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Cooper Valves, LLC v. Valvtechnologies, Inc.

Court of Appeals of Texas, Fourteenth District

July 20, 2017

COOPER VALVES, LLC AND BARRY DON HOEFFNER, Appellants
v.
VALVTECHNOLOGIES, INC., Appellee

         On Appeal from the 11th District Court Harris County, Texas Trial Court Cause No. 2016-67168

          Panel consists of Justices Christopher, Busby, and Jewell.

          OPINION

          J. Brett Busby, Justice

         Appellee ValvTechnologies, Inc. (VTI) filed this suit after appellant Barry Hoeffner left its employ and went to work for appellant Cooper Valves, LLC. In this accelerated interlocutory appeal, Cooper Valves and Hoeffner challenge the trial court's order granting a temporary injunction requested by VTI.[1]

         Appellants argue that the trial court abused its discretion when it signed the temporary injunction because the order (1) is based on unenforceable noncompetition and nonsolicitation covenants by Hoeffner, (2) is overbroad and vague in violation of Texas Rule of Civil Procedure 683, and (3) contains findings by the trial court that are not supported by sufficient evidence. We conclude Hoeffner's covenants are unenforceable and cannot support the sections of the temporary injunction based on them. We further conclude that although there is evidence in the record supporting the trial court's findings of misappropriation and threatened misappropriation of certain VTI trade secrets, the temporary injunction violates Rule 683 because it is impermissibly vague and overbroad. We therefore reverse the challenged sections of the trial court's temporary injunction and remand the case to the trial court for further proceedings consistent with this opinion.

         Background

         VTI is in the business of designing, developing, manufacturing, and selling various types of industrial valves worldwide. Cooper operates a similar business. The two companies compete, however, in only a single category of valves: metal-seated ball valves for severe service applications.

         Hoeffner worked for Baker Hughes Corporation, where he developed an expertise in addressing customers' industrial process and design problems. Kevin Hunt, the CEO of VTI, hired Hoeffner in 1997. Hoeffner signed an agreement with VTI at that time, and it provides that he is an at-will employee. In the 1997 Agreement, Hoeffner agreed not to disclose VTI's "Confidential Business Information, " which is defined as including

any information not generally known in the relevant trade industry, which is disclosed to, discovered by, or known to [Hoeffner] as a consequence of [Hoeffner's] employment by [VTI], including but not limited [to] information concerning [VTI's] products, processes, services, research developments, manufacturing, purchasing, accounting, engineering, marketing, distribution, construction, merchandising, selling, soliciting, or customers, regardless of whether the information is in a written or unwritten form; and including but not limited to drawings, blueprints, plans, computer programs and printouts, manuals, notebooks, compositions, reports, files, records, customer lists, accounting sheets and statements, proposals, formulae, processes, and machines. The parties agree that the use of the term Confidential Business Information in this Agreement shall include all of the foregoing.

         The 1997 Agreement also includes a covenant not to compete. This covenant provides, in pertinent part,

2. Noncompetition by Employee:
For a period of two (2) years after the termination of [Hoeffner's] employment for any reason, [Hoeffner] agrees that he will not, either directly or indirectly, become an employee, manager, owner, officer of, or consultant for any other company, corporation or entity within the world, where such other company, corporation, or entity is engaged, either directly or indirectly, in a Business which is competitive with the Business of [VTI]. [Hoeffner] agrees that this restriction applies to [Hoeffner's] performance of the same or similar duties and activities [Hoeffner] performed for [VTI] or activities where the performance of such activities could result in the disclosure of the Confidential Business Information of [VTI]. . . .

         The 1997 Agreement additionally provides that Hoeffner cannot solicit VTI's customers for the purpose of competing with VTI, and cannot "solicit the employees of [VTI] for purposes of hiring such individuals to enter into competition with [VTI]." According to the agreement, it cannot "be modified, amended, or terminated except by a written instrument executed by [Hoeffner] and a duly authorized officer of [VTI]."

         Hoeffner worked for VTI from 1997 until early 2000, when he quit and went to work for a software company. According to Hunt, when Hoeffner left VTI, there was no expectation that he would return to work for VTI, there were no discussions at that time regarding Hoeffner returning to VTI, and VTI did not hold his job open for Hoeffner while he was gone. Additionally, Hunt testified that if Hoeffner had gone to work for a competitor, VTI would have considered that a breach of his covenant not to compete.

         Approximately eighteen months after leaving VTI, Hoeffner approached Hunt about returning to work there. Hunt, concerned because Hoeffner's departure had been under less than ideal circumstances, told Hoeffner that he would have to think about it. Ultimately, Hoeffner went through an interview process with senior-level VTI employees to determine whether "everybody could get along." Hoeffner was rehired on October 1, 2001.

         VTI required Hoeffner to sign a new confidentiality agreement when he was rehired, but not a new noncompetition agreement. The 2001 Confidentiality Agreement included a new definition of confidential information:

As used in this Agreement, the term "Confidential Information" means (1) proprietary information of VTI; (2) information marked or designated by VTI as confidential; (3) information, whether or not in written form and whether or not designated as confidential, which is know [sic] to me as being treated by VTI as confidential; and (4) information provided to VTI by third parties which VTI is obligated to keep confidential. Confidential information includes, but is not limited to, computer programs, discoveries, ideas, designs, drawings, specifications, techniques, computer and other models, data, statistical and other programs, documentation, processes, know-how, customer lists, marketing plans, and financial and technical information.

         Hoeffner agreed that he would not disclose any VTI confidential information without VTI's written consent. Hoeffner further agreed that he would not "copy, transmit, reproduce, summarize, quote, or make any commercial or other use whatsoever of confidential information, except as may be necessary to perform my duties for VTI." Finally, Hoeffner agreed that he would "exercise the highest degree of care in safeguarding confidential information against loss, theft, or other inadvertent disclosure, and agree generally to take all steps necessary to ensure the maintenance of confidentiality."

         After his return to VTI, Hoeffner became the Industry Director of Hydrocarbons.[2] In that role, Hoeffner was responsible for VTI's worldwide hydrocarbon operations and was aware of confidential information, planning, and worldwide activities regarding that industry, including the development of new valves for VTI clients.[3] In addition, as an Industry Director, Hoeffner participated in company-wide planning and status meetings. Personnel from all six VTI industry groups participated in these meetings, and Hoeffner therefore knew about and had access to all types of VTI confidential information.

         Hoeffner began talking with representatives from Cooper about becoming Cooper's president in August or September 2015. Hoeffner revealed VTI's profit margin for metal-seated ball valves to Ionel Nechiti, a Cooper owner, during those negotiations. Hoeffner also told Nechiti that "I know I am still riding a fence here, but I would like to introduce Steve [Mines] to some contacts in Total." Total was a VTI customer, Mines was a Cooper employee, and the referenced contacts were people Hoeffner had met at Total through his work at VTI. Hoeffner also asked Nechiti about Cooper's interest in "a Trunnion product either through design or acquisition." At that time, a trunnion valve was a type of valve that VTI produced but Cooper did not.[4] Additionally, Hoeffner had been deeply involved in VTI's development of the trunnion valve. The negotiations were successful and Hoeffner accepted the position of president at Cooper on January 4, 2016.

         Hoeffner notified VTI that he was leaving the company on January 18. On January 25, when Hoeffner arrived at VTI, he was summoned to a meeting. Edward Ferris, VTI's Director of Human Resources, asked Hoeffner to turn in his VTI laptop computer, which he did. Ferris also asked Hoeffner to turn over his personal cell phone to Keith Bethel, VTI's Information Technology manager.[5]Hoeffner did so and then allowed Bethel to delete anything he wanted from the phone, including all VTI-related information. Bethel also wiped Hoeffner's contacts-both business and personal-from the phone. According to Hoeffner, within two days of his departure from VTI, he deleted all VTI documents he could find from his personal computers and then turned those machines over to a third-party forensic IT company for quarantining. Hoeffner had no access to his computers after that date.

         Soon after he started working for Cooper, Hoeffner met with representatives from Bechtel, a VTI "specifier." Hoeffner explained that a specifier is a company that writes specifications for projects and therefore influences which valves and other products a customer will buy for a particular project. Hoeffner also met with representatives from Dow, Monroe Refining, ExxonMobil, Total, and Marathon- all VTI customers. While employed at VTI, Hoeffner had worked on a project to design Porvair's Pulsejet Valve. Once he moved to Cooper, Hoeffner contacted representatives at Porvair regarding Cooper's interest in developing two possible valves, "a ball valve and the other a rising stem possibility."[6]

         On October 3, 2016, VTI filed suit against Hoeffner and Cooper alleging, among other things, that Hoeffner and Cooper misappropriated VTI confidential information and trade secrets and that Hoeffner breached his 1997 and 2001 Agreements, including the 1997 covenant not to compete. VTI sought a temporary restraining order as well as temporary and permanent injunctions. After a three-day evidentiary hearing, the trial court granted VTI's request for a temporary injunction.

         The court's order imposing the temporary injunction includes a lengthy definition of VTI's "Confidential and Trade Secret Information." According to the order, such information "includes, but is not limited to the following" categories: (1) "information regarding the actual customers of [VTI] listed on the attached [Exhibits 1 and 1A] which [have] been filed under seal, as well as [VTI's] specifiers and distributors. . . .;"[7] (2) engineering, manufacturing, and product development information for VTI valves; (3) vendors for materials, labor, and services for the valves; (4) information on VTI's ...


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