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Hydroprocessing Associates, LLC v. McCarty

United States District Court, S.D. Mississippi, Southern Division

August 23, 2019

HYDROPROCESSING ASSOCIATES, LLC PLAINTIFF
v.
GARLON M. MCCARTY, ET AL. DEFENDANTS

          ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR PRELIMINARY INJUNCTION

          LOUIS GUIROLA, JR. UNITED STATES DISTRICT JUDGE

         THIS MATTER came before the Court for a hearing on Plaintiff's [14] Amended Motion for Temporary Restraining Order and Preliminary Injunction on July 26, 2019. Plaintiff seeks an injunction requiring Defendants, each a former employee, to comply with the non-compete and non-recruitment clauses in their employment agreements. Following the hearing, the parties were allowed to submit closing briefs. After due consideration of the evidence produced at the hearing, the parties' arguments and the relevant law, it is the Court's opinion that Plaintiff has carried its burden to show that it would be irreparably harmed if Defendants Garlon McCarty and Andrew Russell are not enjoined from violative activities. The Motion will be denied as to the remaining Defendants.

         BACKGROUND

         Plaintiff Hydroprocessing Associates, LLC (“HPA”) is a contractor that provides highly specialized technical services and mechanical work to, among others, Chevron Corporation in Pascagoula. The eight defendants are individuals who previously worked for HPA, but now work for a competitor. Garlon McCarty is alleged to have been the ringleader, leaving HPA to work for the competitor and recruiting the other seven defendants. All Defendants signed employment agreements that contain non-competition and non-recruitment clauses. HPA seeks only an order under Fed.R.Civ.P. 65 enjoining Defendants from violating the noncompetition and non-recruitment clauses in their employment agreements.[1]Specifically, HPA wants Defendants enjoined from:

a. contacting or soliciting HPA's clients, including Chevron, for the remainder of their respective 12-month non-competition periods;
b. except as to Defendant Higgins, providing, or assisting others in providing, products or services that compete with HPA to HPA's clients, including Chevron; and
c. directly or indirectly soliciting for employment, hiring, participating in the recruiting or hiring of, or going into business with HPA's employees.

         Defendants argue that 1) the non-competition provisions are unduly oppressive and greater than necessary to protect HPA's business interests, rendering them unreasonable; and 2) HPA will suffer only loss of business income, which does not constitute irreparable injury.

         During the pendency of the injunction motion, the Court entered an [12] Order requiring the parties to maintain the status quo, which remains in effect until entry of this order resolving HPA's motion for injunctive relief.

         DISCUSSION

         A. The Legal Standard

         To obtain a preliminary injunction, the applicant must show: (1) a substantial likelihood that he will prevail on the merits, (2) a substantial threat that he will suffer irreparable injury if the injunction is not granted, (3) that the threatened injury outweighs the threatened harm to the party whom the applicant seeks to enjoin, and (4) that granting the preliminary injunction will not disserve the public interest. Lake Charles Diesel, Inc. v. Gen. Motors Corp. 328 F.3d 192, 195-96 (5th Cir. 2003). The Fifth Circuit has “cautioned repeatedly that a preliminary injunction is an extraordinary remedy which should not be granted unless the party seeking it has ‘clearly carried the burden of persuasion' on all four requirements.” Id. at 196 (quoting Miss. Power & Light Co. v. United Gas Pipe Line Co., 760 F.2d 618, 621 (5th Cir. 1985)).

         B. Findings of Fact

         The services HPA provides for oil refineries are “turnkey, ” meaning HPA provides all services that a refinery could require related to its catalysts, including installing blinds, removing exchangers, and mechanical services. (Tr. 22:7-25, ECF No. 31.) HPA also has the capability to handle mechanical work with exchangers and equipment and machinery outside catalyst work, and HPA has handled that work for Chevron Corporation in the past. (Id. at 23:20-23; 45:17-20, 23-24; 54:11-21; 55:1-3.)

         HPA is headquartered in Moss Point, Mississippi. (Id. at 23:1-3.) While HPA has offices elsewhere, and while HPA does work in other locations, HPA does most of its work at Chevron's refinery in Pascagoula, Mississippi. (Id. at 23:12-17.) Since 2007, HPA has had a close relationship with Chevron. (Id. at 29:11-25.) This relationship - and HPA's safety and performance record - led Chevron to designate HPA as a preferred vendor, meaning HPA did not have to bid for Chevron work and simply submitted projections instead. (Id. at 29:11-25; 33:4.)

         HPA's preferred vendor status at Chevron was partly due to Defendant Mike McCarty's role as HPA's go-to guy. (Id. at 27:3-6; 139:18-20.) McCarty had been with HPA for 12 years and was “the face” of HPA at the Chevron refinery (id. at 27:3-6; 109:21-25), overseeing all operations there as HPA's Operations Manager (id. at 65:17). McCarty had intimate knowledge of HPA's equipment and patented technology (id. at 26:23 - 27:13), HPA's operations and staffing (id. at 26:23 - 27:13; 134-135), and HPA's costs for bidding and what it took to do the work (id. at 27:7-16.) McCarty was responsible for preparing projections and estimates for customers, including Chevron. (Id. at 27:9-13.)

         HPA knew that its relationship with Chevron relied on the leadership team McCarty had built and trained. (Id. at 30:13-18.) HPA's work requires around 50 employees (id. at 61:7-14), but McCarty's “crew” made up the leadership that was consistently called for every job at the Chevron refinery. (Id. at 52:1-4.) McCarty's crew consisted of each Defendant, except Andrew Russell:

• Justin Higgins was McCarty's “right-hand person” as HPA's Project Manager, who was a key client contact that communicated directly with Chevron's impact-team leaders. (Id. at 22:21-23; 93:8-11; 94:1-8.)
• Harry O. Ridgdell was HPA's Lead Supervisor and another “go-to guy” for HPA's customers. (Id. at 94:1-8.) As the Lead Supervisor, Ridgdell ran the whole job (id. at 174:12-15) and himself oversaw the Lead Top Supervisor and Lead Ground Supervisor. (Id. at 94:1-8.)
• Robert Barnett was a Lead Top Supervisor, who supervised all work at the top of the reactor. (I ...

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