A Texas Business Court jury awarded $49 million to an Austin-based minerals company after finding its former executives stole its playbook, copied proprietary software and poached customers for their competing business.
Ruslan Grumble/Fotolia
A jury has awarded $49 million to an Austin-based minerals company after finding three former executives stole its playbook, copied proprietary software and poached customers for their competing business.
The award, which came after a two-week trial in the 3rd Business Court Division in Austin, is among the largest in the new business courts, which began hearing cases in September 2024. It was also the first jury trial in the Austin court.
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The case was brought by ES3 Minerals LLC, which said former executives David Ryan, Nicholas Kreines and Jettie Rangel stole trade secrets to launch their own business and do further harm to ES3.
The company sued for theft of trade secrets, breach of fiduciary duty, breach of contract and fraudulent transfer.
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“At its core, this case was about protecting the systems, technology and business we’ve built at ES3,” said Trey Stanton, founder of ES3 Minerals, which buys and sells mineral rights.
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It alleged that Ryan and Kreines plotted to steal ES3’s software, known as Rainmaker, and enlisted overseas developers to duplicate it. ES3 said Kreines also stole lists of its buyers and that the group took reams of ES3 data they used to sell their new business to ES3 customers.
Pumpjacks operate near a drilling rig in July 2022 along Texas 191 between Midland and Odessa.
Jon Shapley/Houston Chronicle file photo
Rangel had been the head of ES3’s analyst department, Kreines was vice president of business development and Ryan was vice president of mineral acquisitions.
Ryan and Rangel started Liberty Mineral Partners in 2023, while Kreines — who was partnering on the business — restarted his own firm called NAK Resources LLC in early 2024.
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Ryan denied the allegations in court filings, saying he was fired for refusing to steal a consultant’s training materials and relabeling them as ES3 property.
Kreines said he had been asked to stay on through January 2024 after tendering his resignation, and that he restarted NAK Resources during that time. At the end of the month, he said, ES3 declined to pay him owed commissions.
ES3 said he was shilling for himself and Liberty Mineral Partners, helping to secure a $480,000 deal that netted him $216,000 on his first day. In eight months, ES3 said, the trio made $20 million.
Text messages between the business partners were compelling, showing they were attempting to poach more ES3 employees and shield their revenue from litigation through trusts and offshore accounts.
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The Heman Marion Sweatt Travis County Courthouse is the site of many business court trials.
Austin American-Statesman
The defendants said ES3 wanted to squash its former employees rather than see them succeed.
A jury disagreed, finding unanimously the three had acted in concert to misappropriate ES3’s buyers’ information, trade secrets and sales techniques. It also found Kreines violated his fiduciary duty to benefit the group. The jury valued ES3’s trade secrets at over $40 million and unanimously awarded $9 million in damages.
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The judgment was appealed Monday to Texas’ 15th Court of Appeals.