NL Industries, Inc. v. Gulf & Western Industries

Decision Date07 August 1986
Docket NumberNo. 85-6039-K.,85-6039-K.
Citation650 F. Supp. 1115
PartiesNL INDUSTRIES, INC., Plaintiff, v. GULF & WESTERN INDUSTRIES, INC., a Delaware Corporation; Gulf & Western Manufacturing Company, a Delaware Corporation Licensed to do Business in the State of Kansas Until October 24, 1983, a/k/a Taylor Forge Engineering [or Engineered] Systems Division — Gulf & Western Industries; Gulf & Western Manufacturing Company, a Delaware Corporation Licensed to do Business in the State of Kansas From and After October 24, 1983, a/k/a Taylor Engineering [or Engineered] Systems Division — Gulf & Western Industries; Taylor Forge Engineered Systems, Inc., a Kansas Corporation, a/k/a Taylor Forge Engineered Systems Division — Gulf & Western Industries; Wickes Manufacturing Company, Inc., A Delaware Corporation; T.F. Holding's, Inc., a Delaware Corporation; Mario Willars, an Individual; and William Bossart, an Individual, Defendants.
CourtU.S. District Court — District of Kansas

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Alvin D. Herrington, McDonald, Tinker, Skaer, Quinn & Herrington, Wichita, Kan., and Law Offices of Peter W. Cavette, Los Angeles, Cal., for plaintiff.

Ronald C. Newman, Mustain & Newman, Kansas City, Kan., and H. Fred Northcraft, Woody Schlosser, Smith, Gill, Fisher & Butts, Kansas City, Mo., Mario Willars, Katy, Tex., William Bossart, Tomball, Tex., for Gulf & Western Industries, Inc., Gulf & Western Mfg. Co., Wickes Mfg. Co., Inc.

Joel Poole, Polsinelli, White & Vardeman, Kansas City, Mo., for Taylor Forge Engineered

Systems, Inc. and T.F. Holding's, Inc.

MEMORANDUM AND ORDER

PATRICK F. KELLY, District Judge.

This case is before the court on various motions to dismiss. Individual defendants William Bossart and Mario Willars have moved the court to dismiss them pursuant to Rule 12(b)(2) for lack of personal jurisdiction. Defendants Gulf & Western Industries, Inc., Gulf & Western Manufacturing, Inc., Wickes Manufacturing Co., Inc., Taylor Forge Engineered Systems, Inc., and T.F. Holdings, Inc. (collectively "Gulf & Western") have moved the court, pursuant to Rule 12(b)(6), to dismiss the complaint against them in its entirety for failure to state a claim upon which relief can be granted.

This case involves an alleged scheme of commercial bribery and price-fixing resulting in harm to NL's manufacturing plant in Houston, Texas. Plaintiff claims Gulf & Western bribed NL's Houston plant manager, Mario Willars, thereby inducing him to enter purchase contracts on behalf of NL with Gulf & Western. The contracts were for various supplies utilized by NL in manufacturing off-shore drilling equipment, and totaled millions of dollars. Subsequently, one of Gulf & Western's employees who was allegedly involved in the bribery — William Bossart — left Gulf & Western to work for a company in the same business, Johnson Controls. Through Bossart's actions, Gulf & Western and Johnson Controls allegedly entered identical purchase contracts with NL and then devised a scheme to fix the prices.

All of the alleged activities occurred in 1981. In 1982, NL cancelled the purchase contracts. On November 18, 1985, NL brought suit in this court against Mario Willars, William Bossart, and Gulf & Western. NL's complaint sets forth 13 counts: (1) tortious interference with business, contractual and fiduciary relations; (2) commercial bribery pursuant to § 2(c) of the Robinson-Patman Act, 15 U.S.C. § 13(c); (3) fraud and misrepresentation; (4) illegal restraint of trade under Kansas law; (5) restraint of trade under the Sherman Act, 15 U.S.C. §§ 1, 15; (6) violations of RICO, 18 U.S.C. § 1961 et seq.; (7) commercial bribery under Kansas law; (8) deceptive commercial practices under Kansas law; (9) deceptive trade practices under Texas law; (10) breach of the implied covenant of good faith; (11) breach of contractual agreement and fiduciary duties asserted only against defendant Willars; (12) civil conspiracy; and (13) misappropriation of trade secrets.

Defendants Willars and Bossart are both Texas residents. Further, they both resided in Texas during all times relevant to this lawsuit. They have each moved for dismissal due to lack of personal jurisdiction. For reasons set forth in the final portion of this order, their motions will be granted.

Gulf and Western has moved for dismissal of the complaint against them. Gulf & Western asserts the statute of limitations bars all claims except for the fraud claim, but that plaintiff has failed to state a claim for fraud. Gulf & Western also contends the plaintiff has failed to state claims for violations of the Robinson-Patman Act, RICO, Kansas penal statutes (commercial bribery, deceptive trade practices, civil conspiracy), the implied covenant of good faith, the Texas Consumer Protection Act, and misappropriation of trade secrets. As set forth herein, the court finds the plaintiff has failed to state claims for violation of the Robinson-Patman Act, RICO, commercial bribery, deceptive trade practices under Kansas or Texas law, civil conspiracy, fraud, and misappropriation of trade secrets. The plaintiff is given leave to amend its claims for fraud and misappropriation of trade secrets. The plaintiff is further given leave to amend to allege grounds for tolling the statute of limitations, which has otherwise run on the remainder of the claims.

I. Facts

In 1981, NL Industries, Inc. (NL) was one of the nation's largest manufacturers and suppliers of equipment and services for the petroleum industry. NL's principal place of business is in New York, where its stock is publicly traded on the New York Stock Exchange. NL Shaffer is a division of NL Industries which manufactures and sells various specialized oilfield equipment for use in on-shore and off-shore drilling operations. One of NL Shaffer's manufacturing plants is located in Houston, Texas. It is this division of NL that was involved in the transactions concerned in this law-suit.

Among the products purchased by NL for use in its Houston plant are air pressure vessels (bottles filled with compressed air which is used in equipment manufactured by NL to stabilize off-shore drilling rigs), metal castings or "sheaves", and "accumulators" and "chain guards or chain wheel guides".

In or about June, 1981, NL entered into a contract with Gulf & Western for the purchase of "sheaves"; in July, 1981, NL entered into a contract with Gulf & Western for the purchase of "accumulators"; and in September, 1981, NL entered into a contract with Gulf & Western for the purchase of "chain guards or chain wheel guides".

The complaint alleges that these orders were secured by Gulf & Western through the influence of a woman named Eulalia "Wissie" Treesh, a low level Gulf & Western employee in Houston who was allegedly the mistress of Mario Willars, the plant manager for NL in Houston. Ms. Treesh was allegedly hired because of her "connection" with Willars. Plaintiff makes no allegation that the contracts were at an "inflated price." Rather, plaintiff alleges Willars did not act in accordance with the NL Shaffer purchasing policies in entering the purchase contracts.

When Willars became plant manager of the Houston plant in 1981, he personally took charge of the selection, negotiation and placement of orders for air pressure vessels. According to plaintiff "the contracts for air pressure vessels were highly valued since NL historically was a large producer of motion compensation equipment and such contracts could easily run into the millions of dollars." Under Willars' direction, NL discontinued ordering air pressure vessels from its traditional suppliers and began placing orders with Gulf & Western's Kansas divisionTaylor Forge — at the request of Ms. Treesh and co-defendant William Bossart, who was a salesman for Taylor Forge in Houston. In July, 1981, NL issued a purchase order with Taylor Forge for 12 air pressure vessels at a unit price of $15,343.00. In August, 1981, NL issued another purchase order with Taylor Forge for 12 units at the same price. Later in August, 1981, NL increased its order to 92 air pressure vessels. Plaintiff claims these prices were "substantially in excess of the prices paid to NL's traditional suppliers."

In September, 1981, Bossart, who had represented Gulf & Western (Taylor Forge) in the sales of the vessels to NL, left Gulf & Western's employ and went to work as a sales representative of the same product line for Johnson Controls. Following Bossart's move to Johnson Controls, Willars made it known to both Gulf & Western and Johnson Controls that NL in Houston would be ordering specified air pressure vessels, and submitted "trade secret documents, drawings and design data" of NL to Johnson Controls and Gulf & Western.

Plaintiff then alleges that at unspecified times "representatives of Gulf & Western and Johnson Controls regularly communicated by phone or by mail or in person" regarding their dealings with NL. Plaintiff alleges that on "information and belief" Gulf & Western and Johnson Controls "fixed prices for air pressure vessels, or allocated, or attempted to allocate, NL business between them." (Complaint, ¶ 21.) Plaintiff further alleges that the bids received from Gulf & Western and Johnson Controls were "substantially the same" and "significantly more" than bids from "past vendors...." (Complaint, ¶ 20.) Willars allegedly signed purchase orders for the same number of air pressure vessels from both Gulf & Western and Johnson Controls at the same approximate time.

Plaintiff alleges further that prior to signing the purchase contracts for the air pressure vessels, Mr. Willars was "escorted" to Las Vegas in November, 1981 by Mr. Bossart, Ms. Treesh, and Mr. Bossart's secretary. "NL was informed and believes that such conduct was undertaken to take advantage of Mr. Willars' gambling habit so as to allocate the orders for the bottles in question between Gulf & Western and Johnson Controls." NL...

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