Face Challenges Confidently

068 Unocal Corp. v. Dickinson Resources, Inc.

Tuesday, September 8th, 2015

Richard F. Brown

The following is not a legal opinion. You should consult your attorney if the case may be of significance to you.
Unocal Corp. v. Dickinson Resources, Inc., 889 S.W.2d 604 (Tex. App.–Houston [14th Dist.] 1994 no writ) explores the risks associated with shopping an oil and gas prospect. Dickinson, an independent geologist who was in the business of generating and selling oil and gas prospects, contacted Unocal to discuss an offshore prospect. At the beginning of the meeting, Dickinson signed a waiver agreement to the effect that his presentation would not preclude Unocal from subsequent activity in the area of his prospect. The parties then examined each other’s maps, seismic data and well logs. Unocal declined Dickinson’s prospect. Dickinson sued for breach of confidential relationships, misappropriation of trade secrets, and quantum meruit (value of thing given). The jury awarded Dickinson $1.4 million in actual damages and $2.6 million in punitive damages.
Held: Dickinson is bound by his waiver and loses. The waiver was unambiguous, it was supported by consideration (Dickinson got to meet with Unocal and to see their date), and Dickinson could have protected himself by asking for a confidentially agreement.
The case is significant in that it illustrates both parties have an opportunity to protect themselves going into such a meeting by a waiver and/or a confidentiality agreement. Absent an effective waiver, Unocal would have been taking a significant risk in conducting any activities within the prospect at any time for years after the presentations. There are decided cases imposing significant liabilities against companies who do exactly what Unocal did, but which failed to get a waiver. From the promoter’s perspective, if no waiver is requested, the promoter is probably better off without a confidentiality agreement, because the lawsuit is usually worth more than the prospect. Faced with a waiver, the promoter should get a confidentiality agreement or go on down the street, because there is no protection against a well-drawn waiver.