Master Flow Technologies v. Chris Lee

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

23-615

MASTER FLOW TECHNOLOGIES, LLC

VERSUS

CHRIS LEE

**********

APPEAL FROM THE
TENTH JUDICIAL DISTRICT COURT
PARISH OF NATCHITOCHES, NO. 93,987
HONORABLE LALA B. SYLVESTER, DISTRICT JUDGE

**********

CHARLES G. FITZGERALD
JUDGE

**********

Court composed of Van H. Kyzer, Charles G. Fitzgerald, and Gary J. Ortego, Judges.

REVERSED AND REMANDED;
INJUNCTION DISSOLVED.

John C. Nickelson
Nickelson Law PLLC
7591 Fern Avenue, Suite 1403
Shreveport, Louisiana 71115
Phone: (318) 678-5786
Counsel for Defendant/Appellant:
Chris Lee

William Daniel Dyess
Dyess Law Firm
207 Church Street, Suite 106
Natchitoches, Louisiana 71457
Phone: (318) 352-5880
Counsel for Defendant/Appellant:
Chris Lee

Sarah K. Casey
Baker Donelson Bearman Caldwell & Berkowitz, PC
201 St. Charles Avenue, Suite 3600
New Orleans, Louisiana 70170
Phone: (504) 566-5200
Counsel for Intervenor:
Mulholland Energy Services, LLC

Brian A. Homza
Cook Yancey King & Galloway
333 Texas Street, Suite 1700
Shreveport, Louisiana 71120
Phone: (318) 221-6277
Counsel for Plaintiff/Appellee:
Master Flow Technologies, LLC

Jared Dunahoe
Dunahoe Law Firm
1402 Second Street
Natchitoches, Louisiana 71458
Phone: (318) 352-1999
Counsel for Plaintiff/Appellee:
Master Flow Technologies, LLC

FITZGERALD, Judge.

In this appeal, we are called upon to review a preliminary injunction related

to an employment agreement.

SUMMARY OF FACTS AND PROCEDURAL HISTORY

From 2019 to 2023, Chris Lee worked as a sales representative for Master

Flow Technologies LLC (“MFT”). Chris left MFT after accepting the position of

sales manager with Mulholland Energy Services (“Mulholland”).

Shortly thereafter, MFT filed a petition for temporary restraining order,

preliminary injunction, and permanent injunction, seeking to prohibit Chris from

competing against MFT and from disclosing confidential information. The lawsuit

also included a claim under the Louisiana Uniform Trade Secrets Act. MFT based

its lawsuit on noncompetition and confidentiality provisions included in Chris’s

employment agreement.

On June 8, 2023, following a contradictory hearing, the trial court issued a

preliminary injunction that prohibits Chris from competing with MFT in various

parishes in Louisiana and counties in Texas and from disclosing or using MFT’s

proprietary or confidential information. This appeal arises from that preliminary

injunction.

On appeal, Chris asserts that the trial court erred in issuing the preliminary

injunction for two reasons: first, the noncompetition provision and the subsequent

judgment fail to define the prohibited activities with specificity. And second, the

judgment enjoins him from disclosing trade secrets or confidential information

without specifying the protected information. Chris also asserts that MFT failed to

prove the existence of any trade secret or confidential information.

LAW AND ANALYSIS

The preliminary injunction specifically enjoins Chris from the following:

1. Competing with MFT through the provision of services which
are the same or similar to MFT’s Business, and from providing
marketing services for any company which offers services which
are the same or similar to MFT’s Business and Services in the
Parishes of Natchitoches, Red River, Sabine, Desoto, Bossier,
Webster, Winn, Caddo, and Bienville in the State of Louisiana
and the Counties of Nacagdoches, Angelina, San Augustine,
Shelby, and Sabine in the State of Texas as provided for in the
November 6, 2019 Employment Agreement;

2. Disclosing, using or putting into practice MFT’s Proprietary
Information, trade secrets, process or information; and

3. Disclosing, using or putting into practice any information that
MFT has designated in writing as being confidential.

A preliminary injunction is an interlocutory procedural device that preserves

the status quo between the parties until a trial on the merits. Novelarie Techs., LLC

v. Harrison, 08-157 (La.App. 5 Cir. 8/19/08), 994 So.2d 57. Preliminary injunctions

are designed to prevent future acts which may cause irreparable injury, loss, or

damage to the applicant. Although interlocutory, a party aggrieved by either the

granting or denial of a preliminary injunction may file an appeal. La.Code Civ.P. art.

3612.

Generally, a trial court is allowed wide discretion in determining whether an

injunction is warranted, and the decision will not be disturbed on appeal absent an

abuse of discretion. Yorsch v. Morel, 16-662 (La.App. 5 Cir. 7/27/17), 223 So.3d

1274, writ denied, 17-1475 (La. 11/13/17), 230 So.3d 207.

First Issue for Review

Chris first asserts that the trial court erred in entering the preliminary

injunction because both the noncompetition provision and the subsequent judgment

fail to define the prohibited activities with specificity. In our view, the underlying

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issue is a question of law: the validity of the noncompetition provision in the

employment agreement. Thus, we review this issue de novo.

Louisiana disfavors noncompetition agreements, deeming them contrary to

public policy except in limited circumstances specified by statute. Paradigm Health

Sys., LLC v. Faust, 16-1276 (La.App. 1 Cir. 4/12/17), 218 So.3d 1068. That public

policy is expressed in La.R.S. 23:921:

A. (1) Every contract or agreement, or provision thereof, by
which anyone is restrained from exercising a lawful profession, trade,
or business of any kind, except as provided in this Section, shall be null
and void. However, every contract or agreement, or provision thereof,
which meets the exceptions as provided in this Section, shall be
enforceable.

....

C. Any person, including a corporation and the individual
shareholders of such corporation, who is employed as an agent, servant,
or employee may agree with his employer to refrain from carrying on
or engaging in a business similar to that of the employer and/or from
soliciting customers of the employer within a specified parish or
parishes, on a like business therein, not to exceed a period of two years
from termination of employment. . . .

D. For the purposes of Subsections B, C, E, F, J, K, and L of this
Section, a person who becomes employed by a competing business,
regardless of whether or not that person is an owner or equity interest
holder of that competing business, may be deemed to be carrying on or
engaging in a business similar to that of the party having a contractual
right to prevent that person from competing.

To be valid, the agreement must strictly comply with the requirements of

La.R.S. 23:921. Water Processing Tech. v. Ridgeway, 618 So.2d 533 (La.App. 4 Cir.

1993). The statute itself demands strict construction by declaring that any agreement

not in compliance with the exceptions “shall be null and void.” La.R.S.

23:921(A)(1). As we discern no ambiguity in this statute, we must apply it as

written. La.Civ.Code art. 9. Further, noncompetition agreements are strictly

construed in favor of the employee and against the party attempting

enforcement. LaFourche Speech and Language Serv., Inc. v. Juckett, 94-1809

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(La.App. 1 Cir. 3/3/95), 652 So.2d 679, writ denied, 95-0850 (La. 5/12/95), 654

So.2d 351.

In Daiquiri’s III on Bourbon, Ltd. v. Wandfluh, 608 So.2d 222 (La.App. 5 Cir.),

writ denied, 610 So.2d 801 (La.1993), the fifth circuit concluded that La.R.S.

23:921(C) requires noncompetition agreements to specifically define the employer’s

business. In that case, because the agreement lacked specificity and broadly

precluded the employee from engaging in countless different businesses by

prohibiting him from “selling frozen drinks for consumption by the general public,”

the court ruled that the agreement was unenforceable. This decision was based on

Louisiana’s policy disfavoring noncompetition agreements and the general rule

construing them strictly in the employee's favor.

LaFourche, 652 So.2d 679, followed Daiquiri’s III reasoning and held that

noncompetition agreements must specifically define the employer’s business to be

valid.

Likewise, in Brand Energy Solutions, LLC v. Gilly, 16-1025 (W.D. La.

1/18/2017), 2017 WL 238917 (unpublished opinion), the court considered an

agreement that restricted an employee from carrying on or engaging in business

similar to that of the company. The agreement attempted to define the employer’s

business by listing numerous activities and services. The employer argued that the

law allows it to restrict an employee from conducting business which is similar to

that of the employer, regardless of whether the employee performed work related to

all of the employer’s business activities. The court disagreed, finding that the

agreement was overly broad. The court specifically concluded that, to be valid, a

noncompetition agreement “must identify with reasonable certainty those areas

which the employer lawfully may prohibit competition.” Id. at *6.

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With strict interpretation and this guidance in mind, we turn our attention to

the noncompetition agreement before us. On November 10, 2019, MFT and Chris

(referred to as “CL” in the subject agreement) entered into an employment

agreement which contains the following pertinent language:

WHEREAS, CL employment shall provide all services relating to
production facilities, completion operations, and MFT desires the CL
Services to assist it in furthering the success of its various business
operations and is employing CL to carry on and successfully promote
Master Flow Technologies, LLC in its business, specifically including,
but not limited to Hydraulic Torque Wrenches, Hydrostatic Test Units,
Rig Wash/Steam Wash, Cooler/Heat Exchanger Maintenance, Casing
Cut Saw, High Pressure Greasing, Stack Lift Winches, 10k-15K Pump
Trucks, Gap Vac Trucks, Roustabout Services, Facility Repairs,
Environmental/Disposal, Rental Item LED Light Plants, Rental Item
Trash Pumps 2"-6", Pipeline Pig & Test, (the “MFT Services”);

....

3. NON CIRCUMVENTION/NO COMPETITION. . . . CL hereby
agrees that it will not compete with MFT through the provision of
services which are the same or similar to MFT’s Business, Master Flow
nor shall it provide marketing services for any company which offers
services which are the same or similar to MFT’s Business and Services
for a period of two (2) years following the termination of this
Agreement. The area of services provided by MFT are the Parishes of
Natchitoches, Red River, Sabine, Desoto, Bossier, Webster, Winn,
Caddo and Bienville in the State of Louisiana and the Counties of
Nacogdoches, Angelina, San Augustine, Shelby and Sabine in the State
of Texas.

A plain reading of the agreement reveals two fundamental flaws: first, the

agreement is ambiguous. And second, the noncompetition language is overly broad.

To begin, the agreement prohibits Chris from competing with MFT through

the provision of services which are the “same or similar” to MFT’s business. It then

prohibits Chris from providing marketing services to companies offering “services

which are the same or similar to MFT’s business and services.” However, section 3

of the agreement, the noncompetition provision, fails to define MFT’s business or

MFT’s business and services.

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To find any information about MFT’s business and services, we must turn

back to the opening paragraph of the agreement, which is a job description with a

laundry list of services purportedly within the employment purview of Chris and the

business of MFT. The description tasks Chris with carrying on and promoting MFT

“in its business” which includes “Hydraulic Torque Wrenches, Hydrostatic Test

Units, Rig Wash/Steam Wash, Cooler/Heat Exchanger Maintenance, Casing Cut

Saw, High Pressure Greasing, Stack Lift Winches, 10k-15K Pump Trucks, Gap Vac

Trucks, Roustabout Services, Facility Repairs, Environmental/Disposal, Rental Item

LED Light Plants, Rental Item Trash Pumps 2"-6", Pipeline Pig & Test[.]”

The list is ambiguous in its language; it is also completely open-ended by

stating that it “is not limited to” those items. The noncompetition provision fails to

define MFT’s business or the service areas in which Chris may be lawfully

prohibited with any certainty, much less reasonable certainty.

The agreement is also overly broad. The opening paragraph of the agreement

tasks Chris with providing “all services relating to production facilities” and

“completion operations,” as well as carrying on and promoting MFT’s numerous

“business operations,” including the open-ended litany of oilfield related activities

quoted above. And although the noncompetition provision attempts to prohibit Chris

from working in any of those areas or providing marketing services to anyone who

works in those areas, the record clearly establishes that Chris’s position with MFT

was simply as a sales representative.

The noncompetition provision goes beyond the plain language of La.R.S.

23:921(C), and enforcement of the agreement would prohibit Chris, a sales

representative, from not only competing with MFT in similar sales jobs but from

working in essentially any position or with any company in the oil and gas industry.

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As written, the noncompetition agreement would prohibit Chris from providing any

services, or from marketing any services, for any oil and gas related business.

As determined in Paradigm Health, 218 So.3d 1068, merely stating that an

employee may not engage in the same or similar business as the employer is

insufficient. And like Paradigm Health, we reject enforcement of a noncompetition

agreement that restricts an employee from engaging in services that he never

performed with his former employer.

We further conclude that the noncompetition provision in this case cannot be

reformed. Although courts have the opportunity in some instances to strike overly

broad references without invalidating the entire agreement, such is not the case here.

The agreement before us would require a complete rewrite, not simply a minor edit.

We have no authority to rewrite an ambiguous and overly broad noncompetition

agreement into compliance with La.R.S. 23:921.

For the above reasons, the noncompetition agreement between Chris and MFT

is invalid. As a result, the preliminary injunction is null and void in this respect.

After all, a party seeking an injunction has the burden of proving its right to the relief

sought. In considering the request, the court must determine the validity and

enforceability of the agreement. As succinctly stated in Advanced Med. Rehab., LLC

v. Manton, 21-315, p. 8 (La.App. 5 Cir. 2/2/3/22), 362 So.3d 703, 711:

Where the actions the employer seeks to enjoin pursuant to a non-
competition agreement do not fall within the exception found in La.
R.S. 23:921(C), or where the agreement is found to be unenforceable
for failure to conform to La. R.S. 23:921, the employer seeking
enforcement is unable to carry its burden of establishing that it is
entitled to the relief sought.

Second Issue for Review

Here, Chris asserts that the preliminary injunction is improper in that it enjoins

him from disclosing trade secrets or confidential information without specifying the

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protected information. He further asserts that MFT failed to prove the existence of

a trade secret or confidential information.

In relevant part, the employment agreement states:

2. PROPRIETARY INFORMATION; NON-DISCLOSURE; AND
CONFIDENTIALITY

2.1. By reason of their relationship, MFT may provide CL with certain
valuable and confidential proprietary information regarding financial
and other information (the “Proprietary Information”), including the
names of Customers, which information is proprietary to MFT and
which CL shall keep strictly confidential. CL may not disclose the
Proprietary Information to any person outside of its company, or use or
exploit it for any purpose whatsoever without the express, written
permission of MFT. In addition, CL hereby agrees to bind any and all
people or companies it may deal with together with the company’s
officers, directors, employees, agents, representatives, consultants,
contractors, and other persons to whom the Proprietary Information
may be disclosed with permission to the same strict confidentiality
obligation set forth herein.

2.2. CL agrees to hold any information which has been designated in
writing as confidential by MFT in the strictest confidence and shall not
disclose such information to any third party without MFT’s permission.

“Whether or not something constitutes a trade secret is a question of fact. We

review the factual findings of the trial court under the manifest error/clearly wrong

standard of review.” Marine Pile Drivers, L.L.C. v. Welco, Inc, 43,498, p. 3 (La.App.

2 Cir. 8/13/08), 988 So.2d 878, 880 (citations omitted).

Very simply, the trial court manifestly erred in finding that MFT proved the

existence of a trade secret or proprietary information. 1 In American Biocarbon, LLC

v. Keating, 20-2059, p. 4 (M.D. La. 12/10/20), 2020 WL 7264459, at *4 (unpublished

opinion) (quoting Navigation Holdings, LLC v. Molavi, 445 F.Supp.3d 69, 75 (N.D.

Cal. 3/27/20)), the court explained:

“[T]o allege a trade secret, the plaintiff must ‘describe the subject
matter of the trade secret with sufficient particularity to separate it from
1
The preliminary injunction is also fatally flawed in that it lacks specificity in this respect.
“An order granting either a preliminary or final injunction or a temporary restraining order shall
describe in reasonable detail . . . the act or acts sought to be restrained.” La.Code Civ.P. art 3605.

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matters of general knowledge in the trade or of special persons who are
skilled in the trade, and to permit the defendant to ascertain at least the
boundaries within which the secret lies.’”

The burden of proving the existence and identification of a trade secret lies

with the plaintiff. Ring St., LLC v. Cypress Connects, LLC, 23-1486 (E.D. La.

7/27/23), ___ Fed.Supp.3d ___ (2023 WL 4825194).2 Simply declaring one’s

procedures or processes a trade secret without articulating the specifics fails to

invoke trade secret protection. Praeses, LLC v. Bell, 54,601 (La.App. 2 Cir. 6/29/22),

343 So.3d 933. In Praeses, the plaintiff failed to identify the precise methods,

procedures, and formulas it claimed to be proprietary or subject to being proprietary.

As defined by La.R.S. 51:1431(4):

4) “Trade secret” means information, including a formula,
pattern, compilation, program, device, method, technique, or process,
that:

(a) derives independent economic value, actual or potential, from
not being generally known to and not being readily ascertainable by
proper means by other persons who can obtain economic value from its
disclosure or use, and

(b) is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.

In addition to trade secrets, the preliminary injunction here prohibits Chris

from disclosing or using proprietary information. Section 2.1 of the agreement

defines “proprietary information” as “certain valuable and confidential proprietary

information regarding financial and other information (the ‘Proprietary

Information’), including the names of Customers, which information is proprietary

to MFT and which CL shall keep strictly confidential.”

In its petition, MFT alleged that Chris breached the agreement by sharing

confidential information. According to MFT, Chris implemented a proprietary rig-

2
In this case, the federal district court recognized that the treatment of trade secrets under
the federal Defend Trade Secrets Act and the Louisiana Uniform Trade Secrets Act is nearly
identical.
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washing process at Mulholland, and he also disclosed confidential pricing and

customer information.

At the hearing on the preliminary injunction, MFT owner, Waylon White,

testified that his company has a proprietary rig-washing procedure which he

described as “unique” and “way more efficient” than other procedures. When asked

to identify the specific confidential aspects of the procedure, he pointed to MFT’s

method and special soap. Yet Mr. White admitted that Chris had some knowledge

of the procedure from his prior employment with a different company contracted by

MFT. The lack of secrecy is also evidenced by the following testimony of Mr. White:

A. It’s very unique. The way we, we clean our tank system. Like I
explained earlier, we’re, we’re way more efficient, the way we
do it. It is proprietary to us. Nobody else knows about it. The
way the guys, the way that we tie to the tanks, we don’t tie in
from the top, we tie in to the bottom to make it quick, more
efficient.

Q. Nobody else does that?

A. Not to my knowledge, no. That’s because we can clean tanks in
half the time anybody else can.

Q. Alright and nobody’s around when you’re doing your work,
right, watching you do it?

A. Rig people around that are walking around.

Q. There’s people all over the place.

A. Yeah, they don’t pay attention.

....

Q. There are other people working on the rig that aren’t at MFT.

A. Yeah, but they’re, they’re doing their job.

The rig-washing procedure that MFT claims is secret and proprietary is

performed in front of third parties and in plain view. There is simply no evidence of

any effort by MFT to keep this process confidential.

10

And although Mr. White testified that Chris learned about the formulation of

the specialized soap after he became employed with MFT, Mr. White did not accuse

Chris of misappropriating this information. What is more, Mr. White testified that

MFT has a patent pending for the soap formula, meaning that the formula cannot be

defined as confidential.

Before going further, we note that Chris is free to use the experience and

knowledge that he has gained throughout his work career in his new position. “A

former employee who enters business in competition with his former employer

necessarily utilizes the experience he acquired and the skills he developed while in

his former employment.” Nat'l Oil Service of La., Inc. v. Brown, 381 So.2d 1269,

1273 (La.App. 4 Cir. 1980).

MFT next argues that Chris disclosed trade secret information by revealing

pricing information. However, MFT admitted that Chris was only in possession of

MFT’s historic pricing; he had no information about the current-day pricing

practices of the company. MFT also admitted that its pricing is fluid and disclosed

to its customers. Undoubtedly, those customers use this information in negotiations

with other outside parties. This is not secret information. A “special pricing list may

be a trade secret if efforts are made to maintain its secrecy.” Pontchartrain Medical

Labs, Inc. v. Roche Biomedical Laboratories, Inc., 95–2260, p. 6 (La.App. 1 Cir.

6/28/96), 677 So.2d 1086, 1090.

MFT also failed to carry its burden of proving the confidentiality of its

customer list. There is no evidence that MFT made any effort to keep its list secret

or that the information was not readily ascertainable. “A customer list . . . may be a

trade secret if efforts are made to maintain its secrecy.” Id. Simply declaring that the

information is secret or proprietary is insufficient. As explained in Praeses, 343

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So.3d at 942, “a confidentiality agreement cannot transform information that is

generally known into a trade secret.”

Finally, MFT admitted that Chris did not take any confidential records or

written information with him when he left for Mulholland. His knowledge of the

pricing information and customer list, for example, came solely from memory. In

Gulf Toy House, Inc. v. Bertrand, 306 So.2d 361 (La.App 3 Cir. 1975), this court

held that preventing an employee working from memory from soliciting customers

of a former employer would have the effect of preventing that employee from

working in the geographic area. Hence, such a prohibition would be a roundabout

way of enforcing an otherwise unenforceable confidentiality agreement.

In the end, the trial court manifestly erred in finding the existence of legally

protectable trade secrets and proprietary information. And as a result, the trial court

abused its discretion in issuing the preliminary injunction in this respect.

DISPOSITION

The judgment of the trial court is reversed, and the preliminary injunction is

dissolved in its entirety. This matter is remanded to the trial court for further

proceedings. And all costs of this appeal are assessed to Master Flow Technologies

LLC.

REVERSED AND REMANDED;
INJUNCTION DISSOLVED.

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