Supreme Court rules for Shell in employee dispute

Kelly Holleran May 10, 2010, 4:53am

Justice Bernette Johnson

The Louisiana Supreme Court found in favor of Shell and another corporation, deciding that an oil industry service provider failed to produce enough evidence to prove that Shell stole two of its employees.

Cheramie Services and its owner Attecia Cheramie filed a lawsuit in 1999 against Shell and Filco International, alleging the defending companies conspired to steal two of Cheramie's employees and caused damages under the Unfair Trade Practices and Consumer Protection Law (LUTPA).

According to the complaint, Cheramie Services won a bid to provide support personnel to Shell for its offshore activities. Pursuant to the complaint, Cheramie hired two clerks -- Kenneth K. Ward and Kevin W. Kays -- to work on Shell's auger tension-leg platform located in the Gulf of Mexico. Each of the clerks worked 14-day shifts and alternated their shifts so at least one was always on the platform. For their work, Ward and Kays received $13 per hour, but got no benefits for vacation, insurance or retirement, the complaint says.

About six months after Cheramie hired Ward and Kays, Shell stopped paying Cheramie for the clerks' services and instead began paying Filco after the two clerks left Cheramie and went to work for its competitor, the suit states.

Cheramie claims Shell and Filco colluded to steal its two employees. In addition, Cheramie alleges Shell stole another of its employees when it recommended her for a job on a different Shell platform called the Ursa TLP.

Shell sought a logistics coordinator aboard the Ursa TLP, and Cheramie recommended Mary Perez, a worker who had worked for Cheramie on a different project, for the job, the complaint says.

"Theerafter, Perez was sent by Ms. Cheramie to One Shell Square in New Orleans to be interviewed for the position by Shell employees," the Supreme Court's opinion states. "Perez attested that she was told if she wanted the position she would have to work for Filco, apparently because Filco, not Cheramie Services, had submitted the successful bid. Because Perez needed the job, she chose to leave the plaintiffs' employ and work for Filco."

After Cheramie filed the suit against Shell and Cheramie alleging wrongful termination, breach of contract and collusion, Shell filed a timely answer, but Filco failed to respond. On May 2, 2001, Filco paid Cheramie a settlement in return for dismissal of the suit against it, according to the decision.

In 2007, the trial court granted summary judgment in favor of Shell and dismissed Cheramie's complaint against the company. But Cheramie disagreed with the court's decision and appealed, saying it erred when it foundShell did not breach a contract and did not violate the Unfair Trade Practices and Consumer Protection Law.

Louisiana's Court of Appeals sided with Shell, finding it had not breached a contract, but it did reinstate Cheramie's claim of violations of the Unfair Trade Practices and Consumer Protection Law. The appeals court decided Cheramie made a prima facie showing that Shell and Filco did indeed conspire to steal Cheramie's employees, thus causing injury to Cheramie's business.

The case finally made its way to the Louisiana Supreme Court, where Shell argued Cheramie could not even bring a claim under the Unfair Trade Practices and Consumer Protection Law against it. The law is designed only to protect Shell's business competitors and consumers, and Cheramie fits neither description, Shell argued.

The majority of Louisiana's Supreme Court disagreed with Shell's assessment, saying the law extends to provide protection to a number of other entities. But in its decision, the Supreme Court continues on to say that the other entity -- in this case Cheramie -- must also provide proof of the unfair or deceptive method, act or practice on the part of the perpetrator. Cheramie failed to provide adequate proof to show that Shell deliberately caused it harm, the Supreme Court decided.

"A corollary to this principal is the general rule denying the liability of competitors who lure away at-will employees, in the absence of a showing that the competitor had an unlawful or improper purpose or used unlawful or improper means," Justice John Weimer wrote in the Supreme Court's decision. "The courts are concerned not only with the interests of competing employers, but also with the employee's interests; the interests of the employee in his own mobility and betterment are deemed paramount to the competitive interests of the employers, where neither the employee nor his new employer has committed any illegal act accompanying the employment change. Therefore, only egregious actions involving elements of fraud, misrepresentation, deception, or other unethical conduct will be sanctioned based on LUTPA."

The Supreme Court found that Shell had no intention of attempting to steal Chearmie's employees away from it and didn't even know Ward and Kays had switched companies until they became Filco employees.

In fact, according to affidavits, Ward and Kays approached Shell's employees about switching parent contractors because they remained dissatisfied with Cheramie's refusal to provide them with benefits. Shell's employees told the two clerks they saw no reason why Shell would have any interest in whether the clerks worked for one parent company or another.

"The first time Miessner [a Shell supervisor] became aware of the two men switching companies was when they turned in Filco time sheets instead of Cheramie time sheets," the Supreme Court's decision says.

Kays testified that due to his switch in companies, he earned $10,000 more per year. He also said no one encouraged him to switch companies, and he had already decided to leave for Filco even before he talked to Shell supervisors to ask them about the legalities of the situation.

Cheramie cannot blame Shell for stealing Perez away from its employ as Cheramie called Shell about Perez. Cheramie's failure to submit a successful bid for the Ursa TLP opening resulted in its loss of Perez as an employee, and ultimately, Perez decided to work for Filco -- neither it nor Shell can be held liable for violations of LUTPA, the Supreme Court decided.

When Shell filed for summary judgment, Cheramie faced a burden of providing additional factual evidence to prove that Shell and Filco colluded against it. However, Cheramie failed to produce any evidence supporting its claim that its employees left its company due to a collusion between Shell and Filco, the Supreme Court ruled.

"In sum, plaintiff's response to Shell's evidence fails to refute the affidavits by Ward and Kays and Ms. Cheramie's deposition testimony, showing that the three workers were merely exercising their prerogatives as at-will employees to change the companies for which they worked," the Supreme Court decided. "Plaintiffs failed to produce any evidence of actions by Shell which would be tantamount to 'unfair or deceptive acts or practices' in the conduct of their offshore operations. Plaintiffs' inadequate response to Shell's evidence made summary judgment appropriate."

The Supreme Court reversed the appellate court's ruling and dismissed Cheramie's complaint against Shell.

Justices Bernette J. Johnson, Jeanette Theriot Knoll and Greg G. Guidry concurred.

Louisiana Supreme Court case number: 09-c-1633.

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