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Sustainable Energy Generation Group, LLC v. Photon Energy Projects B.V.

Court of Chancery of Delaware

May 30, 2014

SUSTAINABLE ENERGY GENERATION GROUP, LLC, Plaintiff,
v.
PHOTON ENERGY PROJECTS B.V., PHOTON ENERGY N.V., and PHOTON ENERGY INVESTMENTS N.V., Defendants.

Submitted: January 14, 2014

Richard P. Rollo, Esq., Kevin M. Gallagher, Esq., RICHARDS, LAYTON & FINGER, P.A., Wilmington, Delaware; Michael C. Hefter, Esq., BRACEWELL & GIULIANI LLP, New York, New York; Attorneys for Plaintiff.

M. Duncan Grant, Esq., Christopher B. Chuff, Esq., PEPPER HAMILTON LLP, Wilmington, Delaware; Attorneys for Defendants.

MEMORANDUM OPINION

PARSONS, Vice Chancellor.

This action arises from the exchange of confidential information between entities in the alternative energy industry. The plaintiff, an entity incorporated and based in Delaware, was solicited by the defendants, a group of related Dutch companies, to partner on solar energy projects in the United States. After an in-person meeting between representatives from both sides, a confidentiality agreement was executed and the plaintiff shared purportedly confidential information with the defendants. The plaintiff and the defendants, however, were unable to partner successfully on any projects. The plaintiff alleges that the defendants never intended to partner with it, but instead were interested only in using the plaintiffs confidential information to help them raise capital through a bond offering. As a result, the plaintiff has asserted claims for breach of the confidentiality agreement, misappropriation of confidential information, and tortious interference with prospective business opportunities. The plaintiff seeks, among other relief, monetary damages for the defendants' tortious interference and an injunction prohibiting the defendants from any further use or disclosure of its confidential information.

The defendants have moved to dismiss the complaint in its entirety on the grounds that this Court lacks personal jurisdiction over them and that the plaintiff failed to provide them with adequate service of process. In addition, the defendants argue that the plaintiff has failed, in each count of the complaint, to state a claim upon which relief can be granted.

Having considered the parties' briefs and heard argument on the motion, I conclude that the defendants' motion to dismiss should be granted with respect to Count V of the complaint for tortious interference with a prospective business relationship. In all other respects, the motion to dismiss is denied.

I. BACKGROUND

A. The Parties

Plaintiff, Sustainable Energy Group, LLC ("SEG"), is a Delaware limited liability company with its principal place of business in Hockessin, Delaware. SEG is a renewable energy company specializing in energy engineering and the development of renewable energy projects.

Defendant Photon Energy N.V. ("Photon") is a Dutch corporation that develops renewable energy power projects around the world and operates through several subsidiary entities. Defendants Photon Energy Projects B.V. ("PEP") and Photon Energy Investment N.V. ("PEI, " and together with Photon and PEP, "Defendants") are both Dutch corporations and wholly owned subsidiaries of Photon. Photon, PEP, and PEI each have their principal place of business in Amsterdam, The Netherlands.

B. Facts [1]

1. Photon approaches SEG

In October 2012, Photon approached SEG about potentially working together on a sustainable energy project. At the time, SEG was developing similar projects on the East Coast of the United States in Delaware, New Jersey, Pennsylvania, and Vermont. On October 18, 2012, Peter Novotny, Photon' s co-founder, and Jeff Fry, a Photon executive, traveled to the United States to meet with Peter Burcat and Pierre D' Amours, SEG' s principals.

After landing in Philadelphia, Novotny and Fry met Burcat and D' Amours at SEG' s pipeline project in Northeast Philadelphia. From there, the group went on to see SEG' s pipeline projects in Millville, New Jersey, and in Milford, Delaware. At the end of the day, the group met in Wilmington, Delaware to discuss a potential business transaction between the two parties. During the meeting in Wilmington, Novotny and Fry disclosed that Photon was planning to raise capital through a bond offering in Europe, and that they believed the success of the offering depended, at least in part, on SEG being able to show growth in its global pipeline of renewable energy projects. Novotny and Fry also indicated that when they left Delaware, they would be traveling to New York to discuss the potential bond offering with investment professionals.

Subsequent to the Delaware meeting, the parties continued to discuss a potential transaction. The discussions occurred primarily by email, telephone, and Skype between SEG' s offices in Delaware and Photon' s offices in Europe. As talks between the parties progressed, they decided to execute a non-disclosure agreement (the "NDA"). After exchanging drafts between their respective offices, on November 29, 2012, SEG and PEP entered into the NDA.

2. The terms of the NDA

Under the NDA, which is governed by Delaware law, SEG and PEP agreed "to hold in confidence and refrain from the unauthorized use of any confidential or proprietary information of the other party."[2] "Proprietary Information" is defined as:

[A]ll information concerning the business and affairs of a party, including but not limited to, any and all proprietary information, trade secrets, product specifications, data, know how, formulae . . . expansion plans (e.g. existing, and new entry into new, geographic and/or product markets); locations of new offices (including proposed locations) . . . whether furnished or learned before or after the date hereof, whether oral, written or electronic, and regardless of the manner or form in which it is furnished and learned, customer names and financial information, business records, financial statements, files, documents in any format, videos, spreadsheet, and Proprietary Information received from Representatives of the Parties.[3]

SEG and PEP also agreed that "[a]ll Proprietary Information shall remain the sole and exclusive property of the disclosing party and nothing in this Agreement, or any course of conduct between the Parties shall be deemed to grant to the receiving party any license or rights in or to the Proprietary Information"[4] of the disclosing party.

Under Section 1(b) of the NDA, the parties also specified that Proprietary Information did not include information that:

(i) [w]as available to the public prior to the time of disclosure; (ii) becomes available to the public through no act or omission of the other party or its Representative; (iii) is communicated rightfully and explicitly to the other party free of any obligation of nondisclosure and without restriction as to its use; (iv) was in the other party' s possession and obtained on a non-confidential basis prior to its disclosure by the disclosing party or its Representatives; or (v) is independently developed by the other party without reference to or use of the Proprietary Information of the disclosing party.

The underlying purpose of the NDA appears to have been to facilitate the exchange of confidential and proprietary information so that each party could evaluate "whether to enter into the Transaction[5] and, if such Transaction is consummated, how best to effect such Transaction."[6]

3. The Burlington and Woolwich Township projects

At some point after the parties met in Delaware, SEG, with Photon' s consent, represented to the owners of sustainable energy projects in Burlington and Woolwich Township, New Jersey, that Photon was interested in proceeding with an investment in each of those respective projects.

a. The Burlington project

On November 28, 2012, Filippo Lambert, a Director at Photon, emailed Burcat and D' Amours laying out a "schedule of needed actions" that needed to be completed before work could begin on an 8.1-megawatt solar project in Burlington, New Jersey.

A few weeks later, after Photon had the opportunity to conduct significant due diligence on the project, D' Amours noted in a December 19, 2012 email to Fry that the Burlington project owner was continuing to ask for documentation verifying that the funding to be provided by Photon, which was needed to launch the project, was in place. D' Amours informed Fry that the project owner would not continue producing relevant documents unless it received assurances of Photon' s commitment to fund the project. That same day, Burcat wrote to Lambert and D' Amours expressing a similar sentiment: the Burlington project owner would not continue to provide due diligence materials unless Photon delivered "the single financial document" that the owner requested confirming Photon' s commitment to fund the project. Photon did not provide the requested document or any other document confirming its interest in providing funding.

b. The Woolwich Township project

Concurrent with the project in Burlington, SEG and Photon also were in discussions to partner on a 312-kilowatt solar project in Woolwich Township, New Jersey. On November 26, 2012, in a conversation between Burcat, D' Amours, Novotny, and Lambert, Burcat and D' Amours requested that their Photon counterparts send them certain cost-savings spreadsheets by the end of the week.[7] The spreadsheets were to include information that Woolwich' s Town Council could use to compare the SEG/Photon bid to that of the project' s only other bidder. Burcat and D' Amours wanted to be able to forward that information to the members of the Town Council on November 30, so that they could review it before a scheduled December 3 Town Council meeting, where the project was scheduled to be discussed.

Photon did not deliver the cost-savings spreadsheets to SEG until the night of December 2, 2012. At the December 3 meeting, the Township Solicitor, the Mayor, and three Council members each remarked individually how SEG' s failure to provide the Town Council with the requested documents before the meeting was unacceptable and unprofessional. Indeed, the Town Council refused to accept D' Amours' s oral representation of the cost-saving figures, informed SEG it was not necessary for them to submit any documents that evening, and summarily dismissed Burcat and D' Amours from the meeting.

Notwithstanding SEG' s prior relationship with Woolwich Township, which included SEG previously having completed a solar project for the township and SEG' s reliance on the township to provide business references as to the quality of its work, SEG was not chosen for the 312-kilowatt solar project.

4. Photon's alleged use of SEG's "Proprietary Information"

The discussions between SEG and Photon and its subsidiaries did not result in the consummation of a transaction or the creation of some other type of business relationship. Nevertheless, pursuant to Section 6 of the NDA, SEG and PEP continue to be bound by its terms.

On February 11, 2013, Photon announced publicly its intention to launch a bond offering, through PEI, on the Frankfurt Stock Exchange. In connection with the prospective bond sale, PEI disseminated a prospectus and a February 2013 investor presentation (the "Bond Investor Presentation") to eligible investors. According to SEG, the Bond Investor Presentation, the bond prospectus, and credit analyst reports concerning the sale of the bonds contain "Proprietary Information" relating to SEG' s United States pipeline projects. SEG also denies having authorized the use of its information in the Bond Investor Presentation, the bond prospectus, or credit analyst reports.

After learning of the alleged unauthorized use of its Proprietary Information, SEG sought an explanation from Photon. In a February 24, 2013 discussion, Photon acknowledged that the use of SEG' s pipeline project information in the bond solicitation materials was not authorized and pledged to rectify the situation. Since making that pledge, Photon has removed some, but allegedly not all, references to SEG' s project pipeline from the bond solicitation materials. Specifically, in its amended investor presentation, Photon continues to refer to at least one SEG project in the United States.

On March 11, 2013, SEG sent Photon and its affiliates a cease and desist letter demanding that they stop using SEG' s United States pipeline project information in their bond disclosures without SEG' s authorization. In response, Photon invited SEG to participate in a Skype teleconference to discuss the issues raised in the March 11 letter. The next day, on March 12, Burcat, Novotny, and Peter Deege, another Photon representative, participated in a Skype call. According to SEG, Deege stated during this call that including SEG' s ...


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