LITIGATION SUMMARY & BACKGROUND
On December 16, 2019, Flotek Industries, Inc. (“Flotek Industries”) and Flotek Chemistry, LLC (“Flotek Chemistry”) (collectively, “Flotek” or the “Company”) filed in the U.S. District Court for the Southern District of Texas (Houston Division) (the “Court”) an Original Complaint against defendant Guide Energy Solutions, LLC (“Guide Energy”) and individual defendants Cody Coomer (“Coomer”), Cody Sutton (“Sutton”), Hasnain Saboowala (“Saboowala”), and Justin Vaughn (“Vaughn”) (collectively, “Defendants”). The individual defendants are former high-level employees of Flotek that voluntarily left the Company in April 2019 and currently work at or are affiliated with Guide Energy, which has a principal place of business located in Prague, Oklahoma.
In addition, immediately following the filing of the Original Complaint, Flotek Industries filed a Motion for Temporary Restraining Order and Preliminary Injunction, seeking limited injunctive relief intended to preserve the status quo and prevent further injury to Flotek Industries.
This civil litigation addresses: (i) trade secret misappropriation pursuant to the Defend Trade Secrets Act, 18 U.S.C. § 1836, et seq.; (ii) trade secret misappropriation pursuant to the Texas Uniform Trade Secrets Act, Texas Civ. Prac. & Rem. Code, § 134A, et. seq.; (iii) civil conspiracy; (iv) breach of contract under Texas law; (v) tortious interference with a contract pursuant to Texas law; (vi) tortious interference with prospective business relations pursuant to Texas law; and (vii) unjust enrichment.
For more information:
• Original Complaint: Please see attachment below.
• Motion for Temporary Restraining Order and Preliminary Injunction: Please see attachment below.
The four former Flotek employees, Coomer, Sutton, Saboowala and Vaughn (the “Ex-Flotek Employees”) were members of the sales and technical organization. By virtue of their years of employment at Flotek, the Ex-Flotek Employees had access to many of the Company’s most valuable proprietary, confidential, and trade secret information, including information relating to Flotek’s customers, vendors, products, pricing, sales, finances, operations, and chemical formulations. The Ex-Flotek Employees executed confidentiality agreements prior to gaining access to any of this information, which prohibit the use of Flotek confidential information for any non-Flotek purpose and require the immediate return of that information upon termination from Flotek.
In April 2019, each of the Ex-Flotek Employees resigned, and two days after the resignation of Coomer and Sutton, Guide Energy was formed in Oklahoma. Approximately three months later, Guide Energy was fully operational and directly competing with Flotek by offering the exact same categories and types of chemical products (excluding micro proppants) and services, along with similar positioning on its offerings.
Subsequent to the resignations, Flotek discovered that Sutton, Coomer, and Vaughn formed and started Guide Energy the same month they resigned, holding the high-level positions of Chief Executive Officer (Sutton), Chief Operating Officer (Coomer) and President (Vaughn). Flotek also learned that Saboowala had also joined Guide Energy either as an employee or as a consultant, though he actively tried to conceal that affiliation from Flotek.
An internal investigation by Flotek revealed that highly confidential and proprietary Flotek information had been transmitted to, and stored on, the personal Dropbox and email accounts of some of the Ex-Flotek Employees.
As discussed previously, the confidentiality agreements between Flotek Industries and the Ex-Flotek Employees explicitly prohibits the use of Flotek confidential information for non-Flotek purposes and requires that any such information be returned to Flotek immediately upon their termination with the company. Despite this, the Company believes that highly confidential and sensitive information may be in the possession of at least some of the Ex-Flotek Employees.
Considering the Defendants’ actions, a Temporary Restraining Order and a Preliminary Injunction Order are being sought to preserve evidence and ensure that Flotek Industries is not irreparably harmed by the improper use of Flotek’s confidential and trade secret information in direct competition.
The Company expects the Court to promptly evaluate the merits of the Motion for Temporary Restraining Order and Preliminary Injunction and make a ruling.
Flotek views its intellectual property and confidential information as a key differentiator in the market and will aggressively protect its rights and pursue any individual(s), groups, or organizations that impedes or violates its rights to the fullest extent available by the law.
Despite the filing of this civil lawsuit, business as normal will continue at the Company. This includes operating with the same rigor and excellence it does today, supported by a steadfast commitment to safety, quality, schedule, cost performance and innovation.