National Oil Service of Louisiana, Inc. v. Brown
| Decision Date | 07 February 1980 |
| Docket Number | No. 9740,9740 |
| Citation | 381 So.2d 1269 |
| Parties | NATIONAL OIL SERVICE OF LOUISIANA, INC. v. Ronnie David BROWN, Bernard Roseman and John Fernandez. |
| Court | Court of Appeal of Louisiana — District of US |
McGlinchey, Stafford, Mintz & Hoffman, Donald A. Mintz and Leopold Z. Sher, New Orleans, for plaintiff-appellant.
Monroe & Lemann, Jerry A. Brown and A. Justin Ourso, III, New Orleans, for defendants-appellees.
Before SAMUEL, LEMMON and SCHOTT, JJ.
Plaintiff has appealed from a judgment denying its request to preliminarily enjoin three former employees from conducting an identical business in plaintiff's business area and to restrain them from using plaintiff's equipment, records and customer lists, from soliciting plaintiff's customers and employees, and from making derogatory statements about plaintiff's business. The issues on appeal involve alleged breaches by the employees of express and implied contractual obligations relating to their commencement of a competitive business before and after the termination of their employment.
Plaintiff corporation was chartered in November, 1975, and it immediately began its waste oil operations in Louisiana. The corporation was owned by Blair family, which also owned several other firms that collected waste oil throughout the southeastern states and processed the oil for resale. Defendant Fernandez, who had worked for the Blairs' Florida company for several years, was named initial manager of the Louisiana operation, and defendant Roseman was employed in October, 1977 as Louisiana sales manager.
Fernandez had been employed with the Florida company under a written contract that contained a non-competition agreement and other prohibitory conditions relating to the employee's activities after termination of employment. Jerrold Blair, plaintiff's president, testified that he and Fernandez verbally agreed to the same terms of employment with the Louisiana corporation, except for a salary increase, and that when Roseman was hired as sales manager, he and Roseman reviewed the contract of the Tampa sales manager and agreed to the same terms, except for a higher salary. Defendant Brown was a truck driver who admittedly was not employed under a written contract (although Blair testified Fernandez had been instructed to have all drivers execute written contracts). Defendants were three of the nine employees in the Louisiana operation.
Plaintiff's operation consisted essentially of collecting waste oil from area businesses by use of trucks with regularly assigned routes. Customers with large amounts of oil for collection were paid by the gallon and were signed to exclusive sales contracts, while waste oil was collected without payment to smaller customers who considered the service as a benefit. New customers were continuously solicited, and customer lists were maintained indicating frequency of collection. These customer lists also formed the basis for daily route sheets which were prepared for the drivers who were paid according to the amount of oil collected. Organization and systematic efficiency were stressed in the operations.
On May 19, 1978, without prior notice, defendants sent Blair a letter of resignation, effective immediately. Blair testified: He immediately flew to New Orleans and discovered that Fernandez had fired his most experienced driver and, along with Roseman, had pirated two other drivers and had begun an identical waste oil operation in the same area under the name of Southern Oil Service. He learned upon further investigation that defendants had copied and taken his customer lists, his route system records and many of his customer contracts; had taken pumps, tanks, pipes, hoses and fittings belonging to the company; had not performed required maintenance work on the company trucks which were in serious disrepair; had discontinued signing major customers to contracts for exclusive sale of waste oil; had collected oil from some customers, processed and sold it without remitting the sales proceeds to the company (all of the waste oil collected in normal operations was transported to Florida and processed there); had told many customers that National Oil was out of business or that National Oil's name had been changed to Southern; and had neglected to collect oil from other customers for a long period until Southern began business and then picked up the accumulated oil from these customers for Southern's account. He reported the matter to the police, who arrested defendants and recovered many of the missing items from them. He did rehire the discharged driver and one of the two that had been lured away by defendants, but he was unable to reestablish the business immediately because of the difficulty of reconstructing the missing customer and route lists. He then filed this injunction proceeding to enjoin defendants from operating the new business, soliciting plaintiff's customers or using plaintiff's records, procedures and trade secrets. The petition also reserved plaintiff's right to seek damages.
In their testimony defendants admitted they had begun planning the new business about April 1, but did not notify Blair; that they had removed some of plaintiff's records (pertaining to plaintiff's best customers, according to Blair) "just to call up possibly later"; that they had solicited all of plaintiff's experienced drivers; that they had taken 6,000 gallons of oil belonging to plaintiff, sold it, and deposited the proceeds to Southern's account, and that they had another 4,500 gallons of plaintiff's oil in their possession; that they stopped signing larger customers to contracts because the customer didn't want to be bothered (although they had identical form contracts printed for Southern's use); that they had taken some tanks, pipes, fittings and hoses which they considered abandoned; and that Fernandez had prepared the following list when they decided to start their own business:
"1) Take Contracts
2) Make duplicate Contracts
3) get Pocket Registers
4) Remove important phone numbers from rolodex
5) write phone numbers on master sheets
6) take naptha
7) test tubes and equip.
8) pull Business Cards
9) oil pipes for trucks"1
One of plaintiff's customers testified that he had called for a pick-up several times before May 19, because his tank was overflowing, and that defendant Brown finally collected his oil on May 23, telling him that Southern had bought plaintiff's business.
Plaintiff first contends defendants were prohibited by enforceable contract provisions from engaging in competitive business in the area, or alternatively, in the event the non-competition provisions are unenforceable under R.S. 23:921, from using the employer's customer lists.
Generally, in the absence of a contrary agreement, an employee is free to compete with his former employer. In Louisiana non-competition agreements are disfavored and are deemed contrary to public policy, except under circumstances outlined in R.S. 23:921 relating to the employer's expenditures of substantial amounts in training the employee or in advertising the business.2 Under such circumstances a voluntary non-competition agreement is permitted for limited periods in limited areas.
In the present case, however, under the evidence most favorable to the prevailing party, the existence of a non-competition agreement was not proved. The only written and signed contract in evidence is one between Fernandez and a corporation other than plaintiff, and plaintiff's president's testimony as to verbal agreements on the pertinent terms was contradicted by Fernandez and Roseman. Inasmuch as there is no proved non-competition agreement, defendants were free to compete against plaintiff upon terminating their employment.
Even in the absence of a specific agreement prohibiting certain methods of competition, however, unfair methods of...
To continue reading
Request your trial
-
Barnes Group, Inc. v. C & C Products, Inc.
...to narrowly defined circumstances far more precise than a general concept of "reasonableness," see National Oil Service v. Brown, 381 So.2d 1269, 1272-73 & n. 2 (La.Ct.App.1980). Applying a mere "reasonableness" standard to such covenants--as opposed to those at issue here, involving indepe......
-
Cheramie Services, Inc. v. Shell Deepwater Production, Inc., No. 09-C-1633 (La. 4/23/2010)
...or to business competitors.1 See Reed v. Allison & Perrone, 376 So. 2d 1067 (La. App. 4 Cir. 1979); National Oil Service of Louisiana v. Brown, 381 So. 2d 1269 (La. App. 4 Cir. 1980); Gil v. Metal Serv. Corp., 412 So. 2d 706 (La. App. 4 Cir. 1982); J.B.N. Morris v. Rental Tools, Inc., 435 S......
-
Cheramie Serv. Inc v. Shell Deepwater Prod. Inc
...or to business competitors.1 See Reed v. Allison & Perrone, 376 So.2d 1067 (La.App. 4 Cir.1979); National Oil Service of Louisiana v. Brown, 381 So.2d 1269 (La.App. 4 Cir.1980); Gil v. Metal Serv. Corp., 412 So.2d 706 (La.App. 4 Cir.1982); J.B.N. Morris v. Rental Tools, Inc., 435 So.2d 528 ......
-
94-2423 La.App. 4 Cir. 1/7/98, Barbe v. A.A. Harmon & Co.
...93-3193 (La.2/11/94), 634 So.2d 379; Morris v. Rental Tools, Inc., 435 So.2d 528 (La.App. 5th Cir.1983); National Oil Service v. Brown, 381 So.2d 1269 (La.App. 4th Cir.1980). However, all of those cases are factually distinguishable from the instant In First Page, 628 So.2d 130, the trial c......
-
Expanded Standing Under the Louisiana Unfair Trade Practices Act and Possible Employee Actions Under the Act
...court cited Reed v. Allison & Perrone, 376 So. 2d 1067 (La. Ct. App. 4th 1979), and National Oil Service of Louisiana, Inc. v. Brow n, 381 So. 2d 1269 (La. Ct. App. 4th 1980), in which, as the Hamilton court noted, the issue of standing did not arise because both cases concerned plaintiffs ......
-
The Standard for Determining "unfair Acts or Practices" Under State Unfair Trade Practices Acts
...Datacomm Interface, Inc. v. Computerworld, Inc. 489 N.E.2d 185, 196 (Mass. 1986). 402 National Oil Service of Louisiana, Inc. v. Brown, 381 So.2d 1269, 1273 (La. Ct. App. 1980). See also SDT Industries, Inc. v. Leeper, 793 So.2d 327, 333 (La. Ct. App. 2001). 403 Pinehurst, Inc. v. O'Leary B......
-
CHAPTER 8 CONFIDENTIALITY AND NONDISCLOSURE AGREEMENTS
...843 F. Supp. 568 (D. Ariz. 1993) (chemical leak detection process constitutes trade secret); National Oil Serv. of La., Inc. v. Brown, 381 So. 2d 1269 (La. Ct. App. 1980) (employee know-how not recognized as a trade secret or proprietary unless tied to some more specific item of information......