Ultraflo Corp. v. Pelican Tank Parts, Inc.

• Decision Date: 22 February 2013
• Docket Number: Civil Action No. H–09–0782.
• Citation: 926 F.Supp.2d 935
• Parties: ULTRAFLO CORPORATION, Plaintiff, v. PELICAN TANK PARTS, INC., Pelican Worldwide Incorporated, and Thomas Joseph Mueller, Defendants.
• Court: U.S. District Court — Southern District of Texas

926 F.Supp.2d 935

ULTRAFLO CORPORATION, Plaintiff,

v.PELICAN TANK PARTS, INC., Pelican Worldwide Incorporated, and Thomas Joseph Mueller, Defendants.

Civil Action No. H–09–0782.

United States District Court,

S.D. Texas,

Houston Division.

Feb. 22, 2013.

James M. McGraw, Travis Scott Crabtree, Looper Reed et al., Houston, TX, for Plaintiff.

John Karl Buche, Buche Assoc PC, Houston, TX, for Defendants.

OPINION AND ORDER

MELINDA HARMON, District Judge.

Pending before the Court in the above referenced cause, alleging in a Third Amended Complaint (instrument # 169) misappropriation of trade secrets, civil conspiracy for the alleged misappropriation, and copyright infringement and seeking a permanent injunction and declaratory judgment, are inter alia the following “renewed” motions for partial summary judgment ¹:

1. Defendants Pelican Worldwide, Inc. (“Worldwide”), Pelican Tank Parts, Inc. (“Tank”), and Thomas Joseph Mueller's (“Mueller's”) renewed motion for partial summary judgment (instrument # 138) that this suit is barred by the statute of limitations;

2. Tank, Worldwide, and Mueller's renewed motion for partial summary judgment (# 140) on the grounds that there are no trade secrets or other proprietary information that would support a claim of conversion, unfair competition by misappropriation, misappropriation of trade secrets, and civil conspiracy; and

3. Tank and Mueller's renewed motion for partial summary judgment (# 142) that they have conclusively negated essential elements for Ultraflo Corporation (“Ultraflo”) to establish causes of action against them and there is no evidence to support any essential element of injunctive relief or damages against Mueller.

I. Procedural History

The dispute between the parties has a lengthy procedural history, summarized as follows by the Court in # 116, 823 F.Supp.2d at pp. 581–82:

Ultraflo sued Defendants Mueller and Pelican Tank in state court alleging various state law claims, including conversion, civil conspiracy, unfair competition, and misappropriation of trade secrets. Ultraflo Corp. v. Pelican Tank Parts, Inc., No. 4:08–cv–1460 (S.D.Tex.2008), Doc. 1–5 at 1. Defendants removed that case to the United States District Court for the Southern District of Texas on the basis of federal question jurisdiction, asserting that Plaintiff's state law claims were completely preempted by the Copyright Act, 17 U.S.C. § 101. No. 4:08–cv–1460. Judge Werlein found that Defendants' removal was untimely, declined to address the potential preemption of Plaintiff's state law claims, and remanded the case to the 280th Judicial District Court of Harris County, Texas. Id., Doc. 21. Defendants filed a notice of appeal to the Fifth Circuit (No. 4:08–cv–1460, Doc. 24) which they subsequently withdrew. Id., Doc. 25.²

Before the case was resolved in state court, Defendant Mueller brought a declaratory judgment action in the United States District Court for the Eastern District of Texas, alleging that Ultraflo infringed copyrights that Mueller held to the technical drawings that Ultraflo claimed were its “trade secrets.” Mueller v. Ultraflo Corp., No. 1:09–cv–160–MAC (E.D.Tex.2009). Mueller and Pelican Tank also moved to dismiss the pending case in state court.

Ultraflo alleges that, out of “a desire to avoid costly procedural fights on two fronts,” it did not respond to the motion to dismiss in state court. The state court subsequently dismissed the case before it. Mueller filed a voluntary notice of dismissal of his case in the Eastern District, which the court granted.

In March of 2009, Ultraflo brought this case against Defendants Pelican Tank and Mueller in the Southern District of Texas, alleging the same state law causes of action it brought in its initial suit before Judge Werlein: conversion, unfair competition, misappropriation of trade secrets, and civil conspiracy. Doc. 1 at 6. Ultraflo also requested a declaratory judgment against Defendants Pelican Tank and Mueller, asserting that “Defendants have raised issues of federal copyright law and have asserted federal Copyright Act rights to assets that belong to Ultraflo.” Doc. 1 at 2. It was on this final request that Ultraflo based its assertion of federal subject matter jurisdiction.

In October of 2010, Ultraflo filed an amended complaint in this case, adding Pelican Worldwide as a defendant and adding a state law claim of unfair competition by misappropriation against all defendants. Doc. 66. On April 18, 2011, the Defendants filed four separate motions for partial summary judgment. Docs. 70, 71, 73, 75.

Only after the Court, in its Opinions and Orders of October 18, 2011 (# 116), 823 F.Supp.2d 578 (S.D.Tex.2011), and September 7, 2012 (# 160) 2012 WL 3929821, ruled in the instant action that Ultraflo's claims for unfair competition, conversion, and civil conspiracy relating to these two torts are preempted by the federal Copyright Act, did Ultraflo supplement its Second Amended Complaint ³ (Supplement to the Second Amended Complaint, # 161). In that Supplement, as ordered, Ultraflo identified provisions of the Copyright Act that Ultraflo was relying on in its request for declaratory judgment on Defendants' counterclaim that Mueller owned the copyright in the valve drawings, which Ultraflo claims that he had made while employed by Ultra flo ⁴ before he went to work for the Pelican Defendants, Ultraflo's competitors,⁵ and which Defendants allegedly infringed. Then Ultraflo filed a motion for leave to file a Third Amended Complaint (# 162), adding Worldwide as a Defendant and asserting a claim for copyright infringement directly against Worldwide under the federal statute. On November 14, 2012 Judge Stacy granted the motion (# 168), and the Third Amended Complaint (# 169) was filed.

The Court's dismissal of the claims for unfair competition, conversion, and civil conspiracy to engage in unfair competition by misappropriation moots substantial portions of the motions for partial summary judgment, which were filed before the September 7, 2012 Opinion and Order and the Third Amended Complaint and which also do not address the Copyright Act claims. Thus the Court reviews the motions for partial summary judgment only with respect to the still pending causes of action.

II. Standard of Review

Summary judgment under Federal Rule of Civil Procedure 56(c) is appropriate when, viewing the evidence in the light most favorable to the nonmovant, the court determines that “the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” A dispute of material fact is “genuine” if the evidence would allow a reasonable jury to find in favor of the nonmovant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Initially the movant bears the burden of identifying those portions of the pleadings and discovery in the record that it finds demonstrate the absence of a genuine issue of material fact; the movant may, but is not required to, negate elements of the nonmovant's case to prevail on summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Lujan v. National Wildlife Federation, 497 U.S. 871, 885, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990); Edwards v. Your Credit, Inc., 148 F.3d 427, 431 (5th Cir.1998).

If the movant meets its burden and points out an absence of evidence to prove an essential element of the nonmovant's case on which the nonmovant bears the burden of proof at trial, the nonmovant must then present competent summary judgment evidence to support the essential elements of its claim and to demonstrate that there is a genuine issue of material fact for trial. National Ass'n of Gov't Employees v. City Pub. Serv. Board, 40 F.3d 698, 712 (5th Cir.1994). “[A] complete failure of proof concerning an essential element of the nonmoving party's case renders all other facts immaterial.” Celotex, 477 U.S. at 323, 106 S.Ct. 2548. The nonmovant may not rely merely on allegations, denials in a pleading or unsubstantiated assertions that a fact issue exists, but must set forth specific facts showing the existence of a genuine issue of material fact concerning every element of its cause of action. Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir.1998). Conclusory allegations unsupported by evidence will not preclude summary judgment. National Ass'n of Gov't Employees v. City Pub. Serv. Board, 40 F.3d at 713;Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir.1996). “ ‘[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment ....’ ” State Farm Life Ins. Co. v. Gutterman, 896 F.2d 116, 118 (5th Cir.1990), quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). “Nor is the ‘mere scintilla of evidence’ sufficient; ‘there must be evidence on which the jury could reasonably find for the plaintiff.’ ” Id., quoting Liberty Lobby, 477 U.S. at 252, 106 S.Ct. 2505. The Fifth Circuit requires the nonmovant to submit “ ‘significant probative evidence.’ ” Id., quoting In re Municipal Bond Reporting Antitrust Litig., 672 F.2d 436, 440 (5th Cir.1982), and citing Fischbach & Moore, Inc. v. Cajun Electric Power Co-op., 799 F.2d 194, 197 (5th Cir.1986). “If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.” Thomas v. Barton Lodge II, Ltd., 174 F.3d 636, 644 (5th Cir.1999), citing Celotex, 477 U.S. at 322, 106 S.Ct. 2548, and Liberty Lobby, 477 U.S. at 249–50, 106 S.Ct. 2505.⁶

The court must consider all evidence and draw all inferences from the factual record in the light most favorable to the nonmovant. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (198...