Southwestern Energy Co. v. Eickenhorst

955 F. Supp. 1078, 42 U.S.P.Q. 2d (BNA) 1824, 1997 U.S. Dist. LEXIS 2294, 1997 WL 82729
CourtDistrict Court, W.D. Arkansas
DecidedMarch 18, 1997
DocketCivil 96-5075
StatusPublished
Cited by5 cases

This text of 955 F. Supp. 1078 (Southwestern Energy Co. v. Eickenhorst) is published on Counsel Stack Legal Research, covering District Court, W.D. Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Southwestern Energy Co. v. Eickenhorst, 955 F. Supp. 1078, 42 U.S.P.Q. 2d (BNA) 1824, 1997 U.S. Dist. LEXIS 2294, 1997 WL 82729 (W.D. Ark. 1997).

Opinion

AMENDED MEMORANDUM OPINION

H. FRANKLIN WATERS, Chief Judge.

Currently before this court are defendant’s two motions for partial summary judgment. Defendant’s first motion for partial summary judgment, filed on November 22, 1996, seeks judgment as a matter of law on plaintiffs’ theft of trade secrets claim. Defendant’s second motion for partial summary judgment, filed on December 24, 1996, seeks judgment as a matter of law on plaintiffs’ breach of contract claim. Collectively, defendant’s two motions address the entirety of the claims raised in plaintiffs’ first amended complaint. For the reasons set forth below, the court finds that said motions should be, and hereby are, granted in part and denied in part.

I. Relevant Facts

The court provided a rather detailed recitation of the alleged facts presented by this case in its memorandum opinion of November 21, 1996, denying defendant’s motion for a more definite statement and motion to dismiss the breach of contract claim. Here, the court will reiterate those facts for the' sake of clarity. 1

Southwestern Energy Company (SWN) is the holding company for several wholly owned subsidiaries including SEECO, Inc., and Arkansas Western Gas Company (AWG). AWG is a regulated gas utility that provides natural gas to residential, commercial, and industrial customers in Arkansas and Missouri. SEECO is engaged in the development, production, and sale of natural gas. A large portion of SEECO’s gas production is sold to AWG.

Marilyn Eickenhorst (Eickenhorst) is a licensed attorney. From 1994 until December of 1995, Eickenhorst was an associate in a Houston law firm. On or about January 4, 1996, Eickenhorst resigned from the law firm.

Beginning in early 1995, the Houston law firm was retained as outside counsel by En *1080 ron Oil & Gas Company (Enron), a natural gas production company, to represent Enron in connection with an investigation of, and potential claims related to, the alleged failure of SWN and its subsidiaries to pay Enron overriding royalties on certain oil and gas leases on lands in Franklin, Johnson, Sebastian, Crawford, and Conway counties in Arkansas.

Eickenhorst worked on the case for Enron under the supervision and direction of C. Robert Vote (Vote), Assistant General Counsel, Litigation, in Enron’s legal department, and under the supervision of Thomas Fulker-son (Fulkerson) a partner in the Houston law firm. Eickenhorst was primarily responsible for the research and investigation of Enron’s claims.

In June of 1995, Eickenhorst wrote a letter to SEECO’s in-house attorneys, outlining Enron’s potential claims for unpaid overriding royalties based on 1939 and 1943 assignments and for underpayment of overriding royalties based on the administration of Contract No. 59. In August of 1995, Eickenhorst asked SWN to fully cooperate and exchange information and documents relating to Enron’s claims and to extend a tolling agreement previously entered into to a mutually agreeable date.

To avoid litigation, SWN agreed to giving Eickenhorst and Enron’s in-house counsel virtually unlimited access to SWN’s internal documents. However, plaintiffs allege that SWN first required Enron, Eickenhorst, and the Houston law firm to agree that SWN’s confidential information and information derived therefrom would not be used for any purpose other than the evaluation and pursuit of Enron’s claims for the nonpayment and underpayment of overriding royalties.

A letter agreement was drafted by Eieken-horst. The agreement provides:

This will confirm our agreement that the documents made available (including information derived therefrom) (1) to EOG [Enron] Oil & Gas Company and (2) to SEE-CO and/or AWG by EOG, will only be used by the parties in negotiating, settling and/or discharging the claims for additional overriding royalties for oil and gas leases. mineral interests and mineral deeds which may cover land in Franklin, Johnson, Sebastian, Crawford and Conway Counties, Arkansas. This agreement does not include documents and information that is generally available, and this agreement will terminate two years from the date the documents are made available.

This letter agreement dated August 28,1995, was on the Houston law firm’s stationery and signed by Eickenhorst.

Following execution of the letter agreement, Eickenhorst and Enron were given access to the following: production data of SEECO, including detailed information regarding volume and prices; SEECO’s lease files; maps and plats showing SEECO’s ownership and production; SEECO’s royalty owner records, including correspondence with royalty owners and names and addresses of royalty owners; SEECO’s title opinions and abstracts; SEECO’s lease rental receipts; SEECO’s division order records; protected versions of pre-filed testimony, exhibits, depositions, and hearing testimony in APSC docket no. 92-028-U; and selected gas sales contracts between SEECO and unaffiliated producers. Plaintiffs allege that most of this information is not generally available either from public sources or from sources other than SWN. Even that information that could be obtained from public sources, would, it is alleged, take several years to accumulate and assimilate.

Plaintiffs allege this information is kept in the strictest confidence and that disclosure to third persons would put SWN or its subsidiaries at a competitive disadvantage. Plaintiffs further allege that although royalty owners had never asserted or threatened to assert the type of claims asserted by Enron, the information Enron obtained from SWN would also provide a factual basis for evaluating such a claim by royalty owners under the theories of liability articulated by Enron.

During the negotiations, Eickenhorst suggested that a settlement of Enron’s claim would minimize the possibility of a similar lawsuit being filed on behalf of royalty owners whose gas was sold under Contract 59. Eickenhorst is also alleged to have suggested that settlement of Enron’s claims would mini *1081 mize SWN’s potential exposure to Meridian Oil.

Eickenhorst was provided a great deal of information during 1995. On October 3, 1995, after Eickenhorst verbally requested SWN to provide her with a computer report reflecting production volumes and prices for approximately 250 wells, Eickenhorst drafted a second letter agreement. This agreement provides as follows:

This will confirm our telephone conversation regarding the confidentiality of the computer report being generated by SEE-CO and AWG reflecting production volumes and prices for approximately 250 wells selected by EOG for analysis.

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955 F. Supp. 1078, 42 U.S.P.Q. 2d (BNA) 1824, 1997 U.S. Dist. LEXIS 2294, 1997 WL 82729, Counsel Stack Legal Research, https://law.counselstack.com/opinion/southwestern-energy-co-v-eickenhorst-arwd-1997.