Star Systems International Limited v. 3M Company and 3M Innovative Properties Company

ACCEPTED
05-15-00669-CV
FIFTH COURT OF APPEALS
DALLAS, TEXAS
7/9/2015 8:29:14 AM
LISA MATZ
CLERK

Case No. 05-15-00669-CV

FILED IN
5th COURT OF APPEALS
THE COURT OF APPEALS FOR THE FIFTH DISTRICT
DALLAS, TEXAS
DALLAS, TEXAS 7/9/2015 8:29:14 AM
LISA MATZ
Clerk

STAR SYSTEMS INTERNATIONAL, LMIITED,

Appellant,

v.

3M COMPANY and 3M INNOVATIVE PROPERTIES COMPANY,

Appellees.

Interlocutory Appeal from Cause No. 401-01813-2014
401st Judicial District Court, Collin County, Texas
Honorable Mark Rusch, Presiding

APPELLANT’S BRIEF

Respectfully submitted,

/s/ Blake L. Beckham
Blake L. Beckham
State Bar No. 02016500
blake@beckham-group.com
Jose Portela
State Bar No. 90001241
jose@beckham-group.com
THE BECKHAM GROUP, P.C.
3400 Carlisle, Suite 550
Dallas, Texas 75204
Telephone: 214-965-9300
Facsimile: 214-965-9301

AND

Maricela Siewczynski Moore
State Bar No. 24032753
maricela@maricelamoorelaw.com
Law Office of Maricela Moore PLLC
3400 Carlisle, Suite 550
Dallas, Texas 75204
Telephone: 214-965-5123
Facsimile: 214-965-9301

COUNSEL FOR LOCKHART
AND STAR SYSTEMS
INTERNATIONAL LIMITED

ORAL ARGUMENT
REQUESTED
 IDENTITY OF PARTIES AND COUNSEL

The following is a complete list of all parties before the Trial Court and the

names and addresses of all Trial Counsel and Appellate Counsel:

1. Defendant Star System International Limited (Appellant in this Court)

represented by:

Blake L. Beckham
State Bar No. 02016500
blake@beckham-group.com
Jose Portela
State Bar No. 90001241
jose@beckham-group.com
THE BECKHAM GROUP, P.C.
3400 Carlisle, Suite 550
Dallas, Texas 75204
Telephone: 214-965-9300
Facsimile: 214-965-9301

Maricela Siewczynski Moore
State Bar No. 24032753
maricela@maricelamoorelaw.com
Law Office of Maricela Moore PLLC
400 Carlisle, Suite 550
Dallas, Texas 75204
Telephone: 214-965-5123
Facsimile: 214-965-9301

2. Defendant Stephen Lockhart (not a party to this appeal)

represented by:

Blake L. Beckham
State Bar No. 02016500
blake@beckham-group.com
i
 Jose Portela
State Bar No. 90001241
jose@beckham-group.com
THE BECKHAM GROUP, P.C.
3400 Carlisle, Suite 550
Dallas, Texas 75204
Telephone: 214-965-9300
Facsimile: 214-965-9301

Maricela Siewczynski Moore
State Bar No. 24032753
maricela@maricelamoorelaw.com
Law Office of Maricela Moore PLLC
400 Carlisle, Suite 550
Dallas, Texas 75204
Telephone: 214-965-5123
Facsimile: 214-965-9301

3. Plaintiffs 3M Company and 3M Innovative Properties Company
(Appellee in this Court)

represented by:

William A Brewer III
State Bar No. 02967035
wab@brewerattorneys.com
Farooq Tayab
State Bar No. 24063028
fat@brewerattorneys.com
Jack G.B. Ternan
State Bar No. 24060707
JGT@brewerattorneys.com
Brewer Attorneys and Counselors
4800 Comerica Tower
1717 Main Street
Dallas, Texas 75201
Telephone: 214-653-4000
Facsimile: 214-653-1014

ii
 TABLE OF CONTENTS

IDENTITY OF PARTIES AND COUNSEL……………………………………….i
TABLE OF CONTENTS ....................................................................................... ..iii

INDEX OF AUTHORITIES…………………………...…………………....….....iv

STATEMENT OF THE CASE…………………………………………………….v
STATEMENT REGARDING ORAL ARGUMENT……………………………..vi

STATEMENT OF JURISDICTION………………………………………………vi

ISSUES PRESENTED…………………………………………………………....vii
STATEMENT OF THE FACTS………………………………………………….vii

SUMMARY OF THE ARGUMENT………………………………………………1

ARGUMENT…………………………………………………………………….…3
A. The Court Should Apply the Abuse of Discretion Standard of Review When
Considering Whether the Trial Court Committed Reversible Error………...3

B. The Trial Court Committed Reversible Error When It Refused to Compel to
Arbitration Appellees’ Claims that are Factually Intertwined with Appellees’
Arbitrable Claims…………………………………………………………....3

C. The Trial Court Committed Reversible Error When it Refused to Stay
Litigation of Appellees’ Claims that Address the Same Issues as Appellees’
Claims that Were Compelled to Arbitration…………………………………9

PRAYER………………………………………………………………………….13

CERTIFICATE OF SERVICE……………………………………………………14

CERTIFICATE OF COMPLIANCE……………………………………………..14

iii
 INDEX OF AUTHORITIES

CASES

In re Merrill Lynch Trust Co FSB, 235 S.W.3d 185 (Tex. 2007).………….…...3, 9

In re FirstMerit Bank, N.A., 52 S.W.3d 749 (Tex. 2001)….…………..……….......4

Prudential Sec. v. Marshall, 909 S.W.2d 896 (Tex. 1995)……………………...…4

Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266 (Tex. 1992)………………….…...4, 5

Waisath v. Lack's Stores, 474 S.W.2d 444, 447 (Tex. 1971)……………...…….…5

Cleveland Constr., Inc. v. Levco Constr., Inc., 359 S.W.3d 843
(Tex. App.—Houston [1st Dist.] 2012, pet. dism’d)…………….....………….……3

Ascendant Anesthesia PLLC v. Abazi, 348 S.W.3d 454
(Tex. App.—Dallas 2011, no pet.)…………………………………….………...3, 5

Weekley-Homes LP v. Rao, 336 S.W.3d 413
(Tex. App.—Dallas 2011, pet. denied)…………………………………………….vi

Gray Wireline Serv. v. Cavanna, 374 S.W.3d 464
(Tex. App.—Waco 2011, no pet.)……………………………………………….....9

In re Sun, 86 S.W.3d 313 (Tex. App.—Austin 2002, no pet.)………………..……..8

In re Western Dairy Transp., LLC, No. 08-13-00190-CV, 2014 Tex. App. LEXIS
8361 (Tex. App.—El Paso July 30, 2014, no pet.)………………………..vi

STATUTES AND RULES

9 U.S.C. § 16(a)(1)………………………………………………………...……..vi

TEX R. APP. P. 28.1…………………………………………………………...…..vi

TEX. CIV. PRAC. & REM. CODE §51.016…………………………………….…... vi

TEX. CIV. PRAC. & REM. CODE §134A.002…………………………….………....7
iv
 STATEMENT OF THE CASE

Nature of the Case: Appellees filed suit against Appellant alleging that
Appellant obtained their confidential information from
Appellees’ former consultants. Appellees asserted
claims against Appellant for tortious interference with
the former consultants’ confidentiality agreements,
conspiracy to tortiously interfere with the former
consultants’ confidentiality agreements, conversion of
Appellant’s confidential information, and violation of
the Texas Uniform Trade Secrets Act.

Parties: Appellant is Star Systems International Limited.

Appellees are 3M Company and 3M Innovative
Properties Company.

Course of Proceedings: On April 22, 2015, Appellant filed a motion to compel
Appellees’ claims to arbitration and to stay the
proceeding on the basis that the former consultants’
confidentiality agreements contained mandatory
arbitration provisions. (CR at 67-112.)

Trial Court 401st Judicial District Court, Collin County, Texas

Trial Court Disposition: The Trial Court ordered Appellees to arbitrate their
claims that Appellant interfered with the Confidentiality
Agreements between Appellees and some of Appellant’s
former consultants. The Trial Court also denied
Appellant’s request that the Court compel to arbitration
Appellees’ claims that Appellant conspired to tortiously
interfere with the Confidentiality Agreements, and that
the use of Appellees’ allegedly confidential information
constitutes conversion and a violation of the Texas
Uniform Trade Secrets Act. The Court also denied
Appellant’s request that the trial court stay the
proceedings pending arbitration of Appellees’ arbitrable
claims.

v
 RECORD AND APPENDIX REFERENCES

References to the Clerk’s Record and Reporter’s Record in this Brief are to

page numbers. Clerk’s Record references are abbreviated by page number as

“CR.” Reporter’s Record references are abbreviated by page number as “RR.”

STATEMENT REGARDING ORAL ARGUMENT

Appellant believes oral argument would be helpful to the Court in resolving

the merits of this interlocutory appeal involving important issues pertaining to

arbitrability and stay of proceedings and hereby requests oral argument.

STATEMENT OF JURISDICTION

This is an accelerated, interlocutory appeal pursuant to Texas Rule of

Appellate Procedure 28.1, Texas Civil Practice and Remedies Code § 51.016, and

9 U.S.C. § 16(a)(1). See Weekley-Homes LP v. Rao, 336 S.W.3d 413, 418 (Tex.

App.—Dallas 2011, pet. denied) (court has jurisdiction over appeal of order

denying motion to compel arbitration when the parties agree to arbitrate subject to

the FAA or when the transaction at issue affects or involves interstate commerce).

In the alternative, this is a writ of mandamus. See In re Western Dairy

Transp., LLC, No. 08-13-00190-CV, 2014 Tex. App. LEXIS 8361, at *2-3 (Tex.

App.—El Paso July 30, 2014, no pet) (“Mandamus is the appropriate procedure by

which [the court of appeals] may review the trial court’s ruling on a motion to

compel arbitration under the common law.”).

vi
 ISSUES PRESENTED

1. Did the trial court commit reversible error when it held that Appellees’

claims for conversion, conspiracy to tortiously interfere with the

Confidentiality Agreements, and claims for violation of the Texas Uniform

Trade Secrets Act were not factually intertwined with Appellees’ claims for

tortious interference with the Confidentiality Agreements and on that basis

denied Appellant’s request to compel Appellees’ claims to arbitration?

2. Did the Trial Court commit reversible error when it held that Appellees’

claims against Lockhart and their claims that Appellant tortiously interfered

with the Karr Consulting Agreement did not address the same issues as the

arbitrable claims for tortious interference with the Confidentiality

Agreements?

STATEMENT OF THE FACTS

This lawsuit arises from a dispute over whether certain of Appellees’ former

employees and consultants shared Appellees’ confidential information with

Appellant in violation of their respective confidentiality agreements. Originally,

this lawsuit was filed by Appellees against their former employee Stephen

Lockhart (“Lockhart”) who they alleged violated his non-compete and

confidentiality agreements when he resigned from Appellees’ employment. (CR at

vii
28.) After his resignation, Lockhart joined Appellant as its Chief Technology

Officer (CR at 31.)

On January 23, 2015, Appellees added Appellant as a party and asserted that

Appellant obtained Appellees’ confidential information not only from Lockhart,

but also from Appellees’ former consultants Chris Cheung (“Cheung”), Robert

Karr (“Karr”), Jet Lai (“Lai”), Darko Shyur (“Shyur”), and Ava Tang (“Tang”).1

Cheung, Tang, Lai, and Shyur signed Confidentiality Agreements that prohibited

them from disclosing or using Appellees’ confidential information. (CR at 82, 88,

94.)

Pursuant to the Confidentiality Agreements, the definition of “confidential

information” includes: “trade secrets, inventions, innovations, processes,

information, legal documents, financial records, specifications, and other

confidential, proprietary, and privileged information owned or licensed by

Company and/or used by Company in connection with the scope of work set forth

in Exhibit “A” or in connection with the general operation of Company’s business.

(CR at 82, 88, 94.) The Confidentiality Agreement also contain broad arbitration

provisions, which provide: “Any controversy arising out of the terms of this

Agreement or its interpretation shall be settled and resolved in the State of

California, County of Orange, in accordance with the rules of the American

1
Cheung, Karr, Lai, Tang, and Shyur are collectively referred to herein as “Former
Consultants.”
viii
Arbitration Association, and the judgment upon award may be entered in any court

having jurisdiction over such controversy. (CR at 83, 89, 95.)

Karr also signed a Confidentiality Agreement, however, the one upon which

Appellees rely to support their claims does not contain an arbitration provision.

(CR at 100-105).2

On April 22, 2015, Appellant filed a motion to compel to arbitration

Appellees’ claims against Appellant on the basis that Appellees were equitably

estopped from refusing to arbitrate their claims that rely upon the Confidentiality

Agreements or are intertwined with claims that rely upon the Confidentiality

Agreements (CR at 67-79.).

On May 7, 2015, the trial court granted in part Appellant’s motion to compel

arbitration finding that the Confidentiality Agreements executed by Cheung, Lai,

Tang, and Shyur contained mandatory arbitration provisions that required

Appellees to arbitrate their claims for tortious interference with the Confidentiality

Agreements because the claims related to the agreements executed by Cheung, Lai,

Tang, and Shyur. (CR at 133-135). The trial court also denied in part the motion

2
On March 11, 2015, Appellee filed a counterclaim requesting the trial court
declare that the Karr Confidentiality Agreement upon which Appellees rely was
superseded by a second agreement, which does not have a confidentiality
agreement that survived the termination of Karr’s engagement as a consultant, and
that the agreement upon which Appellees rely is of no force or effect. (CR at 61-
66, 107-112.) The trial court has not adjudicated Appellant’s counterclaim.
Therefore, for purposes of this appeal, Appellant refers to the Karr Confidentiality
Agreement pled by Appellees.
ix
to compel arbitration finding that Appellees’ claims relating to the alleged

disclosure of confidential information by Karr in violation of his Confidentiality

Agreement, as well as Appellees’ claims for conspiracy to tortiously interfere with

all of the Confidentiality Agreements, conversion of Appellees’ confidential

information, and violation of the Texas Uniform Trade Secrets Act “blend in [with

the claim for tortious interference with the Confidentiality Agreements, but], they

are easily separable.” (RR at 15, CR at 133-135.)

The trial court also denied Appellant’s request to stay the litigation of the

following claims: Appellees’ claims relating to the Karr Confidentiality

Agreement; claims asserting that the use by Appellant of confidential information

that it obtained from Cheung, Lai, Tang, and Shyur constituted conversion,

conspiracy to tortiously interfere with the Confidentiality Agreements, and a

violation of the Texas Uniform Trade Secrets Act; and their claims against

Lockhart for disclosing Appellees’ confidentiality information to Appellant and

breaching his non-compete agreement. (CR at 133-135.)

This interlocutory appeal arises from the trial court’s denial of Appellant’s

request to compel to arbitration all claims that are factually intertwined with

Appellees’ claims for tortious interference with the Confidentiality Agreements

executed by Cheung, Lai, Tang, and Shyur, and its denial of Appellant’s request to

stay these proceeding pending an arbitration of the arbitrable claims.

x
 SUMMARY OF THE ARGUMENT

The trial court’s denial in part of the Motion to Compel Arbitration and Stay

the Proceedings constitutes reversible error because Appellees’ claims that the trial

court refused to compel to arbitration are factually intertwined with the claims that

the trial court compelled to arbitration. The trial court compelled to arbitration

Appellees’ claims for tortious interference with the Confidentiality Agreements

executed by Cheung, Lai, Tang, and Shyur. Those claims cannot be properly

adjudicated in arbitration if at the same time Appellees’ claims that Appellant

conspired to tortiously interfere with the Confidentiality Agreements executed by

Cheung, Lai, Tang, and Shyur, as well as their claims for conversion and violation

of the Texas Uniform Trade Secrets Act (claims that rely upon the disclosure of the

same confidential information that is allegedly protected by the Confidentiality

Agreements) are ordered to proceed in the trial court in a parallel proceeding.

The trial court also committed reversible error in denying Appellant’s

request to stay the litigation of claims that address the same issues as the claims

that the trial court ordered to arbitration. The trial court compelled to arbitration

Appellees’ claims that Appellant tortiously interfered with the Confidentiality

Agreements executed by Appellees’ former consultants Cheung, Lai, Tang, and

Shyur, but at the same time refused to stay the litigation of Appellees’ claim that

Appellants tortiously interfered with the Confidentiality Agreement executed by

1
Appellees’ former consultant Karr. Appellees make no factual distinction between

their allegations that Appellant interfered with the Confidentiality Agreements

executed by Cheung, Lai, Tang, and Shyur, versus their allegations that Appellant

interfered with the Confidentiality Agreement executed by Karr. Therefore,

allowing their claims relating to the Karr Confidentiality Agreement to proceed in

the trial court while Appellees tortious interference claim, as they relate to the

Confidentiality Agreements executed by Cheung, Lai, Tang, and Shyur, to proceed

in arbitration will render the arbitration moot.

Also, allowing Appellees’ claims against Lockhart, as well as their claims

for conspiracy to tortiously interfere with the Confidentiality Agreements,

conversion, and violation of the Texas Uniform Trade Secrets Act to proceed

before the arbitration is completed will render moot the arbitration of Appellees’

claims for tortious interference with the Confidentiality Agreements executed by

Cheung, Lai, Tang, and Shyur.

For these reasons, Appellant request that the Court reverse the trial court’s

order Denying in Part the Motion to Compel Arbitration and Stay the Proceedings,

order the trial court to compel to arbitration all of Appellees’ claims for conspiracy

to tortiously interfere with the Confidentiality Agreements, conversion, and

violation of the Texas Uniform Trade Secrets Act, and stay the proceedings of all

other claims asserted in the trial court.

2
 ARGUMENT

A. The Court Should Apply the Abuse of Discretion Standard of Review
When Considering Whether the Trial Court Committed Reversible
Error.
Texas courts apply the abuse of discretion standard of review when

considering whether a trial court committed reversible error in denying a motion to

compel arbitration. See Cleveland Constr., Inc. v. Levco Constr., Inc., 359 S.W.3d

843, 851 (Tex. App.—Houston [1st Dist.] 2012, pet. dism’d). Texas courts also

apply the abuse of discretion standard of review when considering whether a trial

court committed reversible error in denying a motion to stay litigation pending the

outcome of arbitration. See In re Merrill Lynch Trust Co FSB, 235 S.W.3d 185,

188, 196 (Tex. 2007).

In applying this standard, the Court gives deference to the trial court’s

factual determinations and reviews its legal conclusions de novo. See Cleveland

Constr., Inc., 359 S.W.3d at 851. “Whether an arbitration clause imposes a duty to

arbitrate is a matter of contract interpretation and a question of law for the court to

review de novo.” Ascendant Anesthesia PLLC v. Abazi, 348 S.W.3d 454, 458

(Tex. App.—Dallas 2011, no pet.). In a de novo review, the trial court’s decision

is given absolutely no deference. Id. at 348.

B. The Trial Court Committed Reversible Error When It Refused to
Compel to Arbitration Appellees’ Claims that are Factually Intertwined
with Appellees’ Arbitrable Claims.
It is well settled that arbitration is strongly favored under federal and state
3
law. See Prudential Sec. v. Marshall, 909 S.W.2d 896,898 (Tex. 1995). “The

policy in favor of enforcing arbitration agreements is so compelling that a court

should not deny arbitration unless it can be said with positive assurance that an

arbitration clause is not susceptible of an interpretation which would cover the

dispute at issue.” Id. at 899. A party seeking to compel arbitration must show: (1)

the existence of a valid arbitration agreement, and (2) that the dispute falls within

the scope of the agreement. See In re FirstMerit Bank, N.A., 52 S.W.3d 749, 753

(Tex. 2001). In making such determination, courts focus on the factual allegations,

rather than the legal causes of action asserted. See Marshall, 909 S.W.2d at 900.

If a claim is factually intertwined with arbitrable claims, the parties should be

compelled to arbitrate their dispute even if the dispute is grounded in a legal theory

distinct from a breach of contract claim. See Jack B. Anglin Co. v. Tipps, 842

S.W.2d 266, 270 (Tex. 1992).

The trial court ordered Appellees’ claims for tortious interference with the

Former Consultants’ Confidentiality Agreements to be adjudicated in arbitration

(CR at 134, RR at 15.) Importantly, Appellees do not appeal the trial court’s

finding on the enforceability and applicability of the Confidentiality Agreements.

Therefore, there is no dispute that the arbitration agreements at issue are

enforceable against Appellees and require that all claims within their scope, as well

as those claims that are factually intertwined, be adjudicated in arbitration.

4
 The issue before this Court is whether the trial court committed reversible

error when it held that Appellees’ claims for conspiracy to tortiously interfere with

the Confidentiality Agreements, conversion, and violation of the Texas Uniform

Trade Secrets Act are not factually intertwined with their claims for tortious

interference with the Confidentiality Agreements because, as the trial court noted,

although they “blend,” they are “easily separable[.]” (RR at 15.)

When evidence to support arbitrable claims is the same evidence that is

relevant to the claims that are not grounded in contract, the claims are factually

intertwined and should all be determined in arbitration. See Tipps, 842 S.W.2d at

271 (although misrepresentation claims are grounded in legal theories distinct from

the contract claims, claims are factually intertwined because the same evidence

will be required to support DTPA and breach of contract claims); see also

Ascendant Anesthesia PLLC, 348 S.W.3d at 462 (“To be within the scope of an

arbitration provision, the allegations need only be factually intertwined with

arbitrable claims or otherwise touch upon the subject matter of the agreement

containing the arbitration provision.”).

Appellees assert in support of their tortious interference with existing

contract claims that Appellant interfered with the Former Consultants’

Confidentiality Agreements by using Appellees’ “confidential information,” as that

term is defined. (CR at 39). “Confidential information” as used in the

5
Confidentiality Agreements means: “trade secrets, inventions, innovations,

processes, information, legal documents, financial records, specifications and other

confidential, proprietary and privileged information owed or licensed by

[Appellees], and/or used by [Appellees] in connection with the scope of work set

forth in ‘Exhibit A’ or in connection with the general operation of [Appellees’]

business.” (CR at 25, 42.) Therefore, to prevail on their claim for tortious

interference with the Confidentiality Agreements, Appellees will have to present

evidence that Appellant used their trade secrets, inventions, processes, information,

legal documents, financial records, specifications, and other confidential and

proprietary information. This is the same evidence that Appellees will be required

to present to support their claims for conversion, conspiracy, and violation of the

Texas Uniform Trade Secrets Act.

To prevail on their conversion claim, Appellees must prove that Appellant

exercised unauthorized and unlawful control over Appellees’ personal property to

the exclusion or inconsistent with Appellees’ rights. See Waisath v. Lack's Stores,

474 S.W.2d 444, 447 (Tex. 1971) (conversion is the unauthorized and unlawful

assumption and exercise of dominion and control over the personal property of

another which is to the exclusion of, or inconsistent with, the owner's rights). The

“property” that Appellees assert Appellant converted is the information that is

covered by the Confidentially Agreements’ definition of “confidential

6
information.” (CR at 42) (“[Appellant] assumed and exercised the right of

ownership over confidential and proprietary information, trade secrets, and

tangible property belonging to [Appellees] to the exclusion of [Appellees’]

rights.”). Therefore, Appellees will attempt to rely upon the same evidence to

support their claims for tortious interference with the Confidentiality Agreements

and for conversion.

The Texas Uniform Trade Secrets Act makes it unlawful for a party to

acquire a “trade secret” of another if the party knows or has reason to know that

the trade secret was acquired by “improper means.” TEX. CIV. PRAC. & REM. CODE

§ 134A.002(3)(A). The term “trade secret” is defined by the Texas Uniform Trade

Secrets Act to mean: “information, including a formula, pattern, compilation,

program, device, method, technique, process, financial data, or list of actual or

potential customers or suppliers. . . .” TEX. CIV. PRAC. & REM. CODE §

134A.002(6). The term “improper means” includes theft, bribery,

misrepresentation, breach or inducement of a breach of a duty to maintain secrecy,

to limit use, or to prohibit discovery of a trade secret, or espionage through

electronic or other means.” TEX. CIV. PRAC. & REM. CODE § 134A.002(2).

Appellees allege that Appellant is in violation of the Texas Uniform Trade Secrets

Act because it acquired Appellees’ “trade secrets” that Appellant obtained from the

Former Consultants who allegedly breached their Confidentiality Agreements.

7
(CR at 41) (“[Appellant] acquired, disclosed and used [Appellees’] trade secrets by

improper means, in that it took trade secrets known by Lockhart and the Former

Consultants and used them to its benefit.”). Therefore, to prove their claim,

Appellees will seek to present evidence that the Former Consultants breached the

Confidentiality Agreements and disclosed the allegedly confidential and

proprietary information protected by those agreements. This is the same evidence

that Appellees will seek to rely upon to support their claim for tortious interference

with the Confidentiality Agreements.

In support of their conspiracy claim, Appellees allege that Appellant and

Lockhart conspired to interfere with the Former Consultants’ Confidentiality

Agreements. (CR at 45). Therefore, to prove their conspiracy claim, Appellees

will have to prove that Appellant, in fact, interfered with the Confidentiality

Agreement. The evidence that Appellees will attempt to present to support their

tortious interference with a contract claim is the exact same evidence that it will

seek to rely upon to support their claim for conspiracy to tortiously interfere with

the Confidentiality Agreements.

The complete overlap of factual issues mandates that Appellees adjudicate

their conspiracy, conversion, and violation of Texas Uniform Trade Secrets Act

claims in arbitration. See In re Sun, 86 S.W.3d 313, 318 (Tex. App.—Austin 2002,

no pet.) (tort claims are intertwined with arbitrable claims when they are factually

8
based entirely upon the same alleged acts).

C. The Trial Court Committed Reversible Error When it Refused to Stay
Litigation of Appellees’ Claims that Address the Same Issues as
Appellees’ Claims that Were Compelled to Arbitration.
“Both the Federal and Texas Arbitration Acts require courts to stay litigation

of issues that are subject to arbitration.” In re Merrill Lynch Trust Co., 235 S.W.3d

185, 194 (Tex. 2007). “Without such a stay, arbitration would no longer be the rapid,

inexpensive alternative to traditional litigation it was intended to be so long as one

could find a trial judge willing to let the litigation proceed for a while.” Id. (internal

quotation omitted). “Thus, when an issue is pending in both arbitration and

litigation, the Federal Arbitration Act generally requires the arbitration to go forward

first. [A]rbitration should be given priority to the extent it is likely to resolve issues

material to this lawsuit.” Id. (internal quotation omitted). “Even when a party has

brought arbitrable claims against one party and claims not subject to arbitration

against another party in the same lawsuit, courts should stay all litigation if the

collateral litigation addresses the same issues as arbitration which threatens to render

the arbitration moot.” See Gray Wireline Serv. v. Cavanna, 374 S.W.3d 464, 472

(Tex. App.—Waco 2011, no pet.) (citing Merrill Lynch Trust, 235 S.W.3d at 195-

196)).

This case arises from Appellees’ assertion that Lockhart and the Former

Consultants had access to 3M’s technical knowledge, product information, pricing

information, and customer information, and that they shared this information with
9
Appellant. (CR at 20-21, 41.) (First Am. Pet., ¶¶ 27-29, 108). Appellees assert that

when the Former Consultants shared Appellees’ information with Appellant, they

breached the Confidentiality Agreements. Appellees rely on the Former Consultants’

purported contract breaches to support their claims against Appellant under various

causes of action. (CR at 25-26, 39-40, 41, 42, 45.) (First Am. Pet., ¶¶ 40-43, 100-

102, 107-108, 113, 129).

The trial court correctly held that Appellees’ claims that Appellant tortiously

interfered with Cheung, Lai, Tang, and Shyur’s Confidentiality Agreements must be

determined by arbitration. Therefore, Appellees’ claims that Appellant tortiously

interfered with the Confidentiality Agreements executed by Tang, Cheung, Shyur,

and Lai were compelled to arbitration, and all discovery and proceedings relating to

the alleged interference by Appellant with the Confidentiality Agreements executed

by Tang, Cheung, Shyur, and Lai’s Confidentiality Agreements were stayed. (CR at

134.)

The trial court did not compel to arbitration or stay Appellees’ claims that

Appellant interfered with Karr’s Confidentiality Agreement because the

Confidentiality Agreement upon which Appellees rely in support of their claim that

10
Appellant interfered with Karr’s confidentiality obligations does not contain an

arbitration agreement. (CR at 43.)3

The practical result of the trial court’s order is that the exact same arbitrable

tortious interference claims will be adjudicated in parallel proceedings: claims

relating to Tang, Cheung, Shyur, and Lai’s Confidentiality Agreements will be

determined in arbitration while claims relating to Karr’s Confidentiality Agreement

will proceed in the trial court. Also, although the court stayed the discovery and

proceedings relating to Tang, Cheung, Shyur, and Lai, it did not stay any of the

discovery or proceedings relating to Karr. (CR at 134.) The stay as currently in

effect creates a quagmire and renders moot the arbitration proceeding because

Appellees do not distinguish their claims between Karr and the other Former

Consultants. (CR at 19) (defining the term “Former Consultants” to include Cheung,

Karr, Lai, Shyur, and Tang); (CR at 19) (alleging that Appellant misused

Confidential Information from the “Former Consultants,” including Karr); (CR at 41)

(alleging in support of violation of Texas Uniform Trade Secret Act claim that

“Former Consultants,” including Karr, breached their duties and shared confidential

information with Appellant); (CR at 42) (alleging in support of conversion claim that

3
Appellant filed a counterclaim seeking a declaration that the contract on which
Appellees rely is not the controlling agreement between Appellees and Karr.
However, that claim has not been adjudicated, and therefore, for purposes of this
appeal, Appellant will refer to the agreement on which Appellees rely. (CR at 61-
66.)
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Appellant used confidential information that it obtained from “Former Consultants,”

including Karr); (CR at 45) (alleging in support of their conspiracy claim that

Lockhart and Appellant conspired to use Appellees’ confidential information in

violation of the Confidentiality Agreements executed between Appellees and

“Former Consultants,” including Karr).

Allowing the trial court proceedings to continue also renders moot the claims

that are arbitrable because Appellees’ claims that Lockhart shared confidential

information with Appellant will proceed without allowing a complete determination

of whether Appellant rightfully obtained the “confidential information” at issue from

Tang, Cheung, Shyur, and Lai.4

For the reasons stated above, all claims by Appellees against Appellant and

Lockhart should be stayed pending the arbitration of Appellees’ arbitrable claims

because Appellees’ claims against Appellant and Lockhart all address the same

issues as the claims that are required to be determined by arbitration.

4
The only claim that Appellees assert against Lockhart that does not arise from
Appellees’ allegation that Lockhart disclosed Appellees’ confidential information
or that he acted improperly in concert with Appellant is Appellees’ breach of the
non-compete agreement claim. (CR at 33.) (First Am. Pet.¶ 69). The trial court
committed reversible error when it refused to stay the litigation of this claim
because Appellees’ assertion that Lockhart’s breach caused Appellees to lose
customers cannot be adjudicated without first adjudicating whether the purported
loss of customers to Appellant was caused by activities by the Former Consultants,
and that particular claim relates back to the Confidentiality Agreements.
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 PRAYER

For these reasons, Appellant respectfully requests that the Court reverse the

trial court’s order denying in part the Motion to Compel Arbitration and to Stay

Proceedings and remand this cause to the trial court for further proceedings

consistent with this Court’s ruling. Appellant also respectfully request such further

relief, general or specific to which it may be entitled at law or in equity.

Respectfully submitted,

/s/ Blake L. Beckham
Blake L. Beckham
State Bar No. 02016500
blake@beckham-group.com
Jose Portela
State Bar No. 90001241
jose@beckham-group.com
THE BECKHAM GROUP, P.C.
3400 Carlisle, Suite 550
Dallas, Texas 75204
Telephone: 214-965-9300
Facsimile: 214-965-9301

AND

Maricela Siewczynski Moore
State Bar No. 24032753
maricela@maricelamoorelaw.com
Law Office of Maricela Moore PLLC
3400 Carlisle, Suite 550
Dallas, Texas 75204
Telephone: 214-965-5123
Facsimile: 214-965-9301

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 COUNSEL FOR LOCKHART
AND STAR SYSTEMS
INTERNATIONAL LIMITED

CERTIFICATE OF SERVICE

I hereby certify that on July 9, 2015, a true and correct copy of the foregoing
Appellant’s Brief was served on all counsel of record listed below in accordance
with Rule 9.5(c) of the Texas Rules of Appellate Procedure via electronic filing as
follows:

Via Electronic Mail at JGT@brewerattorneys.com
Jack George Ternan
Brewer Attorneys and Counselors
1717 Main Street Ste. 4800
Dallas, Texas 75201

/s/ Maricela Siewczynski Moore
Maricela Siewczynski Moore

CERTIFICATE OF COMPLIANCE

This brief complies with the type-volume limitation of TEX. R. APP. P. 9.4(i)
because, exclusive of the matters excepted from the word count limitations of the
Rule, this Brief contains 3,523 words.

/s/ Maricela Siewczynski Moore
Maricela Siewczynski Moore

I:\STAR Systems Int'l\Appellant Brief 070815.doc

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