Southwestern Energy Production Company, Appellant/Cross-Appellee v. Toby Berry-Helfand and Gery Muncey, Appellees/Cross-Appellants
411 S.W.3d 581
| Tex. App. | 2013Background
- Toby Berry‑Helfand (reservoir engineer) and Gery Muncey (geologist) spent years compiling and analyzing public and proprietary data to identify James Lime "sweet spots" across a five‑county area; they produced maps, cross‑sections, spreadsheets and a methodology later called a trade secret.
- Helfand and Muncey (Team Works) presented their Pearson prospects to Southwestern Energy Production Co. (Sepco) on Feb. 15, 2005 under a one‑year confidentiality agreement limiting use to evaluation of those prospects and prohibiting lease acquisition within the defined area without Team Works.
- Sepco declined the Pearson deal, returned materials, later acquired extensive leases near Helfand’s identified sweet spots, and (after a successful Cabot well) drilled many James Lime horizontal wells clustered in or near Helfand’s locations, producing large revenues.
- Helfand sued multiple parties over alleged misappropriation; she added Sepco as a defendant in 2009. A jury found (among other things) misappropriation of a trade secret and awarded about $11.45M in actual damages; the trial court added $23.89M disgorgement and attorney’s fees, totaling ≈ $40M.
- On appeal, the court affirmed the trade‑secret misappropriation damages ($11.445M), reversed and rendered on several theories (fiduciary duty, fraud, theft, breach of contract damages, and disgorgement), and remanded for Sepco’s attorney’s fees under the Texas Theft Liability Act.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a fiduciary duty arose from the confidentiality agreement | Helfand: the agreement and entrustment created a confidential (fiduciary) relationship | Sepco: parties dealt at arm’s length; confidentiality agreement did not create a fiduciary duty | Court: No fiduciary relationship as a matter of law; claim reversed |
| Whether fraud was proved | Helfand: Sepco misled her about competitive position, concealed AMI, induced presentation | Sepco: no false statements, no reliance or injury, no duty to disclose; mere contract breach not fraud | Court: Insufficient evidence of fraud; claim reversed |
| Whether Helfand’s compilation/methodology was a trade secret and whether Sepco misappropriated it | Helfand: compilation & methodology were secret and conditioned on confidentiality; Sepco used them to plan/lease/drill | Sepco: independent internal work, prior lack of interest explains later shift, coincidence; no proof of use or intent | Court: Compilation qualified as a trade secret; circumstantial evidence supported misappropriation verdict; misappropriation upheld |
| Whether statutory theft and disgorgement were supported | Helfand: Sepco knowingly appropriated trade secret without effective consent; equitable disgorgement appropriate | Sepco: Helfand consented when she presented materials under agreement; no evidence Sepco intended to deprive at time of presentation; no fiduciary duty for disgorgement | Court: Theft finding reversed (consent effective and no intent to deprive shown); disgorgement reversed |
Key Cases Cited
- Exxon Corp. v. Emerald Oil & Gas Co., L.C., 348 S.W.3d 194 (Tex. 2011) (legal‑sufficiency and discovery‑rule principles)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (standards for legal sufficiency review)
- Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171 (Tex. 1997) (limits on imposing informal fiduciary duties)
- Hyde Corp. v. Huffines, 314 S.W.2d 763 (Tex. 1958) (confidential disclosure during licensing negotiations may give rise to implied confidentiality)
- In re Bass, 113 S.W.3d 735 (Tex. 2003) (definition and treatment of trade secrets in oil and gas context)
- Univ. Computing Co. v. Lykes‑Youngstown Corp., 504 F.2d 518 (5th Cir.) (use of reasonable‑royalty/defendant‑benefit approaches to measure trade‑secret damages)