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Tripp v. Pickens

United States District Court, W.D. Louisiana, Shreveport Division

November 2, 2018






         Leo Tripp, Jimmy Tripp, and Steve Stone (“Plaintiffs”) developed a solar-powered chemical injection pump to be used in oil and gas production. They allege that they contracted with Richart Distributors d/b/a Flomore Products (“Flomore”) to market the product and split the profits evenly. The relationship soured, and Plaintiffs filed this suit in state court against Flomore and Richard Pickens, who is Flomore's CEO and primary shareholder. Plaintiffs asserted claims of breach of contract, detrimental reliance, and unjust enrichment.

         Flomore and Pickens (“Defendants”) removed the case based on diversity jurisdiction and filed a motion for summary judgment. Doc 29. Plaintiffs conceded to the dismissal of Mr. Pickens as a defendant. Judge Doughty denied Flomore's request for summary judgment because he found genuine disputes of material fact as to whether the Plaintiffs and Flomore had a valid oral contract that could form the basis of Plaintiffs' breach of contract and detrimental reliance claims. Doc 51.

         Plaintiffs represent that they later discovered that Mr. Pickens had secretly filed a patent application for the pump that listed him as the sole inventor, and he had lied about it in his deposition. In April 2018, soon after an unsuccessful attempt to negotiate a settlement of the case, Flomore sent Plaintiffs a letter and gave notice that, to the extent there was a contract between the parties, it was terminated as of May 31, 2018. Plaintiffs then sought leave to amend their complaint to add claims against Flomore and Mr. Pickens under the Louisiana Unfair Trade Practices Act (“LUTPA”) based on (1) the secret patent application and (2) Flomore's unilateral termination of the pump distribution contract without a good-faith basis.

         The court found that Plaintiffs had demonstrated good cause and granted leave to amend. A continuance of the trial was ordered to allow for discovery and other proceedings related to the new claims. Before the court is Defendants' Motion to Dismiss (Doc. 81) that attacks the new LUTPA claims as (1) untimely and (2) failing to state a claim against Flomore or Mr. Pickens. For the reasons that follow, it is recommended that Defendants' motion be denied.

         Summary of Relevant Allegations

          This is a Rule 12(b)(6) contest, so the court must “accept all well-pleaded facts as true and view those facts in the light most favorable to the plaintiff.” Midwest Feeders, Inc. v. Bank of Franklin, 886 F.3d 507, 513 (5th Cir. 2018). Plaintiffs' original complaint alleged that they met Flomore representatives at a trade show in 2013 and eventually introduced them to the idea of launching a new pump that Plaintiffs had designed that had advantages over the pump that Flomore was marketing at the time. A prototype was demonstrated, and Flomore agreed with the Plaintiffs that they would go into business together to sell the pump and split the profits 50/50. Flomore would receive the benefit of the improved pump design, and Plaintiffs would benefit from Flomore's expertise in manufacturing and sales. Plaintiffs allege that they “shook hands on the deal, thereby forming a valid and enforceable contract.” Plaintiffs devoted substantial effort to get the pump ready for sale. The parties discussed having lawyers reduce the agreement to writing. Mr. Pickens told Plaintiffs that he would do so, but he never followed through. Plaintiffs allege that Mr. Pickens was attempting induce them to continue developing the pump for market.

         The product launched in August 2014, and it was a tremendous success. Plaintiffs soon attempted to contact Mr. Pickens to discuss moving forward on their agreement to split the profits, but Mr. Pickens refused to discuss it. Mr. Pickens and Flomore employees soon cut off all communication with Plaintiffs. Plaintiffs never received any financial benefit from Flomore or Mr. Pickens for sales of the pump or the work they devoted towards development of the pump.

         Certain allegations in the amended complaint are particularly relevant to the issues at hand. A sealed copy of the amended complaint was filed at Doc. 75, and a redacted version is at Doc. 78. The pleading was filed under seal to protect certain business information, but it is necessary to discuss some of those facts to resolve the pending motion.

         The “parties agreed that any patents relating to the pump design would be submitted in the names of the Plaintiffs and Pickens and/or Flomore as co-inventors.” Amended Complaint, Doc. 75 at ¶ 7. In June 2014, when Plaintiffs were actively developing the production version of the pump, Flomore and Mr. Pickens secretly applied for a provisional patent for the pump. The application, part of a scheme to steal Plaintiffs' ideas, did not list Plaintiffs as co-inventors. ¶¶ 10-10(a). The application instead listed Mr. Pickens as the sole inventor and applicant. Mr. Pickens signed a declaration of inventorship in which he swore to the truth of the application's contents, including its listing of Pickens as the sole inventor. ¶ 10(b). Plaintiffs allege that, despite the representations in the 2014 patent application, “Plaintiffs are the sole inventors, or, at a minimum[, ] co-inventors thereof.” ¶ 10(d).

         Defendants deliberately hid from Plaintiffs that they had caused the provisional patent application to be filed. Mr. Pickens “made a false statement about the existence of the patent application in his deposition in this matter in September 2017.” Plaintiffs did not learn of the application until a December 2017 deposition of a Flomore manager, who admitted that an application had been filed. ¶ 11. Plaintiffs then asked Defendants to produce all materials filed with the patent office concerning the pump. Defendants, after initially refusing to produce the materials, produced a portion of the documents in February 2018. Plaintiffs determined that the material was incomplete, made further demands, and eventually received from Defendants more material in March 2018. ¶ 11.

         The produced material included a second, non-provisional patent application that had been filed in June 2015. This application also listed Mr. Pickens as the sole inventor and applicant, and it included a declaration by Pickens swearing to the truth of its contents. ¶ 12. Flomore and Mr. Pickens knew when the application was filed that it contained false statements of material information. Neither Flomore nor Pickens has corrected either of the applications to list Plaintiffs as inventors or co-inventors, which Plaintiffs assert violates federal patent law. ¶ 13. This misconduct was compounded by the fact that Mr. Pickens had represented to Plaintiffs that he would cause Flomore's attorney to apply for a patent that would include Plaintiffs' names once the pump was launched in the marketplace. ¶ 14.

         Plaintiffs also base a LUTPA claim on the fact that Flomore and Mr. Pickens sent Plaintiffs a letter on April 23, 2018 to advise that Flomore “was unilaterally terminating the contract between it and the Plaintiffs, effective as of May 31, 2018.” ¶ 21. Flomore took this action in bad faith to retaliate against Plaintiffs for asserting their rights under the contract. There was no valid economic reason for Flomore to cease selling the pump, so the termination letter was issued “in bad faith and is contrary to the intent of the contract confected by the parties, ” so it should be declared null and void. ¶ 22. Plaintiffs believe that Flomore continues to market and sell the pump to this day, as if it were Flomore's own product, with no right to profits benefitting Plaintiffs. The pump has generated substantial revenue for Flomore, but Plaintiffs have not seen a dime. ¶ 24.

         Rule 12(b)(6) Standard

          Defendants have challenged Plaintiffs' LUTPA claims by filing a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). In assessing the motion, the court must accept as true all well-pleaded facts in the complaint and view those facts in the light most favorable to the plaintiff. See In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007). “To survive a Rule 12(b)(6) motion to dismiss, a complaint ‘does not need detailed factual allegations,' but must provide the plaintiff's grounds for entitlement to relief-including factual allegations that when assumed to be true ‘raise a right to relief above the speculative level.'” Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007) (quoting Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1964-65 (2007)). ...

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