Air Products and Chemicals, Inc. v. Johnson

• Decision Date: 19 February 1982
• Citation: 442 A.2d 1114,296 Pa.Super. 405
• Parties: , 215 U.S.P.Q. 547 AIR PRODUCTS AND CHEMICALS, INC. v. Richard A. JOHNSON and Liquid Air Corporation, Appellants.
• Court: Pennsylvania Superior Court

Page 1114

442 A.2d 1114

296 Pa.Super. 405, 215 U.S.P.Q. 547

AIR PRODUCTS AND CHEMICALS, INC. v. Richard A. JOHNSON and Liquid Air Corporation, Appellants.

Superior Court of Pennsylvania.

Argued Nov. 4, 1981.

Filed Feb. 19, 1982.

James D. Crawford, Philadelphia, for appellants.

Casper C. Schneider, Jr., New York City, for appellee.

Before BROSKY, POPOVICH and MONTGOMERY, JJ.

BROSKY, Judge:

On March 4, 1981, appellee, Air Products and Chemicals, Inc., hereinafter, Air Products, brought an action in equity against appellants, Richard A. Johnson and Liquid Air Corporation, hereinafter Liquid Air, seeking declaratory and injunctive relief restraining Johnson from accepting employment with Liquid Air for two years. An ex-parte injunction issued on March 4, 1981. ¹ A hearing was held from March 23, 1981 until April 6, 1981, at which the trial court heard testimony concerning the continuance of that injunction. The court concluded and ordered on April 6, 1981 that Johnson could begin to work with Liquid Air but enjoined Liquid Air from using Johnson in their on-site operations and prohibited Johnson from disclosing any confidential information. On August 7, 1981, the court ordered the injunction extended until March 7, 1982, after it considered the voluminous post-hearing submissions presented by the parties. This appeal followed. ² We affirm.

Johnson and Liquid Air present three questions on appeal. First, they assert that the trial court improperly constrained Johnson from participating in full employment practices at Liquid Air in light of the fact that he was not in any way burdened by a restrictive covenant in his employment contract with Air Products. Secondly, they remonstrate that, even if the injunction properly issued, that it is impermissibly broad in scope. Thirdly, they contend that the trial court denied Liquid Air its constitutionally guaranteed right to due process when it was excluded from the in camera hearing held by the trial court, when it heard evidence from which it would determine whether and what trade secrets existed. We will address each issue seriatum.

It is clear that our review herein is very narrow. We will look only to determine whether there were reasonable grounds, which are apparent, which justified the trial court's actions. We will not scrutinize the actions of the lower court any further unless the reasons relied upon by it were simply unreasonable or the legal analysis presented by the trial court was inaccurate. Valley Forge Historical Society v. Washington Memorial Chapel, 493 Pa. 491, 426 A.2d 1123 (1981); Boyd v. Cooper, 269 Pa.Super. 594, 410 A.2d 860 (1979). ³

The facts involved in this dispute are very numerous. We will describe them at some length. Air Products and Liquid Air are among the largest manufacturers and distributors of industrial gases in the United States. ⁴ They trade in substantially similar types of gases though their relative market positions have resulted in Air Products possessing a superior position in "on-site" sales and Liquid Gas in "merchant" sales. "On-site" gas serves large industrial customers. Gas is piped to the customer. ⁵ "Merchant" gas is delivered to smaller customers in tanks or cylinders.

Johnson was an employee of Air Products from 1966 to 1981. He is a college graduate, with a degree in petroleum engineering from Pennsylvania State University. Most of the experience Johnson had at Air Products was in on-site gas sales. Notably, from 1975 to 1981, Johnson had charge of Air Products' on-site sales. In January, 1981, he was elected a vice-president of Air Products.

This dispute arose out of a decision made in 1980 by Liquid Air to hire a vice-president in charge of marketing. Thus, Liquid Air contacted an executive search firm in New York. Air Products was a natural place to search for such a person. Sometime later, the recruiter came upon Johnson, established contact with him, and found him receptive to its proposals.

In December, 1980, Liquid Air decided that it would employ, the executive it was able to obtain, as the president of its Canadian subsidiary. The candidate was to work first, however, with Liquid Air's industrial gas division headquartered in San Francisco. The duties required of the person who filled the position involved the full range of industrial gas operations, including the on-site mode of delivery. Johnson was offered the position. He accepted. ⁶ Air Products subsequently filed this action in the court below.

Air Products clearly is concerned that Johnson may use the knowledge he acquired at Air Products about its on-site business and disclose that information to Liquid Air. Specifically, Air Products fears that Johnson may disclose trade secrets to Liquid Air about which Johnson learned as an Air Products employee. Air Products has developed its on-site business with great energy and financial expense. Liquid Air has not procured similar information related to on-site activities. This information includes technical data concerning the methods of delivery of on-site gas, status of negotiations with customers, and the analysis of market opportunities. Johnson was knowledgeable about all of these programs and technologies. While Johnson clearly does not have detailed knowledge about Air Product's market opportunities or about the technological process involved in the on-site mode of delivery of industrial gas, the record supports the trial court, when it said:

Johnson does not know the minutiae of this process, but he well knows the problems Air Products encountered to make the process a success. Because he knows the conclusions of Air Products' research and field-testing, his knowledge would be extremely valuable to a competitor since it would cut the developmental risk involved in a similar project.

(Trial Court Opinion at page 7.)

Essentially, Air Products has developed substantial plans concerning the on-site delivery of gas. It has devoted significant resources to the development of these plans and considers their technological advancements and marketing strategies to be trade secrets. Johnson is familiar with these plans.

Air Products undertook to protect itself from disclosure of what it considers trade secrets by its employees by requesting its employees to agree to sign "Employee Patent and Trade Secret Agreements." In January of 1966, Johnson entered such an agreement in which he indicated that he would not disclose any information which Air Products considered confidential to anyone outside the corporation. ⁷

When Johnson was interviewed for a position with Liquid Air no inquiry was made about any knowledge of trade secrets which he might have had. For that matter, there is no evidence that Johnson ever offered to disclose any such information. In fact, there is testimony, given by Liquid Air officials, that Johnson was instructed to refrain from disclosing any such information he acquired at Air Products which was unknown to Liquid Air. It is clear also that Johnson took no documents or property with him from Air Products to Liquid Air. It is evident that he did not and does not possess the knowledge to replicate any of the plans for any equipment or about the technological processes involved in this dispute.

The record indicates that Johnson is an honest man. There is no dispute as to his integrity. It is certain that he intends to refrain from disclosing any of the proven trade secrets of Air Products. Johnson's responsibilities at Liquid Air will be broader than those he had at Air Products. Thus, the likelihood of disclosure of secret information, is arguably less likely because Johnson will not be faced with circumstances where specific, confidential information may be disclosed. Hence, Johnson and Liquid Air conclude, an inadvertent disclosure of confidential information is very unlikely. Nevertheless, as Johnson and Liquid Air state in their brief:

At the time he left Air Products on February 24, 1981, Johnson did have knowledge of a limited amount of specific information which he presently believes may be sensitive or confidential information of Air Products.

(Appellant's Brief at page 11.)

Air Products obtained an injunction against Johnson and Liquid Air on March 4, 1981. A hearing on the continuance of that objection was held from March 23, 1981 to April 6, 1981. These proceedings were conducted in the trial court as an in camera hearing and a representative of Liquid Air's executives was not permitted to participate in that portion of the hearing concerning the existence of trade secrets. Johnson participated in the hearing as did numerous attorneys who were actively involved in the representation of Liquid Air and an expert hired by Liquid Air. The trial court determined that Johnson did have knowledge of certain information which Air Products considered trade secrets and which the trial court concluded were trade secrets. ⁸

The trial court stated:

Air products is developing its on-site business in certain areas which are particularly sensitive to its competitive market position. One of these is in petroleum recovery systems, which involve the injection of pressurized nitrogen into oil wells to increase productivity. Nitrogen injection is not a new technology. Confidential to Air Products, however, is its own appreciation of technical problems and safety precautions associated with the technology. Probably of even greater significance is the information and data collected by Air Products on current and future projects as well as on potential future opportunities for the firm. This information consists of the status of negotiations with customers, proposed plant configurations and methods of delivery as well as analysis of market opportunities. Johnson was in receipt of all reports on these matters and, indeed, prepared some himself. The information contained in these reports was developed at considerable expense by Air Products' personnel, including...