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Maxum Petroleum, Inc. v. Hiatt

United States District Court, W.D. Oklahoma

June 16, 2017

MAXUM PETROLEUM, INC., Plaintiff,
v.
STEPHEN HIATT and CHEMOIL CORPORATION, INC., Defendants.

          ORDER

          VICKI MILES LaGRANGE, UNITED STATES DISTRICT JUBGE

         Before the Court is Plaintiff Maxum Petroleum, Inc.'s Motion to Compel Document Production and Renewed Motion for a Judicial Conference, filed January 13, 2017. On January 20, 2017, defendants responded, and on January 25, 2017, plaintiff replied. Also before the Court is Defendants' Motion to Compel Plaintiff's Production of Documents, filed January 13, 2017. On January 20, 2017, plaintiff responded, and on January 25, 2017, defendants replied. Based on the parties' submissions, the Court makes its determination.

         I. Background

         On September 26, 2016, plaintiff Maxum Petroleum, Inc., (“Maxum”) filed this action in the United States District Court of Connecticut.[1] In its Complaint, Maxum alleges that defendant Stephen Hiatt (“Hiatt”) resigned his senior level position at Maxum and assumed a similar position with defendant Chemoil Corporation, Inc. (“Chemoil”) (collectively “Defendants”), a direct competitor of Maxum. Maxum further alleges Hiatt had access to and was well versed in Maxum's proprietary information and trade secrets. Maxum also alleges that Hiatt recruited a former colleague, Randy Ogden, as well as two other employees to quit Maxum and join Chemoil. As a result of Chemoil employing its former employees, Maxum alleges that Chemoil is now in possession of Maxum's trade secrets and proprietary information, which Maxum believes Defendants will exploit for unfair competitive advantage. Maxum alleges the following claims against Defendants: (1) breach of contract (against Hiatt only); (2) breach of fiduciary duty (against Hiatt only); (3) misappropriation of trade secrets - Defend Trade Secrets Act, 18 U.S.C. § 1836; (4) misappropriation of trade secrets - Connecticut Uniform Trade Secrets Act; (5) conversion; (6) violation of Connecticut Unfair Trade Practices Act; (7) common law unfair competition; (8) tortious interference with prospective economic advantage (against Chemoil only); and (9) tortious interference with contract.

         Both parties now seek an order from this Court compelling the respective parties to produce requested documents. Specifically, Maxum requests that defendants produce all documents responsive to its Second Requests for Production of Documents and a judicial conference with the Court to address any other outstanding issues.[2] Defendants request that Maxum produce documents sought in their First and Second Requests for Production of Documents.

         II. Discussion

         A. Maxum's motion to compel

         Maxum seeks information from Defendants regarding business documents relating to the development of Chemoil's lubricant and diesel businesses, and correspondence and documents relating to Chemoil's recent recruitment and hiring of former Maxum employees, including electronic files and devices from former employees of Maxum who are now employed by Chemoil. Specifically, Maxum alleges that Chemoil is exploiting its trade secrets by utilizing former Maxum employees to sell lubricant products to oil and gas drilling customers, an area that Chemoil did not previously service.

         Maxum requests information regarding Chemoil's contacts and efforts to sell lubricants to rig customers, including all documents and communications reflecting, relating to, referring to, discussing, or concerning: (1) any contact with prospective or actual purchasers of lubricant products and services other than fracking customers (Request for Production No. 3); (2) Chemoil's efforts to sell lubricant products or services to customers other than fracking customers (Request for Production No. 4); (3) any contacts with Atlas, H&P, Nabors, Patterson, Precision, Cactus, Ensign, Trinidad, Unit, Latshaw, Pioneer, and/or Sidewinder (Request for Production No. 6); and (4) credit applications by or for prospective customers of lubricant products and services (Request for Production No. 7). See Plaintiff's Second Requests for Production of Documents, attached as Exhibit 6 to the Declaration of Jason Koral Pursuant to Local Rule 37(a) and in Support of Plaintiff's Motion to Compel Document Production [docket no. 52].

         Maxum also seeks information regarding Chemoil's efforts to launch its new lubricant business (Request for Production Nos. 8 & 9) and use of former Maxum employees to expand sales and purchases of lubricant products (Request for Production No. 5). Maxum further seeks evidence relating to damages in the form of sales made and profits earned in its diesel fuel products and services and its lubricant products and services (Request for Production No. 1). See Plaintiff's Second Requests for Production of Documents, attached as Exhibit 6 to the Declaration of Jason Koral Pursuant to Local Rule 37(a) and in Support of Plaintiff's Motion to Compel Document Production [docket no. 52].

         Further, Maxum seeks documents related to Chemoil's alleged recruitment and hiring of Maxum employees, including all documents and communications reflecting, relating to, referring to, discussing or concerning: (1) Chemoil's recent efforts to recruit and hire current and former Maxum employees including Hiatt, Randy Ogden, Todd King, Phillip DeLong, and David Schneider (Request for Production No. 13); (2) Chemoil's recent efforts to hire drivers to serve lubricants customers (Request for Production No. 8); and (3) draft and final versions of employment agreements, commission schedules, benefits, employee manuals, and/or company policies provided to Hiatt, Ogden, King, DeLong, and Schneider (Request for Production No. 14). See Plaintiff's Second Requests for Production of Documents, attached as Exhibit 6 to the Declaration of Jason Koral Pursuant to Local Rule 37(a) and in Support of Plaintiff's Motion to Compel Document Production [docket no. 52].

         Defendants acknowledge Maxum's breach of contract claim against Hiatt and insist they do not object to producing discovery related to Hiatt allegedly soliciting employees and customers; however, defendants object to all other discovery requests on the grounds that Maxum's trade secret claims have no merit. Specifically, Defendants contend that the information regarding plaintiff's customer list and pricing are not trade secrets, and since Ogden, King, DeLong, and Schneider did not have a non-compete agreement with Maxum, they are free to use the knowledge and relationships they acquired while working at Maxum during their employment with Chemoil.

         Having carefully reviewed the parties' submissions, the Court finds that Defendants should be required to produce the requested documents in Maxum's Second Request for Production of Documents. Specifically, Maxum contends that Hiatt, Ogden, King, and Delong all attached USB drives to their Maxum laptops either shortly before or the same day of their departure. See Plaintiff's Memorandum of Law in Support of its Motion to Compel [docket no. 50] at 13-14. Further, Maxum contends that Ogden and King accessed sensitive pricing, customers and sales information, upon their departure.[3] See id at 14. Based on Maxum's allegation that former employees, who now work for Chemoil, accessed electronic documents and files upon their departure from Maxum, the Court finds that the information Maxum seeks in its Second Request for Production of Documents is relevant and should be produced; however, with respect to Request for Production No. 1, the Court finds that only documents showing the monthly sales, gross profit, and net profit of rig lubricant products is relevant as to damages in this matter, as that is the area Maxum claims defendants have engaged in misappropriating its trade secrets. Therefore, the Court finds that Maxum's motion to compel should be granted in part and denied in part.

         B. Chemoil's ...


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