Group v. Country Life Ins. Co.

• Decision Date: 11 February 2011
• Docket Number: Civil Action No. C–10–278.
• Citation: 771 F.Supp.2d 680
• Parties: PENSION ADVISORY GROUP, LTD., et al., Plaintiffs,v.COUNTRY LIFE INSURANCE COMPANY, et al., Defendants.
• Court: U.S. District Court — Southern District of Texas

771 F.Supp.2d 680

PENSION ADVISORY GROUP, LTD., et al., Plaintiffs,

v.COUNTRY LIFE INSURANCE COMPANY, et al., Defendants.

Civil Action No. C–10–278.

United States District Court, S.D. Texas, Corpus Christi Division.

Feb. 11, 2011.

Tracy Wesley Druce, William P. Ramey, III, Houston, TX, for Plaintiffs.Michael D. Lane, Sault Hootsell, III, Phelps Dunbar LLP, New Orleans, LA, Patricia Hair, Phelps Dunbar LLP, Houston, TX, Timothy C. Meece, Banner & Witcoff, Chicago, IL, Patricia Canales Bell, Canales and Simonson, Corpus Christi, TX, for Defendants.

ORDER

JANIS GRAHAM JACK, District Judge.

On this day came on to be considered (1) Country Life Insurance Company's Motion to Dismiss for Failure to State a Claim, Motion for a More Definite Statement and Motion to Strike (D.E. 39) (2) Defendant Dale Hall's Motion to Dismiss for Lack of Personal Jurisdiction, Motion to Dismiss for Failure to State a Claim or, Alternatively, for More Definite Statement, and Motion to Strike (D.E. 40), and (3) Defendants Country Life Insurance Company's and Dale Hall's Motion to Transfer Venue (D.E. 42).

For the reasons stated herein, the Court (1) GRANTS IN PART AND DENIES IN PART Country Life Insurance Company's Motion to Dismiss for Failure to State a Claim, Motion for a More Definite Statement and Motion to Strike (D.E. 39), (2) GRANTS IN PART AND DENIES IN PART Defendant Dale Hall's Motion to Dismiss for Lack of Personal Jurisdiction, Motion to Dismiss for Failure to State a Claim or, Alternatively, for More Definite Statement, and Motion to Strike (D.E. 40), and (3) DENIES Defendants Country Life Insurance Company's and Dale Hall's Motion to Transfer Venue. (D.E. 42).

I. Jurisdiction

This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1332, as the parties are completely diverse and the amount in controversy exceeds $75,000.

II. Factual and Procedural Background

Plaintiffs Pension Advisory Group, Ltd., Paul Hinson, and Larry Walters filed this action on December 18, 2009 in the 156th Judicial District Court of Aransas County, Texas. Defendant Country Life Insurance Co. (“Country Life”) was served on July 23, 2010 and Defendant Dale Hall (“Hall”) was served on December 9, 2010. This action was removed to this Court on August 20, 2010. (D.E. 1.)

Plaintiffs have amended their Complaint several times, most recently on January 12, 2011. (D.E. 36.) ¹ The facts in this matter, as alleged by Plaintiffs, are quite long and complex, but may be briefly summarized as follows. Plaintiff Paul Hinson, the developer of “countless innovative insurance and investment products,” founded Pension Advisory Group, Ltd. (“PAG”) in 1984 (then known as Tax Awareness Planning, Inc.). One innovative “insurance and investment” product was partially memorialized in U.S. Provisional Patent Application No. 60/570,889 (the “ '899 Application”), filed on May 13, 2004. The '899 Application disclosed and claimed development of a product designed to provide “disability insurance to participants in certain tax-qualified retirement plans.” The '899 Application was assigned to PAG, and eventually matured into U.S. Patent Application No. 10/908,419 (the “'419 Application”), on May 11, 2005. (D.E. 60 at 2–3.)

On or about October 15, 2005, Hinson first met with Larry Walters, an insurance actuary and marketing professional, who operates as a member of Diversified Growth Solutions (“DGS”), a third party Plaintiff in this action. Hinson and Walters collaborated on new products for PAG. (D.E. 60 at 3.)

In February 2007, Walters approached Defendant Dale Hall, Vice President and Chief Actuary for Country Life, to determine if Country Life would be interested in developing a group long term disability insurance product based in part upon the product design memorialized in the '419 Application. Defendants Hall and Country Life were interested and later that month PAG and Country Life entered into a Mutual Confidentiality Agreement (“CDA”). In reliance on the CDA, PAG and DGS disclosed many trade secrets to Country Life, necessary to convert PAG's product design into a marketable insurance product. The trade secrets allegedly disclosed included customer lists, customer relationships, customer data, and competitive knowledge of insurance regulations and processing. (D.E. 60 at 3–4.)

Hinson and Walters worked regularly with Hall and other Country Life staff members to develop the product, and Country Life was to market PAG's product under the name Retirement Contributions Protector (“RCP”). PAG and Country Life then entered into several agreements, namely an Exclusivity Agreement (dated July 22, 2008) and two Facilitation Agreements (dated August 11 and September 22, 2008). Thereafter, in November 2008, Wade Harrison, Vice President of Country Life requested that Hinson and Walters discontinue approaching him directly, and instead work through their attorneys. At that point, questions as to ownership of the products at issue arose. According to Plaintiffs, Country Life did not initially claim any ownership interest in the product or information at issue. (D.E. 60 at 4–7.)

In May 2009, Hinson advised Country Life that PAG's patent attorneys filed a continuation-in-part application claiming priority to the '419 Application, that would incorporate computer processing methodology into the claims, as required by the U.S. Patent & Trademark Office (“USPTO”). This application was formally filed on July 10, 2009, as U.S. Application No. 12/501,326 (the “'326 Application”). However, Country Life representatives, including Hall, informed Hinson and Walters that they believed they owned the information in the '326 Application. Plaintiffs state that Country Life demanded that Hinson withdraw the '326 Application on the grounds that it contained Country Life's confidential and propriety information. Hinson agreed not to publish the '326 Application until issues with Country Life could be resolved.² PAG filed a second continuation-in-part application, U.S. Application No. 12/573,020 (“'020 Application”) on October 2, 2009, claiming the benefit of PAG's previous applications with a non-publication request. This prevented the '326 Application from issuing as a patent and delayed PAG's collection of royalties. (D.E. 60 at 7–9.)

Plaintiffs state that they requested evidence supporting Country Life's claims of ownership, but no such evidence was ever provided. Country Life, however, continued its demand that Hall be listed as an inventor on the '020 Application. Plaintiffs allege that Country Life's actions have had a significant financial impact on the businesses of PAG and DGS, as well as on Hinson's health. (D.E. 60 at 9.)

On December 18, 2009, PAG, Hinson, and Walters filed this action in the 156th Judicial District Court of Aransas County, Texas, seeking a declaratory judgment that the '020 Application did not contain information owned by or confidential to Country Life. Thereafter, on February 25, 2010, Country Life filed a protest with the USPTO stating that the description in the '326 Application contained information which was owned by and confidential to Country Life. The USPTO accepted this protest, and prevented issuance of the ' 326 Application until the protest was resolved. Plaintiffs state that Country Life's protest contained numerous trade secrets of PAG and DGS including customer data and customer lists. The protests also contained a declaration from Hall asserting that he owned the information contained in the '020 Application. Hinson, however, filed a declaration in the '326 Application that he believed he was the sole inventor of the subject matter at issue. (D.E. 60 at 9–10.)

Following service on July 23, 2010, Country Life removed this action to this Court on August 20, 2010. (D.E. 1.) Country Life answered on November 17, 2010, and filed a counterclaim. (D.E. 31, 47.) Country Life seeks, inter alia, a declaratory judgment that it is the rightful owner of the propriety and confidential information that it developed, that Counter–Defendants unlawfully used the property at issue, breached the Mutual Confidentiality Agreement and the Exclusivity Agreement, and that Country Life is entitled to royalties and other profits associated with the Retirement Contributions Protector product. (D.E. 47 at 28.) Country Life also seeks a preliminary and permanent injunction, enjoining Counter–Defendants from using, disclosing, or publishing Country Life's propriety and confidential information, filing or publishing any service mark or patent applications containing Country Life's propriety information, and marketing the Retirement Contributions Protector without Country Life's written consent. (D.E. 47 at 30.) Country Life states claims for breach of contract, misappropriation of trade secrets, violation of the Theft Liability Act, and unfair competition. (D.E. 47 at 30–34.)

Third Party Defendant DGS also filed a counterclaim against Country Life and Hall on January 10, 2011. The claims asserted in the Third Party Counterclaim are largely similar to those asserted in the Third Amended Complaint, though it only states a breach of contract claim with respect to the Facilitation Agreement, and does not state claims for libel, business disparagement, or theft. (D.E. 53 at 10–13.)

Pending before the Court are Country Life's Motion to Dismiss for Failure to State a Claim, Motion for a More Definite Statement and Motion to Strike (D.E. 39), Hall's Motion to Dismiss for Lack of Personal Jurisdiction, Motion to Dismiss for Failure to State a Claim or Alternatively for More Definite Statement, and Motion to Strike (D.E. 40), and Defendants' Motion to Transfer Venue (D.E. 42). These

Motions are fully ripe. (D.E. 57; D.E. 58; D.E. 61; D.E. 62; D.E. 69; D.E. 70; D.E. 71.) The Court held oral arguments on the pending motions on February 10, 2011.

III. Discussion

The Court first considers Defendant Hall's Rule 12(b)(2) motion to dismiss for lack of...