Q'Max America. Inc., D/B/A Q' Max America Solutions, Inc., D/B/A Q'Max Solutions, D/B/A Q'Max Solutions, Inc. v. Screen Logix, LLC

Court of Appeals of Texas·Decided March 1, 2016·No. 01-15-00319-CV·Published

Opinion

Opinion issued March 1, 2016

In The

Court of Appeals

For The

First District of Texas

and confidential information via a consulting agreement to assist Q’Max in building a shaker screen manufacturing facility. Screen Logix sued and sought a temporary injunction enjoining Schulte and Baker from performing under the consulting agreement, and the trial court granted relief.

In this interlocutory appeal, Q’Max argues that the trial court abused its discretion in entering the temporary injunction because (1) the alleged usurpation of the Q’Max “business opportunity” happened in the past and therefore Screen Logix could not demonstrate that it threatened imminent and irreparable harm, (2) Screen Logix did not demonstrate that it had a probable right to relief on its breach of fiduciary duty claim because Screen Logix did not demonstrate that the consulting agreement constituted a “business opportunity” that belonged to it, and (3) the temporary injunction is overbroad because it completely restricts Schulte and Baker from performing under the consulting agreement.1 We affirm.

Background

Screen Logix manufactures shaker screens, which are used to separate impurities from drilling mud after it is pumped into the ground and back out again for re-use. From December 2009 to January 2014, Schulte served as Screen Logix’s Vice President of Engineering and Baker served as Screen Logix’s Vice President

1 Schulte and Baker have not appealed.

of Sales. Both Schulte and Baker had written employment agreements.2 Relevant to the underlying dispute, the agreements provided that Schulte and Baker must present to Screen Logix in writing any business opportunities related to or connected to Screen Logix’s business:

Business Opportunities. For as long as the Employee shall be employed by the Employer and thereafter with respect to any business opportunities learned about during the time of the Employee’s employment by the Employer, the Employee agrees that with respect to any future business opportunity or other new and future business proposal which is offered to, or comes to the attention of the Employee during the Term of this Agreement or any renewal term thereof, and which is specifically related to, or connected with, the Business, the Employer shall have the right to take advantage of such business opportunity or other business proposal for its own benefit. The Employee agrees to promptly deliver notice to the Board in writing of the existence of such opportunity or proposal, and the Employee may take advantage of such opportunity only if the Employer does not elect to exercise its right to take advantage of such opportunity.

Also relevant to the underlying dispute, the agreements prohibited Schulte and Baker from disclosing Screen Logix’s confidential information:

Confidential Information. The Employee acknowledges that in the course of his employment with the Employer, he may receive certain trade secrets, know-how, lists of customers, employee records and other confidential information and knowledge concerning the Business (“Confidential Information”), which the Employer desires to protect.

The Employee understands that such Confidential Information is confidential and agrees not reveal [sic] such Confidential Information to anyone outside the Employer. The Employee further agrees not to use such Confidential Information during the term of this Agreement and thereafter to compete with the Employer. Upon termination of this

2 The two agreements are identical in all relevant respects.

Agreement, the Employee shall surrender to the Employer all papers, documents, writings, and other property produced by him or coming into his possession by or through this Agreement and relating to the information referred to in this Section . . ., which are not general knowledge in the industry, and the Employee agrees that all such materials will at all times remain the property of the Employer.

Schulte and Baker also each signed a separate Memorandum of Agreement Regarding Invention and Confidential Information in which they agreed not to disclose Screen Logix’s confidential information and agreed that all information regarding Screen Logix’s business, including “technical data, cost estimates, proposals, forecasts, financial data, general correspondence, and the scope, the content or the results of research and development work” was presumed confidential.

Q’Max sold shaker screens bearing the Q’Max label, but which were not manufactured by Q’Max. Q’Max, however, was interested in building its own manufacturing facility to produce its own shaker screens. In October 2014, Simon Tyldsley, a director of operations at Q’Max, approached Schulte and Baker about assisting Q’Max with building a shaker screen manufacturing facility in Dubai. Shortly after their discussion, Baker emailed Tyldsley and told him “[i]n regards to screen facility, keep that between us and your top management.”

Baker testified at the temporary injunction hearing that he and Schulte told the president of Screen Logix, Jeff Walker, about Q’Max’s proposal to build a plant, and that Walker said Screen Logix was not interested. But Walker disputed that; he testified that he knew nothing about the proposal until after Schulte and Baker had

left Screen Logix. It is undisputed that the Q’Max opportunity was never presented to Screen Logix in writing.

On November 4, 2014, Tyldsley, Schulte, Baker, and a Q’Max Vice President, Pete Mackenzie, had dinner together in Houston. At the dinner, the men discussed Schulte and Baker helping Q’Max build the Dubai manufacturing facility and manufacture and sell screens. The following day, Schulte used his personal email account to send Tyldsley and Mackenzie two documents, one titled “Key Employees” and the other a “Startup List Given to QMAX.” Baker prepared the “Key Employees” list, which described Baker’s and Schulte’s goals in joining Q’Max. The “startup list,” prepared by Schulte, contained detailed cost breakdowns and projections for the first three years of operation at the proposed Q’Max plant.

A few days after the dinner, Schulte and Baker traveled to Dubai to meet with Q’Max. Schulte and Baker secured a $140,000 order from Q’Max for screens from Screen Logix, but also discussed leaving Screen Logix to assist Q’Max in building the manufacturing facility. After returning from Dubai, Schulte sent a “rough draft of contract for the technology”—a draft consulting agreement delineating Schulte’s and Baker’s responsibilities with respect to the Dubai facility—to Tyldsley and to Baker at Baker’s wife’s personal email address. 3

3 Schulte and Baker did not use their Screen Logix email accounts to communicate about the Q’Max manufacturing facility. Schulte used his personal email account, and Baker used his wife’s personal account.

A week later, Schulte sent Tyldsley and Baker an email regarding “Information Required from Legal Dept.” Among other things, Schulte wrote “Many people manufacture screens, but none have been able to exceed the quality of the products we designed, but we can. We will teach this process to your employees.” Schulte also emphasized the “urgency” with which he and Baker needed to get a signed contract from Q’Max because their current employment agreements would expire soon and they did not want to walk away “without a contract in hand.”

On December 11, 2014, in response to Tyldsley’s question regarding whether Q’Max should wait to make changes to the consulting agreement until after Schulte’s and Baker’s lawyers reviewed the draft, Schulte responded, “Please don’t wait, timing is critical.” He also noted that “[a] start date of Jan 15th as you had proposed would be better for us than Jan 2nd at this point. It will allow us to spread out our departures from present company.”

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Q'Max America. Inc., D/B/A Q' Max America Solutions, Inc., D/B/A Q'Max Solutions, D/B/A Q'Max Solutions, Inc. v. Screen Logix, LLC, (Tex. Ct. App. 2016).

Q'Max America. Inc., D/B/A Q' Max America Solutions, Inc., D/B/A Q'Max Solutions, D/B/A Q'Max Solutions, Inc. v. Screen Logix, LLC (Q'Max America. Inc., D/B/A Q' Max America Solutions, Inc., D/B/A Q'Max Solutions, D/B/A Q'Max Solutions, Inc. v. Screen Logix, LLC) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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