Mixed verdict in National Oilwell Varco, M-I Swaco noncompete case



A Harris County jury on Monday delivered a mixed verdict in a contentious fight between two Houston energy services companies over trade secrets, confidentiality and a noncompete agreement.
The case, which has stretched over more than two-years involved Jeff Russo, who signed a noncompete agreement when he took a $13-per-hour laborer job with M-I Swaco and, after working his way up to become a top salesman, left to work for rival National Oilwell Varco.

The verdict, delivered in state district court in Harris County, allows Russo to keep his six-figure job at National Oilwell Varco while finding that M-I Swaco acted in bad faith when it claimed Russo misappropriated trade secrets as a way to enforce the noncompete agreement. The jury awarded Russo and National Oilwell Varco $176,000 in attorneys fees.

But the jury also found that Russo failed to comply with M-I Swaco’s confidentiality provisions and awarded $493,000 in attorney’s fees to M-I Swaco, a unit of energy services giant Schlumberger. The verdict did not specify how Russo breached the confidentiality provisions.

The verdict underscores the complexity of the case and the lengths that companies will go to protect trade secrets. The case took several twists and turns, including charges by National Oilwell Varco that M-I Swaco attempted to use legal discovery– the process for getting documents in a dispute — as a ruse to gain access to the trade secrets at National Oilwell Varco. M-I Swaco denied the charge.

“It’s clear to me they’re fighting to the death for the trade secrets,” said Jonathan R. Childers who represents energy clients in trade secret cases. “It’s not the employment obligations.”
Both sides declared victory Monday, although the final judgment will be decided by Judge Bill R. Burke, Jr.,who heard the case. John Zavitsanos ,who represents National Oilwell Varco and Russo, said he will ask the judge for additional fees to cover the $2 million his clients have spent and financial sanctions against M-I Swaco.

“They were chasing this guy for three years,” he said. “They were doing it just to harass him.”

Ed Friedman, the Houston lawyer representing M-I Swaco, praised the jury’s determination that Russo violated the confidentiality agreements and said the company would seek to collect the nearly $500,000 in legal fees. “M-I Swacp takes very seriously its confidential information,” said Friedman.