Maxum Petroleum, Inc. v. Hiatt et al

Filing 88

ORDER granting in part and denying in part 49 Plaintiff Maxum Petroleum, Inc.'s Motion to Compel Document Production and Renewed Motion for a Judicial Conference and granting in part 51 Defendants' Motion to Compel Plaintiff's Production of Documents (as more fully set out). Signed by Honorable Vicki Miles-LaGrange on 6/16/2017. (ks)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
MAXUM PETROLEUM, INC.,
Plaintiff,
v.
STEPHEN HIATT and
CHEMOIL CORPORATION, INC.,
Defendants.

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Case No. CIV-17-287-M

ORDER
Before the Court is Plaintiff Maxum Petroleum, Inc.’s Motion to Compel Document
Production and Renewed Motion for a Judicial Conference, filed January 13, 2017. On January
20, 2017, defendants responded, and on January 25, 2017, plaintiff replied. Also before the Court
is Defendants’ Motion to Compel Plaintiff’s Production of Documents, filed January 13, 2017. On
January 20, 2017, plaintiff responded, and on January 25, 2017, defendants replied. Based on the
parties’ submissions, the Court makes its determination.
I.

Background
On September 26, 2016, plaintiff Maxum Petroleum, Inc., (“Maxum”) filed this action in

the United States District Court of Connecticut. 1 In its Complaint, Maxum alleges that defendant
Stephen Hiatt (“Hiatt”) resigned his senior level position at Maxum and assumed a similar position
with defendant Chemoil Corporation, Inc. (“Chemoil”) (collectively “Defendants”), a direct
competitor of Maxum. Maxum further alleges Hiatt had access to and was well versed in Maxum’s
proprietary information and trade secrets. Maxum also alleges that Hiatt recruited a former
colleague, Randy Ogden, as well as two other employees to quit Maxum and join Chemoil. As a

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On March 15, 2017, this action was transferred to this Court.

result of Chemoil employing its former employees, Maxum alleges that Chemoil is now in
possession of Maxum’s trade secrets and proprietary information, which Maxum believes
Defendants will exploit for unfair competitive advantage. Maxum alleges the following claims
against Defendants: (1) breach of contract (against Hiatt only); (2) breach of fiduciary duty (against
Hiatt only); (3) misappropriation of trade secrets – Defend Trade Secrets Act, 18 U.S.C. § 1836;
(4) misappropriation of trade secrets – Connecticut Uniform Trade Secrets Act; (5) conversion;
(6) violation of Connecticut Unfair Trade Practices Act; (7) common law unfair competition; (8)
tortious interference with prospective economic advantage (against Chemoil only); and (9) tortious
interference with contract.
Both parties now seek an order from this Court compelling the respective parties to produce
requested documents. Specifically, Maxum requests that defendants produce all documents
responsive to its Second Requests for Production of Documents and a judicial conference with the
Court to address any other outstanding issues. 2 Defendants request that Maxum produce
documents sought in their First and Second Requests for Production of Documents.
II.

Discussion
A.

Maxum’s motion to compel

Maxum seeks information from Defendants regarding business documents relating to the
development of Chemoil’s lubricant and diesel businesses, and correspondence and documents
relating to Chemoil’s recent recruitment and hiring of former Maxum employees, including
electronic files and devices from former employees of Maxum who are now employed by Chemoil.
Specifically, Maxum alleges that Chemoil is exploiting its trade secrets by utilizing former Maxum

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The Court has set a Status and Scheduling Conference in this matter for July 6, 2017;
therefore, the Court will not be addressing Maxum’s requests for a judicial conference in this
Order.
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employees to sell lubricant products to oil and gas drilling customers, an area that Chemoil did not
previously service.
Maxum requests information regarding Chemoil’s contacts and efforts to sell lubricants to
rig customers, including all documents and communications reflecting, relating to, referring to,
discussing, or concerning: (1) any contact with prospective or actual purchasers of lubricant
products and services other than fracking customers (Request for Production No. 3); (2) Chemoil’s
efforts to sell lubricant products or services to customers other than fracking customers (Request
for Production No. 4); (3) any contacts with Atlas, H&P, Nabors, Patterson, Precision, Cactus,
Ensign, Trinidad, Unit, Latshaw, Pioneer, and/or Sidewinder (Request for Production No. 6); and
(4) credit applications by or for prospective customers of lubricant products and services (Request
for Production No. 7). See Plaintiff’s Second Requests for Production of Documents, attached as
Exhibit 6 to the Declaration of Jason Koral Pursuant to Local Rule 37(a) and in Support of
Plaintiff’s Motion to Compel Document Production [docket no. 52].
Maxum also seeks information regarding Chemoil’s efforts to launch its new lubricant
business (Request for Production Nos. 8 & 9) and use of former Maxum employees to expand
sales and purchases of lubricant products (Request for Production No. 5). Maxum further seeks
evidence relating to damages in the form of sales made and profits earned in its diesel fuel products
and services and its lubricant products and services (Request for Production No. 1). See Plaintiff’s
Second Requests for Production of Documents, attached as Exhibit 6 to the Declaration of Jason
Koral Pursuant to Local Rule 37(a) and in Support of Plaintiff’s Motion to Compel Document
Production [docket no. 52].
Further, Maxum seeks documents related to Chemoil’s alleged recruitment and hiring of
Maxum employees, including all documents and communications reflecting, relating to, referring

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to, discussing or concerning: (1) Chemoil’s recent efforts to recruit and hire current and former
Maxum employees including Hiatt, Randy Ogden, Todd King, Phillip DeLong, and David
Schneider (Request for Production No. 13); (2) Chemoil’s recent efforts to hire drivers to serve
lubricants customers (Request for Production No. 8); and (3) draft and final versions of
employment agreements, commission schedules, benefits, employee manuals, and/or company
policies provided to Hiatt, Ogden, King, DeLong, and Schneider (Request for Production No. 14).
See Plaintiff’s Second Requests for Production of Documents, attached as Exhibit 6 to the
Declaration of Jason Koral Pursuant to Local Rule 37(a) and in Support of Plaintiff’s Motion to
Compel Document Production [docket no. 52].
Defendants acknowledge Maxum’s breach of contract claim against Hiatt and insist they
do not object to producing discovery related to Hiatt allegedly soliciting employees and customers;
however, defendants object to all other discovery requests on the grounds that Maxum’s trade
secret claims have no merit. Specifically, Defendants contend that the information regarding
plaintiff’s customer list and pricing are not trade secrets, and since Ogden, King, DeLong, and
Schneider did not have a non-compete agreement with Maxum, they are free to use the knowledge
and relationships they acquired while working at Maxum during their employment with Chemoil.
Having carefully reviewed the parties’ submissions, the Court finds that Defendants should
be required to produce the requested documents in Maxum’s Second Request for Production of
Documents. Specifically, Maxum contends that Hiatt, Ogden, King, and Delong all attached USB
drives to their Maxum laptops either shortly before or the same day of their departure. See
Plaintiff’s Memorandum of Law in Support of its Motion to Compel [docket no. 50] at 13-14.
Further, Maxum contends that Ogden and King accessed sensitive pricing, customers and sales

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information, upon their departure. 3 See id at 14. Based on Maxum’s allegation that former
employees, who now work for Chemoil, accessed electronic documents and files upon their
departure from Maxum, the Court finds that the information Maxum seeks in its Second Request
for Production of Documents is relevant and should be produced; however, with respect to Request
for Production No. 1, the Court finds that only documents showing the monthly sales, gross profit,
and net profit of rig lubricant products is relevant as to damages in this matter, as that is the area
Maxum claims defendants have engaged in misappropriating its trade secrets. Therefore, the Court
finds that Maxum’s motion to compel should be granted in part and denied in part.
B.

Chemoil’s motion to compel

Chemoil seeks information from Maxum regarding: (1) the state of Maxum’s business, (2)
documents related to the identity of Hiatt’s employer and whether Maxum has customers and
employees to be solicited; and (3) an unredacted copy of the Laptop Analysis TransPerfect Case
No. C2018349 (“Laptop Analysis”). In its brief, Chemoil advises the Court that Maxum has agreed
to produce documents regarding the state of its business and the identity of Hiatt’s employer and
whether Maxum has customers and employees to be solicited. Chemoil states that it will “review
the documents when produced and advise Plaintiff and the Court whether such documents satisfy
some or all the requests in [those] groupings.” Defendant’s Mot. to Compel at 5 & 7. Based on
Chemoil’s advisement that Maxum has agreed to produce the requested documents, the Court finds
that Chemoil’s requests for an order from the Court compelling Maxum to produce information
regarding the state of Maxum’s business and documents related to the to the identity of Hiatt’s

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In its brief, Maxum explains that upon commencing this action, it hired independent
forensic computer specialists to analyze the laptop computers of the Maxum employees who left
to join Chemoil. See Plaintiff’s Memorandum of Law in Support of its Motion to Compel [docket
no. 50] at 13.
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employer and whether Maxum has customers and employees to be solicited is premature and,
therefore, will not be addressed in this Order.
Chemoil further contends that it needs an unredacted copy of Maxum’s Laptop Analysis,
as the redacted version produced by Maxum redacts the conclusion of the report, and Chemoil
believes the conclusion will support its defense that Hiatt and other employees did not remove any
confidential information from Maxum’s computer system. Maxum contends that the redacted
portions of the Laptop Analysis report are protected by the work product doctrine, as the redacted
information contains communication to counsel in anticipation of litigation and, therefore, is
undiscoverable.
Federal Rule of Civil Procedure 26(b) permits undiscoverable documents prepared in
anticipation of litigation or trial by a party or its representative to be discoverable, if the party
requesting the document can show that the document would otherwise be discoverable and that it
has a substantial need for the document and cannot, without undue hardship, obtain a substantial
equivalent document by other means. See Fed. R. Civ. P. 26(b)(3)(A). Having carefully reviewed
the parties’ submissions, the Court finds that Maxum should produce a copy of the Laptop Analysis
with the conclusion of the report unredacted. 4 The Court finds that the conclusion of the Laptop
Analysis is relevant information for Chemoil’s defense and Chemoil would not have access to the
information without it being produced by Maxum. Therefore, the Court finds that Chemoil’s
Motion to Compel should be granted in part.

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The Court finds that all other redacted portions of the report shall remain redacted.
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III.

Conclusion
Accordingly, for the reasons set forth above, the Court GRANTS IN PART and DENIES

IN PART Maxum’s Motion to Compel Document Production and Renewed Motion for a Judicial
Conference [docket no. 49] as follows: (1) the Court GRANTS Maxum’s motion to compel and
ORDERS Chemoil to produce documents and information requested in Maxum’s Second Request
for Production of Documents, with the exception to Request for Production No. 1, in which
Chemoil is only ordered to produce documents related to the monthly sales, gross profit, and net
profit of Chemoil’s rig lubricant products and services on or before July 17, 2017; and (2) the
Court DENIES Maxum’s request for a Judicial Conference as MOOT.
Additionally, for the reasons set forth above, the Court GRANTS IN PART Defendants’
Motion to Compel Plaintiff’s Production of Documents [docket no. 51] as follows: the Court
ORDERS Maxum to produce a copy of the Laptop Analysis with the conclusion unredacted to
Chemoil on or before July 17, 2017, and FINDS that Chemoil’s requests for the production
information related to Maxum’s business state and documents related to the identity of Hiatt’s
employer and whether Maxum has any customers or employees that could be solicited is
premature.
IT IS SO ORDERED this 16th day of June, 2017.

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