West Virginia Record

CLARKSBURG – A prominent energy and gas company has filed suit against one of its former drilling managers, alleging the manager began working for a competing company under violation of his employment contract.

Consol Energy and CNX Gas Company claim they hired defendant Joshua Hinton as a drilling manager, a job that allowed him access to confidential and critical business information crucial to the companies' effective and efficient operation.

In an effort to compensate and retain Hinton, Consol Energy and CNX gave him a $30,000 retention bonus, according to the complaint filed April 29 in U.S. District Court for the Northern District of West Virginia. In exchange for the money, Hinton agreed to refrain from serving as an officer or employee of a competing company for at least three years following the agreement, the suit states. In addition, he agreed not to disclose or use any of the confidential information for his personal benefit or for the benefit of another company, the complaint says.

Hinton also participated in Consol's Equity Incentive Plan, which includes a Restricted Stock Unit Award Program, the plaintiffs claim. Under the program, Hinton was awarded 738 Consol restricted stocks, one-third of which would vest on Feb. 17, one-third of which would vest on Feb. 17, 2011, and the remaining one-third of which would vest on Feb. 17, 2012, according to the complaint.

"The value of the shares that vested on or about February 17, 2010, was in excess of $11,000," the suit states. "Subject to vesting, the remaining RSUs had a value in excess of $21,000 as of April 27, 2010," the suit states.

In exchange for his receiving the stocks, Hinton agreed to refrain from acting as an officer or employee of a competing company for at least two years; agreed not to perform services for any customer of the company for at least two years; agreed not to induce any of the plaintiffs' employees from engaging in an activity or conduct that is prohibited or to terminate an individual's employment with the company; and to refrain from assisting others engaging in any of the above-mentioned activities, the complaint says.

On Feb. 22, after receiving the $30,000 and the restricted stock units, Hinton resigned as drilling manager with Consol and CNX and accepted a job at East Resources, a direct competitor of Consol and CNX, the plaintiffs claim.

Now, Consol and CNX fear their trade secrets and confidential information will be disclosed to a competitor; that they will lose business investments; and that they will lose the confidentiality of their financial dealings, methods, plans and business affairs. They have also sustained an economic loss, they claim.

On Feb. 25, Consol and CNX gave Hinton written notice of his breach of contract and requested their funds be returned to them within 10 days, according to the complaint.

However, Hinton refused to turn over the $30,000 or any of his vested RSUs, the suit states.

In addition to the money, Consol and CNX are seeking a preliminary injunction preventing Hinton from serving as an officer or employee with East Resources, from contacting any of its customers or prospective customers, from engaging in any activity prohibited by his agreements and from assisting others in any of the activities in his agreement with Consol and CNX. They are also seeking damages for breach of contract, breach of duty of loyalty and misappropriation of trade secrets; plus attorneys' fees, costs and other relief the court deems just.

Steven P. McGowan and John R. Callcott of Steptoe and Johnson in Charleston and Robert M. Vukas in Pittsburgh will be representing them.

U.S. District Court case number: 1:10-cv-70