Helmerich & Payne Int'l Drilling Co. v. Schlumberger Tech. Corp.

• Decision Date: 26 December 2017
• Docket Number: Case No. 17-CV-358-GKF-FHM
• Court: U.S. District Court — Northern District of Oklahoma
• Parties: HELMERICH & PAYNE INTERNATIONAL DRILLING CO., Plaintiff, v. SCHLUMBERGER TECHNOLOGY CORPORATION, Defendant.

HELMERICH & PAYNE INTERNATIONAL DRILLING CO., Plaintiff,
v.
SCHLUMBERGER TECHNOLOGY CORPORATION, Defendant.

Case No. 17-CV-358-GKF-FHM

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OKLAHOMA

December 26, 2017

OPINION AND ORDER

This matter comes before the court on the Motion of Defendant Schlumberger Technology Corporation to Dismiss Counts 3 and 4 of the First Amended Complaint [Doc. #66]. For the reasons discussed below, the motion is granted.

I. Background

This matter relates to a License Agreement between H&P and Omron Oilfield & Marine, Inc., concerning certain software developed for use in the oil industry. The License Agreement granted H&P a right to use and modify the software in the conduct of H&P's customary rig leasing service and business. See generally [Doc. #64-1]. Additionally, section 3 of the License Agreement included a non-solicitation provision, which stated:

[H&P] and its Affiliates will not actively solicit any former (i.e., within two (2) years of their departure from [Omron] or its Affiliates) or current employee or individual contractor of [Omron] or its Affiliates or their predecessors for purposes of assisting [H&P] or its Affiliates in any manner in connection with developing hardware or software that competes with the Software or Licensor Hardware. Notwithstanding the foregoing, [H&P] and its Affiliates shall not be precluded from (i) hiring an employee who independently approaches them, or (ii) conducting general recruiting activities, such as participation in job fairs or publishing advertisements in publications or on Web sites for general circulation.

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[Doc. #64-1, p. 5] ("Non-Solicitation Provision"). Omron was acquired by Schlumberger in June 2016.

H&P claims that, on June 16, 2017, Schlumberger wrongfully revoked the License Agreement based on H&P's alleged active solicitation of Schlumberger employees Fergus Hopwood and Philip Martin to develop competitive software. [Doc #64, ¶ 20]. As a result, on June 22, 2017, H&P initiated litigation in this court asserting four counts: (1) breach of contract; (2) declaratory judgment that the Non-Solicitation Provision, as interpreted by Schlumberger, violates Oklahoma's restraint of trade statute (15 O.S. § 217), the Sherman Act (specifically, 15 U.S.C. § 1), and the Oklahoma Antitrust Reform Act (specifically 79 O.S. § 203(A)); (3) violation of § 1 of the Sherman Act; and (4) violation of § 203(A) of the Oklahoma Antitrust Reform Act. Schlumberger moved to dismiss H&P's Complaint and, on September 8, 2017, this court granted Schlumberger's motion to dismiss in part, denied the motion in part, and granted H&P the opportunity to amend. [Doc. #60].

On September 22, 2017, H&P filed the Amended Complaint, which asserts four counts: (1) breach of contract; (2) declaratory judgment that H&P has not violated the Non-Solicitation Provision, and that Schlumberger's attempted revocation of the License Agreement is invalid; (3) declaratory judgment that Schlumberger's interpretation of the Non-Solicitation Provision violates § 203(A) of the Oklahoma Antitrust Reform Act; and (4) declaratory judgment that the Non-Solicitation Provision violates Oklahoma's restraint of trade statute. [Doc. #64]. Schlumberger moves to dismiss count three and count four of the First Amended Complaint pursuant to Fed. R. Civ. P. 12(b)(6).

II. Motion to Dismiss Standard

Federal Rule of Civil Procedure 12(b)(6) permits a court to dismiss a claim that "fail[s] to state a claim upon which relief can be granted." "To survive a motion to dismiss under Rule

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12(b)(6), a plaintiff must plead sufficient factual allegations 'to state a claim to relief that is plausible on its face.'" Brokers' Choice of Am., Inc. v. NBC Universal, Inc., 861 F.3d 1081, 1104 (10th Cir. 2017) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim is facially plausible 'when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'" Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). "Mere 'labels and conclusions' and 'a formulaic recitation of the elements of a cause of action' are insufficient." Estate of Lockett ex rel. Lockett v. Fallin, 841 F.3d 1098, 1107 (10th Cir. 2016) (quoting Twombly, 550 U.S. at 555). "Dismissal is appropriate if the law simply affords no relief." Commonwealth Prop. Advocates, LLC v. Mortg. Elec. Registration Sys., Inc., 680 F.3d 1194, 1202 (10th Cir. 2011).

When considering a Rule 12(b)(6) motion to dismiss, the court may consider "not only the complaint, but also the attached exhibits and documents incorporated into the complaint by reference." Id. at 1201.

III. Analysis

Schlumberger moves to dismiss count 3 and count 4 of the Amended Complaint. The court will separately consider each count.

A. Count 3 - Declaratory Judgment that Schlumberger's Interpretation of the Non-Solicitation Provision of the License Agreement and Revocation Violates 79 O.S. § 203(A)

Section 203(A), title 79 of the Oklahoma statutes, part of the Oklahoma Antitrust Reform Act, declares "[e]very act, agreement, contract, or combination in the form of a trust, or otherwise, or conspiracy in restraint of trade or commerce within [Oklahoma] . . . to be against public policy and illegal." 79 O.S. § 203(A). The Oklahoma Supreme Court has interpreted section 203(A) to

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prohibit "only those acts that unreasonably restrain trade or commerce."¹ Fine Airport Parking, Inc. v. City of Tulsa, 71 P.3d 5, 10 (Okla. 2003) (emphasis added).

"There are 'two main analytical approaches for determining whether a defendant's conduct unreasonably restrains trade: the per se rule and the rule of reason.'" Buccaneer Energy (USA), Inc. v. Gunnison Energy Corp., 846 F.3d 1297, 1306 (10th Cir. 2017) (quoting Gregory v. Fort Bridger Rendezvous Ass'n, 448 F.3d 1195, 1203 (10th Cir. 2006)).² Courts apply a presumption in favor of the rule of reason. Id.

Pursuant to the rule of reason analysis, "only those acts, contracts, agreements or combinations which prejudice the public interest by unduly restricting competition, or unduly obstructing the due course of trade, or which injuriously restrain trade, are unlawful." Beville, 39 P.3d at 759. See also Fine Airport Parking, Inc., 71 P.3d at 10 ("'The fundamental test of the reasonableness of an action, which, by its nature, restrains trade, is its effect on the public.'") (quoting Krebsbach v. Henley, 725 P.2d 852, 858 (Okla. 1986)). Thus, the court must inquire as to "the extent to which challenged conduct harms competition and . . . then determine whether any such harm is nonetheless justified by countervailing procompetitive benefits." Buccaneer Energy (USA), Inc., 846 F.3d at 1306.

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The per se analysis, on the other hand, applies only to those "'agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use.'" Id. (quoting Nw. Wholesale Stationers, Inc. v. Pac. Stationery & Printing Co., 472 U.S. 284, 289 (1985)). See also Fine Airport Parking, Inc., 71 P.3d at 10 ("Restraint of trade that has a pernicious effect on competition is conclusively presumed unreasonable and a per se violation of the antitrust statutes."). That is, "[p]er se violations are restricted to those restraints 'that would always or almost always tend to restrict competition and decrease output,'" Campfield v. State Farm Mut. Auto. Ins. Co., 532 F.3d 1111, 1119 (10th Cir. 2008) (quoting Bus. Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S. 717, 723 (1988) (emphasis added) (internal citations omitted)), and, then, "only if courts can predict with confidence that it would be invalidated in all or almost all instances under the rule of reason." Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 886-87 (2007). Thus, courts have applied the per se analysis only to "recognized types of behavior with which the courts have substantial experience, including horizontal and vertical price-fixing agreements, group boycotts, market allocation, and certain types of tying agreements." Mayfield SWD, L.L.C. v. Blevins, No. CIV-10-0467-HE, 2011 WL 195656, at *5 (W.D. Okla. Jan. 19, 2011).

1. Appropriate Level of Analysis

The parties disagree as to the appropriate level of analysis. Schlumberger argues that the claim must be subject to the rule of reason analysis, [Doc. #66, pp. 6-7], while H&P asserts that the per se rule applies to its claim for declaratory judgment as to 79 O.S. § 203A.³ [Doc. #68, pp.

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8-13]. The court concludes that the rule of reason, rather than the per se approach, is applicable to H&P's claim for declaratory relief as to 79 O.S. § 203A for three reasons.

First, the conduct alleged in the Amended Complaint does not fall within the categories of behavior to which the per se rule has previously been applied because the Amended Complaint does not allege a horizontal or vertical price-fixing agreement in the traditional sense, a group boycott, common market allocation, or tying agreement.

Second, the court is not persuaded that unilateral conduct of the type alleged in this matter—specifically, a single entity's interpretation of a non-solicitation provision included in a broader license agreement—would be invalidated in all or almost all instances under the rule of reason. In Champagne Metals, the Tenth Circuit declined to apply the per se rule to unilateral conduct, stating that it "[was] not prepared to determine that the Oklahoma Supreme Court would hold this unilateral conduct to be a per se violation absent some guidance from that Court." See Champagne Metals, 458 F.3d at 1092. H&P has not directed this court to subsequent guidance from the Oklahoma Supreme Court to the contrary. The absence of precedential case...