On November 22, 2011, the Supreme Court of the State of Oklahoma held in Howard v. Nitro-Lift Technologies, LLC that an arbitration agreement in employment contracts between two former employees, Eddie Lee Howard and Shane Schneider, and Nitro-Lift Technologies, LLC (“Nitro-Lift”) did not prohibit judicial review of the contracts’ non-competition and non-solicitation provisions where Oklahoma adopted a legislative public policy against restraints of trade. See 15 Okl. St. §217 et seq. Generally, a Federal or State court will enforce parties’ agreement to arbitrate and submit appropriate disputes to arbitration unless the court finds that the arbitration agreement itself was invalid. However, the supreme court in Howard refused to submit the question of whether the restraints of trade were valid to arbitration, suggesting that the Oklahoma judiciary had primary authority over the question and not the arbitrator.
Nitro-Lift argued that the non-competition and non-solicitation agreements were necessary to protect trade secrets about its process used to generate nitrogen for application on oil and gas well sites and to prevent the former employees from disclosing the trade secrets to a competitor. Nevertheless, the supreme court found the non-competition and non-solicitation agreements between the former employees and Nitro-Lift void pursuant to 15 Okl. St. §219A. The statute provides that a former employer cannot prevent a former employee from engaging in the same or similar business as the employer, as long as the former employee does not directly solicit goods and services from the former employer’s established customers.