Bar Grp., LLC v. Bus. Intelligence Advisors, Inc.

Decision Date22 February 2017
Docket NumberCIVIL ACTION H–16–0428
Citation215 F.Supp.3d 524
CourtU.S. District Court — Southern District of Texas

Deborah Essig Taylor, John S. Dorsa, Jr, Attorney at Law, Houston, TX, James Virgil Hammett, Jr, Attorney at Law, Lampasas, TX, for Plaintiff.

Kevin Frank Risley, Thompson, Coe, Cousins & Irons, LLP, Houston, TX, for Defendants.



Pending before the Court in the above referenced cause, removed from the 112th Judicial District Court of Harris County, Texas on diversity jurisdiction pursuant to 28 U.S.C. §§ 1332(a),1 1441, and 1446, and seeking damages for tortious interference with contract and with prospective contract and defamation per se, are (1) Defendant Business Intelligence Advisors, Inc.'s ("BIA's") motion to dismiss for lack of personal jurisdiction and/or failure to state a claim under Federal Rules of Civil Procedure 12(b)(2) and/or 12(b)(6), or, alternatively, request for stay pending resolution of related litigation in a New York State court (instrument #8), and (2) Plaintiff The BAR Group, LLC's ("TBG's") motion for leave to file first amended complaint (#18).

Background Facts As Alleged in the Original Petition

In its Deception Training Course through slides, live presentations, and discussion, with anecdotes from presenters, developed in part by the Central Intelligence Agency ("CIA") and the Federal Bureau of Investigation ("FBI") to train FBI Special Agents, with academic research integrated by TBG, TBG provides programs and training sessions designed to teach attendees to recognize deception by identifying deceptive behaviors. TBG insists that the TBG Course Material is public information, neither confidential nor proprietary to TBG or any other business organization.

Two TBG principals, Robert Bettes ("Bettes") and Lee Howell ("Howell"), both former special agents of the FBI, in that capacity took the Deception Detection Training Course provided to special agents of the FBI by members of the CIA. They subsequently were given governmental approval to commercialize privately the CIA Deception Training Course's methods and content. In 2001 the CIA Course Authors sold that commercial entity to Defendant BIA. Upon information and belief, TBG states that the course was not, and is not, proprietary; it was funded by U.S. taxpayers and has always been in the public domain. BIA then recruited Bettes, Howell, and another principal of TBG, Dennis Matko ("Matko"), to provide the deception detection training for TBG in the private sector. While these men were employed by BIA, BIA prominently advertised that it was offering training in a course developed and used by the CIA to detect deception.

After their employment with BIA was over, Bettes, Howell and Matko joined with former CIA employees, who gave them slides and later copies of those slides prepared by these former CIA employees, to provide training to private industry organizations, separate from BIA. A short period later Bettes, Howell, and Matko were granted the right to use the former CIA employees' Deception Detection Training Course and their slides and written materials. Furthermore TBG obtained a Foundational Interview course from the FBI and incorporated a segment, called "Active Listening," into TBG's course. Thus TBG's Deception Training Course was composed of materials from the former CIA and/or FBI employees along with publicly available information and content from sources other than BIA. While some TBG course materials appear very similar to BIA course materials because of the common source of publically available materials presented in the Detection Deception Course by both TBG and BIA, TBG maintains that neither the principals of TBG, Bettes, Howell, and Matko, nor anyone associated with TBG, incorporated any BIA course material nor used any proprietary or confidential information of BIA.

BIA has not sued TBG or any of the former employees now associated with TBG, but BIA has sued KPMG, BIA's former client and TBG's present client, in New York State, after KPMG used TBG to provide its TBG Deception Detection Training Course to KPMG employees. BIA alleges that KPMG breached and continues to breach its contracts with BIA by "permitting BAR Group to provide training sessions to KPMG employees 'incorporating' Foundational Interviewing Skills Material and/or Strategic Information Collection Materials (the "BIA Course Materials") provided pursuant to those Agreements." TBG insists that BIA knows that TBG has not and does not incorporate any BIA course materials in those it provided to KPMG, that the basics of its program and its material provided to KPMG are not proprietary and confidential, but are public information, that TBG's employees learned the basics of the materials provided to KPMG through training they had received as special agents of the FBI, not from BIA, and that TBG has not at any time incorporated any BIA materials, including those alleged to be the basis of BIA's suit against KPMG.

In the instant action TBG sues BIA first for tortious interference with contract2 and tortious interference with prospective contract.3 TBG points out that at the time BIA filed its suit against KPMG, TBG was actively negotiating a new contract with KPMG to provide TBG's course to KPMG. TBG contends that BIA's lawsuit against KPMG in New York "is a willful and transparent attempt to interfere with the existing contract and/or future contracts between TBG and KPMG and to cause damage to TBG.

TBG's second cause of action against BIA is for defamation per se,4 for contacting KPMG and falsely accusing TBG and its principals, Bettes, Howell, and Matko, of improperly incorporating or otherwise using BIA's course materials and harming TBG in its business and reputation.

Because the Court's jurisdiction is the threshold issue, the Court addresses BIA's motion to dismiss first.

Standards of Review
Personal Jurisdiction and Rules 8, 12(b)(2), and 12(b)(6)

A court must find that it has personal jurisdiction over that defendant before it makes any decision on the merits. SinochemInt'l Co. v. Malaysia Int'l Shipping Corp. , 549 U.S. 422, 430, 127 S.Ct. 1184, 167 L.Ed.2d 15 (2007) ; Guidry v. U.S. Tobacco Co. , 188 F.3d 619, 623, n.2 (5th Cir. 1999) ("Personal jurisdiction is an essential element of the jurisdiction of a district court, without which it is powerless to proceed to an adjudication.").

When a defendant files a motion to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2), the plaintiff bears the burden of demonstrating that the court has jurisdiction over the defendant. Luv N' Care, Ltd. v. Insta–Mix, Inc. , 438 F.3d 465, 469 (5th Cir. 2006), citing Wyatt v. Kaplan , 686 F.2d 276, 280 (5th Cir. 1982).5 At the pretrial stage of litigation, if the district court does not conduct a hearing on personal jurisdiction, the plaintiff need only present a prima facie case of personal jurisdiction. Wilson v. Belin , 20 F.3d 644, 648 (5th Cir.), cert. denied , 513 U.S. 930, 115 S.Ct. 322, 130 L.Ed.2d 282 (1994) ; Felch v. Transportes Lar–Mex S.A. DE CV, 92 F.3d 320, 325 (5th Cir. 1996) ; Johnston v. Multidata Systems Intern. Corp. , 523 F.3d 602, 609 (5th Cir. 2008). Proof by preponderance of the evidence is not required. Johnston , 523 F.3d at 609.6

When a defendant disputes the factual bases for personal jurisdiction, the district court may consider the record before it, including "affidavits, interrogatories, depositions, oral testimony, or any combination of the recognized methods of discovery." Quick Technologies, Inc. v. Sage Group PLC , 313 F.3d 338, 344 (5th Cir. 2002) (quoting Thompson v. Chrysler Motors Corp. , 755 F.2d 1162, 1165 (5th Cir. 1985), cert. denied , 540 U.S. 814, 124 S.Ct. 66, 157 L.Ed.2d 29 (2003) ; Kelly Law Firm, P.C. v. An Attorney for You , 679 F.Supp.2d 755, 762 (S.D. Tex. 2009). The court has discretion as to the type and amount of discovery it will allow, but unless there is a full and fair hearing, it should not act as a factfinder and must construe all disputed facts in favor of the plaintiff. Walk Haydel , 517 F.3d at 241. On a motion to dismiss under Rule 12(b)(2), uncontroverted allegations in plaintiff's complaint are taken as true, and conflicts between facts in the parties' affidavits must be resolved in plaintiff's favor for purposes of the prima facie case of personal jurisdiction. Johnston , 523 F.3d at 609 ; Kelly Law Firm , 679 F.Supp.2d at 762 ; Revell v. Lidov , 317 F.3d 467, 469 (5th Cir. 2002). Nevertheless, the court is not required to credit conclusory allegations even if they are uncontroverted. Panda Brandywine Corp. v. Potomac Elec. Power Co. , 253 F.3d 865, 869 (5th Cir. 2001).

Under the federal rules, except where a federal statute provides for broader personal jurisdiction, the district court's personal jurisdiction is coterminous with that of a court of general jurisdiction of the state in which the district court sits. Submersible Sys., Inc. v. Perforadora Cent., S.A. de C.V. , 249 F.3d 413, 418 (5th Cir. 2001). See also Wyatt v. Kaplan , 686 F.2d 276, 279 (5th Cir. 1982) ("Under the Federal Rules of Civil Procedure, a federal district court in a diversity case may exercise personal jurisdiction over a defendant residing outside the state in which it sits only to the extent permitted by state law."). A federal court sitting in diversity may exercise personal jurisdiction over a nonresident defendant if (1) the forum state's long-arm statute confers personal jurisdiction over that nonresident defendant and (2) if the exercise of personal jurisdiction satisfies due process under the United States Constitution. McFadin v. Gerber , 587 F.3d 753, 759 (5th Cir. 2009), citing Moncrief Oil Int'l, Inc. v.OAO Gasprom , 481 F.3d 309, 311 (5th Cir. 2007). The Texas long-arm statute, ...

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