Court Order: You Shall Not Start Your New Job at that Oil Company Because We're Worried About Irreparable Harm to the Oil Company You Just Quit

| Marcus, Ellen

"Oil Well "

Engineer Milos Milosevic may have thought that he and Schlumberger Technology Corporation were like oil and water when he recently left Schlumberger, which provides services to the oil and gas industry, to work for Halliburton Company, a direct competitor.  On Friday, a Texas state court said not so fast, and issued a temporary restraining order (or TRO) against Dr. Milosevic that prohibits him from starting his new job at Halliburton.  The court also ordered Dr. Milosevic to “restrain from using or disclosing [Schlumberger’s] trade secrets,” and to “immediately return” any of Schlumberger’s documents or other property.  Schlumberger requested the TRO at the outset of a lawsuit that it filed against Dr. Milosevic for breach of a non-compete contract and misappropriation of trade secrets. 

Courts differ on the factors that they consider in deciding whether to issue a TRO, but almost all courts require a showing that the party seeking the TRO would suffer “irreparable harm” absent the TRO, and weigh that against the harm of a TRO to its target.  Irreparable harm is harm that cannot be remedied by the payment of money – such as the destruction of an historic building. 

In the employment context, some courts have concluded that the payment of money cannot repair the damage done by the disclosure of trade secrets to a direct competitor, and have found that the danger of irreparable harm to the employer outweighs the damage caused to the former employee who is prevented from starting a new job.  The Texas state court reached that conclusion in issuing the TRO against Dr. Milosevic.  

TRO proceedings tend to be ex parte, which means that the target of the TRO does not have advance notice of the proceedings or the chance to respond.  The idea is that, if the target had notice, he would swing his wrecking ball before the court could order him not to tear down the building.  Or, in Dr. Milosevic’s case, he would divulge all of Schlumberger’s secrets to Halliburton, giving Halliburton the competitive advantage to drive Schlumberger out of the oil business.  TROs usually have expiration dates and set a date for a hearing on whether the court should issue a longer-lasting preliminary injunction.  The TRO against Dr. Milosevic expires in two weeks, when the court will have a hearing on whether to issue a preliminary injunction.