Schlumberger Limited and Schlumberger Technology Corporation v. Charlotte Rutherford ( 2015 )

ACCEPTED
01-14-00776-CV
FIRST COURT OF APPEALS
HOUSTON, TEXAS
3/13/2015 6:10:37 PM
CHRISTOPHER PRINE
CLERK
No. 01-14-00776-CV
In the Court of Appeals FILED IN
1st COURT OF APPEALS
for the First Judicial District
HOUSTON, TEXAS
3/13/2015 6:10:37 PM
Houston, Texas CHRISTOPHER A. PRINE
Clerk
SCHLUMBERGER LIMITED AND
SCHLUMBERGER TECHNOLOGY CORPORATION,
Appellants/Cross-Appellees,
v.
CHARLOTTE RUTHERFORD,
Appellee/Cross-Appellant.
On Appeal from the
127th District Court at Houston, Texas
APPELLANTS’ REPLY BRIEF
Craig Smyser Sean D. Jordan
Land Murphy State Bar No. 00790988
Justin Waggoner Kent C. Sullivan
SMYSER KAPLAN & VESELKA, L.L.P. Danica L. Milios
700 Louisiana Street, Suite 2300 Peter C. Hansen
Houston, Texas 77002-2700 SUTHERLAND ASBILL & BRENNAN LLP
[Tel.] (713) 221-2300 600 Congress Ave., Suite 2000
[Fax] (713) 221-2320 Austin, Texas 78701
[Tel.] (512) 721-2679
[Fax] (512) 721-2656
sean.jordan@sutherland.com
COUNSEL FOR APPELLANTS
ORAL ARGUMENT REQUESTED
TABLE OF CONTENTS
Index of Authorities ......................................................................... iii
Summary of Argument ...................................................................... 2
Argument ........................................................................................... 5
I.  The Court Has Jurisdiction To Consider
Schlumberger’s Appeal. .................................................. 5
II.  The TCPA Does Not Apply to Schlumberger’s
Claims Against Rutherford............................................. 7
A.  The TCPA Protects Public Communications
with a Nexus to Participation in
Government, Not Private Communications
for Commercial Gain. ............................................. 8
1.  The TCPA should be construed
consistent with the express purpose
set forth in its text. ..................................... 10
2.  The Cheniere Energy, Jardin, and
Whisenhunt decisions do not
misconstrue the TCPA................................ 12
B.  The TCPA Is Inapplicable Because
Schlumberger’s Suit Is Not Premised on
TCPA-Protected Communications. ..................... 15
1.  Schlumberger’s suit does not implicate
the First Amendment concerns
addressed by the TCPA. ............................. 16
2.  Applying the TCPA to a broad array of
claims unrelated to the statute’s
purpose leads to unreasonable and
absurd results. ............................................ 18
i
III.  Even Assuming the TCPA Applies, Schlumberger
Met Its Evidentiary Burden To Prevent Dismissal
of Its Claims. ................................................................. 21
A.  The TCPA Imposes a Minimal Evidentiary
Burden on the Non-Movant. ................................ 21
B.  Schlumberger Carried Its Evidentiary
Burden To Prove a Prima Facie Case with
Clear and Specific Evidence for Every Claim
Asserted Against Rutherford............................... 23
1.  Breach of fiduciary duty ............................. 24
2.  Misappropriation of trade secrets .............. 27
3.  Conversion. ................................................. 30
4.   Texas Theft Liability Act............................ 32
IV.  The Trial Court Abused Its Discretion in
Awarding $350,000 in Attorneys’ Fees and
$250,000 in Sanctions Against Schlumberger. ............ 34
A.  Rutherford Failed To Segregate Her Fees as
Required by Texas Law. ...................................... 34
B.  The Trial Court’s Award of Sanctions
Cannot be Reconciled with the Record. .............. 36
Prayer ............................................................................................... 38
Certificate of Service ....................................................................... 39
Certificate of Compliance ................................................................ 40
ii
INDEX OF AUTHORITIES
Cases
Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson,
209 S.W.3d 644 (Tex. 2006)............................................................... 6
Aviles v. Aguirre,
292 S.W.3d 648 (Tex. 2009) (per curiam) ....................................... 12
BBB of Metro. Houston, Inc. v. John Moore Servs., Inc.,
441 S.W.3d 345 (Tex. App.—Houston [1st Dist.] 2013, pet. denied) ... 14
Biopolymer Eng'r, Inc. v. ImmuDyne, Inc.,
304 S.W.3d 429 (Tex. App.—San Antonio 2009,
op. vacated pursuant to settlement) ............................................... 35
Bonito Boats, Inc. v. Thunder Craft Boats, Inc.,
489 U.S. 141 (1989) ......................................................................... 17
Casso v. Brand,
776 S.W.2d 551 (Tex. 1989)............................................................. 29
Charalambopoulos v. Grammer,
3:14–CV–2424–D, 2015 WL 390664 (N.D. Tex. Jan. 29, 2015) ..... 10
Cheniere Energy, Inc. v. Lotfi,
449 S.W.3d 210
(Tex. App.—Houston [1st Dist.] 2014, no pet.) ....................... 9, 14, 19
Cohen v. Cowles Media Co.,
501 U.S. 663 (1991) ......................................................................... 17
Dolcefino v. Randolph,
No. 14-00-00602-CV, 2001 WL 931112
(Tex. App.—Houston [14th Dist.] 2001, pet. denied) ....................... 7
Freeman v. Schack,
154 Cal. App. 4th 719 (Cal. App. 4 Dist. 2007) .............................. 18
iii
Grainger v. W. Cas. Life Ins. Co.,
930 S.W.2d 609
(Tex. App.—Houston [1st Dist.] 1996, writ denied) ....................... 30
Hyde Corp. v. Huffines,
314 S.W.2d 763 (Tex. 1958)............................................................. 17
Jardin v. Marklund,
431 S.W.3d 765
(Tex. App.—Houston [14th Dist.] 2014, no pet.) .................. 9, 14, 16
Kinney v. BCG Attorney Search,
No. 03–12–00579–CV, 2014 WL 1432012
(Tex. App.—Austin Apr. 11, 2014, pet. denied) (mem. op.) ............. 7
KTRK Television, Inc. v. Fowkes,
981 S.W.2d 779 (Tex. App.—Houston [1st Dist.] 1998, writ
denied), rev’d in part on other grounds,
Turner v. KTRK Television, Inc., 38 S.W.3d 103 (Tex. 2000) .......... 7
Marks v. St. Luke’s Episcopal Hosp.,
319 S.W.3d 658 (Tex. 2010)............................................................. 13
Newspaper Holdings, Inc. v. Crazy Hotel Assisted Living, Ltd.,
416 S.W.3d 71
(Tex. App.—Houston [1st Dist.] 2013, pet. denied) ....................... 24
Paulsen v. Yarrell,
No. 01–14–00351–CV, 2014 WL 7174259
(Tex. App.—Houston [1st Dist.] Dec. 16, 2014, no pet.) .................. 5
R.J. Suarez Enters. v. PNYX, L.P.,
380 S.W.3d 238 (Tex. App.—Dallas 2012, no pet.) ........................ 33
Rivers v. Johnson Custodial Home, Inc.,
No. A-14-CA-484-SS, 2014 WL 4199540 (W.D. Tex. Aug. 22, 2014) ... 10
RRR Farms, Ltd. v. Am. Horse Prot. Ass’n, Inc.,
957 S.W.2d 121
(Tex. App.—Houston [14th Dist.] 1997, pet. denied) ..................... 30
iv
Schimmel v. McGregor,
438 S.W.3d 847
(Tex. App.—Houston [1st Dist.] 2014, pet. filed) ............... 22, 24, 26
Smith v. Baldwin,
611 S.W.2d 611 (Tex. 1980)............................................................. 12
St. Martin Evangelical Lutheran Church v. S. Dakota,
451 U.S. 772 (1981) ................................................................... 10, 11
TGS–NOPEC Geophysical Co. v. Combs,
340 S.W.3d 432 (Tex. 2011)............................................................. 13
T-N-T Motorsports, Inc. v. Hennessey Motorsports, Inc.,
965 S.W.2d 18
(Tex. App.—Houston [1st Dist.] 1998, pet. dism’d)........................ 28
Tony Gullo Motors I, L.P. v. Chapa,
212 S.W.3d 299 (Tex. 2006)............................................................. 35
U.S. Fire Ins. Co. v. Sheppard, Mullin, Richter & Hampton,
171 Cal. App. 4th 1617 (Cal. App. 4 Dist. 2009) ............................ 18
West v. Schlumberger Tech. Corp.,
234 F.3d 1279 (9th Cir. 2000) ......................................................... 37
Whisenhunt v. Lippincott,
416 S.W.3d 689
(Tex. App.—Texarkana 2013, pet. filed) .............................. 9, 10, 14
Statutes
TEX. CIV. PRAC. & REM. CODE § 27.002 ............................................ 2, 8, 11
TEX. CIV. PRAC. & REM. CODE § 27.005(c) ................................................ 22
TEX. CIV. PRAC. & REM. CODE § 27.008(b) .................................................. 5
TEX. CIV. PRAC. & REM. CODE § 27.011 ..................................................... 11
TEX. CIV. PRAC. & REM. CODE § 27.011(b) ............................................ 2, 13
v
TEX. CIV. PRAC. & REM. CODE § 51.014(a)(12) ............................................ 5
TEX. GOV’T CODE § 311.023(3) .................................................................... 6
TEX. R. CIV. P. 97(a) ............................................................................ 20, 21
Other Authorities
Senate Comm. on State Affairs, Engrossed Bill Analysis,
Tex. H.B. 2935, 83d Leg., R.S. (2013) ..................................................... 6
vi
No. 01-14-00776-CV
In the Court of Appeals
for the First Judicial District
Houston, Texas
SCHLUMBERGER LIMITED AND
SCHLUMBERGER TECHNOLOGY CORPORATION,
Appellants/Cross-Appellees,
v.
CHARLOTTE RUTHERFORD,
Appellee/Cross-Appellant.
On Appeal from the
127th District Court at Houston, Texas
APPELLANTS’ REPLY BRIEF
TO THE HONORABLE FIRST COURT OF APPEALS:
As its text and history make clear, the Texas Citizens’
Participation Act (TCPA) was never intended to protect private
communications for personal gain, like those involved here. And when
it does apply, the TCPA imposes only a minimal evidentiary burden on
the non-movant. Misconstruing both the scope of the TCPA and its
evidentiary standards, the trial court dismissed nearly every claim
asserted by Schlumberger against Rutherford. In so doing, the trial
court created troubling precedent. If the TCPA’s purpose will no longer
be consulted in determining its applicability, and rational inferences
from circumstantial evidence no longer allowed, the statute’s reach will
be constrained only by the creativity of counsel. As this case
demonstrates, bizarre results will follow.
SUMMARY OF ARGUMENT
When it enacted the TCPA, the Legislature included a “Purpose”
provision, making clear that the statute is intended to “encourage and
safeguard the constitutional rights of persons to petition, speak freely,
and otherwise participate in government to the maximum extent
permitted by law . . .” TEX. CIV. PRAC. & REM. CODE § 27.002. It also
commanded that courts must construe the statute “to effectuate its
purpose and intent fully.” Id. § 27.011(b). In this case, the trial court
demonstrably failed to interpret and apply the TCPA consistent with its
purpose and the Legislature’s command.
Schlumberger’s lawsuit against Rutherford has nothing to do with
abridging her constitutional rights to “petition, speak freely, and
otherwise participate in government to the maximum extent permitted
by law.” Nor does the TCPA protect Rutherford’s conduct at issue in
2
this lawsuit: breach of fiduciary duties by use of Schlumberger’s
confidential information obtained while Rutherford was its top
Intellectual Property lawyer; improper removal and use of physical and
electronic property from Schlumberger’s premises; allowing third
parties to access Schlumberger’s confidential information and
documents in her possession; and improperly and without permission
deleting a large number of company files, including files containing
confidential data and information. See CR.1344, 1415, 1418–21.
Disregarding the mismatch between Schlumberger’s claims and
the purpose and scope of the TCPA, the trial court concluded that the
TCPA was applicable in this case. Rutherford now urges the Court to
ratify that decision. Heedless of the broader consequences, Rutherford
invites this Court to likewise ignore the TCPA’s purpose of protecting
only public communications analogous to participation in government,
advocating instead that the Court endorse a myopic reading of isolated
portions of the statute, focused solely on its definitions of the “right to
petition” and “right of association.” Thus, Rutherford envisions a
virtually unlimited reach for the TCPA’s dismissal mechanism, leading
to unworkable and absurd results. The Court should reject Rutherford’s
3
invitation to expand the scope of the TCPA beyond the text of the
statute and the intent of the Legislature.
But even if the TCPA applies, Schlumberger introduced more than
sufficient clear and specific evidence to establish a prima facie case,
precluding dismissal of its claims. The trial court reached a contrary
conclusion only by determining that circumstantial evidence is
inadmissible to defeat a TCPA motion, a construction of the statute that
is unsupported by its text and that runs afoul of longstanding
evidentiary standards in Texas.
For her part, Rutherford is unwilling to endorse explicitly the trial
court’s indefensible “no circumstantial evidence” rule, choosing instead
to focus on mischaracterizing Schlumberger’s evidence as mere
speculation and innuendo. But the record speaks for itself, and includes
ample direct and circumstantial evidence to defeat Rutherford’s TCPA
motion. For all of these reasons, the Court should reverse the trial
court’s decision dismissing Schlumberger’s claims for breach of fiduciary
duty, misappropriation of trade secrets, conversion, and violation of the
Texas Theft Liability Act.
4
ARGUMENT
I. THE COURT HAS JURISDICTION TO CONSIDER SCHLUMBERGER’S
APPEAL.
Referencing dicta from Paulsen v. Yarrell, No. 01–14–00351–CV,
2014 WL 7174259 (Tex. App.—Houston [1st Dist.] Dec. 16, 2014, no
pet.), Rutherford asserts that the Court lacks jurisdiction over
Schlumberger’s appeal. Specifically, Rutherford claims that an
amendment to Texas Civil Practice and Remedies Code Section 51.014
impliedly negates Schlumberger’s ability to appeal the grant—as
opposed to a denial―of a TCPA motion to dismiss under Texas Civil
Practice and Remedies Code Section 27.008(b).1 Rutherford is wrong.
Section 27.008(b) provides for appeals from orders on TCPA
motions to dismiss without regard for whether an order is a grant or
denial. And legislative history confirms that (1) the intent of the TCPA
was to allow appeals from both grants and denials of TCPA motions to
dismiss, and (2) the amendment to Section 51.014 did not alter the
1. See TEX. CIV. PRAC. & REM. CODE § 27.008(b) (“An appellate court shall expedite
an appeal or other writ, whether interlocutory or not, from a trial court order on a
motion to dismiss a legal action under Section 27.003 or from a trial court’s failure
to rule on that motion in the time prescribed by Section 27.005.”); § 51.014(a)(12)
(“A person may appeal from an interlocutory order of a district court, county court
at law, statutory probate court, or county court that . . . denies a motion to dismiss
filed under Section 27.003.”).
5
TCPA in that regard. See Senate Comm. on State Affairs, Engrossed
Bill Analysis, Tex. H.B. 2935, 83d Leg., R.S. (2013) (sponsor explains
that the original legislation allows appeals from grants and denials of
TCPA dismissal motions, and that the amendment was simply intended
to correct a Second Court of Appeals case finding no jurisdiction over
the denial of a TCPA motion).
The Court should not read an implied modification of
Section 27.008(b) into Section 51.014(a)(12)—doing so would be contrary
to the express intent of the author of both provisions. See TEX. GOV’T
CODE § 311.023(3) (courts may consider legislative history); Alex
Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644, 651–52
(Tex. 2006) (“cautiously” looking to legislative history where statutory
language nebulous). Indeed, Rutherford fails to point to any analogous
case law holding that an amendment to one statute impliedly modified
another, contrary to the express legislative intent of that amendment.
In any event, the Court has jurisdiction because the trial court’s
order partially denied the TCPA motion, thereby providing jurisdiction
over the entire order under Section 51.014(a)(12). See Kinney v. BCG
Attorney Search, No. 03–12–00579–CV, 2014 WL 1432012, at *1, 13
6
(Tex. App.—Austin Apr. 11, 2014, pet. denied) (mem. op.) (finding
jurisdiction over both appeal and cross-appeal of partial denial and
partial grant of TCPA motion to dismiss). In a closely analogous
context, Texas courts of appeals have held that when jurisdiction under
Section 51.014(a)(6) is triggered, jurisdiction exists over the entire
order, and not just over the claims triggering jurisdiction. See Dolcefino
v. Randolph, No. 14-00-00602-CV, 2001 WL 931112, at *3 (Tex. App.—
Houston [14th Dist.] 2001, pet. denied) (“this court has jurisdiction over
the entire order denying appellants’ motions for summary judgment”);
but see KTRK Television, Inc. v. Fowkes, 981 S.W.2d 779 (Tex. App.—
Houston [1st Dist.] 1998, writ denied), rev’d in part on other grounds,
Turner v. KTRK Television, Inc., 38 S.W.3d 103 (Tex. 2000) (finding
jurisdiction present only with regard to specific claims triggering
jurisdiction).
In sum, the Court has appellate jurisdiction and should address
the merits of Schlumberger’s appeal.
II. THE TCPA DOES NOT APPLY TO SCHLUMBERGER’S CLAIMS
AGAINST RUTHERFORD.
Rutherford asserts that Schlumberger’s claims implicate the
TCPA’s protection of her “right to petition” and “right of association.”
7
CR.237. Rutherford bore the initial burden of demonstrating the
TCPA’s applicability by a preponderance of the evidence. Because
Rutherford did not, and could not, meet that burden, the trial court
erred in dismissing Schlumberger’s claims.
A. The TCPA Protects Public Communications with a
Nexus to Participation in Government, Not Private
Communications for Commercial Gain.
The TCPA’s language, context, and legislative history confirm that
it protects communications made publicly and with a nexus to
participation in government, and not private communications for
commercial gain.
Section 27.002 describes the purpose of the TCPA as follows: “to
encourage and safeguard the constitutional rights of persons to petition,
speak freely, associate freely, and otherwise participate in government
to the maximum extent permitted by law.” TEX. CIV. PRAC. & REM.
CODE § 27.002 (emphasis added).
As decisions from both this Court and the Fourteenth Court of
Appeals have noted, because the stated purpose of the TCPA includes
the phrase “otherwise participate in government,” it is apparent that
the Legislature intended to protect only communications that are
8
analogous to participating in government. See Cheniere Energy, Inc. v.
Lotfi, 449 S.W.3d 210, 216 (Tex. App.—Houston [1st Dist.] 2014, no
pet.) (explaining that the terms “citizen” in the title of the TCPA and
“participate in government” in its purpose provision “contemplate a
larger public purpose”); id. at 217 (Jennings, J., concurring) (“By
including the phrase ‘otherwise participate in government’ in Section
27.002, the legislature intended to protect only constitutionally
protected freedoms that rise to such a level that they can be considered
participation in government.”) (internal punctuation omitted); Jardin v.
Marklund, 431 S.W.3d 765, 770–73 (Tex. App.—Houston [14th Dist.]
2014, no pet.).
Other Texas courts have also recognized that the TCPA is not
intended to protect private communications. In Whisenhunt v.
Lippincott, for example, the Sixth Court of Appeals held that the TCPA
did not apply to a motion to dismiss defamation claims based on
internal emails that had never been published in a newspaper, social
media, or other public forum. 416 S.W.3d 689, 697–700 (Tex. App.—
Texarkana 2013, pet. filed). See also Rivers v. Johnson Custodial Home,
Inc., No. A-14-CA-484-SS, 2014 WL 4199540, at *1–2 (W.D. Tex. Aug.
9
22, 2014); Charalambopoulos v. Grammer, 3:14–CV–2424–D, 2015 WL
390664 (N.D. Tex. Jan. 29, 2015). The court explained, “Considering
the language of the statute as a whole, the Legislature’s statement of
intent, and existing law, which was referenced by the Legislature, we
conclude that the TCPA does not apply to speech that is only privately
communicated. Only under such an interpretation can both purposes of
the TCPA be served.” Whisenhunt, 416 S.W.3d at 700.
1. The TCPA should be construed consistent with
the express purpose set forth in its text.
Rejecting the considered analysis of the issue in the Cheniere
Energy, Jardin, and Whisenhunt decisions, Rutherford argues that the
language in the TCPA’s purpose provision should be given no
consideration in this case. Rather, in Rutherford’s view, the Court
should focus solely on the language in Section 27.001 of the statute
defining the “right to petition” and “right of association.” See Appellee’s
Br. 27–28.
For the proposition that the TCPA’s “Purpose” provision should be
ignored, Rutherford directs the Court to St. Martin Evangelical
Lutheran Church v. South Dakota, 451 U.S. 772 (1981). According to
Rutherford, in St. Martin the U.S. Supreme Court “observ[es] that
10
general statements of legislative purpose ‘cannot defeat the specific and
clear wording of a statute.’” Appellee’s Br. 28 (quoting St. Martin, 451
U.S. at [791] 786 n.19).
But Rutherford misquotes St. Martin, omitting key language from
the opinion that negates her argument. The actual quote from St.
Martin reads as follows: “general statements of overall purpose
contained in legislative reports cannot defeat the specific and clear
wording of a statute.” St. Martin, 451 U.S. at 786 n.19 (emphasis
added). Of course, Schlumberger, like this Court in Cheniere Energy,
points first and foremost to the clear statutory text of the TCPA setting
forth its purpose, not legislative reports as discussed in St. Martin. See
TEX. CIV. PRAC. & REM. CODE § 27.002 (“Purpose”). Further, the text of
the TCPA itself directs that it be interpreted in light of its purpose. See
id. § 27.011 (“Construction”). Rutherford’s suggestion that the TCPA’s
purpose be given little or no weight in interpreting its operative
provisions runs afoul of the plain text of the statute.
Contrary to Rutherford’s suggestion, Texas courts consistently
interpret statutes pursuant to express purposes set forth in statutory
text. See, e.g., Aviles v. Aguirre, 292 S.W.3d 648, 649 (Tex. 2009) (per
11
curiam) (noting that no other construction of the statute at issue would
comply with the explicit purpose of the statute); Smith v. Baldwin, 611
S.W.2d 611, 615 (Tex. 1980) (interpreting DTPA, which commands that
it be construed to promote its purpose set forth in Section 17.44 of the
Texas Business and Commerce Code, in light of the legislative intent
expressed in that section). Rutherford offers no legitimate reason, nor
could she, why the TCPA—unlike other Texas statutes with “purpose”
provisions—should be interpreted without reference to that provision.
2. The Cheniere Energy, Jardin, and Whisenhunt
decisions do not misconstrue the TCPA.
Leaving aside Rutherford’s misreading of St. Martin, she goes on
to suggest that the Cheniere Energy, Jardin, and Whisenhunt courts all
misconstrued the TCPA. But it is Rutherford who misunderstands both
the statute and these decisions, urging a construction of the TCPA that
is contrary to both the statute’s text as well as established canons of
construction.
As to Cheniere Energy and Jardin, Rutherford maintains that
these decisions incorrectly read the TCPA’s “Purpose” provision to
“override” the definitions of the “right to petition” and “right of
association” provisions in the statute. See Appellee’s Br. 27–30. Not so.
12
Cheniere Energy and Jardin do not stand for the proposition that
the TCPA’s purpose provision “overrides” any other provision of the
statute. Rather, these decisions properly recognize that all the
provisions in the TCPA are informed by, and should be construed in
harmony with, the TCPA’s overarching purpose articulated in Section
27.002. This approach to construing the TCPA is consistent with both
the text of the statute as well as established canons of construction. See
TEX. CIV. PRAC. & REM. CODE § 27.011(b) (expressly requiring Texas
courts to construe all of the TCPA’s provisions “to effectuate its
purpose”); see also TGS–NOPEC Geophysical Co. v. Combs, 340 S.W.3d
432, 441 (Tex. 2011) (explaining that the words of a statute should not
be examined in isolation, but rather must be informed by the context in
which they are used); Marks v. St. Luke’s Episcopal Hosp., 319 S.W.3d
658, 663 (Tex. 2010) (explaining that courts cannot interpret a statute
in a manner that renders any part of the statute meaningless or
superfluous).2
2. Rutherford argues that Cheniere Energy conflicts with this Court’s decision in
BBB of Metro. Houston, Inc. v. John Moore Servs., Inc., 441 S.W.3d 345 (Tex. App.—
Houston [1st Dist.] 2013, pet. denied). Rutherford overreads John Moore. In that
case, the Court made clear that it was deciding only that “the scope of [the TCPA] is
not limited only to protect speech directed toward the government.” Id. at 353
(emphasis added). The Cheniere Energy decision also does not conclude that the
13
Rutherford also argues that Whisenhunt, and in turn Cheniere
Energy and Jardin, incorrectly conclude that the TCPA does not protect
private communications. See Appellee’s Br. 31–32. Again, however,
Rutherford’s argument turns on her request that the Court ignore the
TCPA’s language, which makes clear that the statute protects public
communications analogous to or involving participation in government,
not private communications for commercial gain. Whisenhunt, 416
S.W.3d at 697; Jardin, 431 S.W.3d at 770–71; Cheniere Energy, 449
S.W.3d at 216.
In sum, the basis for Rutherford’s disagreement with Whisenhunt,
Cheniere Energy, and Jardin is that each of those decisions recognized
an essential aspect of the TCPA that Rutherford urges this Court to
ignore: the TCPA was designed to promote public discourse, citizen
participation, and the exchange of ideas for the betterment of all. A
reading of the TCPA that disregards this purpose would be contrary to
the text and intent of the statute, and would dangerously expand its
reach well beyond the expectations of the Legislature.
TCPA is so limited. Rather, Cheniere Energy understands the TCPA to protect
public communications involving citizen participation—whether directed to the
government or simply to the public—not private communications for personal gain.
Thus the holdings in John Moore and Cheniere Energy do not conflict, as Rutherford
suggests.
14
B. The TCPA Is Inapplicable Because Schlumberger’s
Suit Is Not Premised on TCPA-Protected
Communications.
Rutherford could not, and did not, meet her burden to prove by a
preponderance of the evidence that Schlumberger’s lawsuit was filed in
response to, premised upon, or otherwise implicated TCPA-protected
communications.
Rutherford argues that her conduct triggering Schlumberger’s
lawsuit is protected by the TCPA because it is somehow “connected” to
the filing of patent litigation against Schlumberger by Dynamic 3D
Geosolutions, a subsidiary of her employer Acacia. See Rutherford’s
Cross-Appellant’s Br. 29–30. The Court should reject this argument for
several reasons.
First, none of Schlumberger’s claims are “based on,” “related to,”
or a “response” to Dynamic’s patent litigation. Rather, Schlumberger
brought claims against Rutherford addressing rights and remedies
independent of and different from those at issue in patent litigation.
Likewise, none of Schlumberger’s claims implicates First Amendment
concerns, much less the specific First Amendment concerns protected by
15
the TCPA. Finally, accepting Rutherford’s expansive interpretation of
the TCPA leads to unreasonable and absurd results.
1. Schlumberger’s suit does not implicate the First
Amendment concerns addressed by the TCPA.
According to Rutherford, if any connection can be drawn between
Dynamic’s patent litigation and Schlumberger’s suit against her, the
protections of the TCPA are invoked. Rutherford is mistaken.
To begin with, Rutherford’s argument is premised on the notion
that Dynamic’s pursuit of patent litigation somehow constitutes an
exercise of Rutherford’s constitutional rights. This is not the case. See
Jardin, 431 S.W.3d at 774. Rutherford cannot invoke any “right to
petition” that Dynamic may possess. See id.
And although Dynamic’s allegations alerted Schlumberger that
Rutherford may have violated her contractual and legal duties, causing
Schlumberger to investigate her departure, the fact that information
discovered during that investigation resulted in the filing of this lawsuit
does not equate to this lawsuit being connected to Dynamic’s patent
case. Rather, Schlumberger’s suit against Rutherford involves multiple
causes of action, including breach of contract, breach of fiduciary duty,
and misappropriation of trade secrets claims, all of which address rights
16
and remedies independent of and different from those at issue in patent
litigation. As both the U.S. Supreme Court and Texas courts have
recognized, the law protecting trade secrets advances “goals outside the
contemplation of the federal patent scheme” in a manner “not aimed
exclusively at the promotion of [the] invention itself.” Bonito Boats, Inc.
v. Thunder Craft Boats, Inc., 489 U.S. 141, 166 (1989); see also Hyde
Corp. v. Huffines, 314 S.W.2d 763, 773 (Tex. 1958).
Further, as in this case, trade secret misappropriation cases often
involve breaches of contracts or breaches of confidence. Such cases do
not implicate First Amendment concerns, much less the specific First
Amendment concerns protected by the TCPA. See, e.g., Cohen v. Cowles
Media Co., 501 U.S. 663, 668–72 (1991) (holding that First Amendment
protections were not triggered by a private cause of action for
promissory estoppel); see also Schlumberger’s Cross-Appellees’ Br. 31–
37.
Under Rutherford’s expansive view of the TCPA, contrary to these
precedents, an employee and even a fiduciary such as herself, can
invoke the TCPA as a shield to “immunize” tortious, unlawful, and
unethical conduct so long as that misconduct has some connection to a
17
subsequently filed patent lawsuit. Surely the Legislature did not
intend the TCPA to apply in this manner.3
2. Applying the TCPA to a broad array of claims
unrelated to the statute’s purpose leads to
unreasonable and absurd results.
Rutherford’s argument that the TCPA’s protections are invoked by
the mere existence of any connection between Dynamic’s patent lawsuit
and Schlumberger’s claims against her is perhaps most troubling
because it is predicated on an interpretation of the TCPA that is
unworkable, unreasonable, and leads to absurd results. It turns on an
expansive and aggressive reading of the TCPA, particularly regarding
3. California courts have rejected the overly broad interpretation of that State’s
anti-SLAPP statute that Rutherford advocates here. California courts look to the
“gravamen of a cause of action [to determine] whether the anti-SLAPP statute
applies.” U.S. Fire Ins. Co. v. Sheppard, Mullin, Richter & Hampton, 171 Cal. App.
4th 1617, 1625 (Cal. App. 4 Dist. 2009). With particular reference to suits asserting
attorney misconduct, California courts have recognized a “growing body of case law
[holding] that actions based on an attorney’s breach of professional and ethical
duties owed to a client are not SLAPP suits, even though protected litigation
activity features prominently in the factual background.” Appellants’ Br. 40.
Rutherford calls this precedent “irrelevant” because the California statute applies to
a cause of action “arising from” protected activity, whereas the Texas statute
applies to a cause of action that is “based on, relates to, or is in response to”
protected activity. Appellee’s Br. 40-41. But California courts are not focused on
the distinction between the asserted technical definitions of the phrases “arises
from” and “relates to.” Rather, like Texas courts, California courts look to the
purpose of the anti-SLAPP statute and determine whether the act underlying the
plaintiff’s cause of action was “an act in furtherance of the defendant’s right of
petition or free speech.” Freeman v. Schack, 154 Cal. App. 4th 719, 727 (Cal. App. 4
Dist. 2007).
18
the breadth of its provisions protecting the “right to petition” and the
“right of association,” that insists these provisions be read broadly, and
in isolation, rather than in light of the TCPA’s “Purpose” set forth in
Section 27.002.
As this Court has recognized however, untethering the TCPA’s
“right to petition” and “right of association” provisions from its “larger
public purpose” and the “generally recognized parameters of First
Amendment protections” leads to an unreasonable and absurd
expansion of the statute’s applicability. Cheniere Energy, 449 S.W.3d at
216–17 (noting that if the statute is not read in light of these
considerations, “any communication that is part of the decision-making
process in an employment dispute—to name just one example—could be
used to draw within the TCPA’s summary dismissal procedures private
suits implicating only private issues”).
The consequences of applying Rutherford’s rule demonstrate the
concerns articulated in Cheniere Energy. For example, under
Rutherford’s interpretation, the TCPA would apply to any and all
compulsory counterclaims because they are necessarily “associated” or
“connected” with the triggering claim or suit. See TEX. R. CIV. P. 97(a)
19
(providing that a pleading “shall state as a counterclaim any claim . . . if
it arises out of the transaction or occurrence that is the subject matter
of the opposing party’s claim”). The upshot would be that every
compulsory counterclaim would invoke the TCPA’s procedures,
including a potential award of attorneys’ fees, sanctions against the
(compulsory) counterclaimant, and—according to the trial court—
dismissal of the compulsory counterclaims unless the counterclaimant
can prove its case by non-circumstantial evidence at the outset of a
lawsuit and long before the completion of discovery.4
In addition, under Rutherford’s interpretation, the TCPA could be
used to abrogate or substantially undermine longstanding Texas
statutory and common law remedies for tortious and unlawful conduct.
Applied as broadly as Rutherford suggests, the TCPA could shield
4. Rutherford argues that it is “implausible” to suggest that all compulsory
counterclaims would implicate the TCPA’s protections because “[a] counterclaim can
be, but is not necessarily, filed in response to—that is, in retaliation for—the
plaintiff’s filing of the original claim, which is an act of petitioning.” Appellee’s Br.
34.
Rutherford appears to have forgotten what she asserts elsewhere in the same brief:
under Section 27.003(a) the TCPA is also triggered by a legal action that “relates to”
the “right to petition,” not just legal actions that are filed “in response to” the
exercise of the right to petition. Of course, by their nature compulsory
counterclaims are necessarily “related to” the triggering claim or suit. See TEX. R.
CIV. P. 97(a).
20
conduct contravening Texas’s Free Enterprise and Antitrust Act of
1983, the Texas Insurance Code, and Texas’s anti-discrimination and
anti-retaliation laws. See Schlumberger’s Cross-Appellees’ Br. 40–48.
The notion that the Legislature intended the TCPA’s reach to be so
broad and all-encompassing, shielding all manner of illegal and tortious
conduct unrelated to the purposes of the TCPA, strains credulity.5
III. EVEN ASSUMING THE TCPA APPLIES, SCHLUMBERGER MET ITS
EVIDENTIARY BURDEN TO PREVENT DISMISSAL OF ITS CLAIMS.
Even if the Court concludes that Schlumberger’s lawsuit
implicates the TCPA, it should reverse the trial court’s dismissal of
Schlumberger’s claims for breach of fiduciary duty, misappropriation of
trade secrets, conversion, and violation of the Texas Theft Liability Act.
The TCPA imposes a minimal evidentiary burden on plaintiffs seeking
to avoid dismissal, and Schlumberger more than adequately met that
burden.
A. The TCPA Imposes a Minimal Evidentiary Burden on
the Non-Movant.
If the trial court determines that a movant in a TCPA dismissal
motion has met her initial burden to demonstrate that the non-movant’s
5. Even if the TCPA applies in this case, the commercial speech exception in Section
27.010(b) of the TCPA prevents dismissal of Schlumberger’s claims against
Rutherford. See Appellants’ Br. 46–48.
21
lawsuit implicates the TCPA, the burden shifts to the non-movant to
establish “by clear and specific evidence a prima facie case for each
essential element of the claim in question.” TEX. CIV. PRAC. & REM.
CODE § 27.005(c). In determining whether a non-movant carries that
burden, the trial court “shall consider” both the pleadings and evidence,
id. § 27.006, and it must review them in the light most favorable to the
non-movant. Schimmel v. McGregor, 438 S.W.3d 847, 855–56 (Tex.
App.—Houston [1st Dist.] 2014, pet. filed).
Here, the trial court made clear that it interpreted Section
27.005(c)’s requirement that the non-movant submit “clear and specific”
evidence establishing a prima facie case to foreclose the court’s
consideration of any circumstantial evidence. RR.IX.45. But
interpreting the TCPA to preclude rational inferences from
circumstantial evidence would violate the definition of a prima facie
case under Texas law, the ordinary meaning of “clear and specific,” and
the elementary principle of Texas law that any fact may be proved
through circumstantial evidence. Appellants’ Br. 50–54. Moreover,
precluding rational inferences from circumstantial evidence would by
definition lead to absurd results, and would require the Court to
22
conclude that the Legislature intended to impose on litigants a higher
burden to survive a motion to dismiss filed at the outset of a case than
would be necessary ultimately to prevail at trial. See id. 6
The Court should confirm that (1) the prima facie standard
defines the quantum of evidence needed to overcome a TCPA motion,
and (2) the terms “clear and specific” relate to the quality of evidence
and do not exclude circumstantial evidence and rational inferences.
B. Schlumberger Carried Its Evidentiary Burden To
Prove a Prima Facie Case with Clear and Specific
Evidence for Every Claim Asserted Against
Rutherford.
Rutherford does not deny that in evaluating a TCPA motion, the
Court must review the pleadings and evidence in the light most
favorable to the non-movant. Schimmel, 438 S.W.3d at 855–56;
Newspaper Holdings, Inc. v. Crazy Hotel Assisted Living, Ltd., 416
S.W.3d 71, 80–81 (Tex. App.—Houston [1st Dist.] 2013, pet. denied).
6. In addition, precluding the use of circumstantial evidence would violate the Open
Courts provision of the Texas Constitution. See Appellants’ Br. 55–58. Tellingly,
Rutherford’s lead argument in response to Schlumberger’s Open Courts argument is
a wholesale retreat from any claim of a heightened evidentiary standard, as
Rutherford instead argues that she is applying only generally applicable Texas law
precluding “meager” circumstantial evidence and “stacked” inferences. Appellee’s
Br. 50. This is irreconcilable with both her argument on appeal, e.g. Rutherford’s
Cross-Appellant’s Br. 20, and her trial court argument, e.g., RR.VII.42, which
convinced the trial court that the TCPA prohibits the use of circumstantial evidence
by a plaintiff, e.g., RR.VII.41-42, RR.IX.45, 47–48.
23
Nevertheless, she makes strained attacks on Schlumberger’s evidence
that serve only to underscore the invalidity of the evidentiary standard
she advocates. By presenting direct and circumstantial evidence to
support each of its claims, Schlumberger met its burden under Section
27.005(c). See Appellants’ Br. 59–71.
1. Breach of fiduciary duty
In support of its breach of fiduciary duty claim, Schlumberger
presented evidence showing that a number of USB drives were attached
to Rutherford’s computer between the time she accepted her new
position with Acacia and her last day at Schlumberger—a timeframe in
which, as Schlumberger’s Deputy General Counsel for Intellectual
Property, Rutherford indisputably owed Schlumberger the highest of
fiduciary duties. CR.1334. Those drives contained confidential
Schlumberger information, including trade secrets. CR.1334, 1415, 18–
21. Rutherford accessed these drives after accepting employment with
Acacia, CR.1334, connected some of them to her Acacia laptop, CR.2859,
and ultimately failed to return those drives to Schlumberger upon her
departure from the company, CR.1406–07, 1414, 1431. Rutherford also
failed to return a My Book external hard drive, which contained
24
confidential Schlumberger emails. CR.73, 1406–07, 1414, 1431.
Finally, Rutherford deleted files from her company-issued laptop before
returning it. CR.1334.7
In response, Rutherford asserts that Schlumberger’s evidence
established only that it could not find the drives, not that Rutherford
had taken them. Appellee’s Br. 53 & n.6. But Rutherford fails to
explain witness testimony directly contradicting her account of what
she did with the missing devices. See CR.1431 (Supplemental
Declaration of Janet Lennon). Although Rutherford would have the
factfinder believe her testimony and not Schlumberger’s witnesses, the
governing standard requires just the opposite. See Schimmel, 438
S.W.3d at 855–56.
Rutherford also argues that the affidavit of David Cowen,
demonstrating that she accessed confidential information, is invalid.
7. Moreover, as Schlumberger discovered after bringing its lawsuit, Rutherford
breached her fiduciary duties by concurring in the filing of a lawsuit against
Schlumberger involving subject matter she worked on as a Schlumberger attorney.
CR.1422, CR.2849–52, RR.VIII.PX.13 p.46. Rutherford does not deny that this
constituted a breach of her fiduciary duties, which was also established through the
affidavits of two experts on Texas’ disciplinary rules and ethical requirements. See
CR.2998–3045 (Affidavits of Charles Herring and James McCormack). Rutherford’s
consciousness of her misconduct is evidenced by the fact that her narrative changed
as the case progressed. While she initially insisted that she had no communications
whatsoever with Acacia pertaining to Schlumberger, she later admitted to having
such communications. Compare, CR.1187–96, CR.1210, with RR.VIII.PX13 p.36.
25
She maintains that testimony based on an “understanding” is not
evidence, and Cowen stated that he has an “understanding” of what
devices were used by Rutherford. Appellee’s Br. 55. But Cowen
explains that he identified the various files accessed while the user
“crutherford2” was logged in. E.g., CR.1334. Rutherford’s assertion
that this is insufficient to show that she was using the devices at issue
demonstrates that her interpretation of the “clear and specific”
standard excludes rational inferences, and is therefore unworkable.8
Rutherford also argues that the deleted files could have been sent
to the recycling bin or could have been backed up. Appellee’s Br. 56.
However, the mere fact that information was potentially recoverable
does not negate a prima facie case, particularly where evidence is
viewed in the light most favorable to the plaintiff defending against a
TCPA motion to dismiss. Again, Rutherford’s argument improperly
inverts the applicable standard.
8. Similarly, Rutherford attacks the Robin Nava affidavit as not being based on
personal knowledge, claiming that “it is not proper for a lay witness with no
computer or forensic background to rely on a purported expert to reach her
conclusions.” Appellee’s Br. 56. However, the substantive portion of Nava’s
affidavit is her testimony that various files contained IP content based on her
personal familiarity with Rutherford’s naming conventions, and her personal
knowledge of the value of Schlumberger’s IP content. CR.1413–22.
26
Finally, Rutherford asserts that Schlumberger did not address the
damages element of the breach of fiduciary duty claim. Appellee’s Br.
57. This argument fails. First, damages are not necessary for a breach
of fiduciary duty claim. See Appellants’ Br. 59–63. Second, the
evidence establishes that Rutherford removed confidential trade secret
information. See id. at 62. To the extent Rutherford implies this
information is somehow valueless, Nava’s testimony includes evidence
of the value of the trade secrets that Rutherford improperly removed in
breach of her fiduciary duties. CR.1413–22. In any event, it is
undisputed that Schlumberger sought injunctive relief requesting the
return of its information.
2. Misappropriation of trade secrets
As Schlumberger previously demonstrated regarding its breach of
fiduciary duty and misappropriation of trade secrets claims, Rutherford
was in possession of a substantial amount of secret information, both on
the devices she failed to return upon her departure and also as a result
of her position with Schlumberger as Deputy General Counsel for
Intellectual Property. CR.1205, 1414, 18–21, 1614–15. She developed,
managed, and assessed Schlumberger’s IP strategies. Id. The very fact
27
that Rutherford had and took secret information after accepting
employment with Acacia, where she is indisputably in a position to use
it to compete against Schlumberger, demonstrates the prima facie case.
See T-N-T Motorsports, Inc. v. Hennessey Motorsports, Inc., 965 S.W.2d
18 (Tex. App.—Houston [1st Dist.] 1998, pet. dism’d).
In response, Rutherford asserts that Schlumberger failed to
identify any purportedly stolen information. Appellee’s Br. 17.
Rutherford is incorrect. The Cowen affidavit specifically identified
Schlumberger files accessed by Rutherford, including numerous files
whose names plainly signify IP content. CR.1334 et seq. In addition,
Nava explained that the files referenced by Cowen contained
Schlumberger’s confidential trade secret information, CR.1415, and she
identified specific files as containing trade secret information pertaining
to Petrel, CR.1415, 18–21. Further, Rutherford herself has admitted
that some of the drives contained confidential information. CR.1205.
Rutherford goes on to make various complaints about the Nava
affidavit, none of which have merit. First, Rutherford argues that
Nava’s affidavit does not state the basis for Nava’s claim that the
affidavit is based on her personal knowledge. Appellee’s Br. 59. But
28
Nava’s declaration explains that she is familiar with Schlumberger’s IP
information and strategy based on her position as Schlumberger’s
Deputy General Counsel for Intellectual Property. CR.1413–15. As
such, Rutherford’s complaint is meritless.
Second, Rutherford asserts that Nava’s testimony is that of an
interested witness that cannot easily be controverted. Appellee’s Br. 59.
But that evidentiary principle arises in the summary-judgment context,
and has no application here. See, e.g., Casso v. Brand, 776 S.W.2d 551,
557 (Tex. 1989) (holding, inter alia, that if an affidavit of an interested
witness cannot be easily controverted, it will not support a summary
judgment).9 Further, the case cited by Rutherford for this argument,
Grainger v. Western Casualty Life Insurance Co., 930 S.W.2d 609 (Tex.
App.—Houston [1st Dist.] 1996, writ denied), concerns testimony
regarding an individual’s subjective knowledge or intentions, which are
not susceptible of being easily controverted. See Grainger, 930 S.W.2d
at 615. Here, Nava testified to factual information about
Schlumberger’s intellectual property and business strategies, in
9. More generally, the rationale of the body of law regarding an interested witness’s
testimony that cannot easily be controverted is that the jury should decide the
issue, and it therefore should not be finally determined at an early stage of
litigation. E.g., RRR Farms, Ltd. v. Am. Horse Prot. Ass’n, Inc., 957 S.W.2d 121,
132 (Tex. App.—Houston [14th Dist.] 1997, pet. denied).
29
contrast to the Grainger plaintiffs’ testimony as to their own
expectations and intentions. Thus, Grainger is inapposite.
Finally, Rutherford argues that Schlumberger has no damages
and “fails to explain how [Rutherford] used the information or why
Schlumberger thinks she used the information.” Appellee’s Br. 60.
Again, this argument ignores the record. Schlumberger’s prima facie
case is established by, among other things, the fact that Rutherford
possessed and removed confidential information belonging to
Schlumberger after she accepted employment with Acacia, where she is
indisputably in a position to use that information to compete against
Schlumberger, and that Rutherford’s actions have impaired the value of
Schlumberger’s trade secrets. Appellants’ Br. 65–66.
3. Conversion.
In support of its conversion claim, Schlumberger provided direct
evidence that it owned computer devices that Rutherford had control
over and failed to return to Schlumberger when she left the company,
despite being asked to do so at her exit interview. CR.73, 77, 1406–07,
1414, 1431. Schlumberger is entitled to have that property returned or
to be reimbursed for its value.
30
In response, Rutherford offers no legitimate complaints about
Schlumberger’s evidence. She begins by asserting that the testimony of
Janet Lennon, Rutherford’s assistant at Schlumberger, somehow does
not establish that Schlumberger owned the devices at issue. Appellee’s
Br. 61–62. But Lennon testified that she provided the devices (USB
flash drives) to Rutherford at Rutherford’s request. CR.76. Contrary to
Rutherford’s suggestion, the rational inference from Lennon’s testimony
is that Lennon met Rutherford’s request by obtaining the devices from
Schlumberger.10
Similarly, Rutherford claims that the affidavit of Gary DeLeon
fails to demonstrate that Schlumberger owned the external hard drive
because he inaccurately stated the date that he assisted in backing up
Rutherford’s files. Appellee’s Br. 61. This is another instance, however,
of Rutherford arguing that a minor discrepancy in a witness’s testimony
requires draconian results. After all, Rutherford does not dispute that
10. Rutherford also attacks Lennon for stating in an affidavit that she provided
“about ten USB flash drives,” while later testifying that she could not “put a
number to” the flash drives she provided. Appellee’s Br. 62. However, there is no
meaningful discrepancy in this testimony. In both instances, Lennon was unable to
recall the exact number of devices provided to Rutherford, but in one instance she
estimated the number was “about ten.” Rutherford’s suggestion that Lennon’s
testimony is invalid or not credible based on these answers is transparently without
merit.
31
Schlumberger provided her the external hard drive. Rutherford’s
assertion that an IT Department Manager’s failure to correctly recall a
date hardly supports her suggestion that his testimony should therefore
be ignored in its entirety.
Finally, Rutherford claims that Schlumberger “does not even
make an argument regarding conversion damages in its brief.”
Appellee’s Br. 62. But Schlumberger explained that it “is entitled to
have [its] property returned or be reimbursed for its value.” Appellant’s
Br. 68.11 In sum, Rutherford fails to raise any meaningful challenge to
the prima facie evidence supporting Schlumberger’s conversion claim.
4. Texas Theft Liability Act
Finally, the evidence Schlumberger submitted below readily
establishes a prima facie case of each of the elements of its Texas Theft
Liability Act claim. See Appellants’ Br. 70.
In response, Rutherford asserted that Schlumberger presented no
evidence and made no argument with regard to intent and damages.
11. Rutherford cites R.J. Suarez Enters. v. PNYX, L.P., 380 S.W.3d 238, 242 (Tex.
App.—Dallas 2012, no pet.), for the proposition that Schlumberger must provide
evidence of the value of converted property. But that case involved the
unremarkable requirement that, by the end of a trial, a party must provide evidence
of the specific amount of damages it incurred. Id. As such, it is inapposite to a
party’s prima facie burden.
32
Appellee’s Br. 64. Rutherford is mistaken. Schlumberger argued in the
trial court and this Court that computer devices provided by the
company to Rutherford, containing confidential business information,
were intentionally taken by Rutherford and not returned. See
Appellants’ Br. 70–71. In support of this argument, Schlumberger cited
record testimony directly contradicting Rutherford’s account of what
she did with the devices at issue. See id. (citing, inter alia, CR.1431 in
comparison to CR.1206–08).
As such, Schlumberger introduced evidence clearly and
specifically showing that Rutherford has been untruthful with regard to
her taking of the drives and information, demonstrating that she
intentionally and wrongfully removed Schlumberger’s devices and
information. Schlumberger further explained that Rutherford’s actions
“have damaged Schlumberger” and cited Nava’s testimony describing
the value of the intellectual property taken. Appellants’ Br. 70 (citing
CR.2892–93). Rutherford’s contrary claims are belied by the record.
33
IV. THE TRIAL COURT ABUSED ITS DISCRETION IN AWARDING
$350,000 IN ATTORNEYS’ FEES AND $250,000 IN SANCTIONS
AGAINST SCHLUMBERGER.
Finally, the trial court’s attorneys’ fees and sanctions awards
cannot withstand scrutiny. Specifically, Rutherford’s submission for
attorneys’ fees was insufficient and internally inconsistent with regard
to segregation of fees between the dismissed causes and the breach of
contract claim.
Moreover, to the extent Rutherford is correct that her attorneys’
fees cannot be segregated because the breach of contract claim is
intertwined with the other causes of action, bringing those other causes
cannot constitute sanctionable wrongdoing. In any event, the trial
court’s imposition of sanctions is independently unreasonable because
Rutherford’s claims that Schlumberger has engaged in a history of
revenge litigation, and engaged in improper conduct here, are
demonstrably false.
A. Rutherford Failed To Segregate Her Fees as Required
by Texas Law.
As an initial matter, Rutherford erroneously asserts that the fee
segregation requirements of Tony Gullo Motors I, L.P. v. Chapa, 212
S.W.3d 299, 310–14 (Tex. 2006), do not apply to TCPA fee awards
34
because the TCPA’s fee provision authorizes fees “as justice and equity
require.” Appellee’s Br. 65–66. But the authority Rutherford cites for
that supposed proposition, Biopolymer Engineer, Inc. v. ImmuDyne,
Inc., 304 S.W.3d 429, 446 (Tex. App.—San Antonio 2009, op. vacated
pursuant to settlement), says nothing of the sort.
Rather, the Biopolymer court applied Tony Gullo’s segregation
holding and determined that the plaintiff’s declaratory judgment claims
against three defendants were “intertwined to the point of being
inseparable.” Biopolymer, 304 S.W.3d at 446. Thus, Rutherford has
cited to no case law actually supporting her argument that the “justice
and equity” language in the TCPA’s attorneys’ fees provision means the
fee segregation requirements of Tony Gullo do not apply.
Rutherford also claims that her affidavits established that more
than $580,000 of her $611,000 in fees could not be segregated.
Appellee’s Br. 66. But Rutherford tellingly makes no attempt to
respond to Schlumberger’s Appellants’ Brief, which explained that
Rutherford’s submitted billing records demonstrated that she made a
minimal, insufficient, and internally inconsistent effort to comply with
35
Tony Gullo. See Appellants’ Br. 76 & n.24. As such, the attorneys’ fee
award should be reversed.
B. The Trial Court’s Award of Sanctions Cannot be
Reconciled with the Record.
The trial court’s award of sanctions is unsupported by the record.
To the extent that Rutherford is correct that Schlumberger’s dismissed
claims were inextricably intertwined with its breach of contract claim,
the trial court’s imposition of sanctions for bringing those claims was
necessarily arbitrary and an abuse of discretion. And regardless, the
trial court’s award of sanctions was unreasonable and should be
overturned because Rutherford’s allegations of a history of revenge
litigation by Schlumberger, and improper conduct here, are
unsupported by history or the record.
For example, Rutherford claims that “Schlumberger has filed
more than one revenge suit against former employees,” citing two prior
instances of litigation. In Schlumberger Tech. Corp. v. Krall, No. 2011–
23838 in the 127th District Court of Harris County, a no-evidence
summary judgment was granted against Schlumberger in a case
involving a former employee defendant. See CR.2282. But Rutherford
fails to disclose to the Court that Schlumberger in fact prevailed against
36
the employee’s new employer, and was awarded $1.2 million in damages
for tortious interference.
The second case relied on by Rutherford is even less compelling—
it is a 15-year-old case, brought against Schlumberger, and thus self-
evidently fails to demonstrate a pattern of revenge suits. See West v.
Schlumberger Tech. Corp., 234 F.3d 1279, at *2 (9th Cir. 2000)
(unpublished opinion). Rutherford unsurprisingly fails to cite any
authority imposing sanctions based on wholly dissimilar litigation
separated by fifteen years.
Rutherford’s allegations that Schlumberger should be sanctioned
for introducing “sham affidavits” are equally unpersuasive. For
example, Rutherford claims that Lennon’s affidavit stated that
Rutherford organized many hard copy documents in her office prior to
leaving, but that Lennon later testified that Rutherford “used very few
paper files.” Appellee’s Br. 70 (citing CR.264–65, 268). However,
Lennon never testified that “Rutherford used very few paper files.” Her
actual testimony was that Rutherford didn’t like to have a lot of paper,
regularly shredded documents, and that the amount of physical paper
on Rutherford’s desk was typically less than a foot high—but it “just
37
depended.” CR.264. As such, Rutherford’s attack on Lennon’s
testimony cannot be reconciled with the record.
In sum, the trial court’s awards of fees and sanctions are
unsupported by history or the record, and should be reversed as
arbitrary and unreasonable.
PRAYER
The Court should reverse the trial court’s order dismissing
Schlumberger’s claims for breach of fiduciary duty, misappropriation of
trade secrets, conversion, and violations of the Texas Theft Liability
Act, hold that Rutherford’s dismissal motion is denied in its entirety,
and remand the case for further proceedings.
Alternatively, the Court should reverse the imposition of sanctions
and award of attorneys’ fees and render judgment that neither
sanctions nor attorneys’ fees should be awarded against Schlumberger.
In the further alternative, the Court should remand with instructions
that the trial court require proper segregation of Rutherford’s fee
request to exclude recovery for any work related to Schlumberger’s
breach of contract claim.
38
Respectfully submitted,
/s/ Sean D. Jordan
Craig Smyser Sean D. Jordan
Land Murphy State Bar No. 00790988
Justin Waggoner Kent C. Sullivan
SMYSER KAPLAN & VESELKA, L.L.P. Danica L. Milios
700 Louisiana Street, Suite 2300 Peter C. Hansen
Houston, Texas 77002-2700 SUTHERLAND ASBILL & BRENNAN LLP
[Tel.] (713) 221-2300 600 Congress Ave., Suite 2000
[Fax] (713) 221-2320 Austin, Texas 78701
[Tel.] (512) 721-2679
[Fax] (512) 721-2656
sean.jordan@sutherland.com
COUNSEL FOR APPELLANTS
CERTIFICATE OF SERVICE
On March 13, 2015, the foregoing document was served via
Odyssey File & Serve, U.S. Certified Mail, return receipt requested,
electronic mail, or third-party carrier on the following:
Thomas C. Wright
Shelley J. White
WRIGHT & CLOSE L.L.P.
One Riverway, Suite 2200
Houston, Texas 77056
wright@wrightclose.com
white@wrightclose.com
COUNSEL FOR APPELLEE
/s/ Sean D. Jordan
Sean D. Jordan
39
CERTIFICATE OF COMPLIANCE
In compliance with Texas Rule of Appellate Procedure 9.4(i)(2),
this brief contains 7,494 words, excluding the portions of the brief
exempted by Rule 9.4(i)(1).
/s/ Sean D. Jordan
Sean D. Jordan
40