Ricky D. Parker and James Myers v. Schlumberger Technology Corporation ( 2015 )

ACCEPTED
01-14-01018-CV
FIRST COURT OF APPEALS
HOUSTON, TEXAS
2/17/2015 5:12:09 PM
CHRISTOPHER PRINE
CLERK
CASE NO. 01-14-01018-CV
FILED IN
1st COURT OF APPEALS
IN THE COURT OF APPEALS FOR HOUSTON, TEXAS
THE FIRST DISTRICT OF TEXAS 2/17/2015 5:12:09 PM
HOUSTON, TEXAS CHRISTOPHER A. PRINE
Clerk
RICKY D. PARKER AND JAMES MYERS,
Appellant,
v.
SCHLUMBERGER TECHNOLOGY CORPORATION,
Appellee.
Interlocutory Appeal
th
from the 268 District Court of Fort Bend County, Texas
Cause Number 14-DCV-218252
APPELLEE’S BRIEF ON THE MERITS
______________________________________________________________
Jeff Barnes William L. Davis
State Bar No. 24045452 State Bar No. 05563800
barnesj@jacksonlewis.com davisw@jacksonlewis.com
JACKSON LEWIS P.C. JACKSON LEWIS P.C.
1415 Louisiana, Suite 3325 500 N. Akard, Suite 2500
Houston, Texas 77002 Dallas, Texas 75201
PH: (713) 650-0404 PH: (214) 520-2400
FX: (713) 650-0405 FX: (214) 520-2008
TABLE OF CONTENTS
I. STATEMENT OF THE CASE ...........................................................................1
II. ISSUES PRESENTED ......................................................................................2
III. STATEMENT OF FACTS ...............................................................................3
A. Parker sold his wireline, slick line, and braided line business to Schlumberger.3
B. Parker and Myers agreed to post-employment restrictive covenants ...................3
C. Parker, and later Myers, ran the business that Schlumberger purchased..............6
D. Parker formed a wireline, slick line, and braided line business in competition
with Schlumberger..................................................................................................6
E. Myers “retired” on September 16, 2014................................................................8
F. Parker and Myers solicited, recruited, and hired Schlumberger employees .........8
G. Parker and Myers solicited Schlumberger customers...........................................9
H. Parker and Myers admit they breached their restrictive covenant agreements ..10
IV. PROCEDURAL BACKGROUND ...............................................................13
V. SUMMARY OF ARGUMENT ........................................................................15
VI. ARGUMENT ...................................................................................................17
A. The District Court properly entered a temporary injunction against Appellees 17
1. Standard of review ............................................................................................17
2. The temporary injunction does not contain an “industry wide” exclusion ......18
3. The temporary injunction only restricts Appellants from working in wireline,
slick line, and braided line operations ...............................................................20
4. The temporary injunction contains reasonable geographic limitations............20
5. The temporary injunction contains reasonable customer restrictions ..............22
6. The temporary injunction contains reasonable time limitations.......................25
i
7. Schlumberger offered evidence of irreparable harm ........................................28
B. The District Court properly applied Texas law...................................................30
1. Standard of review ............................................................................................30
2. The application of Texas law is not contrary to a fundamental policy of
Oklahoma ..........................................................................................................30
3. Oklahoma does not have a more significant relationship than Texas ..............35
4. Oklahoma does not have a materially greater interest in the determination of
the issue............................................................................................................39
C. This Court lacks jurisdiction to review the District Court’s denial of Appellants’
motion for reconsideration .................................................................................41
D. The District Court properly denied Appellants’ motion to compel arbitration .42
1. Standard of review ............................................................................................42
2. Appellants did not present the entire APA to the District Court......................43
3. There is no arbitration agreement between Schlumberger and Myers.............44
4. The District Court was required to determine the arbitrability of
Schlumberger’s claims against Myers ..............................................................48
5. The District Court properly concluded that Schlumberger’s claims against
Parker are outside the scope of the APA ..........................................................49
6. The District Court did not err by deciding the arbitrability of Schlumberger’s
claims against Parker ........................................................................................52
VII. PRAYER .........................................................................................................57
CERTIFICATE OF COMPLIANCE.......................................................................59
CERTIFICATE OF SERVICE ................................................................................59
ii
INDEX OF AUTHORITIES
Cases
Ameripath, Inc. v. Hebert, 447 S.W.3d 319 (Tex. App.—Dallas 2014, pet. filed) .27
Abetter Trucking Co. v. Arizpe, 113 S.W.3d 503, 510 (Tex. App.—Houston [1st
Dist.] 2003, no pet.). .................................................................................... 26, 27
American Express Financial Advisors v. Scott, 955 F. Supp. 688 (N.D. Tex. 1996)
...............................................................................................................................28
AT&T Technologies., Inc. v. Communications Workers of America, 475 U.S. 643
(1986)....................................................................................................................49
Bayly, Martin & Fay, Inc. v. Pickard, 780 P.2d 1168 (Okla. 1989) .......................34
Burlington Resources Oil & Gas Co., LP v. San Juan Basin Royalty, 249 S.W.3d
34 (Tex. App.—Houston [1st Dist.] 2007).................................................... 53, 55
Butler v. Arrow Mirror & Glass, Inc., 51 S.W.3d 787 (Tex. App.—Houston [1st
Dist.] 2001, no pet.) ..............................................................................................21
Butnuru v. Ford Motor Co., 8 S.W.3d 198 (Tex. 2002)..........................................17
CMH Homes v. Perez, 340 S.W.3d 444 (Tex. 2011)...............................................41
Curtis v. Ziff Energy Group, Ltd., 12 S.W.3d 114 (Tex. App.—Houston [14th
Dist.] 1999, no pet.) ..............................................................................................19
DeSantis v. Wackenhut Corp., 793 S.W.2d 670 (Tex. 1990) ..................................30
Digges v. Knowledge Alliance, Inc., 176 S.W.3d 463 (Tex. App.—Houston [1st
Dist.] 2004, no pet.) ..............................................................................................42
Eakle v. Grinnell Corp., 272 F. Supp. 2d 1304 (E.D. Okla. 2003) ...... 31, 32, 33, 34
Elgohary v. Herrera, 405 S.W.3d 785 (Tex. App.—Houston [1st Dist.] 2013, no
pet.) .......................................................................................................................49
EMS USA, Inc. v. Shary, 309 S.W.3d 653 (Tex. App.—Houston [14th Dist.] 2010,
no pet.) ..................................................................................................................17
Ennis, Inc. v. Dunbrooke Apparel Corp., 427 S.W.3d 527 (Tex. App.—Dallas
iii
2014, no pet.) ........................................................................................................36
Exxon Mobil Corp. v. Drennen, --- S.W.3d ----, 2014 Tex. Lexis 760 (Tex. Aug.
29, 2014) ........................................................................................................ 38, 39
Farren v. Autoviable Serv., Inc., 508 P.2d 646 (Okla. 1973) ..................................31
Gallagher Healthcare Insurance Services v. Vogelsang, 312 S.W.3d 640 (Tex.
App.—Houston [1st Dist.] 2009, pet. denied)......................................................22
Hill v. GE Power Systems, Inc., 282 F.3d 343 (5th Cir. 2002)................................46
Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002) ..................................48
In re Kellogg Brown & Root, Inc., 166 S.W.3d 732 (Tex. 2005)............................44
In re Merrill Lynch Trust Co. FSB, 235 S.W.3d 185 (Tex. 2007) ..........................45
In re Rubiola, 334 S.W.3d 220 (Tex. 2011) ............................................................48
In re Service Corporation International, 355 S.W.3d 655 (Tex. 2011)..................49
In re Weekley Homes, LP, 180 S.W.3d 127 (Tex. 2005).................................. 44, 45
James & Jackson, LLC v. Willie Gary, LLC, 906 A.2d 76 (Del. 2006) ........... 55, 56
Karlin v. DCP Midstream, LP, 2013 Tex. App. Lexis 6966 (Tex. App.—Amarillo
June 6, 2013, pet. denied) .....................................................................................47
Loy v. Harter, 128 S.W.3d 397 (Tex. App.—Texarkana 2004, pet. denied) ..........51
Mabrey v. Sand Stream, Inc., 124 S.W.3d 302 (Tex. App.—Fort Worth 2003, no
pet.) .......................................................................................................................51
M-I LLC v. Lee, 733 F. Supp. 2d 759 (S.D. Tex. 2010) ..........................................21
Nazareth Hall Nursing Center v. Castro, 374 S.W.3d 590 (Tex. App.—El Paso
2012, no pet.) ................................................................................................. 41, 42
ODL Services, Inc. v. ConocoPhillips Co., 264 S.W.3d 399 (Tex. App.—Houston
[1st Dist.] 2008, no pet.) ................................................................................ 52, 54
Oliver v. Omnicare, Inc., 103 P.3d 626 (Okla. Ct. App. 2004)...............................32
Osornia v. Amerimex Motor & Controls, Inc., 367 S.W.3d 707 (Tex. App.—
iv
Houston [14th Dist.] 2012, no pet.) ......................................................................43
Per Group LP v. Medical Media Holdings, LLC, 294 S.W.3d 378 (Tex. App.—
Dallas 2009, no pet.) .............................................................................................54
Pre-Paid Legal Servs., Inc. v. Cahill, 924 F. Supp. 2d 1281, 1290 (E.D. Okla.
2013) )………………………………………………………………………… 33
Roe v. Ladymon, 318 S.W.3d 502 (Tex. App.—Dallas 2010, no pet.) ...................48
Schlumberger Technology Corp. v. Baker Hughes, Inc. 355 S.W.3d 791 (Tex.
App.—Houston [1st Dist.] 2011, no pet.)...................................................... 53, 57
Skyleasing, LLC v. Tejas Acvo, Inc., 2006 Tex. App. Lexis 7098 (Tex. App.—
Houston [14th Dist.] Aug. 10, 2006, no pet.) ................................................ 46, 48
Speedemissions, Inc. v. Bear Gate, LP, 404 S.W.3d 34 (Tex. App.—Houston [1st
Dist.] 2013, no pet.) ................................................................................. 42, 43, 47
The Branch Law Firm, LLP v. Osborn, 447 S.W.3d 390 (Tex. App.—Houston
[14th Dist.] 2014, no pet. h.).................................................................................44
The Inland Sea, Inc. v. Castro, 420 S.W.3d 55 (Tex. App.—El Paso 2012, pet.
denied)...................................................................................................................45
Transperfect Translations, Inc. v. Leslie, 594 F. Supp. 2d 742 (S.D. Tex. 2009)...29
Unitel Corp. v. Decker, 731 S.W.2d 636 (Tex. App.—Houston [14th Dist.] 1987,
no writ)..................................................................................................................28
Vaughn v. Intrepid Directional Drilling Specialists, Ltd., 288 S.W.3d 931 (Tex.
App.—Eastland 2009, no pet.) .............................................................................24
VSR Financial Services, Inc. v. McLendon, 409 S.W.3d 817 (Tex. App.—Dallas
2013, no pet.) ........................................................................................... 44, 45, 47
Wetzel v. Sullivan, King & Sabom, P.C., 745 S.W.2d 78 (Tex. App.—Houston [1st
Dist.] 1988, no writ)..............................................................................................43
Wright v. Sport Supply Group, Inc., 137 S.W.3d 289 (Tex. App.—Beaumont 2004,
no pet.) ..................................................................................................................28
XL Insurance Co. v. Hartford Accident and Indemnity Co., 918 S.W.2d 687 (Tex.
v
App.—Beaumont 1996, pet. dism’d w.o.j.)..........................................................50
Zep Manufacturing Co. v. Harthcock, 824 S.W.2d 654 (Tex. App.—Dallas 1992,
no writ)..................................................................................................................20
Statutes
9 U.S.C. § 16..................................................................................................... 41, 42
Okla. Stat. tit. 15 § 218 ............................................................................................31
Tex. Bus. & Comm. Code § 15.50(a) ......................................................................18
Tex. Civ. Prac. & Rem. Code § 51.016 ............................................................ 41, 42
Tex. R. App. P. 33.1(a) ................................................................... 22, 26, 28, 34, 39
Tex. R. Evid. 801(d).................................................................................................23
Other Authorities
Restatement (Second) of Conflict of Laws § 187 .............................................. 30, 38
vi
I. STATEMENT OF THE CASE
Appellee Schlumberger Technology Corporation (“Schlumberger”)
filed the underlying proceeding on October 8, 2014 to enforce restrictive covenant
agreements with two former Schlumberger managers, Appellants Ricky Parker and
James Myers. The District Court entered a TRO in favor of Schlumberger on
October 9, 2014 and set Schlumberger’s application for a temporary injunction for
hearing within fourteen days. After two agreed extensions of the TRO, the District
Court presided over the temporary injunction hearing on December 5 and 8, 2014.
Appellants did not appear to testify at the temporary injunction hearing, but their
counsel attended. After the two-day hearing, the District Court determined that
Schlumberger had satisfied the prerequisites for a temporary injunction against
Appellants and entered a temporary injunction to maintain the status quo until a
trial on the merits, which the District Court set for March 17, 2015. The parties
later agreed to continue the trial setting until May 18, 2015.
1
II. ISSUES PRESENTED
1. Did the District Court abuse its discretion when it enjoined
Appellants from competing in the wireline, slick line, and braided line business in
a limited geographical area?
2. Does Section 51.016 of the Texas Civil Practice and Remedies
Code authorize an interlocutory appeal from the District Court’s order denying
Appellants’ motion to reconsider the denial of their motion to compel arbitration?
3. Did the District Court abuse its discretion when it denied
Appellants’ motion to compel arbitration?
2
III. STATEMENT OF FACTS
A. Parker sold his wireline, slick line, and braided line business to
Schlumberger
Parker owned and operated Parker Energy Services (“Parker
Energy”), which provided wireline, slick line, and braided line services to
operators in the oilfield. (2 R.R. 15, 17-18.) Myers was second-in-command at
Parker Energy. (2 R.R. 19.) Parker sold his company to Schlumberger for
$17,000,000 in September 2011. (2 R.R. 15, 18, 26.) Given that the primary value
of Parker Energy was its customer relationships and employees, the parties
attributed $15,000,000 of the purchase price to goodwill. (2 R.R. 18, 26.)
B. Parker and Myers agreed to post-employment restrictive covenants
In connection with the sale of Parker Energy and as part of
transitioning their employment to Schlumberger, Parker, Myers, and other Parker
Energy employees joining Schlumberger signed Intellectual Property, Confidential
Information, and Non-Compete Agreements (“ICN Agreements”). (2 R.R. 20.)
By signing the ICN Agreements, Parker and Myers promised that, for one-year
after the termination of their employment, they would not:
 Solicit, recruit, or hire Schlumberger employees; or
 Work for a competitor in the same business segment in which they
worked for Schlumberger (i.e., wireline, slick line, and braided line).1
1
Parker and Myers’ ICN Agreements contain geographical limitations that are broader than what
Schlumberger sought to enforce in the underlying proceeding. Schlumberger only sought to
enjoin Parker and Myers from competing in the counties in which they worked and managed
3
(5 R.R. Ex. 1 ¶¶ 5, 13; Ex. 2 ¶¶ 5, 13.) Parker and Myers agreed in the ICN
Agreements that these post-employment restrictions were reasonable. (5 R.R. Ex.
1 ¶ 9; Ex. ¶ 9.)
The ICN Agreements also contain Texas choice of law and
mandatory venue provisions:
Because Employee may work in various locations and to eliminate
potential certainty over the governing law, this Agreement shall be
interpreted and construed exclusively in accordance with the laws of
the State of Texas. Venue for any dispute(s) arising from or related to
this Agreement shall lie solely, and is convenient, in Fort Bend
County, Texas. Employee consents to the choice of law and venue
provisions of this Agreement and agrees that Employee will not
contest these provisions in any future proceeding(s). Employee agrees
that Texas, as the Company’s United States Headquarters, has a
greater legal interest in matters relating to this Agreement than any
other state, has a greater public policy interest in matters relating to
this Agreement than any other state, and has a greater factual
relationship to matters relating to this Agreement than any other state.
(5 R.R. Ex. 1 ¶ 17; Ex. 2 ¶ 17.)
In addition to the ICN Agreement, to protect the goodwill that
Schlumberger was purchasing from Parker Energy, Myers was required to sign a
Retention Bonus Agreement. (2 R.R. 19; 5 R.R. Ex. 3.) Myers promised that, for
a year after the termination of his employment, he would not:
 Solicit, recruit, or hire Schlumberger employees;
while employed by Schlumberger, and where Schlumberger performed wireline, slick line, and
braided line jobs for customers about which Parker and Myers obtained Company Confidential
Information. (C.R. 19.)
4
 Solicit or accept work from customers that he dealt with on behalf of
Schlumberger that is substantially similar to the work he performed for
Schlumberger;
 Provide services to customers that he dealt with on behalf of
Schlumberger that are substantially similar to the services he performed
while at Schlumberger; and
 Perform work for a competitor that is substantially similar to the work he
performed for Schlumberger in the geographic territory serviced by the
Schlumberger office in which he worked.
(5 R.R. Ex. 3 ¶ 5.)
Conditioned on his compliance with the post-employment restrictive
covenants and his agreement to work for Schlumberger for at least two years,
Schlumberger paid Myers $100,000 as part of the Retention Bonus Agreement.
(Id. ¶¶ 1, 2, 12; 2 R.R. 55.) Although (as explained below) Myers clearly failed to
live up to the post-employment promises he made in the Retention Bonus
Agreement, he has not repaid Schlumberger the $100,000 that he received. (2 R.R.
58-59.)
In the Retention Bonus Agreement, Myers also agreed that the
Judicial District Courts of Fort Bend County had “exclusive jurisdiction” to settle
any disputes relating to the Retention Bonus Agreement. (5 R.R. Ex. 3 ¶ 11.)
Myers irrevocably consented to the jurisdiction and venue of the Judicial District
Courts of Fort Bend County for any disputes arising out of or relating to the
5
Retention Bonus Agreement. (Id.) Finally, like the ICN Agreements, the
Retention Bonus Agreement contains a Texas choice of law provision. (Id.)
C. Parker, and later Myers, ran the business that Schlumberger purchased
Parker and Myers became Schlumberger employees after the sale of
Parker Energy. (2 R.R. 15-16.) Parker remained in charge of the wireline, slick
line, and braided line business that Schlumberger purchased. (Id.) Myers
managed the business’s operations and supervised the field crews. (2 R.R. 16.)
During the time when Parker was in charge of the business, Parker and Myers
managed wireline, slick line, and braided line work in Texas, Oklahoma,
Louisiana, Arkansas, and Pennsylvania. (3 R.R. 25, 52-53.)
Parker retired from Schlumberger in October 2013, though he
continued to come into the office periodically. (2 R.R. 16, 23-24.) After Parker’s
retirement, Myers became the “[n]umber one person in charge.” (2 R.R. 15-16.)
Myers managed wireline, slick line, and braided line work performed in Texas,
Oklahoma, Louisiana, Arkansas, Pennsylvania, Ohio, West Virginia, and New
York. (2 R.R. 49, 51; 5 R.R. Ex. 74.)
D. Parker formed a wireline, slick line, and braided line business in
competition with Schlumberger
Unbeknownst to Schlumberger at the time, Parker formed
Professional Wireline, LLC (“PWL”) after his retirement. (2 R.R. 60; 3 R.R. 32.)
6
PWL is a wireline, slick line, and braided line company. (2 R.R. 46.) There is no
question that Schlumberger and PWL are competitors. (2 R.R. 58; 3 R.R. 32.)
Parker ordered six wireline trucks for PWL in December 2013 or
January 2014 at a cost of over $2 million. (3 R.R. 46.) At his deposition, Parker
refused to answer whether he also ordered several hundred thousand dollars of
tools in April 2014, though he admitted sending the vendor an email titled “Top
Secret” during that time because he did not want Schlumberger to know that he
was building tools for PWL. (3 R.R. 46-47.) Parker also purchased eight or nine
pick-up trucks for PWL at the end of August 2014 or first of September 2014. (3
R.R. 48.) Parker admitted that he purchased this number of trucks because he
knew at the time that Schlumberger employees were joining PWL. (3 R.R. 49.)
Myers was involved in PWL’s business activities while he was still
working for Schlumberger. Prior to Myers’ resignation, he worked with Parker to
procure and test equipment and tools, and helped put Master Service Agreements
in place with customers. (3 R.R. 35, 41, 103.) Furthermore, as early as April
2014, Myers ordered expensive tools for PWL on Schlumberger’s dime. (3 R.R.
106-09.) Myers ordered equipment for a new truck in April 2014, even though
Schlumberger did not put any new trucks into service in April 2014 or during the
following months, and had no use for the equipment that Myers ordered. (3 R.R.
7
108-09, 112.) Moreover, Schlumberger has been unable to locate the equipment
Myers ordered. (3 R.R. 106-09.)
E. Myers “retired” on September 16, 2014
Myers resigned from Schlumberger at about 6:00 p.m. September 16,
2014. (3 R.R. 60; 5 R.R. Ex. 17.) Myers told Schlumberger that he was “retiring”
despite being only about forty-five years old. (3 R.R. 90; 5 R.R. Ex. 17.) Myers
claims that he had “all intentions of retiring” when he sent his resignation email,
yet the morning after his “retirement” he officially started working for PWL and
soliciting Schlumberger’s customers to move their work to PWL. (2 R.R. 34; 3
R.R. 58, 67-68.)
F. Parker and Myers solicited, recruited, and hired Schlumberger employees
Only thirty minutes after his resignation, Myers held a “party” at his
home. (3 R.R. 59-60.) The only attendees at this “party” were four Schlumberger
employees who had reported to Myers, and their wives. (3 R.R. 61.) Myers told
the Schlumberger employees he was going to work PWL (despite having “all
intentions of retiring” just thirty minutes earlier) and instructed them to visit with
Parker about a job at PWL. (3 R.R. 60-62.)
One of the dinner attendees, Daniel Harrison, a Schlumberger field
specialist, gave Schlumberger notice of his resignation about six hours later, at
3:50 a.m. on September 17, 2014. (2 R.R. 36-37.) Eight more Schlumberger
8
employees who had reported to Myers resigned throughout that same day, and
another employee resigned on September 18, 2014. (3 R.R. 84; 5 R.R. Ex. 9.) All
of the employees who resigned immediately joined PWL without any notice to
Schlumberger, which left Schlumberger without the personnel to cover jobs. (2
R.R. 37; 3 R.R. 99.) Moreover, Parker and Myers hired these employees despite
knowing that each employee had an ICN Agreement that prevented him from
working for PWL for a year after his resignation from Schlumberger. (3 R.R. 40,
71.) In total, in just twenty-four hours after Myers’ resignation, PWL poached
about half of the workforce that Schlumberger had entrusted to Parker and Myers
before their resignations. (2 R.R. 37; 5 R.R. Ex. 9.)2
G. Parker and Myers solicited Schlumberger customers
The morning after Myers’ resignation, he began soliciting the same
customers that he dealt with at Schlumberger. (2 R.R. 56; 3 R.R. 66-70.) Myers
and Harrison met with BP the morning of September 17, 2014. (3 R.R. 87-88.)
BP requires at least one day’s advanced notice of appointments, which indicates
that Myers scheduled the appointment while still employed by Schlumberger and
before he gave notice of his resignation. (3 R.R. 88-90.) Myers also solicited Unit
Petroleum, Jones Energy, Linn Energy, LTO, Chesapeake, and Chevron on
2
Schlumberger’s GPS records also showed that some of the Schlumberger employees who
joined PWL had visited PWL’s office the week before Myers’ resignation. (2 R.R. 52; 3 R.R.
96.)
9
September 17, 2014. (3 R.R. 90.) Parker solicited Linn Energy, Unit Petroleum,
and XTO, all prior to September 23, 2014. (3 R.R. 32-33.)
Just seven days after Myers’ resignation, PWL was already signing up
to do business with XTO, Linn Energy, and Unit Petroleum. (3 R.R. 33.) Within
ten days of Myers’ resignation, PWL performed a job for XTO. (3 R.R. 36.) Prior
to the District Court’s entry of the TRO (still just a few weeks after Myers’
resignation), PWL had already performed jobs for XTO, Linn Energy, and Unit
Petroleum—all Schlumberger customers with whom Parker and Myers dealt
during their employment with Schlumberger. (3 R.R. 66, 115; 5 R.R. Ex. 13.)
H. Parker and Myers admit they breached their restrictive covenant
agreements
There is absolutely no doubt that Parker and Myers breached the
restrictive covenants in the ICN Agreements and Myers’ Retention Bonus
Agreement. Parker admitted that he breached his ICN Agreement by operating a
competing wireline, slick line, and braided line business, and by hiring
Schlumberger employees. (3 R.R. 32, 41-43.) Myers admitted that he violated his
agreements by working for PWL immediately after his “retirement.” (3 R.R. 65-
66.) The evidence—which Myers did not refute at the temporary injunction
hearing—also clearly demonstrated that Myers breached the customer and
employee non-solicitation provisions in the ICN Agreement and Retention Bonus
Agreement. (3 R.R. 59-63, 66-70, 87-90.)
10
Several additional facts from the temporary injunction hearing favor
the District Court’s balance of equities in favor of Schlumberger:
 The District Court could have easily concluded that Parker and Myers
lacked any credibility. They did not appear to testify at the temporary
injunction hearing and their deposition testimony, which was offered into
evidence, was replete with evasive “I don’t know” and “I don’t
remember” answers to simple questions. For example, when Myers was
questioned about numerous text messages between Myers and Parker
about PWL before Myers’ resignation (texts that Appellants produced in
expedited discovery), Myers answered all questions about the texts with
“I do not know” or “I do not remember.” (3 R.R. 76-77.)
 The evidence at the temporary injunction hearing indicated that Myers
diverted business to PWL prior to his resignation. (3 R.R. 101-102.)
 Just hours before his resignation, Myers lied to his supervisor and said he
was not leaving Schlumberger. (3 R.R. 94.)
 The District Court could have concluded that Parker named his start-up
company to trick customers into thinking it was part of Schlumberger.
The business Parker ran for Schlumberger used the name Production
Wireline, which was abbreviated as PWL. (2 R.R. 60; 3 R.R. 75.)
Parker named his new company Professional Wireline, which also uses
the abbreviation PWL. (2 R.R. 60; 3 R.R. 75.)
 Evidence at the temporary injunction hearing indicated that Parker
continued to operate PWL in violation of the District Court’s TRO. (4
R.R. 104.)
 Following the entry of the TRO, Myers gave Parker the phone he used at
Schlumberger, which Parker gave to another PWL employee, so PWL
could get business if a Schlumberger customer called Myers. (3 R.R. 39,
59.)
 Operators will not hire a service company to do work unless the company
has a satisfactory Health, Safety, and Environmental (“HSE”) manual. (3
R.R. 129.) PWL’s HSE manual is virtually identical to the HSE manual
purchased by Schlumberger when it bought Parker’s business. (3 R.R.
125.) By copying Schlumberger’s HSE manual instead of creating its
11
own from scratch, PWL accelerated the time that is required for a start-up
to be in a position to obtain work from customers. (3 R.R. 129.)
 PWL’s price list is very similar to Schlumberger’s price list, but Myers
could not explain the similarities even though he was the one responsible
for creating PWL’s price list. (3 R.R. 73-74.)
12
IV. PROCEDURAL BACKGROUND
The District Court entered a TRO against Appellants on October 9,
2014. (C.R. 46-53.) After agreed extensions of the TRO, the District Court held a
temporary injunction hearing on December 5 and 8, 2014. (C.R. 296.) Matt
Billingham, Schlumberger’s North American Production Manager, and Mike
Yarborough, Schlumberger’s U.S. Slickline Manager, testified on behalf of
Schlumberger. (2 R.R. 13; 3 R.R. 80-81.) Parker and Myers did not appear for the
temporary injunction to provide any testimony, and Schlumberger submitted
excerpts of their deposition testimony into evidence.
After a two-day hearing, the District Court granted Schlumberger’s
request for a temporary injunction. (C.R. 296.-305.) The temporary injunction
contains restrictions on Parker and Myers’ solicitation of Schlumberger employees
and use of Schlumberger confidential information, which Appellants have not
appealed. (C.R. 304-05.) The temporary injunction also provides:
 Enjoined Parties shall not directly or indirectly work for, or assist
(whether as an owner, employee, consultant, contractor or otherwise) any
business or commercial operations of wireline, slick line and braided line
operations in the counties set forth in Plaintiff’s Exhibit 74 which is
attached.
 Enjoined Parties shall not solicit, contact, or accept wireline, slick line or
braided line work and/or services, from the Established Customers of
Schlumberger in the states of Oklahoma, Texas, Arkansas, Kansas,
Pennsylvania, and Louisiana.
13
 Enjoined Parties shall not provide, or supervise, advise, manage, or serve
as a consultant for businesses who are performing, wireline, slick line or
braided line work for the Established Customers of Schlumberger in the
states of Oklahoma, Texas, Arkansas, Kansas, Pennsylvania and
Louisiana.
(C.R. 305.) These are the only portions of the temporary injunction that
Appellants have appealed. Appellants also challenge the District Court’s denial of
their motion to compel arbitration, and denial of their motion for reconsideration of
that motion. (C.R. 284-85.)
14
V. SUMMARY OF ARGUMENT
The District Court correctly determined that Schlumberger satisfied
the prerequisites for a temporary injunction. There was no dispute at the
temporary injunction hearing that Parker and Myers breached their restrictive
covenant agreements (and Appellants do not argue otherwise on appeal).
Moreover, the District Court’s temporary injunction tailored restrictions on
Appellants’ competitive activities that are reasonable based on the evidence
presented at the temporary injunction hearing. Finally, Schlumberger easily
established the required showing of irreparable harm, as Texas law considers a
former employee’s breach of a restrictive covenant agreement to be the epitome of
irreparable injury.
Nor did the District Court abuse its discretion when applying the
Texas choice of law provisions in the ICN Agreements and Retention Bonus
Agreement at the temporary injunction stage. Oklahoma enforces non-compete
agreements that are formed in connection with the sale of a business. The evidence
at the temporary injunction hearing established that the ICN Agreements and
Retention Bonus Agreement were formed in connection with the sale of Parker
Energy. Because the public policy of Oklahoma authorizes non-compete
agreements in this context, the application of Texas law to the ICN Agreements
and Retention Bonus Agreement is not contrary to a fundamental policy of
15
Oklahoma. Additionally, independent of the fact that the application of Texas law
was not contrary to a fundamental policy of Oklahoma, the District Court correctly
applied Texas law because the evidence at the temporary injunction hearing was
sufficient to conclude that Oklahoma did not have a more significant relationship
to the parties and transaction, and that Oklahoma did not have a materially greater
interest in the outcome of the dispute.
Appellants also challenge the District Court’s order denying their
motion to compel arbitration and their motion for reconsideration of that order.
Appellants did not attach the arbitration agreement to their motion to compel
arbitration or admit it into evidence during the hearing on the motion. A trial court
cannot abuse its discretion denying a motion to compel arbitration when the
movant has not presented the court with the entire arbitration agreement.
Appellants’ motion for reconsideration appears to be an attempt to cure their
failure to present the arbitration agreement to the District Court, but this Court
lacks jurisdiction to review an interlocutory order denying a motion for
reconsideration.
16
VI. ARGUMENT
A. The District Court properly entered a temporary injunction against
Appellees
1. Standard of review
The decision to grant a temporary injunction lies within the sound
discretion of the district court. EMS USA, Inc. v. Shary, 309 S.W.3d 653, 657
(Tex. App.—Houston [14th Dist.] 2010, no pet.). The appellate court draws all
legitimate inferences from the evidence in the light most favorable to the trial
court’s decision. Id. As long as some evidence to support the district court’s
decision, the district court has not abused its discretion. Id. Moreover, in the
absence of findings of fact or conclusions of law, the appellate court upholds the
decision to grant a temporary injunction on any legal theory supported by the
record. Id.
In reviewing the District Court’s temporary injunction, this Court does
not address the ultimate question of whether Parker and Myers’ restrictive
covenant agreements are enforceable. Id. at 658. Instead, the issue is whether the
District Court erred in concluding that Schlumberger established (1) a cause of
action against Appellants, (2) a probable right to relief, and (3) a probable,
imminent, and irreparable injury in the interim. Butnuru v. Ford Motor Co., 8
S.W.3d 198, 204 (Tex. 2002). As explained below, the District Court’s finding
that Schlumberger satisfied these three elements is fully supported by the record.
17
A restrictive covenant agreement is enforceable if it (1) is “ancillary
to or part of an otherwise enforceable agreement,” and (2) contains reasonable
limitations as to time, geographical area, and scope of activity. Tex. Bus. &
Comm. Code § 15.50(a). If a restrictive covenant satisfies the first prong of
Section 15.50(a), but contains overbroad limitations as to time, geographical area,
or scope of activity, the court must reform the limitations and enforce the
restrictive covenant as reformed. Id. § 15.51(c).
Appellants do not dispute that the ICN Agreements and Myers’
Retention Bonus Agreement meet the first prong of Section 15.50(a). Nor do
Appellants dispute that they breached the ICN Agreements and Retention Bonus
Agreement. Accordingly, Schlumberger will focus on the arguments raised by
Appellants related to the second prong of Section 15.50(a).
2. The temporary injunction does not contain an “industry wide” exclusion
The District Court did not abuse its discretion in crafting the
temporary injunction’s limitations regarding scope of activity. The temporary
injunction restricts Parker and Myers from working for “wireline, slick line, or
braided line” operations. Appellants claim that this amounts to an “industry-wide”
exclusion. They fail, however, to point to any evidence in the record
demonstrating how the temporary injunction prevents them from earning a living
in another segment of the oilfield services industry, in the oil and gas industry in
18
general, or in a different industry altogether. The Fourteenth Court of Appeals has
rejected an argument similar to Appellants’ and reasoned that an oil and gas
industry employee was not faced with an “industry wide” exclusion where he was
only restricted from working in a particular segment of the oil and gas industry.
See Curtis v. Ziff Energy Group, Ltd., 12 S.W.3d 114, 119 (Tex. App.—Houston
[14th Dist.] 1999, no pet.) (agreement that restricted employee from working for
“oil and gas consulting firms” contained reasonable limitation as to scope of
activity). Similarly, here, because the temporary injunction is limited to a segment
of the oil and gas industry, it does not amount to an industry-wide restriction.
Moreover, Appellants fail to inform this Court of undisputed evidence
proving that the restrictions contained in the temporary injunction do not prevent—
and are not preventing—Appellants from making a living. Witnesses testified at
the temporary injunction hearing that Parker owns and operates a composite coiled
tubing business, that Parker’s composite coiled tubing business does not compete
with Schlumberger, and that Schlumberger was not seeking to restrict Parker or
Myers from working in composite coiled tubing. (2 R.R. 48-49.) Thus, not only
could Parker and Myers work in composite coiled tubing or a variety of other jobs
in the oilfield services industry under the terms of the temporary injunction, but
Parker (and presumably Myers) already are working in the composite coiled tubing
19
business. The temporary injunction does not contain an “industry-wide” exclusion
because it is limited to the wireline, slick line, and braided line business.
3. The temporary injunction only restricts Appellants from working in
wireline, slick line, and braided line operations
Appellants also advance a hypothetical argument that the temporary
injunction would restrict them from working as a janitor for a wireline, slick line,
and braided line business. Appellants, however, offered no evidence at the
temporary injunction hearing that wireline, slick line, and braided line companies
employ janitors or anyone else outside of an operations role. In short, the record
does not support Appellants’ academic theory.
Moreover, even if wireline, slick line, and braided line companies
employed janitors, the terms of the temporary injunction would not prevent
Appellants from working as janitors. The temporary injunction only restricts
Appellants from working in “wireline, slick line, or braided line operations.”
Thus, the temporary injunction prevents Appellants from working in operations
roles like they have for PWL, but not hypothetical janitor jobs that are not part of a
company’s wireline, slick line, or braided line operations.
4. The temporary injunction contains reasonable geographic limitations
As a general rule, a geographic restriction is reasonable if it is tailored
to the territory in which the employee worked during his employment. Zep Mfg.
Co. v. Harthcock, 824 S.W.2d 654, 660 (Tex. App.—Dallas 1992, no writ). The
20
reasonableness of a geographical restriction ultimately depends on the nature and
extent of the employer’s business, and the degree of the employee’s involvement in
that business. Butler v. Arrow Mirror & Glass, Inc., 51 S.W.3d 787, 793 (Tex.
App.—Houston [1st Dist.] 2001, no pet.). When the employee is a manager, a
geographic limitation is reasonable if it covers the territories over which the
employee had responsibility. Id. at 794 (upholding a reformed non-compete
covenant that prohibited a former manager from working in those counties where
he previously oversaw operations); see also M-I LLC v. Lee, 733 F. Supp. 2d 759,
798 (S.D. Tex. 2010) (“Covenants with wide geographic areas have been upheld
frequently in Texas courts, especially when the area covered constitutes the
employee’s actual sales or work territory.”).
Here, the District Court’s temporary injunction restricts Parker and
Myers from competing in specific counties in Texas, Oklahoma, Louisiana,
Arkansas, Pennsylvania, Ohio, West Virginia, and New York. The evidence
demonstrated that the business that Parker and Myers managed had operations at
well sites in these counties, and that as the managers in charge of Schlumberger’s
wireline, slick line, and braided line business, they supervised the Schlumberger
crews at these well sites. (4 R.R. 72; 5 R.R. Ex. 74.) There was also additional
testimony, separate from Exhibit 74, that Parker and Myers had responsibilities
over operations in Texas, Oklahoma, Louisiana, Arkansas, and Pennsylvania. (2
21
R.R. 49, 51; 3 R.R. 25, 52-53.) As the managers in charge of the business, Parker
and Myers were “the face of Schlumberger” to the customers in the locations
where their crews worked. (2 R.R. 25.) Appellants, who did not appear to testify
at the temporary injunction hearing, did not rebut the evidence regarding the
geographical scope of their work and responsibilities. Because the temporary
injunction’s geographic limitation was tailored to the evidence describing the
geographical scope of Parker and Myers’ responsibilities, the District Court did not
abuse its discretion.3
Finally, Appellants failed to specify for the District Court any grounds
for why the geographical scope of the temporary injunction was overbroad and
have not preserved the argument on appeal. Tex. R. App. P. 33.1(a).
5. The temporary injunction contains reasonable customer restrictions
The temporary injunction enjoins Parker and Myers from soliciting or
accepting wireline, slick line or braided line work and/or services from specific
Schlumberger customers in six states. The list of restricted customers is based on
Mike Yarborough’s testimony and Exhibit 13. Yarborough testified that, as Parker
and Myers’ direct supervisor, he was familiar with the customer base for the
3
To the extent that Appellants challenge the temporary injunction’s geographical restrictions
regarding solicitation of specific customers, such a challenge is without merit. A customer
restriction is a reasonable (and enforceable) alternative to a geographical limitation, meaning that
no geographical limitation is required for a customer non-solicitation restriction. Gallagher
Healthcare Ins. Servs. v. Vogelsang, 312 S.W.3d 640, 654 (Tex. App.—Houston [1st Dist.]
2009, pet. denied)
22
business that Parker and Myers ran, and that Exhibit 13 was a list he prepared
identifying that customer base. (3 R.R. 114.)
Contrary to Appellants’ position, Exhibit 13 is not hearsay.
“‘Hearsay’ is a statement, other than one made by the declarant while testifying
at the trial or hearing, offered in evidence to prove the truth of the matter
asserted.” Tex. R. Evid. 801(d) (emphasis added). Yarborough, based on his
personal knowledge, testified at the hearing that customer base of the business
Parker and Myers ran were those customers listed in Exhibit 13. Thus, the
“statement” at issue—the identity of the customers of the business that Parker and
Myers ran—was “made by the declarant while testifying at trial” and is not
hearsay. Tex. R. Evid. 801(d).
Appellants also claim that the District Court erred because
Schlumberger did not offer evidence that Parker and Myers had individual dealings
with each of the customers listed in Exhibit 13. At the temporary injunction stage,
however, Schlumberger’s only needed to establish a probable right to relief on the
merits. The evidence showed that (1) Parker and Myers managed the business that
provided wireline, slick line, and braided line services to customers, (2) as the
managers in charge of the business, Parker and Myers were “the face of
Schlumberger” to the customers, and (3) that they were responsible for maintaining
Schlumberger’s relationships with its customers and “pivotal” in protecting
23
Schlumberger’s customer goodwill. (2 R.R. 15-16, 19, 25.) Appellants offered no
evidence indicating that they did not have contact with the customers of the
business they ran for Schlumberger. Viewing the evidence in a light most
favorable to the District Court’s decision, Schlumberger established a probable
right to restrain Parker and Myers from soliciting the customers of the business
unit they ran for Schlumberger. See Vaughn v. Intrepid Directional Drilling
Specialists, Ltd., 288 S.W.3d 931, 937-38 (Tex. App.—Eastland 2009, no pet.)
(affirming temporary injunction against oilfield service salesman that restricted
him from soliciting all of his former employer’s customers in five states).
Finally, Appellants’ complaints about the customer restrictions are
pointless given that Appellants are subject to broader non-compete restrictions.
Parker and Myers have non-compete agreements with Schlumberger that prohibit
them from competing with Schlumberger in the wireline, slick line, and braided
line segment. As part of enforcing the non-compete restrictions, the District Court
could have taken a “belts and suspenders” approach and restrained Appellants from
soliciting any and all customers for wireline, slick line, and braided line work
within the specified geographical area, regardless of whether Appellants had
dealings with those customers. In other words, if Parker and Myers are barred
from working for a competitor in the wireline, slick line, and braided line segment,
they are necessarily prohibited from soliciting or accepting wireline, slick line, and
24
braided line work from customers. Accordingly, Appellants’ complaints about the
customer restrictions are futile.
6. The temporary injunction contains reasonable time limitations
The ICN Agreements and Myers’ Retention Bonus Agreement contain
one-year restrictive covenants. (5 R.R. Exs. 1-3.) Texas courts regularly hold that
a one-year time limitation is reasonable and Appellants do not contend that the
one-year time limitation is unreasonable. Instead, Appellants complain that the
temporary injunction enforces the restrictive covenants until the March 17, 2015
trial setting.
Myers resigned on September 16, 2014 and, accordingly, he is subject
to the restrictive covenants in the ICN Agreement and Retention Bonus Agreement
until September 16, 2015. (5 R.R. Exs. 2, 3, 17.) The temporary injunction order,
on its face, is not “open-ended” as Appellants contend, but restricts Myers’
competitive activities until the March 17, 2015 trial setting, which is well before
the one-year periods in his agreements expire. Additionally, it was Myers—not the
District Court—who sought to have the trial setting delayed by asking this Court to
stay the underlying proceeding and have the trial setting continued. Finally, Myers
made no complaint to the District Judge about the temporal restriction based on the
trial date as opposed to another date (or even generally about the reasonableness of
the one-year limitation in his agreements), and therefore he may not raise this
25
complaint on appeal. Tex. R. App. P. 33(a). Because the temporary injunction
order does not exceed the reasonable one-year limitation in Myers’ restrictive
covenants, the District Court did not abuse its discretion.
Parker resigned in October 2013 and his ICN Agreement requires an
extension beyond the one-year restriction to compensate for any period in which he
was in breach of the agreement. (2 R.R. 16; 5 R.R. Ex. 1 ¶ 7.) The record is
replete with evidence that Parker owned and worked for PWL beginning as early
as December 2013, which would extend Parker’s ICN Agreement for ten months.
(3 R.R. 35, 41, 46-49, 103, 106-09.) Moreover, given Parker’s $2 million
expenditure in December 2013 or January 2014, and giving deference to the
District Court’s evaluation of the witnesses’ credibility (or lack thereof), there is
sufficient evidence to conclude that Parker solicited Myers in violation of the ICN
Agreement before he invested $2 million in the start-up company. (3 R.R. 46.)
The evidence demonstrating Myers’ involvement with PWL business activities
while still on Schlumberger’s payroll, as early as April 2014, only bolsters the
inference that Parker solicited Myers early on. (3 R.R. 35, 41, 103, 106-09, 112.)
Parker relies on Abetter Trucking Co. v. Arizpe for the proposition that
he was permitted to “prepare to compete” during the one-year period of the ICN
Agreement. The employee in Abetter Trucking, however, did not have a non-
compete agreement; instead, the opinion addressed whether the employee violated
26
his common law fiduciary duty by preparing to compete with his employer during
the employment relationship. 113 S.W.3d 503, 510 (Tex. App.—Houston [1st
Dist.] 2003, no pet.). The “preparing to compete” common law principles upon
which Parker relies do not apply when the employee and his employer have
entered a restrictive covenant agreement. Ameripath, Inc. v. Hebert, 447 S.W.3d
319, 341 n.22 (Tex. App.—Dallas 2014, pet. filed). Indeed, Abetter Trucking
expressly stated that an employer who wished to restrict an employee’s
competitive activities beyond what the common law prohibited “may seek to
accomplish that goal through a non-competition agreement.” 113 S.W.3d at 510.
By signing the ICN Agreement, Parker agreed that he would not
“directly or indirectly work for or assist” a competing wireline, slick line, or
braided line business. The evidence established that PWL is a competitor of
Schlumberger’s in the wireline, slick line, and braided line segment, and that
Parker worked for PWL as early as December 2013. (3 R.R. 32, 46.) Viewing the
facts in a light most favorable to the District Court’s decision, Schlumberger
established a probable right to relief to have Parker’s ICN Agreement extended
until the March 17, 2015 trial setting in the temporary injunction order.
Schlumberger met its burden to establish a probable right to relief on
the merits, and the District Court tailored the temporary injunction to contain
27
limitations as to time, geographic scope, and scope of activity that are both
reasonable and supported by the record.
7. Schlumberger offered evidence of irreparable harm
Appellants also claim there is no evidence that Schlumberger will
suffer irreparable harm in the absence of the temporary injunction. Appellants,
however, did not raise the alleged absence of irreparable harm evidence to the
District Court. Accordingly, this complaint is waived. Tex. R. App. P. 33.1(a).
Even if Appellants had not waived this complaint, “[i]n Texas, injury
resulting from the breach of non-compete covenants is the epitome of irreparable
injury.” Am. Express Fin. Advisors v. Scott, 955 F. Supp. 688, 693 (N.D. Tex.
1996). An employee’s breach of a restrictive covenant agreement is prima facie
evidence of an irreparable injury. Wright v. Sport Supply Group, Inc., 137 S.W.3d
289, 294 (Tex. App.—Beaumont 2004, no pet.); Unitel Corp. v. Decker, 731
S.W.2d 636, 641 (Tex. App.—Houston [14th Dist.] 1987, no writ). The evidence
at the temporary injunction hearing demonstrated that Parker and Myers breached
their restrictive covenants (which Appellants do not dispute on appeal) and
therefore Schlumberger established a presumption of irreparable harm. Wright v.
Sport Supply Group, Inc., 137 S.W.3d at 294.
Additionally, even absent the presumption of irreparable harm,
Schlumberger offered evidence upon which the District Court could have
28
concluded that Schlumberger established irreparable harm. As a result of Parker
and Myers’ breaches, Schlumberger lost business to PWL and faced the possible
loss of customers. (2 R.R. 56; 4 R.R. 96.) At the temporary injunction hearing,
Schlumberger witnesses expressed uncertainty about whether additional customers
would move their business to PWL absent a temporary injunction and whether
Schlumberger would be able to repair the damage already done to its customer
relationships. (4 R.R. 96) This evidence is sufficient to demonstrate irreparable
harm. See Transperfect Translations, Inc. v. Leslie, 594 F. Supp. 2d 742, 757
(S.D. Tex. 2009) (holding that the “possible loss customers is sufficient to establish
irreparable harm.”).
Moreover, Parker and Myers’ solicitation of Schlumberger employees
decimated the business that Schlumberger purchased from Parker and caused
irreparable harm. (3 R.R. 81.) In fact, Schlumberger had serious concerns that it
would not be able to keep the business running. (Id.) Had Parker and Myers’
recruitment efforts in violation of their restrictive covenant agreements continued,
Schlumberger very likely would have been forced to close the business. (3 R.R.
86.) Additionally, Parker and Myers poached highly trained senior employees with
about 100 years of combined service and it will take an estimated three years to
rebuild the business to the level it was before Parker and Myers’ recruited away
29
Schlumberger’s workforce. (4 R.R. 75.) This is clear evidence of irreparable
harm.
Appellants have waived any complaint about irreparable harm.
Alternatively, viewing the evidence in a light most favorable to the District Court’s
order, Schlumberger demonstrated that it would suffer irreparable harm unless the
District Court maintained the status quo until a trial on the merits.
B. The District Court properly applied Texas law
1. Standard of review
Texas follows Section 187(2) of the Restatement (Second) of Conflict
of Laws to resolve choice of law questions. DeSantis v. Wackenhut Corp., 793
S.W.2d 670, 678 (Tex. 1990). Parker and Myers agreed to Texas choice of law
provisions (and promised not to contest the provisions in any future legal
proceedings). (5 R.R. Ex. 1 ¶ 17; Ex. 2 ¶ 17; Ex. 3 ¶ 11.) Under Section 187(2),
the parties’ Texas choice of law provision controls unless:
 Oklahoma has a more significant relationship than Texas to the
transaction and the parties, and
 Oklahoma has a materially greater interest in the determination of the
issue, and
 Texas law would be contrary to a fundamental policy of Oklahoma.
Restatement (Second) of Conflict of Laws § 187(2).
30
2. The application of Texas law is not contrary to a fundamental policy of
Oklahoma
While it is unclear what element or elements of Section 187(2) the
District Court found insufficient for Appellants to overcome the Texas choice of
law provision at the temporary injunction stage, there is evidence to support the
determination that the application of Texas law would not be contrary to a
fundamental public policy of Oklahoma.
The application of Texas law is not contrary to a fundamental policy
of Oklahoma because the laws governing the enforceability of the agreements at
issue are not materially different under Texas or Oklahoma law. Section 218 of the
Oklahoma Contracts Code allows non-compete agreements in the context of a sale
of a business where, as here, the buyer purchases the goodwill of a business. Okla.
Stat. tit. 15 § 218; Eakle v. Grinnell Corp., 272 F. Supp. 2d 1304, 1310 (E.D. Okla.
2003). “[T]he purpose of this statute is to allow the parties to the transfer of a
going business to mutually agree, as part of the value of the business transferred,
that the transferee will be protected from his transferor who might use his
previously acquired experience, contacts and expertise to promote his own interests
in the same field of business in competition with his transferee.” Farren v.
Autoviable Serv., Inc., 508 P.2d 646, 648 (Okla. 1973).
To fall under Section 218 of the Oklahoma Contracts Code, the non-
compete covenant does not have to be contained in the actual purchase agreement,
31
but can be made contemporaneous to the purchase agreement. Eakle, 272 F. Supp.
2d at 1311; Oliver v. Omnicare, Inc., 103 P.3d 626, 629 (Okla. Ct. App. 2004).
Moreover, the buyer can bind not only the seller to a non-compete agreement, but
also key employees of the seller who ran the business and developed the goodwill
that the buyer purchased. Oliver, 103 P.3d at 629-30.
There was evidence before the District Court to establish that Parker
and Myers’ restrictive covenants fell under Section 218 of the Oklahoma Contracts
Code. Parker sold his business in a transaction that attributed $15,000,000 of the
$17,000,000 purchase price to goodwill. (2 R.R. 15, 18, 26.) As part of the
transaction, Schlumberger required Parker to sign the ICN Agreement containing a
covenant not to compete. (2 R.R. 20.) Because the public policy of Oklahoma
authorizes non-compete agreements in the context of the sale of goodwill, the
application of Texas law to Parker’s ICN Agreement is not contrary to a
fundamental policy of Oklahoma. Eakle, 272 F. Supp. 2d at 1312 (application of
Delaware law to a non-compete agreement that was signed contemporaneous to the
sale of business was not contrary to Oklahoma fundamental policy because “the
public policy of Oklahoma authorizes non-compete agreements in the context of
the sale of goodwill.”).
With respect to Myers, he was required to sign the ICN Agreement
and Retention Bonus Agreement as part of the transaction involving the sale of
32
$15,000,000 in goodwill. (2 R.R. 19, 26.) Myers’ was instrumental in operating
Parker Energy and developing the goodwill that was sold to Schlumberger. (2
R.R. 19.) He was the key customer-relationship employee at Parker Energy, and at
the time of the transaction Schlumberger viewed him as the “number one person”
vital to maintaining continuity in customer relationships and keeping employee
morale high. (Id.) Schlumberger so highly appraised Myers’ contribution and
importance to Parker Energy that it paid him $100,000 to restrict his ability to take
the goodwill that Schlumberger purchased by going to work for a competitor. (2
R.R. 19, 28.) Because the public policy of Oklahoma authorizes non-compete
agreements with key employees in the context of the sale of goodwill, the
application of Texas law to Myers’ ICN Agreement and Retention Bonus
Agreement is not contrary to a fundamental policy of Oklahoma. Eakle, 272 F.
Supp. 2d at 1312.4
On appeal, Appellants have waived any argument that their
agreements are not covered by Section 218 of the Oklahoma Contracts Code. Prior
to the temporary injunction hearing, Schlumberger raised the critical impact of
Section 218 on the District Court’s choice of law analysis (see C.R. 207-08), but
Appellants provided the District Court no grounds for why Oklahoma would
4
Nor would the enforcement of employee or customer non-solicitation covenants be contrary to
Oklahoma public policy. Oklahoma does not consider employee or customer non-solicitation
agreements to be restraints on trade or against public policy. Okla. Stat. tit. 15 §§ 219A(A),
219B; Pre-Paid Legal Servs., Inc. v. Cahill, 924 F. Supp. 2d 1281, 1290 (E.D. Okla. 2013).
33
exclude Appellants’ agreements from Section 218. As a result, Appellants cannot
argue on appeal that their agreements fall outside the scope of Section 218. Tex.
R. App. P. 33.1(a).
Finally, contrary to Appellants’ position, Oklahoma law, like Texas
law, permits courts to modify the restrictions as to time, geographic scope, or
scope of activity to be restricted. Eakle, 272 F. Supp. 2d at 1311. The Oklahoma
Supreme Court specifically recognized that “[j]udicial modifications of contracts
falling within the goodwill exception [§ 218, discussed supra] has long been the
norm.” Bayly, Martin & Fay, Inc. v. Pickard, 780 P.2d 1168, 1173 n.11 (Okla.
1989). Thus, the procedure of contract reformation is not contrary to a
fundamental policy of Oklahoma because Oklahoma also allows this practice.
While Appellants do not point to any differences between Texas law
and Oklahoma law regarding whether a limitation as to time, scope of activity, or
geographical scope is reasonable, any variations that might exist are not a basis for
applying Oklahoma law. Eakle, 272 F. Supp. 2d at 1312. The Court in Eakle
addressed this very issue. The parties entered a non-compete agreement with a
Delaware choice of law provision contemporaneous to the sale of a business. Id. at
1306. The defendant argued that the application of Delaware law would be
contrary to Oklahoma public policy, citing differences between Delaware law and
34
Oklahoma law about what constituted a reasonable geographic limitation in a non-
compete agreement. Id. at 1312. The Court, however, disagreed:
The mere fact a chosen law differs from the forum’s law does not
make the application of the chosen law a violation of the forum’s
public policy. Rather, a broader concept of public policy is required.
Here, the public policy of Oklahoma authorizes non-compete
agreements in the context of the sale of goodwill. While it is true that
certain limitations have been enacted under section 218 to govern
these situations, the fact remains that Oklahoma nonetheless approves
of the concept of non-compete agreements when the sale of goodwill
is involved, albeit with certain geographic restrictions. The court
concludes such restrictions do not act as an impediment to its
application of Delaware law in connection with the [non-compete
agreement].
Id.
Here, the evidence before the District Court was sufficient to conclude
that the agreements at issue were made in connection with the sale of $15,000,000
in goodwill. Appellants did not appear at the temporary injunction hearing to rebut
this evidence, nor can they now claim on appeal that their agreements fall outside
of Section 218 of the Oklahoma Contracts Code. Because Oklahoma authorizes
non-compete agreements in this context, the District Court could have concluded
that applying the Texas choice of law provisions was not contrary to Oklahoma
fundamental policy.
3. Oklahoma does not have a more significant relationship than Texas
The District Court could have also concluded that Appellants did not
demonstrate that Oklahoma has a more significant relationship to the parties and
35
transaction. To determine whether Oklahoma has a more significant relationship,
several factors should be considered: (1) the place of contracting, (2) the place of
negotiation of the agreements, (3) the place of performance, (4) the location of the
subject matter of the contract, (5) the domicile, residence, nationality, place of
incorporation, and place of business of the parties, (6) the needs of the interstate
and international systems, (7) the relevant policies of the forum, (8) the relevant
policies of other interested states and their relative interests in the particular issue,
(9) the protection of justified expectations, (10) the basic policies underlying the
particular field of law, (11) certainty, predictability, and uniformity of result, and
(12) the ease in the determination and application of the law to be applied. Ennis,
Inc. v. Dunbrooke Apparel Corp., 427 S.W.3d 527, 530 (Tex. App.—Dallas 2014,
no pet.).
As for the place of contracting and negotiations, Appellants offered no
evidence that contracting or negotiations of the ICN Agreements and Retention
Bonus Agreement occurred in Oklahoma. The evidence did show that Parker
negotiated the Asset Purchase Agreement (“APA”) (which states that Parker and
Myers must sign the ICN Agreements and Retention Bonus Agreement) in
Oklahoma and that he signed the APA in Texas. (3 R.R. 54-55.) Accordingly, the
factors regarding the place of contracting and negotiations are split between Texas
and Oklahoma.
36
As for place of performance, and the location and subject matter of
the contracts, there are multiple states at issue. During their employment with
Schlumberger, Appellants had an office in Oklahoma and did more than half of
their work in Oklahoma, but they also worked in Texas, Arkansas, Louisiana, and
other states. (3 R.R. 25.) Appellants now work for PWL, an Arkansas company
doing business in Texas, Oklahoma, and Arkansas. (3 R.R. 53-54.)5 Thus, there
are several states where Appellants worked for Schlumberger, and three states
(Texas, Oklahoma, and Arkansas) where Appellants worked for both
Schlumberger and their new employer, PWL. This factor slightly favors
Oklahoma, but Texas is certainly in the mix.
As for domicile and residence, three states are at issue. Schlumberger
is domiciled in Texas. (C.R. 7.) Parker is a resident of Arkansas. (Id.) Myers is a
resident of Oklahoma. (Id.) This factor does not demonstrate that Oklahoma has a
more significant relationship to the parties or transaction.
The next six factors overwhelmingly favor Texas. The Texas
Supreme Court, in a very recent choice of law decision, emphasized that the policy
of Texas in the twenty-first century is to provide multistate and multinational
corporations like Schlumberger the ability “to maintain uniformity in its
employment contracts across all employees, whether the individual employees
5
Appellants’ brief (at page 29) claims that “Oklahoma is the only state where P.W.L. has performed any wireline
operations.” The record pages cited by Appellants do not support the statement and Schlumberger offered testimony
from Parker’s deposition where he admitted that PWL had already done work in Texas. (3. R.R. 53-54.)
37
reside in Texas or New York. This prevents the ‘disruption of orderly employer-
employee relations’ within those multistate companies and avoids disruption to
‘competition in the marketplace.’” Exxon Mobil Corp. v. Drennen, --- S.W.3d ----,
2014 Tex. Lexis 760, at *24 (Tex. Aug. 29, 2014). The Texas Supreme Court
continued:
The drafters of the Restatement explained the rationale for section 187
by stating that “[p]rime objectives of contract law are to protect the
justified expectations of the parties and to make it possible for them to
foretell with accuracy what will be their rights and liabilities.” In
multistate transactions, these prime objectives “may best be attained
. . . by letting the parties choose the law to govern the validity of the
contract.”
* * *
Uniformity is a frequent goal of contracting, as recognized in the
comments to the Restatement section 187, and parties should be able
to achieve that goal by choosing the applicable law.
Id. at *24-25 (quoting Restatement (Second) of Conflict of Laws § 187 cmt. e;
internal citations omitted).
Here, with respect to the remaining factors to be considered, the
application of Texas law facilitates “the needs of the interstate and international
systems” by providing uniformity and predictability for Schlumberger and its
multistate workforce. “[T]he relevant policies of the forum,” which the Texas
Supreme Court recently announced was allowing multistate corporations “to
maintain uniformity in its employment contracts across all employees,” also
38
strongly favors the application of Texas law. Exxon Mobil Corp. v. Drennen, ---
S.W.3d ----, 2014 Tex. Lexis 760, at *24. Finally, the application of Texas law
ensures “the protection of justified expectations” and provides “certainty,
predictability, and uniformity of result.”
All of these remaining factors point to Texas as having a more
significant relationship to the parties and transaction. Appellants did not make any
argument to the District Court regarding these remaining factors or how they
favored Oklahoma (see C.R. 186-192), and have waived any argument on these
factors on appeal. Tex. R. App. P. 33.1(a). Overall, considering the many relevant
factors, there is some evidence supporting the District Court’s decision that
Appellants did not prove that Oklahoma has a more significant relationship.
4. Oklahoma does not have a materially greater interest in the determination
of the issue
There was also evidence supporting the District Court’s conclusion
that Appellants did not prove that Oklahoma has a “materially greater interest” in
determining the enforceability of the ICN Agreements and Myers’ Retention
Bonus Agreement. As explained above, Oklahoma does not even have a “more
significant” relationship to the parties and the transaction. It follows then that
Oklahoma does not have a “materially greater interest” in the enforceability of the
agreements at issue.
39
Most significantly, Parker and Myers are doing work for PWL in
Texas (3 R.R. 53.), and Texas clearly has a significant interest in the enforceability
of restrictive covenant agreements between a Texas corporation and its former
employees who worked for the corporation in Texas and are now attempting to
compete with the corporation in Texas. Beyond the facts already discussed in the
preceding section, it is also worth noting that Parker and Myers had significant
contacts with Texas when forming PWL. PWL registered to do business in Texas
in July 2014. (5 R.R. Ex. 66.) Parker purchased equipment and insurance for
PWL in Texas. (3 R.R. 48, 56, 72.) Several of the customers at issue are Texas-
based companies and PWL agreed to Texas choice of law provisions in its
contracts with those customers. (4 R.R. 99-100.) Finally, as emphasized by the
Texas Supreme Court in Drennen, Texas has a substantial interest in providing
predictability, certainty, and uniformity for employment agreements between a
multistate employer headquartered in Texas and its employees.
It was proper for the District Court to conclude that Appellants’
choice of law argument failed at any of the three obstacles they faced under
Section 187(2) of the Restatement. Because Oklahoma law authorizes non-
compete agreements in the context of a sale of a business (and because Appellants
waived any argument that their agreements fell outside of Section 218 of the
Oklahoma Contracts Code), the application of Texas law is not contrary to an
40
Oklahoma fundamental policy. Additionally, given the number of connections
between Texas, the restrictive covenant agreements, and the parties, and viewing
the evidence in a light most favorable to the District Court’s decision, the District
Court could have concluded that Oklahoma does not have a more significant
relationship to the parties and transaction, or a materially greater interest in this
lawsuit. For any of these reasons, the District Court did not err when applying
Texas law at the temporary injunction stage.
C. This Court lacks jurisdiction to review the District Court’s denial of
Appellants’ motion for reconsideration
Appellants’ appeal of the District Court’s order denying their motion
for reconsideration should be dismissed for lack of jurisdiction. Texas courts
strictly construe statutes permitting interlocutory appeals because they are narrow
exceptions to the general rule that interlocutory orders are not immediately
appealable. CMH Homes v. Perez, 340 S.W.3d 444, 447-48 (Tex. 2011). Section
51.016 of the Texas Civil Practice and Remedies Code provides that, in a matter
subject to the Federal Arbitration Act (“FAA”), a party may take an interlocutory
appeal under the same circumstances that an appeal is permitted under federal law.
Tex. Civ. Prac. & Rem. Code § 51.016.6 Section 16 of the FAA permits
interlocutory appeals from orders denying motions to compel arbitration, but not
orders denying a motion for reconsideration. 9 U.S.C. § 16; see also Nazareth
6
The arbitration provision upon which Appellants rely refers to the FAA. (C.R. 219.)
41
Hall Nursing Ctr. v. Castro, 374 S.W.3d 590, 594 (Tex. App.—El Paso 2012, no
pet.) (“The relevant provisions of the FAA setting forth when an interlocutory
appeal is permitted refer only to orders denying an application to compel
arbitration and not to motion to reconsider.”). Because Texas courts strictly
construe statutes authorizing interlocutory appeals, and because Section 16 of the
FAA excludes orders denying a motion for reconsideration, “Texas courts have
found that an appeal from a trial court’s order denying a motion to reconsider is not
permitted under Section 51.016 of the Texas Civil Practice and Remedies Code
and Section 16 of the FAA.” Nazareth Hall, 374 S.W.3d at 593 (collecting cases);
cf. Digges v. Knowledge Alliance, Inc., 176 S.W.3d 463, 464 (Tex. App.—Houston
[1st Dist.] 2004, no pet.) (holding that motion to reconsider special appearance was
not independently appealable; statute only authorized appeal from order granting
or denying special appearance). Accordingly, this Court lacks jurisdiction to
review the District Court’s denial of Appellants’ motion for reconsideration.
D. The District Court properly denied Appellants’ motion to compel
arbitration
1. Standard of review
The District Court correctly concluded that Schlumberger has not
asserted any claims based on the APA in the underlying lawsuit and rejected
Appellants’ contention that the APA’s arbitration provision requires all of
Schlumberger’s claims to be sent to arbitration. An order denying a motion to
42
compel is reviewed for an abuse of discretion. Speedemissions, Inc. v. Bear Gate,
LP, 404 S.W.3d 34, 41 (Tex. App.—Houston [1st Dist.] 2013, no pet.). Appellate
courts defer to the trial court’s factual determinations if they are supported by the
record and review questions of law de novo. Id.
A party seeking to compel arbitration must first establish that valid
arbitration agreement exists. Osornia v. Amerimex Motor & Controls, Inc., 367
S.W.3d 707, 711 (Tex. App.—Houston [14th Dist.] 2012, no pet.). If a valid
arbitration agreement exists between the parties, a party seeking to compel
arbitration must then establish that the claims at issue are within the scope of the
arbitration agreement. Id. Although there is a presumption in favor of arbitration,
that presumption arises only after the party seeking to compel arbitration proves a
valid arbitration agreement exists. Speedemissions, Inc., 404 S.W.3d at 41.
2. Appellants did not present the entire APA to the District Court
The District Court’s decision to deny Appellants’ motion to compel
arbitration must be affirmed if there is any legal theory supporting it. Wetzel v.
Sullivan, King & Sabom, P.C., 745 S.W.2d 78, 81 (Tex. App.—Houston [1st Dist.]
1988, no writ). When Appellants moved to compel arbitration, they did not attach
the APA to their motion. (C.R. 160-184.) Their motion for reconsideration
appears to be an attempt to cure this defect. (4 R.R. 5-7; C.R. 277.) When the
District Court heard Appellants’ motion to compel arbitration, only the few pages
43
of the APA attached to Schlumberger’s response were before the District Court.
(See C.R. 218-220.)
Appellants’ failure to present the District Court with the entire APA is
fatal to their appeal. A district court does not abuse its discretion denying a motion
to compel arbitration when the entire agreement with the arbitration provision is
not before it. The Branch Law Firm, LLP v. Osborn, 447 S.W.3d 390, 396-98
(Tex. App.—Houston [14th Dist.] 2014, no pet. h.) (affirming denial of motion to
compel arbitration because entire agreement was not before trial court). Because
the District Court’s decision to deny Appellants’ motion to compel arbitration can
be upheld on the basis that Appellants did not attach the entire APA to their motion
to compel, the District Court’s order must be affirmed.
3. There is no arbitration agreement between Schlumberger and Myers
The District Court also properly refused to send Schlumberger’s
claims against Myers to arbitration because Myers is not a signatory to the APA.
As a general rule, a non-signatory to an arbitration agreement cannot compel a
signatory to arbitrate. VSR Fin. Servs., Inc. v. McLendon, 409 S.W.3d 817, 830
(Tex. App.—Dallas 2013, no pet.); see also In re Kellogg Brown & Root, Inc., 166
S.W.3d 732, 738 (Tex. 2005) (the law “does not require parties to arbitrate when
they have not agreed to do so”). Myers contends that, although he is not a
signatory to the APA, the doctrine of direct benefits estoppel allows him to compel
44
Schlumberger to arbitration under the APA. The District Court’s decision not to
apply direct benefits estoppel is reviewed under the abuse of discretion standard.
VSR Fin. Servs., Inc., 409 S.W.3d at 830; see also In re Weekley Homes, LP, 180
S.W.3d 127, 134-35 (Tex. 2005) (stating that the “equitable nature” of direct
benefits estoppel “may render firm standards inappropriate, requiring trial courts to
exercise some discretion based on the facts of each case.”).
Myers incorrectly contends that Texas recognizes two variations of
direct benefits estoppel that allow a non-signatory to compel a signatory to
arbitration. The first variation, according to Myers, applies when a signatory to an
arbitration agreement sues both a signatory and non-signatory based on
“substantially interdependent and concerted misconduct.” The Texas Supreme
Court, however, has expressly rejected this species of direct benefits estoppel. In
re Merrill Lynch Trust Co. FSB, 235 S.W.3d 185, 191 (Tex. 2007) (“we have
never compelled arbitration based solely on substantially interdependent and
concerted misconduct, and for several reasons we decline to do so here.”); The
Inland Sea, Inc. v. Castro, 420 S.W.3d 55, 59 (Tex. App.—El Paso 2012, pet.
denied) (recognizing that Merrill Lynch rejected “concerted misconduct” estoppel).
The second variation of direct benefits estoppel, although a valid
theory under Texas law, does not apply to Schlumberger’s claims against Myers.
Direct benefits estoppel enables a non-signatory to compel arbitration where his
45
“liability arises solely from the contract or must be determined by reference to it.”
Weekley Homes, 180 S.W.3d at 132; see also VSR Fin. Servs., Inc., 409 S.W.3d at
831. The rationale behind the doctrine is that a signatory claimant cannot “have it
both ways,” seeking to hold the non-signatory liable based on duties imposed by
the agreement with the arbitration provision, on the one hand, and denying the
arbitration provision’s applicability because the defendant is a non-signatory, on
the other hand. Id.
Direct benefits estoppel does not apply when the signatory’s claims
merely “relate to” the contract with the arbitration provision. Id. The doctrine is
also inapplicable when the benefit is indirect or when the claims are based on
duties arising outside of the contract with the arbitration provision. Id. Nor does
direct benefits estoppel apply “simply because the signatory’s claims against the
non-signatory ‘touch matters’ covered by the contract or ‘are dependent upon’ the
contract; instead, the signatory’s claims must rely on the terms of the contract.”
Skyleasing, LLC v. Tejas Acvo, Inc., 2006 Tex. App. Lexis 7098, at *15 (Tex.
App.—Houston [14th Dist.] Aug. 10, 2006, no pet.) (emphasis in original; quoting
Hill v. GE Power Sys., Inc., 282 F.3d 343, 348-49 (5th Cir. 2002)).
Schlumberger is not attempting to hold Myers liable based on duties
arising under the APA while at the same time seeking to avoid arbitration. Indeed,
Myers has not identified—to the District Court or this Court—what “direct
46
benefit” from the APA, if any, Schlumberger is seeking to enforce against him in
the lawsuit. At most, the APA contemplated that Myers would sign the ICN
Agreement and Retention Bonus Agreement. Schlumberger, however, is not
claiming that Myers failed to sign the agreements and has not sued him for
refusing to sign the agreements.
Schlumberger’s claims against Myers are independent of the APA:
the claims rely on the express terms of the ICN Agreement and Retention Bonus
Agreement, the common law duties Myers owed as an employee of Schlumberger,
and Myers’ common law duty not to tortiously interfere with Schlumberger’s
prospective business relations. Moreover, Schlumberger’s mere reference to the
APA in its petition is not a basis for applying direct benefits estoppel. VSR Fin.
Servs., Inc., 409 S.W.3d at 833 (rejecting direct benefits estoppel where signatory’s
claims against non-signatory referenced contract with arbitration provision, but
signatory did not seek to enforce obligations in the contract); Karlin v. DCP
Midstream, LP, 2013 Tex. App. Lexis 6966, at *8 (Tex. App.—Amarillo June 6,
2013, pet. denied) (although pleadings referenced contract with arbitration
provision, rejecting direct benefits estoppel because signatory did not seek to hold
non-signatory liable pursuant to the duties imposed by the contract). Because
Schlumberger does not seek to enforce the provisions of the APA against Myers,
the District Court correctly concluded that direct benefits estoppel is inapplicable.
47
Speedemissions, Inc., 404 S.W.3d at 48 (“In this suit, neither Speedemissions nor
Bear Gate is seeking a direct benefit granted by the Stock Purchase Agreement or
relying on a claim or defense under that agreement. Thus, the direct benefits
doctrine of estoppel does not apply here.”); Skyleasing, LLC v. Tejas Acvo, Inc.,
2006 Tex. App. 7098, at *16 (although the signatory’s claim would not exist “but
for” the contract with the arbitration provision, direct benefits estoppel did not
apply because the signatory was not required to prove any terms of the contract in
its claim against the non-signatory).7
4. The District Court was required to determine the arbitrability of
Schlumberger’s claims against Myers
Myers also contends that the arbitrator, rather than the district court,
was required to determine whether a valid arbitration agreement existed between
Schlumberger and Myers. But “[w]hether a non-signatory can compel arbitration
pursuant to an arbitration clause questions the existence of a valid arbitration
clause between specific parties and is therefore a gateway matter for the court to
decide.” In re Rubiola, 334 S.W.3d 220, 224 (Tex. 2011); see also Howsam v.
Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002). This is the rule, regardless of
7
In addition to the fact that no arbitration agreement exists between Schlumberger and Myers,
Schlumberger’s claims against Myers fall outside the scope of the APA’s arbitration provision.
For example, the Retention Bonus Agreement gives the Judicial District Courts of Fort Bend
County “exclusive jurisdiction” to settle any disputes relating to the Retention Bonus Agreement.
(5 R.R. Ex. 3 ¶ 11.) This express provision cannot be harmonized with the APA and
conclusively establishes that the parties did not intend to arbitrate claims relating to the Retention
Bonus Agreement.
48
whether the arbitration agreement at issue contains a reference to AAA Rules
allowing the arbitrator to resolve issues of arbitrability. Elgohary v. Herrera, 405
S.W.3d 785, 792 (Tex. App.—Houston [1st Dist.] 2013, no pet.); Roe v. Ladymon,
318 S.W.3d 502, 517 (Tex. App.—Dallas 2010, no pet.). Because Texas law
requires the district court—and not the arbitrator—to determine the gateway matter
of whether a non-signatory can compel a signatory to arbitration, the District Court
properly addressed the issue of arbitrability.
5. The District Court properly concluded that Schlumberger’s claims
against Parker are outside the scope of the APA
In addition to the fact that Parker did not submit the entire APA to the
District Court, Parker’s motion to compel arbitration was also properly denied
because Schlumberger’s claims against him are outside the scope of the APA.
Arbitration is a matter of contract between the parties, and a court cannot compel a
party to arbitrate a dispute beyond the scope of its arbitration agreement. AT&T
Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 649 (1986). When
evaluating whether claims fall within the scope of an arbitration provision, the
court’s “primary concern is to ascertain and give effect to the intent of the parties
as expressed in the contract.” In re Serv. Corp. Int’l, 355 S.W.3d 655, 661 (Tex.
2011).
The ICN Agreement is the only contract upon which Schlumberger
has sued Parker. The ICN Agreement does not contain an arbitration provision.
49
(C.R. 226.) In fact, the parties’ intent not to arbitrate claims under the ICN
Agreement is evident from the ICN Agreement. The parties agreed in the ICN
Agreement that all disputes relating to the ICN Agreement must be heard
exclusively in Fort Bend County. (Id.) In contrast, the APA contains a Houston
venue provision for both the arbitration and claims for injunctive relief that the
APA permits to be brought in court. (C.R. 219.)
In addition to the inconsistent provisions demonstrating that the
parties did not intend to arbitrate claims under the ICN Agreement, Schlumberger
has not asserted claims against Parker “arising under or in connection with” the
APA:
 Schlumberger does not allege that Parker breached the APA;
 Schlumberger’s contract claim hinges on the terms of the ICN Agreement
and not any term in the APA; and
 Neither Schlumberger nor Parker allege there is any dispute over the
interpretation of the APA.
Schlumberger’s breach of contract claim can stand alone from the APA and
therefore falls outside the scope of the APA’s arbitration provision.
With respect to Schlumberger’s tort claims, “[a] tort claim is
arbitrable if it is so interwoven with the contract [containing the arbitration
provision] that it could not stand alone, but it is not arbitrable if it is completely
independent of the contract and could be maintained without reference to a
50
contract.” XL Ins. Co. v. Hartford Accident and Indemnity Co., 918 S.W.2d 687,
698 (Tex. App.—Beaumont 1996, pet. dism’d w.o.j.). “In cases ordering
arbitration of tort claims, the claims either related directly to the agreement itself or
arose from the legal relationship governed by the agreement containing the
arbitration clause.” Loy v. Harter, 128 S.W.3d 397, 404-05 (Tex. App.—
Texarkana 2004, pet. denied).
Schlumberger’s tort claims against Parker do not meet this standard.
Schlumberger’s aiding and abetting claim (i.e., that he aided Myers’ breach of
fiduciary duties before Myers’ resignation) does not arise out of or depend on the
APA or even Parker’s former employment relationship with Schlumberger. The
claim exists against third-parties (such as competitors) and can be maintained
without reference to the APA. Mabrey v. Sand Stream, Inc., 124 S.W.3d 302, 317
(Tex. App.—Fort Worth 2003, no pet.) (affirming temporary injunction against
developer who aided employees in breaching their fiduciary duties to their
employer).
Schlumberger’s tortious interference claims are also independent of
the APA. Parker’s duties giving rise to Schlumberger’s tortious interference
claims are derived from the common law and do not arise under any obligation
Parker owed Schlumberger under the APA. Additionally, Schlumberger can
maintain these tort claims without any reference to the APA.
51
Parker’s reliance on what he mischaracterizes as a “pre-suit” demand
letter is unavailing. Parker misrepresents that the demand letter asserting claims
under the APA predated Schlumberger’s lawsuit asserting non-APA claims.
Schlumberger, however, filed the lawsuit (asserting no claims under the APA) on
October 8, 2014 and sent the demand letter raising claims under the APA (e.g.,
Parker’s use of a domain name, tools, and equipment he sold to Schlumberger) on
October 29, 2014. (C.R. 7, 180.) The demand letter is entirely consistent with the
District Court’s view that Schlumberger’s claims in the lawsuit are separable from
any claims under the APA. (See C.R. 180-182.)
Finally, regardless of the applicability of the APA’s arbitration
provision to Schlumberger’s claims against Parker, the District Court had authority
to temporarily enjoin Parker and has authority to enter a permanent injunction
against Parker. The APA expressly carves out claims for injunctive relief from the
arbitration clause. (C.R. 218.) Accordingly, even if the APA requires
Schlumberger to arbitrate its damages claims against Parker (which it does not),
the APA permits Schlumberger to maintain claims against Parker for injunctive
relief in court.
6. The District Court did not err by deciding the arbitrability of
Schlumberger’s claims against Parker
Like Myers, Parker also claims that the arbitrator had exclusive
authority to determine whether Schlumberger’s claims were subject to arbitration.
52
As a general rule, courts, rather than arbitrators, decide matters of substantive
arbitrability (i.e., whether an arbitration agreement exists and whether the claims
are within the scope of the agreement). ODL Servs., Inc. v. ConocoPhillips Co.,
264 S.W.3d 399, 412 (Tex. App.—Houston [1st Dist.] 2008, no pet.). For courts to
be divested of their authority to determine issues of arbitrability, the party seeking
to compel arbitration must show “clear and unmistakable evidence” that the parties
intended to confer exclusive authority on the arbitrator to decide matters of
substantive arbitrability. Id. at 413.
Parker relies on Schlumberger Technology Corp. v. Baker Hughes,
Inc. to support his argument that the District Court did not have authority to
determine issues of arbitrability. Schlumberger and Baker Hughes were parties to
an arbitration agreement and, when a dispute arose over whether a particular claim
was arbitrable in the course of the arbitration, the AAA panel decided the issue of
arbitrability. 355 S.W.3d 791, 802 (Tex. App.—Houston [1st Dist.] 2011, no pet.).
Applying the “clear and unmistakable” standard, this Court noted that the
incorporation of AAA Rules that empower an arbitrator to determine arbitrability
“has been held to be clear and unmistakable evidence of the parties’ intent to allow
the arbitrator to decide such issues.” Id.
Contrary to Parker’s position, however, the incorporation of AAA
rules is not dispositive. This Court has warned that a “court should not blindly
53
apply the majority view regarding the effect of mere reference to AAA rules and
ignore the ‘clear and unmistakable standard’ set forth by the Supreme Court.”
Burlington Resources Oil & Gas Co., LP v. San Juan Basin Royalty, 249 S.W.3d
34, 42 (Tex. App.—Houston [1st Dist.] 2007). When evaluating whether there is
“clear and unmistakable evidence,” courts must ultimately be guided by the
“general principles of Texas contract law governing the formation of contract” and
the parties’ objective intent as expressed in their agreements. Id. Even when the
arbitration provision incorporates AAA Rules, this Court has refused to find “clear
and unmistakable evidence” of the parties’ intent to refer all matters of substantive
arbitrability to the arbitrator. See id.; ODL Servs., Inc., 264 S.W.3d at 415.
Parker failed to offer the District Court “clear and unmistakable
evidence” that he and Schlumberger intended to refer the question of arbitrability
regarding Schlumberger’s claims in this case to an arbitrator. First, Parker did not
submit the AAA Rules as evidence and did not ask the District Court to take
judicial notice of the AAA Rules. The Dallas Court of Appeals held a party cannot
meet the “clear and unmistakable evidence” standard based on the arbitration
provision’s incorporation of AAA Rules unless the rules are submitted as evidence.
Per Group LP v. Medical Media Holdings, LLC, 294 S.W.3d 378, 386 (Tex.
App.—Dallas 2009, no pet.).
54
As here, the defendant in Per Group argued that, because the
arbitration agreement incorporated AAA Rules, the arbitrator must decide whether
the asserted claims were subject to an arbitration agreement. Id. The Dallas Court
of Appeals disagreed:
Although the motion to compel refers to the AAA rules as an attached
exhibit to the motion, the exhibit number does not contain those rules
and there is nothing to indicate that the rules were offered into
evidence below. As a result, we conclude that the trial court was
required to determine the scope of the arbitration agreement.
Id. (emphasis added).
The same result is required here: Parker failed to offer the AAA
Rules into evidence and consequently fell short of satisfying the “clear and
unmistakable evidence” standard. Accordingly, the District Court “was required to
determine the scope of the arbitration agreement.” Id. Because the District
Court’s decision to address the arbitrability of Schlumberger’s claims can be
upheld on the basis that Parker did not offer the AAA Rules into evidence, the
District Court’s order should be affirmed.
Second, Parker cannot satisfy the “clear and unmistakable evidence”
standard because the APA does not require all claims to be arbitrated, but instead
carves out claims for injunctive relief from the arbitration provision. In Burlington
Resources, 249 S.W.3d at 42, this Court approvingly cited James & Jackson, LLC
v. Willie Gary, LLC, 906 A.2d 76 (Del. 2006), where the Delaware court evaluated
55
whether the incorporation of AAA Rules established “clear and unmistakable
evidence” of the parties’ intent to have the arbitrator determine arbitrability. The
Court recognized that the incorporation of AAA Rules does not mandate that
arbitrators decide arbitrability in all cases, but generally confers that authority
upon arbitrators where the arbitration provision requires arbitration of “all
disputes.” Id. at 80. In James & Jackson, despite a broad arbitration clause and
the incorporation of AAA Rules, the agreement specifically authorized the parties
to seek injunctive relief and specific performance in the courts. Id. at 81. The
Court held:
Since this arbitration clause does not generally refer all controversies
to arbitration, the federal majority rule does not apply, and something
other than the incorporation of the AAA rules would be needed to
establish that the parties intended to submit arbitrability questions to
an arbitrator.
Id. The movant, however, did not offer “something other than the incorporation of
the AAA rules” to meet its burden, and consequently the Court determined that the
trial court had the authority to resolve matters of arbitrability. Id.
Here, the APA expressly carves out claims for injunctive relief from
the arbitration clause. (C.R. 218.) Specifically, the APA provides that “the
obligations of Seller under this Agreement . . . shall be enforceable by a decree of
specific performance issued by any court of competent jurisdiction, and
appropriate injunctive relief may be applied for and granted in connection
56
therewith.” (Id.) Because the APA does not require all controversies to be
submitted to arbitration, the incorporation of AAA Rules, alone, cannot satisfy the
“clear and unmistakable evidence” standard. James & Jackson, 906 A.2d at 81.8
VII. PRAYER
For the reasons stated above, Schlumberger respectfully requests that
the Court affirm the District Court’s temporary injunction and order denying
Appellants’ motion to compel arbitration, and dismiss Appellants’ interlocutory
appeal of the order denying their motion for reconsideration for lack of
jurisdiction.
8
Appellants’ argument that Schlumberger is judicially estopped from asserting that the District
Court had authority to resolve issues of arbitrability fails for several reasons. First, Appellants
did not raise any argument about judicial estoppel to the District Court (see C.R. 166-67) and
have therefore waived the issue. Second, this case is distinguishable from Schlumberger
Technology Corp. v. Baker Hughes, Inc. in many respects, including but not limited to: (1) the
previous case did not involve non-signatories seeking to compel arbitration, (2) unlike this case,
the issue in the previous case was whether an arbitration panel in a pending arbitration had
authority to determine issues of arbitrability, (3) the APA permits the parties to seek injunctive
relief and specific performance in courts, and (4) the contracts upon which Schlumberger has
sued do not contain any arbitration provision, let alone one incorporating AAA Rules.
57
Respectfully submitted,
/s/ Jeff Barnes
Jeff Barnes
State Bar No. 24045452
barnesj@jacksonlewis.com
JACKSON LEWIS P.C.
1415 Louisiana, Suite 3325
Houston, Texas 77002-7332
PH: (713) 650-0404
FX: (713) 650-0405
and
William L. Davis, Esq.
State Bar No. 05563800
davisw@jacksonlewis.com
JACKSON LEWIS P.C.
500 N. Akard, Suite 2500
Dallas, Texas 75201
PH: (214) 520-2400
FX: (214) 520-2008
ATTORNEYS FOR APPELLEE
SCHLUMBERGER TECHNOLOGY
CORPORATION
58
CERTIFICATE OF COMPLIANCE
I certify that this computer-generated brief contains 14,284 words.
/s/ Jeff Barnes
Jeff Barnes
CERTIFICATE OF SERVICE
I certify that a true and correct copy of the foregoing document was
served on counsel for Appellants Ricky Parker and James Myers on February 17,
2015.
/s/ Jeff Barnes
Jeff Barnes
4837-0907-5745, v. 5
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