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J.C. Energy, LLC v. Hall

United States District Court, D. Wyoming

September 28, 2015

J.C. ENERGY, LLC, a Wyoming limited liability company, Plaintiff,
v.
CHARLES SCOTT HALL, an individual, and PETRO ENERGIES, INC., a Colorado corporation, Defendants.

OPINION AND ORDER GRANTING IN PART, DENYING IN PART J.C. ENERGY'S MOTION FOR PARTIAL SUMMARY JUDGMENT AND OPINION AND ORDER DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

ALAN B. JOHNSON, District Judge.

The Plaintiff's Motion for Partial Summary Judgment (Doc. No. 19) and Defendants' opposition (Doc. No. 24); Defendants' Motion for Summary Judgment (Doc. No. 22), the Plaintiff's opposition (Doc. No. 25), and Defendants' reply (Doc. No. 27) came for hearing September 22, 2015. After reviewing the parties' submissions, the arguments of counsel at the hearing, the applicable law, and being fully advised, the Court finds that Plaintiff's Motion for Partial Summary Judgment (Doc. No. 19) should be GRANTED IN PART and DENIED IN PART, and that Defendants' Motion for Summary Judgment (Doc. No. 22) should be DENIED for the reasons stated at hearing and below.

BACKGROUND

Leading up to the Agreement in Question

In 2012, John Mills, Caleb Kinsella, and Kenneth Mills formed J.C. Energy, LLC (Plaintiff) in Laramie, Wyoming. J.C. Energy specializes in technical and proprietary consulting and servicing for oil and gas companies, which includes weld mapping. Weld mapping-in the most general sense-is the outlining of an oil and gas project. J.C. Energy began performing this type of work for its only customer at the time, Anadarko Petroleum Corporation, in 2012. Initially, J.C. Energy worked for Anadarko in Wyoming and Utah, expanding later to northern Colorado.

In the fall of 2013, J.C. Energy was looking for an inspector: someone to monitor quality control, perform weld mapping, and enter daily logs and reports. On November 7, 2013, J.C. Energy hired Charles Scott Hall (Defendant) to be an inspector. Hall had some experience in oil and gas work, but little knowledge of what he would be doing as an inspector for J.C. Energy. Hall possessed a background in construction, maintenance roustabout services, and gas plant operations. J.C. Energy trained Hall in its business operations and techniques, which included substantial training in weld mapping. According to J.C. Energy, it explained to Hall how Anadarko preferred its weld mapping.[1] Hall had the opportunity to learn the intricacies of J.C. Energy's business relationship with Anadarko and about J.C. Energy's future work and prospective customers.

At some point, the owners of J.C. Energy realized that they should have their employees sign agreements with the company to protect business interests, particularly in the area around southeastern Wyoming and northern Colorado. The Defendants contend that J.C. Energy only required these agreements in response to some company turmoil at J.C. Energy, which John Mills caused. In December of 2013, John Mills tested positive for marijuana, causing Anadarko to remove him from all of their work in northern Colorado. Anadarko allowed Caleb Kinsella to continue J.C. Energy's work in northern Colorado. Three employees became worried about the company's future viability and quit. Mills presented the agreement to the remaining employees, one of whom was Hall.

On January 25, 2014, J.C. Energy met with Hall at a company meeting in Cheyenne, Wyoming. Almost a week prior to the meeting, J.C. Energy presented Hall with the employment agreement in question: "Employee Confidentiality, Non-Compete, and Non-Disclosure Agreement" ("Agreement"). In exchange for $1000.00 in consideration, Hall agreed to all the provisions therein.[2]

The Agreement

The Agreement begins by explaining the importance of the business information to J.C. Energy, why the company entered into the agreement, and what the consideration would be. After the introductory portion, the Agreement addresses Hall's obligation of non-disclosure. The Agreement defines "Information" as "proprietary, confidential and or trade secret Information (including data, techniques and materials, tangible and intangible, customer lists, contacts, industry data, and general know-how), which properly belong to the Company." Doc. No. 20-4, p. 1. After this definition, the Agreement discusses Hall's obligations with regard to non-disclosure of the Information.

1.... (c) During the term of the Employee's service with Company and after termination of such employment, unless authorized in writing by Company, Employee will not:
(i) Use for Employee's benefit or advantage the Information; or
(ii) Use the Information for the benefit or advantage of any third party; or
(iii) Improperly disclose or cause to be disclosed the Information or authorize or permit such disclosure of the Information to any third party; or
(iv) Deliberately or with negligence, use the Information in any manner which may injure or cause loss to the Company directly or indirectly.
(d) Employee will not be liable for the disclosure of Information which:
(i) Is in the public domain; or
(ii) Is received rightfully by Employee from a third party having a lawful right to possess; or
(iii) [is ordered by a court and takes reasonable steps to protect the information]; or....

Doc. No. 20-4, pp. 1-2. After the non-disclosure section, the Agreement addresses ownership of intellectual property, which is not at issue in this case. The Agreement next addresses concerns with prior obligations of employees, before explaining Hall's covenant not to compete.

The covenant not to compete reads as follows.

4.... (a) During the Employee's employment with the Company, and for a period of two (2) years thereafter, the Employee shall not directly or indirectly:
(i) Enter into or attempt to enter into an agreement of employment or otherwise undertake to provide services to any person or entity in similar to those services of the Company within a one-hundred mile (100) radius of Cheyenne, Wyoming;
(ii) Induce or attempt to persuade any former, current or future employee, agent, manager, consultant, director, or other participant in the Company's business to terminate such employment or other relationship in order to enter into any relationship with the Employee, any business or organization in which the Employee is a participant in any capacity whatsoever, or any other business organization in competition with the Company's business; or
(iii) Use contracts, proprietary information, trade secrets, confidential information, customer lists, exclusive suppliers, trade dress, trade names, trademarks, patents, mailing lists, marketing materials, goodwill, or other intangible property used or useful in connection with the Company's business.

Doc. No. 20-4, p. 4. The Agreement provides that these terms survive termination of the employee's employment. The Agreement specifies that Hall was fully aware of his right to discuss all aspects of the Agreement with an attorney of his choice. The Agreement states that it "shall be interpreted and enforced pursuant to the laws of the State of Wyoming." Doc. No. 20-4, p. 5. The Agreement goes on to read "[i]n the event... suit or action is brought by any party under this Agreement to enforce any of its terms, it is agreed that the prevailing party shall be entitled to reasonable attorneys[] fees." Id. Both parties signed the agreement, and J.C. Energy paid Hall his $1000.00.

After the Agreement

During Hall's employment with J.C. Energy, Hall formed his own company to perform the exact same work as J.C. Energy provided. On June 26, 2014, Hall formed Petro Energies, Inc., a Colorado corporation.[3] Petro Energies' principal place of business was and is in Johnstown, Colorado.[4] After setting up his corporation, Hall and Anadarko began a business relationship. On July 24, 2014, Hall entered into a service agreement with Anadarko to perform substantially similar work to what he previously did on behalf of J.C. Energy for Anadarko. Hall and Anadarko specifically negotiated services at ...


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