costs because of enforcement did not show irreparable harm to EagleRidge’s mineral interests and therefore there was no irreparable harm to Eagle’s vested property right in its minerals.
The claimed injury was speculative. The possibility of “hefty” fines was not supported by evidence that the imposition of the fines would be so great so as to destroy the business before it could test the ordinance’s constitutionality in a criminal proceeding.
The future economic loss from a potential shutdown of the wells because of the ordinance was speculative, as was the evidence supporting when the well would become uneconomic because of increased hauling costs. The assertions were not supported by facts.
Eagle Ridge’s contention that restriction of water hauling to night hours would drive removal costs so high as to make the well economically unable to continue production was in essence a claim for regulatory taking. But there was no evidence of the value of the mineral interests in place or any loss of value.
There was no evidence that the losses associated with interruption of its business could not be measured by a certain pecuniary standard.
Under the Civil Practice and Remedies Code, where real property is involved a party is not required to prove an inadequate remedy at law as a precondition to an injunction. However the Supreme Court has interpreted that provision to require both irreparable injury and an inadequate legal remedy. There was no irreparable harm.
EagleRidge’s several arguments relating to Local Government Code Section 211.006 were denied. The statute does not address injunctive relief.
Your musical interlude
The D&O Diary’s overseas assignment continued this week with a stop in Mumbai, India’s financial capital. I was in Mumbai to participate in the annual Bima Gyaan Symposium, an educational and networking event for the professional liability insurance industry in India. As reflected in the pictures below, the event was once again well-attended and was a great success.
The name Bima Gyaan means “insurance knowledge” in Sanskrit. The annual Bima Gyaan event, which is co-sponsored by the Professional Liability Underwriting Society (PLUS), is the premier professional liability insurance event in India. It was pleasure and honor to be able to speak on the topic of D&O Claims Trends and Developments. I always enjoy speaking to and meeting with this group. The audience is young, attentive, and interested. I was pleased to find that so many of the audience members read The D&O Diary. I would like to thank the event committee for inviting me to participate in this event again this year, particularly Suresh B of Trans Asia Advisors and Uttara Vaid of Uttara Vaid Advisory.
In the following guest post, Jeremy Salzman and Kylie Tomas of Sompo International and Ommid Farashahi and Jonathan Cipriani of BatesCarey LLP discuss a recent series of Delaware court decisions in which the courts applied Delaware law in addressing insurance coverage disputes. In their article, the authors question Delaware law appropriately should have been the law applied in those cases. I would like to thank the authors for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article.
It is no secret that Delaware courts exert significant influence on the American corporate law landscape. With more large companies incorporated in Delaware than any other state, Delaware boasts a bench that is extremely well-versed in corporate law issues.
A disturbing trend has developed recently, however, with Delaware courts expanding their influence even further, into the area of insurance law. In a spate of recent decisions, Delaware courts have applied Delaware law to insurance coverage disputes, essentially by default in the absence of a choice of law provision, where the policyholder is incorporated in Delaware. Delaware courts have given little to no regard to, for example, the state where the policy was issued, the state where the policyholder is headquartered, or state amendatory endorsements, attached to the policy, reflecting the intent of the parties to be subject to the law of certain state (other than Delaware).
This unfortunate trend has significant consequences for insurance carriers issuing policies to Delaware-incorporated insureds. These include the increase in the number of coverage actions filed by policyholders against insurers in Delaware, as well as the application of Delaware insurance law, which is often less favorable to insurers than the law of other jurisdictions.
This article discusses how this trend has developed, why this matters to insurers, and what steps insurers can take in response.
The Mills Case
Back in 2010, a Delaware trial court applied Delaware law to an insurance coverage dispute, despite the fact that the insured was headquartered in Virginia and the policy was issued in Virginia. Mills Ltd. P’ship v. Liberty Mut. Ins. Co., 2010 WL 8250837 (Del. Super. Ct. Nov. 5, 2010). Mills involved a coverage dispute, under a D&O policy, regarding exhaustion of underlying insurance. The insured was incorporated in Delaware, but headquartered in Virginia, where the policy was issued. The Mills court opined that, in cases where “the insured risk” is the business conduct of directors and officers located in states across the country or even throughout the world, Delaware will look to factors including the place of contracting, the place of negotiation of the contract, the place of performance, the location of the subject matter of the contract, and the domicile, residence, nationality, place of incorporation, and place of business of the parties. Id. at *5.
While purporting to look at all of these factors, the court stated that, where the underlying litigation involves the directors’ and officers’ “honesty and fidelity to the corporation,” the state of incorporation has a more significant relationship to the policy than the place where the insured has its physical headquarters. In the court’s words: “[The insured’s] directors and officers caused a Delaware corporation to defraud its investors, which made the corporation liable and triggered the corporation’s D&O policy. In a case like this, what difference does [the] headquarters’ location make to the company or the people involved?” Id. at *6. Accordingly, the court applied Delaware law, holding that Delaware employs the “functional exhaustion” rule, which was fatal to the insurer’s exhaustion-based coverage defense.
The Recent Trend
For almost a decade, the Mills decision was considered by many to be an aberration, with no other court following its choice of law analysis – until recently. In March of 2018, another Delaware trial court applied Mills, holding that Delaware law applied, even though the insured was headquartered in California, the policy was issued there, and the policy included California state amendatory endorsements. Arch Ins. Co. v. Murdock, 2018 WL 1129110 (Del. Super. Ct. Mar. 1, 2018). Nevertheless, relying upon Mills, the court applied Delaware law, reasoning that the conduct of the insured’s directors and officers was centrally implicated; that the insured risk involved their “honesty and fidelity” to the corporation; that the individual defendants held management positions pursuant to Delaware law; that the situs of the company’s shares was Delaware; and that prior court rulings had involved Delaware law. The court held that Delaware law, unlike California, did not preclude an insurance indemnity payment for an insured’s fraud, and required the insurers to demonstrate prejudice from the insureds’ violation of the consent provision.
Thereafter, in IDT Corp. v. U.S. Specialty Ins. Co., 2019 WL 413692 (Del. Super. Ct. Jan. 31, 2019), the insured was a Delaware corporation with its principal place of business in New Jersey. The court concluded that Delaware law applied because the insured was incorporated in Delaware, the policies covered D&O liabilities involving the insureds’ “honesty and fidelity” to the corporation, and the merits of the underlying litigation were governed by Delaware law.
In Verizon Commc’ns, Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., 2019 WL 2517418 (Del. Super. Ct. Apr. 26, 2019), the same judge who decided the Murdock case held that Delaware law applied to a D&O policy and, thus (for that reason among others), the coverage action should proceed in Delaware, not New York, even though the insurers filed a dueling action in New York.
More recently, in Pfizer, Inc. v Arch Ins. Co., 2019 WL 3306043 (Del. Super. Ct. July 23, 2019), even though the insured’s principal place of business was in New York, the policy was issued in New York, the policy contained New York amendatory endorsements, and the underlying lawsuit was filed and pending in New York, the Delaware court applied Delaware law, relying on Mills and Murdock.
If this trend continues, the insurance industry can expect Delaware trial courts to apply Delaware law to insurance coverage disputes, essentially by default in the absence of a choice of law provision, where the policyholder is incorporated in Delaware, regardless of where the policy was issued or where the policyholder is headquartered.
Why This Matters to Insurers
While anecdotal, we have seen a significant increase in the number of coverage actions filed by policyholders in Delaware in an effort to avoid litigating in a jurisdiction more likely to apply the law of state where the policy was issued. Not only has the number of such actions increased, but the timing of the filing of these actions has changed as well. In order to “plant the flag” in Delaware, policyholders have been filing coverage litigation more quickly than before, resulting in less pre-litigation dialogue or negotiation between the parties.
This trend is also important to insurers because Delaware insurance law can be particularly unfriendly to insurers. For example, in the Pfizer case discussed above, the Delaware court was asked to decide a “related claims” issue. Finding that Delaware law, not New York law, applied, the court imposed Delaware’s very narrow “relatedness” test and held that two claims were not related because they were not “fundamentally identical.” See Pfizer, 2019 WL 3306043, at *10. Importantly, if the dispute had been decided under New York law, the insurers could have relied on New York’s broader “sufficient factual nexus” test.
Another example is that, unlike courts in other jurisdictions, Delaware courts will not sustain a coverage defense based on an insurer’s lack of consent to settle an underlying case, unless the insurer can show prejudice. See Murdock, 2018 WL 1129110, at *13.
Delaware is also less favorable to insurers with respect to coverage for disgorgement. Compare Gallup, Inc. v. Greenwich Ins. Co., 2015 WL 1201518, (Del. Super. Ct. Feb. 25, 2015) (where a claim for disgorgement is settled without a final adjudication, there is coverage for the settlement, even if disgorgement is uninsurable), with Phila. Indem. Ins. Co. v. Sabal Ins. Grp., Inc., — F. App’x —, 2019 WL 4014100 (11th Cir. Aug. 26, 2019) (rejecting case law holding similarly to Gallup and finding no coverage for settlement of disgorgement claim based on traditional “no Loss” analysis).
How Insurers Can Respond
How can insurers respond to this trend? As to policies already in the marketplace, of course, the industry can continue to seek a good ruling from a different Delaware trial court judge on this issue, presumably based upon a particularly good set of facts. In addition, insurers can seek appellate relief from the Delaware Supreme Court (there is no immediate appellate court in Delaware). However, a challenge to a court’s early decision on choice of law may not be possible until the underlying case is tried or otherwise disposed of by motion, and cases rarely go that far down stream. In addition, it is critical that, if the industry does seek relief from the Delaware Supreme Court, it must evaluate carefully the best “test case” to send up, as a “close call” case could yield a decision from Delaware’s highest court unfriendly to the industry. In the meantime, absent a decision from the Delaware Supreme court, while a “race to the courthouse” is never the preferred option, insurers should consider filing first in the “right” jurisdiction when faced with a coverage dispute, anticipating that the policyholder will likely file in Delaware.
As to policies yet to be issued, there is one clear option – to include a choice of law provision in the policy identifying the law of a state other than Delaware. Insurers may choose to apply the law of the state where the insured is headquartered. Many insurers and insureds probably assume that is the law that will govern the policy anyway, so this may simply reinforce pre-existing expectations of the parties. Of course, it will behoove insurers to be aware of any unique risks or concerns presented by a given jurisdiction and to consider the choice of law provision in light of all relevant factors. Another option is to include a New York choice of law provision, which has been traditionally included by certain markets, and therefore should not be particularly controversial with policyholders or their brokers. Even this option, however, may be subject to challenge, as illustrated by a recent decision by the California Supreme Court. In Pitzer College v. Indian Harbor Insurance Company, 2019 WL 4065521 (Cal. Aug. 29, 2019), the Court held that, even though a policy contained a New York choice of law provision, the court applied California law to certain notice issues, because the issues concerned a “fundamental public policy” of California. Yet another potential option could involve policy language outlining binding arbitration in connection with disputes arising from the application of a policy’s choice of law provision.
While it is unfortunate that insurers must now expect Delaware courts to apply Delaware law where the policyholder is incorporated in Delaware, absent a choice of law provision or other policy built-in procedure, this appears to be the “new normal,” at least for now. But, as discussed above, there are steps that insurers can take, both with respect to those policies already in the marketplace and future policies.
This article is intended for informational purposes, only. It does not constitute legal advice. Nor is it a substitute for legal advice.
The post Guest Post: No Choice of Law in Delaware Coverage Disputes? appeared first on The D&O Diary.
The D&O Diary is on assignment overseas this week with a lengthy itinerary including multiple stops. The first stop on my schedule was in Israel, where I had business meetings in Tel Aviv. My timetable while I was in Israel also allowed an opportunity for a first-time ever visit to Jerusalem. As reflected in the pictures below, the Jerusalem stopover was a truly extraordinary experience.
The primary purpose for my visit to Israel was to participate as the keynote speaker at an event organized by Howden Israel, in collaboration with the Pearl Cohen law firm. The event was well-organized and very well-attended. The audience was lively and attentive – and asked a lot of questions. It was a pleasure to meet so many industry professionals and attorneys who read The D&O Diary. It was also interesting to learn about how much is going on in Israel both as far as economic activity and business development, and in terms of directors’ and officers’ liability and insurance issues, as well. I would like to thank Izik Malik of Howden Israel and Piers Davies and Lianne Gras of RKH Specialty for inviting me to be a part of this terrific event, and for being such excellent hosts while I was in Tel Aviv.
Before my visit to Tel Aviv, I spent the weekend in Jerusalem. I have to admit that I had very high expectations for my Jerusalem visit. Seeing Jerusalem is something that I have basically wanted to do my entire life. Though my expectations were high, the visit to the Holy City far exceeded my expectations. Jerusalem is an amazing place.
In some really important ways, the weekend is absolutely the wrong time to visit Jerusalem. On Fridays and Saturdays, the Jewish and Muslim sites are closed. Of greatest significance, Temple Mount is closed to non-Muslims on Fridays and Saturdays. I was not able to visit Temple Mount until Sunday morning, the last day of my stay in Jerusalem. The hours in which non-Muslims may visit Temple Mount are short, from 8:30 am to 11:30 am. The guide books warn that due to security controls the lines to enter can be very long, so I got there early to be in line when it opened at 8:30. As it turned out, the gates had opened at 7:30, so there was no line at all when I arrived. I did face a one question interrogation (in English): “Where you from?” When I said I was from the United States, the security guard waived me through impatiently. These are not the Droids that you are looking for.
After the wonder and amazement of Jerusalem, Tel Aviv required a little mental adjustment. Tel Aviv is a prosperous, crowded, busy place traffic-clogged streets — and a great beach and great night life. Fortunately, I had time while I was in Tel Aviv to enjoy the beach.
A final note. For anyone planning a visit to Jerusalem (or for anyone who wishes to visit but who can’t travel there now), I strongly recommend Simon Sebag Montefieore’s excellent book “Jerusalem: The Biography.” The book covers the city’s complicated and multi-layered history thoroughly yet entertainingly. Montefiore reviews the city’s history from the time of King David through the Six-Days War. Reading this book substantially enhanced my enjoyment of visiting Jerusalem. It was also extraordinarily helpful in explaining the current situation in the city, as well.
As discussed in prior posts, after the Delaware courts evinced their distaste for the type of disclosure-only settlements that had until then typically resolved merger objection lawsuits, the plaintiffs’ lawyers changed their game. They began filing their merger objection lawsuits in federal court rather than in state court, and then rather than settling the cases, agreed to dismiss their cases in exchange for supplemental proxy disclosures, after which the plaintiffs would seek to recover a so-called “mootness fee.” At least one federal judge recently questioned this “racket,” but the question remained whether more courts would take steps to scrutinize this process and discourage what has become nothing more than the plaintiffs’ lawyers’ extraction of a “go away” payment.
In a positive sign suggesting that court may indeed become more involved in policing this process, a District of Delaware judge recently rejected merger objection lawsuit plaintiffs’ mootness fee petition on the ground that the plaintiffs failed to carry their burden of showing that the supplemental disclosures produced a substantial benefit for the acquired company’s shareholders.
The Delaware litigation arose out of the $5.4 billion acquisition of DST Systems, Inc. by SS&C Technologies. Shortly after DST filed a proxy statement describing the transaction, shareholders filed three lawsuits alleging that the preliminary proxy statement omitted material information in violation of Sections 14(a) and 20(a) of the ’34 Act. DST voluntarily issued a supplemental disclosure to moot the pending lawsuits. The plaintiffs’ agreed the supplemental disclosures mooted their lawsuits, and sought recovery of their attorneys’ fees.
In response to the plaintiffs’ attorneys’ fees petition, the court requested supplemental briefing. The court’s supplemental briefing request reflects a palpable skepticism about the fee request. For example, in the court’s question number 2, the court asks “The Parties request fees for three virtually identical lawsuits. Why should three plaintiffs receive attorneys’ fees for the same supplemental disclosure?” The court’s question 4 notes “Dennis Pratt, a plaintiff in a now-settled Missouri suit, has not entered an appearance in either case, but is requesting that I award him attorneys’ fees. What legal authority supports the propriety of Mr. Pratt’s request?”
As far as I can tell from the record, the defendants opposed the plaintiffs’ fee petition, which is somewhat unusual in these kinds of cases. To the extent the defendants did indeed oppose the petition, I cannot tell why. However, the defendants’ response to the court’s request for supplemental briefing – particularly with respect to the prevalence of this type of merger objection litigation and the near uniformity of outcomes for these kinds of cases (that is, supplemental disclosures and a request for mootness fees) – makes for interesting reading.
The August 23, 2019 Opinion
In an August 23, 2019 opinion (here), District of Delaware Judge Richard G. Andrews denied the plaintiffs’ fee petition, finding that the plaintiffs had failed to carry their burden in establishing that the supplemental disclosures produced a “substantial benefit “on DST shareholders. The court said a review of the supplemental disclosures “reveals that Plaintiffs have failed to carry their burden on materiality of the information.” The Plaintiffs, the court said, “have not established that they provided the stockholders with a substantial benefit so as to warrant an award of attorneys’ fees.”
In making this determination, the Court noted that the plaintiffs did not develop a factual record or proffer expert opinion in support of their contention that the supplemental disclosures had conferred a substantial benefit on DST’s shareholders. Essentially, the court noted, the plaintiffs argued that the information was so plainly material that its disclosure was a substantial benefit as a matter of law – about which the Court said, “I do not find Plaintiffs’ position persuasive.”
To the contrary, the court said, “it is far from clear, as a factual matter in this case, that the information disclosed by Defendants was material.” The various arguments, opinions from other cases, and law review articles on which the plaintiffs relied “do not carry the weight Plaintiffs put on them.”
The court concluded that “absent evidence that the information was material, there is no basis in the record to find that Plaintiffs conferred any benefit on DST stockholders.” Simply put, the court said, “there is no basis in the record to find that Plaintiffs conferred any benefit on DST stockholders.” Thus, the court said, “I will deny Plaintiffs’ motion for attorneys’ fees.”
The most positive thing about this decision is the court’s willingness to become actively involved in assessing the merits of the fee petition. The truth is that what Judge Andrews said about the supplemental disclosures in this case could be said in virtually every single one of these merger objection lawsuit mootness fee cases. The point of this racket is not to produce an actual benefit for shareholders. The point is to provide a pretext for the plaintiffs’ lawyers’ to extract a fee, which the defendants pay just to make the plaintiffs’ lawyers go away.
It is particularly significant that the court applying the scrutiny to this fee request was the District of Delaware. Although plaintiffs’ lawyers have been filing their merger objection lawsuits in a very wide range of federal district court, there have been a plethora of these lawsuits filed in the District of Delaware. For example, of the 101 federal court merger objection lawsuits filed year-to-date this year, 65 were filed in the District of Delaware. If the outcome of this fee petition can be interpreted to signal that the judges in the District of Delaware are going to more closely scrutinize petitions for mootness fees more closely, the attractiveness to the plaintiffs’ lawyers for filing these cases in the District of Delaware could be significantly undermined.
To be sure, Judge Andrews only said that these plaintiffs in this case did not carry their burden of showing a substantial benefit to shareholders. There is nothing about the opinion to suggest that another plaintiff in another case might not be able to carry its burden – or even that these plaintiffs might not have been able to meet their burden if they had done a better job marshalling the evidence to support their petition. The court said only that the plaintiffs had failed to come forward with evidence to support their argument that their lawsuit provided a substantial benefit to shareholders.
Moreover, even if it is the case that the court’s ruling on the plaintiffs’ fee petition here can be interpreted to suggest greater fee petition scrutiny by the judges in the District of Delaware, the plaintiffs’ lawyers can always try to file their lawsuits in another federal district court, where mootness fee petitions might not face the same level of scrutiny.
That said, it certainly is a welcome development to see a court take a close look at a mootness fee case resolution. We can only hope that more judges in more of these cases become similarly involved; the fact is that these kinds of lawsuits are an embarrassment to our entire legal system. If enough courts scrutinize enough of these suits, pretty soon the plaintiffs’ lawyers will have to find another way to make a living. To paraphrase Hamlet, it is a consummation devoutly to be hoped for.
Special thanks to a loyal reader for providing me with a copy of Judge Andrews’s opinion.
The post Delaware Federal Court Rejects Merger Objection Plaintiffs’ Mootness Fee Request appeared first on The D&O Diary.
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.”
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.
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 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..