Dhi Grp., Inc. v. Kent
Decision Date | 12 July 2019 |
Docket Number | Civil Action No. H-16-1670 |
Citation | 397 F.Supp.3d 904 |
Parties | DHI GROUP, INC., f/k/a Dice Holdings, Inc. and Rigzone.com, Inc., Plaintiffs, v. David W. KENT, Jr., et al., Defendants. |
Court | U.S. District Court — Southern District of Texas |
Amir Halevy, Walter Gaylord Lynch, Joseph Webster Golinkin, II, Jordan Lynch & Cancienne PLLC, Houston, TX, for Plaintiffs.
MEMORANDUM, RECOMMENDATION, AND ORDER
Pending before the court1 is PlaintiffsDHI Group, Inc. f/k/a Dice Holdings, Inc.("DHI Group") and Rigzone.com, Inc.'s ("Rigzone")(collectively, "Plaintiffs") Affirmative Motion for Partial Summary Judgment(Doc. 227), Plaintiffs' Motion for Summary Judgment on Oilpro's Counterclaims (Doc. 228), DefendantsSingle Integrated Operations Portal, Inc. d/b/a Oilpro and OILPRO.com's ("Oilpro") and David Kent's ("Kent")(collectively, "Defendants")Motion to StrikePlaintiffs' Expert Evelina Aslanyan("Aslanyan")(Doc. 230), Defendants' Motion for Summary Judgment(Doc. 231), Oilpro's Motion to StrikePlaintiffs' Expert Shane Johnson("Johnson")(Doc. 232), Plaintiffs' Motion for Attorneys' Fees(Doc. 263), and Plaintiffs' Motion to ExcludeTrent Livingston("Livingston")(Doc. 266).The court has considered the motions, the responses, all other relevant filings, and the applicable law.For the reasons set forth below, the courtRECOMMENDS that Plaintiffs' Affirmative Motion for Partial Summary Judgment be DENIED , Plaintiffs' Motion for Summary Judgment on Oilpro's Counterclaims be GRANTED IN PART AND DENIED IN PART , and Defendants' Motion for Summary Judgment be GRANTED IN PART AND DENIED IN PART , and it is hereby ORDERED that Defendants' Motion to Strike Aslanyan is DENIED , Oilpro's Motion to Strike Johnson is DENIED , Plaintiffs' Motion for Attorneys' Fees is GRANTED IN PART AND DENIED IN PART , and Plaintiffs' Supplemental Motion to Exclude Livingston is DENIED .
Plaintiffs filed this lawsuit against multiple defendants alleging violations of various federal statutes as well as state-law causes of action.3Oilpro has responded to Plaintiffs' lawsuit and filed counterclaims against Plaintiffs also alleging violations of various federal statutes and state-law causes of action.4
The present lawsuit concerns the sale of Rigzone, launch of Oilpro, and criminal conduct of Kent.
Rigzone offered an online platform for professionals in the oil and gas industry.5On Rigzone's website, oil and gas professionals were able to create a profile and upload their resumes.6When a resume was uploaded to the Rigzone website it was assigned a unique numerical identifier.7These resumes were maintained in a database by Rigzone.8This process allowed the Rigzone website users to apply for job openings that were posted by recruiters and employers.9Additionally, recruiters and employers who paid for access to the resume database were able to directly solicit professionals who had uploaded their resumes for job opportunities, subject to the user's privacy settings.10
Kent became the majority owner of Rigzone in 2007 when he purchased the majority interest in Rigzone from his father.11At the same time, Kent assumed the positions of President and CEO of Rigzone.12In August 2010, DHI Group purchased Rigzone from Kent for approximately $51 million consisting of $38 million plus a performance-based bonus that eventually equaled $13 million.13The sale of Rigzone to DHI Group was memorialized in a stock purchase agreement (the "Purchase Agreement") that Kent signed.14During the sale of Rigzone, Kent was represented by lawyers and a mergers and acquisitions firm that specialized in selling media businesses.15
The Purchase Agreement that Kent signed represented that Rigzone had "taken all necessary and otherwise reasonable steps to protect and preserve the confidentiality of all of its Trade Secrets and all use by, or disclosure to, any Person of such Trade Secrets has been pursuant to the terms of a [confidentiality agreement]."16Kent agreed that at the time he signed the Purchase Agreement, "all reasonable steps to protect the [Rigzone] website" had been taken.17The Purchase Agreement defined "Trade Secrets" to "mean any trade secrets or other proprietary and confidential information including ... Personal Information, customer lists, ... and data collections."18"Personal Information" was defined as "all information or data associated with individual Persons, including customers and employees, that [was] collected by [Rigzone] in the course of its operations."19
Kent continued as the president of Rigzone for about a year following its sale.20During that time, the company took steps to improve the security of the Rigzone website, including hiring Ernst & Young to do a security audit of the website.21The security audit highlighted some potential security issues that were remediated.22
As a condition of the sale of Rigzone, Kent signed a non-compete agreement that prevented him from operating an oil and gas website until October 1, 2013.23On January 18, 2012, Kent started a new company called SIOPCO.24Under the umbrella of SIOPCO, Kent launched the Oilpro website on the day his non-compete agreement expired.25From the start, Oilpro operated a networking website for oil and gas professionals and competed directly with the Rigzone website.26
Shortly after launching Oilpro, Kent began downloading copies of resumes from the Rigzone resume database through a URL, www.rigzone.com/jobs/resume.asp, that he knew of from his previous work at Rigzone.27This first round of access occurred from October 17, 2013, to April 15, 2014, and resulted in Kent's downloading of just under 100,000 resumes.28
In June and July of 2015, Kent again downloaded resumes from the Rigzone resume database through a second URL, www.rigzone.com/jobs/resumes/resume_writer.asp.29For this second round of access, Kent wrote a program that automatically downloaded the resumes through the URL.30During this second round of access, Kent allegedly downloaded approximately 700,000 resumes.31
Kent downloaded the resumes from the Rigzone database to gain a commercial advantage for Oilpro.32After downloading the resumes, Kent invited some of the people whose resumes he had downloaded to join Oilpro.33
On March 23, 2016, the United States brought criminal charges against Kent for the above conduct as well as other related acts.34On December 19, 2016, Kent pled guilty to a violation of the Computer Fraud and Abuse Act ("CFAA").35At his plea hearing, Kent admitted that he accessed the Rigzone resume database without authorization and took resumes for his own commercial advantage and to help Oilpro.36Kent also admitted that he expected that the resumes would allow him to increase Oilpro's membership.37
On or about June 16, 2015, DHI Group began scraping data from the Oilpro website.38The terms and conditions of Oilpro's website prohibited users from: (1) using "automated means, including spiders, robots, crawlers, agents, or the like to download data from any database of Oilpro, or from the site itself (for example, site or page scraping is prohibited)[;]"(2)"harvest[ing] or otherwise collect[ing] or stor[ing] information about others, including e-mail addresses[;]"(3)"us[ing], download[ing] or otherwise copy[ing], or provid[ing](whether or not for a fee) to a person or entity any directory of users of the Services or other user or usage information or any portion thereof."39The parties hotly dispute whether, in June 2015, there was a link to these terms and conditions on the home page or site map of the Oilpro website.40
Plaintiffs commenced this action on June 10, 2016.41On November 15, 2016, Oilpro filed its second amended answer and counterclaims.42Plaintiffs filed a motion to dismiss Oilpro's counterclaims on December 5, 2016.43On April 21, 2017, the court entered a recommendation that Oilpro's counterclaims for trespass to chattels and unjust enrichment be dismissed.44The recommendation was adopted on October 26, 2017.45
On July 20, 2018, Plaintiffs filed a motion to strike Livingston.46On October 12, 2018, Plaintiffs' filed: (1) a motion to exclude the testimony of Livingston; (2) their pending motion for partial summary judgment; and (3) their pending motion for summary judgment on Oilpro's counterclaims.47On the same day, Defendants filed their pending: (1)motion to strike Aslanyan; (2)motion for summary judgment; and (3)motion to strike Johnson.48On November 16, 2018, Defendants filed responses to Plaintiffs' motions for summary judgment.49On the same day, Plaintiffs filed responses to Defendants' October 12, 2018 motions.50On November 19, 2018, Defendants filed a response to Plaintiffs' motion to exclude Livingston.51On November 26, 2018, Plaintiffs filed replies in support of their October 12, 2018 motions.52On December 3, 2018, Defendants filed replies in support of their October 12, 2018 motions.53
On March 21, 2019, the court held a hearing on Plaintiffs' motions to strike and exclude Livingston.As discussed in more detail below, on March 22, 2019, the court granted both motions in part.54Defendants objected to the court's order granting the motions in part, and, on May 1, 2019, the objections were overruled.55
On April 19, 2019, Plaintiffs filed their pending supplemental motion to exclude Livingston.56Defendants filed a response to the supplemental motion to exclude on May 10, 2019.57Plaintiffs filed a reply in support of their supplemental motion to exclude on May 15, 2019.58Without leave of the court, Defendants filed a sur-reply to the supplemental motion to exclude on May 23,...
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