Reported / Citable
Background
Rockstim Consulting, a Texas oil-and-gas engineering consulting and staffing company, sued SM Energy, Workrise, and other companies and individuals. It alleged that SM put employees of competing firms Workrise and SDS in charge of approving Rockstim’s invoices and scheduling work, stopped timely paying Rockstim, and participated in a plan to hire away Rockstim personnel and use its proprietary job workbooks.
Among numerous federal and Texas claims, Rockstim asserted a Defend Trade Secrets Act claim against all defendants. SM Energy and its employee Nathan Moore moved to dismiss the claims against them under Rule 12(b)(6). The district judge referred that motion to Magistrate Judge Susan Hightower for a report and recommendation.
The Court’s Holding
The magistrate judge recommended dismissing the DTSA claim against Moore because the amended complaint did not allege that he participated in the purported trade-secret misappropriation. The judge also concluded that Rockstim did not plausibly plead the DTSA’s interstate-commerce requirement against SM: its allegations described consulting work, alleged misuse, and the relevant jobs as occurring in Texas, without alleging that the trade secrets related to a product or service used in interstate commerce.
Because the DTSA claim was Rockstim’s only federal claim, the magistrate judge recommended declining supplemental jurisdiction over the remaining Texas-law claims against SM and Moore. The recommendation was to dismiss the DTSA claim with prejudice and the state-law claims without prejudice, while dismissing SM and Moore from the case. Claims against the nonmoving defendants would remain pending if District Judge Robert Pitman accepts the recommendation.
Key Takeaways
- A DTSA complaint must allege that the trade secret relates to a product or service used in, or intended for use in, interstate or foreign commerce.
- General allegations against “all defendants” did not plausibly connect Nathan Moore to the alleged misappropriation.
- With no viable federal claim and no diversity jurisdiction, the magistrate judge recommended leaving the predominantly state-law dispute for state court.
Why It Matters
The recommendation underscores that intrastate allegations alone may not satisfy the DTSA’s interstate-commerce element. It also reflects the usual practice of declining supplemental jurisdiction when the federal claim falls away early in the case.
This was a report and recommendation, not a final ruling; the parties could object, and Judge Pitman must decide whether to adopt it.