Royal Coatings, Inc. v. Stanchem, Inc.

CourtDistrict Court, E.D. Louisiana
DecidedMarch 25, 2024
Docket2:23-cv-06394
StatusUnknown

This text of Royal Coatings, Inc. v. Stanchem, Inc. (Royal Coatings, Inc. v. Stanchem, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Royal Coatings, Inc. v. Stanchem, Inc., (E.D. La. 2024).

Opinion

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA

ROYAL COATINGS, INC. CIVIL ACTION

VERSUS No. 23-6394

STANCHEM, INC. ET AL. SECTION I

ORDER & REASONS Before the Court are motions1 by Omya Specialty Materials, Inc. (“Omya”), in its own capacity and on behalf of former entity Hall Technologies, Inc. (“Hall”), and StanChem, Inc. (“StanChem”) (collectively, “defendants”) to dismiss the claims against them pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6). Plaintiff Royal Coatings, Inc. (“RCI”) opposes the motions.2 Defendants filed replies in support of their motions.3 For the reasons set forth below, the Court grants the motions to dismiss pursuant to Rule 12(b)(2). I. BACKGROUND This matter arises from a business relationship among Hall, StanChem, and RCI.4 RCI alleges that, in 2016, it began working with Hempel USA Inc. (“Hempel”), a fellow manufacturer of protective coatings, to develop a railcar coating.5 The complaint alleges that, in 2022, RCI approached StanChem, a resin polymer manufacturer, and Hall, StanChem’s polymer distributor, about supplying the

1 R. Doc. Nos. 20 (Omya’s motion), 22 (StanChem’s motion). 2 R. Doc. Nos. 28 (opposition to Omya’s motion), 26 (opposition to StanChem’s motion). 3 R. Doc. Nos. 31 (Omya’s reply), 32 (StanChem’s reply). 4 See generally R. Doc. No. 1. 5 Id. ¶ 2. polymer that would be incorporated into the coating that RCI would sell to Hempel.6 RCI alleges that StanChem and Hall agreed to the partnership and each signed a non-disclosure agreement (“NDA”).7 The complaint asserts that RCI then introduced

StanChem and Hall to Hempel and the companies continued collaborating on the development of the railcar coating.8 RCI alleges that, despite the companies’ use of RCI’s essential data and secrets, in March 2023, RCI learned that StanChem and Hall had begun attempting to sell the polymer directly to Hempel, cutting RCI out of the transaction.9 RCI alleges that StanChem and Hall violated the Defend Trade Secrets Act (“DTSA”) and the

Louisiana Unfair Trade Practices Act (“LUPTA”), breached their NDAs, and committed civil conspiracy.10 The complaint further alleges that this Court has personal jurisdiction over StanChem and Omya11 because the causes of action arise out of defendants’ contacts with RCI in Louisiana.12 Omya filed a motion to dismiss pursuant to Rule 12(b)(2), arguing that this Court lacks personal jurisdiction over it.13 More specifically, Omya argues that it does not have a presence in Louisiana large enough to subject it to general jurisdiction and

6 Id. ¶ 6. 7 Id. ¶ 7. 8 Id. ¶ 8. 9 Id. ¶¶ 6–11. 10 See generally id. 11 Hall was merged into Omya. R. Doc. No. 21-1, at 1–2. 12 R. Doc. No. 1, ¶ 17. 13 See generally R. Doc. No. 20-1. none of its acts in Louisiana related to the alleged misconduct warrants an exercise of specific personal jurisdiction.14 In response to Omya’s motion, RCI contends that Omya has sufficient

minimum contacts with Louisiana through the formation of a continuing business relationship that contemplated a long-term association with ongoing obligations.15 RCI also argues that this lawsuit arises out of Omya’s contacts with Louisiana and therefore the exercise of personal jurisdiction over Omya would not be unfair or unreasonable.16 StanChem filed its own motion, asserting that RCI’s complaint should be

dismissed pursuant to Rules 12(b)(2) and 12(b)(6).17 StanChem argues that, while the complaint asserts that it is subject to specific personal jurisdiction, the complaint fails to present any contacts with the State of Louisiana from which specific jurisdiction can arise.18 StanChem also maintains that the complaint should be dismissed pursuant to Rule 12(b)(6) because RCI failed to adequately plead that it took reasonable steps to safeguard the secrecy of the conditional business opportunity pursuant to the DTSA,19 because StanChem has not satisfied the “egregious actions”

requirement of the LUPTA, and because RCI cannot prove an underlying tort in order to sustain a civil conspiracy claim.20

14 Id. at 2. 15 R. Doc. No. 28, at 7. 16 Id. at 10–11. 17 R. Doc. No. 22. 18 R. Doc. No. 22-1, at 9. 19 Id. at 10–11. 20 Id. at 14. RCI counters that, like Omya, StanChem has sufficient minimum contacts with Louisiana through the formation of a continuing business relationship that contemplated a long-term association with ongoing obligations.21 Again, RCI argues

that this lawsuit arises out of StanChem’s contacts with Louisiana and therefore the exercise of personal jurisdiction over StanChem would not be unfair or unreasonable.22 Additionally, in response to StanChem’s Rule 12(b)(6) arguments, RCI contends that the allegations in the complaint are sufficient to state a claim pursuant to the relevant statutes.23 With respect to RCI’s claim pursuant to the DTSA, RCI

argues that it has alleged all the required elements of the cause of action.24 Specifically, RCI asserts that it took reasonable steps to protect the confidentiality of the business opportunity by waiting to disclose the identity of Hempel and by requiring confidentiality with respect to RCI’s trade secrets.25 RCI also argues that it has satisfied the RUPTA’s requirement of alleging “deceptive or unfair” trade practices by alleging that StanChem used RCI's confidential information to complete development of the alternative polymer and by alleging that StanChem falsely

promised not to cut RCI out of the negotiation.26 RCI also argues that the allegations

21 R. Doc. No. 28, at 9. 22 Id. at 11–12. 23 Id. at 13. 24 Id. at 14. 25 Id. 26 Id. at 17. pursuant to the DTSA and the LUPTA are sufficient to pursue a civil conspiracy theory of recovery.27 II. STANDARD OF LAW

a. Rule 12(b)(2) Pursuant to Rule 12(b)(2), a claim against a defendant over whom the court lacks personal jurisdiction must be dismissed. Personal jurisdiction “is an essential element of the jurisdiction of a district court, without which it is powerless to proceed to an adjudication.” Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 584 (1999) (quoting Emps. Reinsurance Corp. v. Bryant, 299 U.S. 374, 382 (1937)) (cleaned up).

“When a nonresident defendant presents a motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing the district court’s jurisdiction over the nonresident.” Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985). “When the district court decides the defendant’s motion without an evidentiary hearing, the plaintiff[’s] burden is met by presenting a prima facie case for personal jurisdiction.” Thompson v. Chrysler Motors Corp., 755 F.2d 1162, 1165 (5th Cir. 1985).

“The allegations of the complaint, except insofar as controverted by opposing affidavits, must be taken as true, and all conflicts in the facts must be resolved in favor of the plaintiff[] for purposes of determining whether a prima facie case for personal jurisdiction has been established.” Id. “The court may determine the jurisdictional issue by receiving affidavits, interrogatories, depositions, oral

27 Id. testimony, or any combination of the recognized methods of discovery.” Id. (citing Washington v. Norton Mfg. Co., 588 F.2d 441, 443 (5th Cir. 1979)). “A federal district court sitting in diversity may exercise personal jurisdiction

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Royal Coatings, Inc. v. Stanchem, Inc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/royal-coatings-inc-v-stanchem-inc-laed-2024.