Amoco Production Co. v. Lindley

• Decision Date: 15 January 1980
• Docket Number: No. 51543,51543
• Citation: 609 P.2d 733,1980 OK 6
• Parties: , 1980 OK 6 AMOCO PRODUCTION COMPANY, Appellee, v. Ralph Herbert LINDLEY, Appellant.
• Court: Oklahoma Supreme Court

Page 733

609 P.2d 733

208 U.S.P.Q. 513, 1980 OK 6

AMOCO PRODUCTION COMPANY, Appellee, v. Ralph Herbert LINDLEY, Appellant.

No. 51543.

Supreme Court of Oklahoma.

Jan. 15, 1980.

Appeal from the District Court of Tulsa County; W. W. Means, Trial judge.

This is a consolidated appeal (Cases Nos. 51,011, 51,494 and 51,543, consolidated under No. 51,543) challenging the propriety of a default judgment for failure to produce documents under court order, and the propriety of entering a temporary injunction in a contractual dispute over the ownership of a computer "software" system, known as the Lindley II Computer Well Log Analysis Program.

Held that entering the default judgment and issuing the temporary injunction under the totality of the circumstances present in the case was an abuse of the trial court's discretion. The default judgment is vacated, the temporary injunction is dissolved, and the case is remanded for a trial on the merits as to the sole issue of ownership of the Lindley II Computer Well Log Analysis Program.

REVERSED AND REMANDED WITH INSTRUCTIONS.

Floyd L. Walker, Walker, Jackman & Associates, Inc., Tulsa, for appellee.

Ralph Herbert Lindley, pro se.

Douglas L. Boyd, Tulsa, for appellant.

BARNES, Justice:

This case centers on the contested ownership of a computer "software" program commonly referred to as the "Lindley System". The "Lindley System" was developed by the Defendant-Appellant while he was in the employ of the Plaintiff-Appellee.

The events leading up to the present litigation began in 1964 upon Lindley's employment with Amoco under a written contract whereby he agreed "to disclose promptly and in writing . . . all inventions or discoveries capable of use in connection with the business of COMPANY . . . and agrees not to disclose same to others, except as required by his employment, without consent of COMPANY." Lindley was employed to do research relating to geological exploration for oil and gas, and he did create various devices, some of which were patented, in keeping with the contract provisions.

Mr. Lindley is a well log analyst by formal training, and therefore his basic research projects were in the area of developing means of using well log data more efficiently and more quickly in the search for hydrocarbons. Well log analysis is a basic tool for engineers and geologists to determine if oil is present in certain geological formations. It is a time-consuming process in a business where it is important to move quickly to ascertain oil prospects in order to obtain leases to the land prior in time to a competitor. The information originally obtained in a well log can be digitized, and once in this format it can be analyzed by a computer. Properly programmed, the computer will analyze well logs in a relatively short period of time. Computer analysis of well logs is a recent innovation and is little developed, so that a company with a good computer "software" system has a competitive advantage within the field of hydrocarbon exploration.

In early 1971, Lindley orally requested permission from Dr. Walton, head of Amoco's Geological Research Department, to develop a general purpose, comprehensive log analysis system with which the data from the operational log digitizer (an invention by Lindley, patented by Amoco) would be analyzed and computed. Lindley's request was denied orally and later in writing by Amoco on the ground that the Company had made a decision to develop another computer program for this purpose (Applications Management System "A.M.S.") and did not wish to allow development of competing systems within the Company. Lindley then worked on the existing log analysis program during Company time, but on his own time he continued to work on his concept of a computer log analysis. In 1973, Lindley disclosed his work to the A.M.S. team and other members of Amoco's management. Thereafter, Lindley was directed to cease creative work on the system and take the developed concepts and integrate them into Amoco's present system. Lindley did document the existing capabilities of the Lindley System during working hours, for use in the A.M.S. System, but continued working on additional program capabilities on his own time. Amoco officially recognized the Lindley System in 1975, when it was found to be responsible for the location of large hydrocarbon-bearing subsurface geological formations. Ten months later, Mr. Lindley left the Company, due to differences with management over the program.

The procedural history of the case is important to understanding the present appeal. Amoco brought suit in the District Court of Tulsa County against Lindley, asking for specific performance of an employment contract. Amoco asserted that under the terms of the contract any "invention" or "discovery" made by Lindley during his employment, which could be used in its business, was its property and not that of the employee. Amoco also requested injunctive relief to restrain Lindley from divulging Amoco's "trade secret" embodied in the "Lindley System" to third parties.

An ex parte temporary restraining order was issued and, upon hearing, a temporary injunction was issued which precluded the Defendant-Appellant from using any part or portion of the Lindley System, including the concepts thereof, for his own use or benefit, or for the use or benefit of any third party, nor could Lindley divulge the workings of this alleged "trade secret" to third parties.

After the temporary injunction was entered, Amoco moved to have the court impose sanctions against Lindley for his failure to produce documents pursuant to court order under the pretrial discovery statute, 12 O.S. 1971, § 548. The court, relying on the findings in the preliminary injunction hearing, plus testimony concerning Mr. Lindley's failure to produce, ordered the Defendant's answer and counterclaim stricken, ordered Lindley to specifically perform certain services under the employment contract while the District Court retained jurisdiction to enforce the specific performance, and Lindley was permanently enjoined from using or disclosing the "Lindley System" or the concepts thereof. Mr. Lindley had, prior to the imposition of sanctions, filed an appeal in this Court, pursuant to 12 O.S.1971, § 993, from the Interlocutory Order for temporary injunction. After the sanctions were issued, he submitted an application to this Court to assume original jurisdiction and for a Writ of Prohibition against the Trial Judge imposing the sanctions, which this Court treated as an application for a stay order, and the respective actions were consolidated into this present appeal.

I.

Although the appeals are consolidated, we will address the issues presented separately. The threshold question is whether the granting of a default judgment was an abuse of discretion under the totality of the circumstances, in this case failure to produce. This is the thrust of the appeal in Case No. 51,543.

Mr. Lindley was ordered to produce certain documents through a motion by Plaintiff pursuant to 12 O.S. 1971, § 548. ¹ The court ordered the production of documents under the statute. In Carman v. Fishel, 418 P.2d 963, 972 (Okl.1966), this Court found that the statute requires a showing of good cause, and further requires more than conclusions to justify the required showing of good cause, and the burden of showing good cause is on the movant. There is no recitation of good cause in the motion or in the order of the court compelling the discovery. In Lisle v. Owens, 521 P.2d 1375, 1377 (Okl.1974), there were substantially more statements as to why documents were needed, but the movant failed to state facts sufficient to show that the information could not be obtained elsewhere. Instead, he merely recited allegations of suspected hostility or inability to obtain. The Court stated the test for a showing of "good cause" to "require a showing of factual good cause as opposed to conclusionary or speculative good cause." This was absent in the present motion for production.

In Carman, supra, at page 968, we said that discovery statutes do vest a trial court with wide discretion in interpretation of these statutes. Although this Court is reluctant to interfere in the action of a trial court, we have that power and will do so "when it may be shown that the trial court clearly exceeded its authority."

Oklahoma requires the showing of good cause before the trial court can exercise its discretion in allowing the order to be entered. When a showing of good cause is absent, the enforcement of the pretrial discovery order can be prohibited by this Court. Carman, supra, 418 P.2d at page 973.

It seems logical that if the Court can prohibit the enforcement of the discovery order, it can certainly lift the sanctions imposed by the trial court which erred in issuing the order.

The problem now becomes, if indeed Lindley has destroyed the documents requested by the Plaintiff, as alleged, can the court accept another motion to compel discovery and sanction the Defendant for failure to do so by a default judgment? We hold that the court cannot.

Section 548 provides no sanctions for failure to produce, while Section 549, dealing with interrogatories, does allow sanctions, and one of those is for default judgment. Therefore, Appellee asserts that the court can impose a default judgment by analogy to the interrogatory statute, or in the alternative it is within the inherent power of the court "to do all things that are necessary for the administration of justice within the scope of its jurisdiction." Layman v. State, 355 P.2d 444 (Okl.Cr.App.1960).

Again, it is not a question of the power of the Court to impose the sanction because the power is there. The question is, rather, whether the extreme sanction of default judgment would be appropriate under the facts of this case.

Appellee relies on two cases for the proposition that a default judgment is an appropriate sanction for...