Mar Oil Co. v. Korpan

973 F. Supp. 2d 775, 2013 WL 5406078, 2013 U.S. Dist. LEXIS 138823
CourtDistrict Court, N.D. Ohio
DecidedSeptember 4, 2013
DocketCase No. 3:11CV1261
StatusPublished
Cited by17 cases

This text of 973 F. Supp. 2d 775 (Mar Oil Co. v. Korpan) is published on Counsel Stack Legal Research, covering District Court, N.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mar Oil Co. v. Korpan, 973 F. Supp. 2d 775, 2013 WL 5406078, 2013 U.S. Dist. LEXIS 138823 (N.D. Ohio 2013).

Opinion

ORDER

JAMES G. CARR, Senior District Judge.

Plaintiff MAR Oil Company (MAR) has sued several defendants, principally among them, for purposes of this order, defendants Myron Korpan, Ronald Brock, and Solstice Energy Partners (SEP), for trade secret misappropriation in violation of the Ohio Uniform Trade Secrets Act (TSA), O.R.C. § 1333.61 et seq. MAR alleges that defendants improperly used its confidential and proprietary information, including seismic data, to lease land and drill in Northwest Ohio for oil and natural gas without expending the costs or time that MAR incurred for research and development.

Jurisdiction is proper under 28 U.S.C. § 1332.

Pending are Brock’s and SEP’s motions under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), to exclude testimony by MAR’s expert Arthur Berman. (Docs. 156, 158). For the reasons that follow, I grant in part and deny in part each motion.

Background

On January 27, 2000, MAR entered into a Consulting and Gross Overriding Royal[779]*779ty Interest (GORI) Agreement with Myron Korpan as its consultant for exploring oil and gas reserves and leasing land in Northwest Ohio. The agreement stated:

This area will also be treated as an area of mutual interest ... Myron [Korpan] agrees that this is an area of non competition and may not pursue an exploration venture on his own or with any other party without the permission of Wayne Toole. Previous and future information on this area is to be held confidential.

(Doc. 19-1 at 1).

On July 2, 2002, MAR and Korpan entered into a superseding Gross Overriding Royalty Agreement (GORA), incorporating the prior GORI Agreement but changing and further codifying some of the terms. These changes related primarily to the scope of the area of mutual interest. The agreement expired on January 27, 2005, subject to extension or renewal.

During the term of the GORA, MAR invested millions of dollars in exploration, including the production of seismic readings. MAR considers the seismic data among its confidential trade secrets. Korpan had access to the seismic data during his time consulting for MAR.

MAR and Korpan did not extend the GORA past January 27, 2005. Since the end of his contractual involvement with MAR in 2005, Korpan has retained certain materials relating to MAR’s exploration for oil and gas reserves. These materials contain information about MAR’s efforts, and include some of MAR’s seismic readings.

In 2008, Korpan began working with Brock and SEP to lease land and explore for oil and gas reserves in the area of mutual interest that was the subject of the GORA. MAR held a lease on what is referred to as “the Johnson property,” but let that lease lapse. On November 22, 2010, after discovering defendants’ subsequent lease on that land, MAR e-mailed Korpan to ask if he was involved in the other defendants’ leasing and exploration efforts. Korpan promptly confirmed his involvement with them.

Defendants have multiple leases within the previously designated area of mutual interest. Some border directly on plaintiffs leases.

MAR sued defendants seeking lost profits and other monetary damages, including the loss of prospective investment. MAR contends that, due to its conflict with Korpan and SEP, it lost a potential initial investment of at least $800,000 and a longer-term investment of millions of dollars by Marksmen Energy Inc. (Marksmen).

MAR designated geologist Arthur Berman as its expert. Berman intends to opine on the importance and value of seismic data, oil and industry standards of confidentiality, defendants’ actions in light of those industry standards, MAR’s measures to preserve the confidentiality of the seismic data, and MAR’s damages from defendants’ use of the proprietary information.

Berman also intends to opine that MAR suffered monetary damages, including the: 1) cost of acquisition of proprietary geological data, including seismic, drilling, and leasing information; 2) loss of prospective investments from Marksmen; and 3) loss of future profits.

Berman expects to base his testimony on: 1) MAR’s records of its expenses to obtain the geological data ($2.9 million); 2) statements by Wayne Toole, the owner of MAR, about Marksmen’s anticipated $800,000 investment; and 3) reports by two geological consulting firms, Ryder Scott Company and Billman Geologic Consultants, Inc., which, according to Berman [780]*780support an estimated loss of future profits of $1.9 million.

Discussion

Federal Rule of Evidence 702 requires me to perform a “gatekeeping role” when considering the admissibility of expert testimony. Daubert, supra, 509 U.S. at 597, 113 S.Ct. 2786. Rule 702 provides:

If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.

Rule 702 applies not only to scientific testimony, but also to other types of expert testimony based on technical or other specialized knowledge. See generally Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 147, 149, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999).

Under Daubert, I exercise a “gatekeeping” function, supra, 509 U.S. at 597, 113 S.Ct. 2786, consisting of three steps.

First, I must determine whether the witness is qualified as an expert. “When making a preliminary finding regarding an expert’s qualifications under Fed.R.Evid. 104(a), the court is to examine ‘not the qualifications of a witness in the abstract, but whether those qualifications provide a foundation for a witness to answer a specific question.’ ” Smelser v. Norfolk Southern Ry. Co., 105 F.3d 299, 303 (6th Cir.1997) (quoting Berry v. City of Detroit, 25 F.3d 1342, 1351 (6th Cir.1994)).

Second, I must determine whether the testimony is reliable. See Daubert, supra, 509 U.S. at 590, 113 S.Ct. 2786. The Court in Daubert listed several factors for consideration in assessing the reliability of scientific testimony, including:

• Whether a “theory or technique ... can be (and has been) tested”;

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973 F. Supp. 2d 775, 2013 WL 5406078, 2013 U.S. Dist. LEXIS 138823, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mar-oil-co-v-korpan-ohnd-2013.