26,675 La.App. 2 Cir. 3/1/95, Wyatt v. PO2, Inc.

• Decision Date: 01 March 1995
• Citation: 651 So.2d 359
• Parties: 26,675 La.App. 2 Cir
• Court: Court of Appeal of Louisiana — District of US

Page 359

651 So.2d 359

26,675 La.App. 2 Cir. 3/1/95

Faris WYATT, Plaintiff-Appellant, v. PO2, INC., Defendant-Appellee.

No. 26675-CA.

Court of Appeal of Louisiana,

Second Circuit.

March 1, 1995.

Writ Denied May 5, 1995.

Lawrence N. Curtis, Lafayette, for appellant.

Joseph J. Bailey, Alexandria, for appellee.

Before NORRIS and WILLIAMS, JJ., and PRICE, J. Pro Tem.

WILLIAMS, Judge.

The plaintiff, Faris Wyatt, acting in her capacity as administratrix of the succession of her deceased daughter, Lisa Myers Stevenson, appeals the trial court's denial of injunctive relief based on its finding that she failed to prove unfair trade practices by the defendant, Patricia H. Voorhies. We affirm.

FACTS

Patricia H. Voorhies and Lisa Myers Stevenson each owned 50% of the stock in PO2, Inc. ("PO2"), a corporation which distributes and maintains home medical supplies, particularly oxygen. Voorhies was president and Stevenson was secretary/treasurer. PO2 acquired clients by referral from health care providers and facilities. Voorhies, a certified respiratory technician, also learned of patients through her employment at a local hospital.

Stevenson died in October, 1990. Subsequently, Faris Wyatt, Stevenson's mother and administratrix of her succession, was appointed to the Board of Directors of PO2. Voorhies continued to operate PO2 with the assistance of her husband, Jeffery Wayne Voorhies, and other employees. Wyatt did not become involved in the operations of PO2. In September, 1993, Voorhies began discussions with Wyatt regarding the purchase of Stevenson's interest in PO2, indicating that if they were unable to negotiate a buy out by the end of the year, she and her husband would leave PO2. The negotiations were unsuccessful.

In December, 1993, Voorhies and her husband established Fresh Air Medical Equipment, Inc. ("Fresh Air"). Jeffery Voorhies left his employment with PO2 in January, 1994. Patricia Voorhies resigned as director, officer, and employee of PO2 effective February 14, 1994. Two other PO2 employees, Scott Swilley and Peggy Mercer, also resigned and went to work for Fresh Air. After Voorhies' resignation from PO2, her husband and Swilley, personally solicited PO2 clients to transfer service to Fresh Air. In addition, advertisements for Fresh Air were run in the newspaper. Approximately 75 percent of the former PO2 clients who transferred to Fresh Air did so as a result of the personal solicitation.

Wyatt filed suit against PO2 and Patricia H. Voorhies, alleging that she was entitled to damages, mandamus, and injunctive relief because Voorhies' diversion of PO2 clients to Fresh Air constituted unfair trade practices. At the conclusion of the hearing on the request for a preliminary injunction, the trial court found that Wyatt failed to prove unfair trade practices and denied her request for injunctive relief. Subsequently, Wyatt unsuccessfully applied to this court for a supervisory writ. ¹ Wyatt now appeals.

DISCUSSION

Wyatt contends the trial court erred in finding that Voorhies' use of confidential information gained in her capacity as an officer, director and employee of PO2 did not constitute unfair trade practice within the meaning of the Unfair Trade Practices and Consumer Protection Law.

The Unfair Trade Practices and Consumer Protection Law, LSA R.S. 51:1401, et seq., enacted in 1972, declares that "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce" are unlawful. LSA R.S. 51:1405(A). However, the definition of unfair trade practices has been left to the courts. What constitutes unfair competition is determined on a case by case basis. Conduct is considered unlawful when it involves "fraud, misrepresentation, deception, breach of fiduciary duty, or other unethical conduct." Core v. Martin, 543 So.2d 619 (La.App. 2d Cir.1989); Dufau v. Creole Engineering, Inc., 465 So.2d 752 (La.App. 5th Cir.1985), writ denied, 468 So.2d 1207 (La.1985). "A practice is unfair when it offends public policy and when the practice is immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers." Dufau, supra, citing Coffey v. Peoples Mortgage & Loan of Shreveport, Inc., 408 So.2d 1153 (La.App. 2d Cir.1981).

In determining what constitutes unfair competition, the court must balance the right of the employee to individual freedom on the one hand and the right of the employer to honest and fair competition and to protection of business assets and property in the nature of trade secrets on the other hand. National Oil Service of Louisiana, Inc. v. Brown, 381 So.2d 1269 (La.App. 4th Cir.1980). Generally, however, in the absence of a contrary agreement, an employee is free to compete with a former employer. National Oil, supra. In an employer's claim against a former employee alleging misappropriation of a customer list, the following factors are considered: "the manner in which and the purpose for which the customer lists are compiled; the conduct and motivation of the employee before and after the employment relationship ends; the manner in which the customers are contacted after the termination; the nature of the representations made to the customers by the former employee; and, the existence of a scheme or an intent to injure or to take over all or a substantial part of the former employer's business." Core, supra, citing National Oil, supra.

Wyatt testified that she was not provided with a customer list or an inventory list for PO2, but was told by Voorhies that the information was on the PO2 computer. Wyatt presented a witness with some computer familiarity who testified that deletions had been made from the PO2 computer; however, other than a word processing program, he could not specify what had been deleted or when any deletions had occurred. He further testified that he was unable to locate a comprehensive list of customers on the PO2 computer. Wyatt testified that she had compiled lists from three folders of PO2 billing information and a ledger. She further testified that Fresh Air had taken 85 to 90 percent of PO2's business. A letter from Fresh Air to PO2 regarding PO2 clients who had transferred service to Fresh Air was introduced by Wyatt at the hearing; it identified 31 clients. Wyatt also testified that a code book which describes equipment and a machine used to test equipment were missing. According to Wyatt, PO2 equipment was left in a state of disrepair.

Voorhies testified that the bulk of PO2's income came from clients to whom it provided oxygen equipment and that at the time she resigned from PO2, there were approximately thirty-five to forty of these clients. She testified she did not know the number of clients to whom PO2 provided other types of medical equipment. Voorhies acknowledged that the names of the patients in need of such equipment are not a matter of public record. She testified that she became aware of the patients both through her work as a respiratory technician at the local hospital and through her position at PO2. Voorhies further testified that there was no comprehensive list of PO2 clients either in writing or in the computer. She acknowledged that she had removed her personally owned word processing program from the PO2 computer, but she denied having deleted or taken PO2 client records. Voorhies testified that she did not solicit PO2 employees to work for Fresh Air. She further testified that neither she, her husband, nor the other former PO2 employees solicited any PO2 clients to transfer to Fresh Air prior to her resignation from PO2. Voorhies denied having taken any supplier list, documentation which would allow her to identify PO2 clients, or any equipment.

Jeffery Voorhies testified that after his wife's resignation from PO2, he visited clients he...