Hess Corporation v. Schlumberger Technology Corporation, No. 4:2016cv03415 - Document 87 (S.D. Tex. 2018)
Court Description: MEMORANDUM OPINION AND ORDER denying 77 MOTION to Disqualify Plaintiff's Expert Dennis Read (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)
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Hess Corporation v. Schlumberger Technology Corporation Doc. 87 United States District Court Southern District of Texas ENTERED IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION HESS CORPORATION, § § § § § § § § § § Plaintiff, v. SCHLUMBERGER TECHNOLOGY CORPORATION, Defendant. December 18, 2018 David J. Bradley, Clerk CIVIL ACTION NO. H-16-3415 MEMORANDUM OPINION AND ORDER Plaintiff Hess Corporation ("Hess") sued Defendant Schlumberger Technology Corporation ( "Schlumberger") in this court. Pending before the court is Schlumberger Technology Corporation's Motion to Disqualify Plaintiff's Expert Dennis Read ( "Schlumberger' s Motion to Disqualify Read") (Docket Entry No. 77) . For the reasons stated below, Schlumberger's Motion to Disqualify Read will be denied. I. Factual Backqround 1 This action arose from the sale and subsequent failure of several Subsurface Safety Valves Schlumberger. ("SSVs") purchased by Hess from Dennis Read is a liability expert for Hess on what 1 See generally Schlumberger's Motion to Disqualify Read, Docket Entry No. 77, pp. 1-4; Hess Corporation's Opposition to Schlumberger Technology Corporation's Motion to Disqualify Dennis Read ("Hess's Opposition to Schlumberger' s Motion to Disqualify Read"), Docket Entry No. 80, pp. 7-11. [All page numbers for docket entries in the record refer to the pagination inserted at the top of the page by the court's electronic filing system, CM/ECF.] Dockets.Justia.com caused the four Schlumberger ssvs at issue to fail. Read is an engineer who worked for an entity acquired by Schlumberger, Cameo Products and Services, and Schlumberger itself from 1994 to 2010. While employed Confidential by Schlumberger, Information Agreement" Agreement") dated January 3, 2000. states: Read signed a "Patent and ("the Confidentiality The Confidentiality Agreement "Employee will not publish or disclose to anyone outside of [Schlumberger] or its Affiliates, or use in any way other than in [Schlumberger's] business, any trade secrets or confidential technical or business information or material of [Schlumberger] or its Affiliates either during or after employment with [Schlumberger] . " 2 During his employment at Schlumberger, Read worked in various departments, including those charged with developing safety valves and seals. litigation. Read never worked on the exact SSVs at issue in this While Read acknowledges that he has seen a schematic of the Metal Spring Energized ("MSE") seals at issue, he never saw the proprietary manufacturing drawings. 2010 and now owns his own machine shop. Read left Schlumberger in Read has not worked on safety valves since his departure from Schlumberger. Hess hired Read as an expert to disassemble and test some of the SSVs at issue. Read performed lengthy testing on the SSVs 2 See Patent and Confidential Information Agreement [Filed Under Seal], Exhibit 2 to Hess's Opposition to Schlumberger's Motion to Disqualify Read, Docket Entry No. 80-2, ~ 1. -2- with Schlumberger' s knowledge. Hess served Read's expert report on Schlumberger on September 14, 2018. October 26, Agreement. 2018, Schlumberger During Read's deposition on produced the Confidentiality Schlumberger now moves to disqualify Read from serving as an expert for Hess. II. Schlumberger argues Analysis that the Confidentiality Agreement prevents Read from testifying as an expert for Hess in this action. Hess argues that Read's testimony is based on his general knowledge of safety valves and not on any confidential information he may have acquired from Schlumberger during his employment. The party seeking to disqualify an expert witness bears the burden of proving that disqualification is appropriate. Koch Refining Co. v. Jennifer L. Boudreau M/V, 85 F.3d 1178, 1181 (5th Cir. 1996). "Federal courts have the inherent power to disqualify experts, although cases that grant disqualification are rare." Id. In determining whether an expert (internal citations omitted) should be disqualified based on a conflict of interest, the court must consider ( 1) whether a confidential relationship existed between the proposed expert and the moving party and (2) whether the moving party disclosed confidential information to the proposed expert that is relevant to the current litigation. Id.; WesternGeco LLC v. Ion Geophysical Corp., Civil Action No. 09-cv1827, 2010 WL 2266610, at *1 (S.D. Tex. June 2, 2010); ACQIS LLC v. -3- Appro International, Inc., Case No. 6:09 at *2 (E.D. Tex. July 14, 2010) A. cv 148, 2010 WL 11470595, (citing Koch, 85 F.3d at 1181). Confidential Relationship Read is a former Schlumberger employee. Read signed the Confidentiality Agreement, which mandated that he not disclose any of Schlumberger's confidential information or trade secrets during or after his employment with Schlumberger. The Confidentiality Agreement imposed upon Read a continuing obligation to preserve Schlumberger's confidential information that he learned during his employment with Schlumberger. fore existed, and continues A confidential relationship thereto exist, between Read and Schlumberger. B. Relevancy of Confidential Information to Current Litigation There can information Schlumberger. 3 be during no dispute his that tenure Read learned developing confidential technology for The issue is whether Schlumberger can point to any confidential information relevant to this litigation known to Read. During his time at Schlumberger Read worked in various departments. It is undisputed that Read worked in one or more departments that 3 The parties disagree as to whether discoverable, technical information can be "confidential" within the scope of a nondisclosure agreement. For purposes of analysis, the court will assume without deciding that it is possible for technical information learned by a former employee to be confidential and fall within the scope of a former employee's non-disclosure agreement. -4- developed or produced safety valves. Although Read undoubtedly learned some confidential information about safety valves, he never worked on the SSVs at issue in this case. to Read's only expertise as the SSVs other than his general knowledge of the field is knowledge gained from performing tests on the failed SSVs. The inquiry into whether a confidential information relevant fact-intensive. former former-employee-expert received to the current litigation is Courts evaluate the nature and extent of employee's relationship with his employer and the what confidential information the employee may have been exposed to during his work for the employer. In ACQIS the plaintiff retained a damages expert who was a former employee of the defendant. ACQIS, 2010 WL 11470595, at *1. The employee has been employed by defendant for over three decades. Id. The employee was "intimately involved in intellectual property licensing practices, [the defendant's] as well as the development of a new intellectual property licensing strategy for [the defendant]." Id. The defendant argued that the vast majority of the employee's experience would be relevant to the litigation and that inevitable. disclosure Id. at *2. of confidential information would be Despite the defendant's concerns, the court refused to disqualify the expert because the defendant failed to point to particular confidential information disclosed to the expert relevant to the litigation. Id. The court noted that the employee's broad licensing knowledge was not sufficient to qualify -5- as "relevant" to the particular technology at issue in the suit. See id. the Read is similarly positioned to the expert in ACQIS. defendant specific in ACQIS, confidential Schlumberger information has known failed to Read to Like point that to would disqualify him from serving as an expert in this case. 4 Schlumberger cites cases where other courts found that the challenged expert Electronics Corp. should v. WG be disqualified. Security Products, In Inc. , Sensormatic Civil Action No. 2:04-Cv-167, 2006 WL 5111116 (E.D. Tex. Feb. 9, 2006), the court concluded that an expert who was a named inventor on one of the patents-in-suit could not serve as an expert for the opposing party. Id. at *3. Sensormatic is distinguishable because Schlumberger has failed to demonstrate that Read has any confidential or technical knowledge of the SSVs at issue in this litigation. In Dyna-Drill Technologies Inc. v. Conforma Clad Inc., Civil Action No. H-03-05599, 2005 WL 5979403 (S.D. Tex. May 16, 2005), the defendant sought to disqualify one of the plaintiff's expert witnesses because he was an employee of the defendant's predecessor entity. The court held that the expert was disqualified because he was "employed for many years by Defendant's predecessor company and 4 In Schlumberger Technology Corporation's Reply in Support of Motion to Disqualify Plaintiff's Expert Dennis Read ("Schlumberger's Reply"), Schlumberger lists "specific" examples of confidential information that Read received from Schlumberger. The list cites Read's general experience of working with safety valves at Schlumberger, but fails to point to specific confidential information known to Read relevant to his analysis of the failed SSVs. See Schlumberger's Reply, Docket Entry No. 82, pp. 8-9. -6- was in charge of the commercialization of the alleged trade secret process at issue in th [e] case." Id. at *1. Dyna-Drill is distinguishable because other than Read's having viewed a nonproprietary schematic of the MSE seals used in the SSVs, Schlumberger fails to cite any specific confidential information known to Read that pertains to the SSVs at issue. The court in WesternGeco, plaintiff's expert, who 2010 WL 2266610, disqualified the had served as an employee of the defendant's predecessor entity, because he directly participated in developing dispute. products to the products at issue in the The court noted that the expert's "field of expertise closely relates to, the related if not encompasses, the technology taught by patents-in-suit." Id. at *2. While the expert did not directly work on the specific inventions at issue in the lawsuit, the court found that "at this stage in the dispute, before the confidential information has been fully disclosed and reviewed by [the plaintiff's] counsel or its experts, the Court lacks confidence in [the plaintiff's] ability to accurately assess what knowledge and expertise will be useful in this litigation." Id. This case is distinguishable from WesternGeco because Read has already conducted extensive testing on the failed SSVs and reviewed various documents produced by both Hess and Schlumberger during discovery. Even after conducting extensive discovery, Schlumberger cannot point to any confidential knowledge possessed by Read that disqualifies him from analyzing the SSVs. -7- Disqualification turns on whether specific confidential information known to Read is relevant to this litigation. While Read's general experience with safety valves from his work with Schlumberger is relevant to this litigation, to disqualify Read, Schlumberger must point to specific confidential learned by Read that is relevant to the information failed SSVs at issue. Schlumberger has failed to meet this burden. Accordingly, Read will not be disqualified from serving as an expert for Hess. III. For the reasons Conclusion stated above, Schlumberger Technology Corporation's Motion to Disqualify Plaintiff's Expert Dennis Read (Docket Entry No. 77) is DENIED. SIGNED at Houston, Texas, on this 18th day of December, 2018. SIM LAKE UNITED STATES DISTRICT JUDGE -8-
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