Thomas v. Joule Processing LLC <b><font color="red">Count 5- Breach of contract of the Consulting Agreement electronically transferred to USDC ND/NY- Albany Division. </font></b>

CourtDistrict Court, N.D. New York
DecidedDecember 5, 2023
Docket1:23-cv-01528
StatusUnknown

This text of Thomas v. Joule Processing LLC <b><font color="red">Count 5- Breach of contract of the Consulting Agreement electronically transferred to USDC ND/NY- Albany Division. </font></b> (Thomas v. Joule Processing LLC <b><font color="red">Count 5- Breach of contract of the Consulting Agreement electronically transferred to USDC ND/NY- Albany Division. </font></b>) is published on Counsel Stack Legal Research, covering District Court, N.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Thomas v. Joule Processing LLC <b><font color="red">Count 5- Breach of contract of the Consulting Agreement electronically transferred to USDC ND/NY- Albany Division. </font></b>, (N.D.N.Y. 2023).

Opinion

UNITED STATES DISTRICT COURT December 05, 2023 SOUTHERN DISTRICT OF TEXAS Nathan Ochsner, Clerk HOUSTON DIVISION

JACOB THOMAS, et al., § § Plaintiffs, § § VS. § CIVIL ACTION NO. 4:23-CV-01615 § JOULE PROCESSING LLC, et al., § § Defendants. §

MEMORANDUM & ORDER Plaintiffs Jacob Thomas and JTurbo Engineering & Technology, LLC (JTurbo) bring various claims against Defendants Joule Processing LLC (Joule) and Plug Power, Inc. (Plug) stemming from Defendants’ alleged misappropriation of novel hydrogen liquefaction technology and related information. ECF No. 1. Plaintiffs’ claims include: violations of the Federal Defend Trade Secrets Act of 2016 (Count 1), misappropriation of trade secrets under the Texas Uniform Trade Secrets Act (TUTSA) (Count 2), breach of contract of the Amended and Restated Exclusivity Agreement (Count 3), breach of contract of the Design Fee Agreement (Count 4), breach of contract of the Consulting Agreement (Count 5), tortious interference with prospective business relationships (Count 6), unfair competition by misappropriation (Count 7), breach of fiduciary duty (Count 8), and conspiracy to commit breach of fiduciary duty (Count 9). Defendants move to dismiss Counts 4 through 9. ECF No. 17. Defendants do not move for dismissal of Counts 1 through 3. For the reasons that follow, Defendants’ Motion to Dismiss is GRANTED IN PART. Counts 4, 6, 7, 8, and 9 are DISMISSED WITH PREJUDICE. Count 5 1 is SEVERED and TRANSFERRED to the United States District Court for the Northern District of New York.

I. BACKGROUND1 Thomas is the founder and president of JTurbo, a company that sells hydrogen liquefaction

technology and provides energy consulting services. In his role at JTurbo, Thomas developed new hydrogen liquefaction technology that requires 50% less energy per unit of output than comparable designs. In addition to creating this technology, JTurbo also invested resources in the production and sale of the technology. This included developing process simulations and data, business operation methods, pricing models, and vendor and customer lists, among other things. JTurbo collaborated with Joule to market the hydrogen liquefaction technology. On April

29, 2021, Joule and JTurbo entered into an Exclusivity Agreement. Under this agreement, Joule obtained the right to be the exclusive packager and provider for JTurbo’s hydrogen liquefaction technology in exchange for paying JTurbo a design fee. In May 2021, Plug contacted Joule and JTurbo to discuss its desire to develop a hydrogen liquefier for its own use. In a meeting on or about September 29, 2021, JTurbo and Joule verbally agreed to sell Plug hydrogen liquefaction units built using JTurbo’s technology, process simulations, and designs. In exchange, Joule consented to pay JTurbo $500,000 per unit sold to

1 At this stage, all well-pleaded factual allegations are accepted as true. Johnson v. Johnson, 385 F.3d 503, 529 (5th Cir. 2004). 2 Plug, up to the first three units. JTurbo memorialized the terms of this agreement, deemed the Design Fee Agreement, in a subsequent email to Joule.

On January 10, 2022, JTurbo and Joule executed an Amended and Restated Exclusivity Agreement (Amended Exclusivity Agreement). The Amended Exclusivity Agreement licensed JTurbo’s hydrogen liquefaction technology to Joule and permitted Joule to sublicense the technology to clients. In exchange, JTurbo was to receive various fees, which would be negotiated separately for each subsequent project. As part of the sublicensing process, Joule and JTurbo were to jointly negotiate the sublicensing fees with each prospective customer. Pursuant to this agreement, JTurbo shared its hydrogen liquefaction technology, process simulations, vendor lists, and process designs with Joule. The Amended Exclusivity Agreement also contained the following merger clause:

This Agreement . . . constitutes the entire Agreement of the Parties with respect to the subject matter hereof, and supersedes any and all previous Agreements by and between JTurbo (or JTurbo principals) and Joule (or Joule’s principals) with respect to the subject matter hereof, if any, as well as any and all proposals, oral or written, and all negotiations, conversations or discussions heretofore had between the parties related to this Agreement. ECF No. 7 at 9. On or about January 10, 2022, Plug and JTurbo entered into a Consulting Agreement. Under this agreement, Thomas provided Plug with expertise to develop its own hydrogen liquefaction plant units. Plug agreed to pay Thomas $300 an hour for consulting services not to exceed 20 hours per week for a period of two years. The agreement contains the following forum selection clause: “Any action or proceeding arising out of this Agreement shall be commenced exclusively in courts located in Albany, New York, and the parties hereby consent to the 3 jurisdiction of any state or federal court located therein.” ECF No. 11-1 at 5. Around June 2022, Plug reduced Thomas’s consulting service hours to 10 hours per week before later terminating his services before the expiration of the contract’s two year period.

In January 2022, Plug acquired Joule, allegedly to access the hydrogen liquefaction technology and related business information without compensating JTurbo. At this point, it appears that the parties’ business relationship began to sour. Around January 2023, Joule received orders from Nikola and TC Energy for three liquefaction plant units, the construction of which required using JTurbo’s hydrogen liquefaction technology. JTurbo was not consulted or compensated in the course of these sales, nor was it compensated for the use of its technology in the sale of units to Plug under the Design Fee Agreement.

In early 2023, Plug posted on LinkedIn to advertise JTurbo’s hydrogen liquefaction technology. This post supposedly disclosed details about the proprietary process simulations and data developed by JTurbo. In the post, Plug represented that it owns the hydrogen liquefaction technology.

II. STANDARD OF REVIEW Defendants seek to dismiss Counts 4, 6, 7, 8, and 9 for failure to state a claim. When considering a 12(b)(6) motion to dismiss, a court must “accept the complaint’s well-pleaded facts as true and view them in the light most favorable to the plaintiff.” Johnson v. Johnson, 385 F.3d 503, 529 (5th Cir. 2004); Bustos v. Martini Club Inc., 599 F.3d 458, 461 (5th Cir. 2010). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true,

to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) 4 (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is 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. This standard is not akin to a “probability requirement,” but asks for more than a sheer possibility that a defendant has acted unlawfully. Id.

The movant carries the burden of proof for dismissal under Rule 12(b)(6). Rittgers v. United States, 131 F. Supp. 3d 644, 649 (S.D. Tex. 2015). Additionally, Defendants seek dismissal of Count 5 for improper venue under either Rule 12(b)(3) or, alternatively, 18 U.S.C. § 1406

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