Texas Court Awards $72 Million to Superior Energy Subsidiary Stabil Drill in Breach of Fiduciary Duty, Fraud, and Trade Secret Misappropriation Lawsuit Against Former Chief Operating Officer and Chief Financial Officer
On April 9, 2019, a Harris County, Texas district court awarded Superior Energy Inc.’s (NYSE: SPN) subsidiary Stabil Drill Specialties, L.L.C. over $72 million in damages, disgorgement, and prejudgment interest against its former Chief Operating Officer Christopher J. Russo and Chief Financial Officer Martin LeBlanc.
A trial team that included attorneys from both Baker McKenzie and Baker Hostetler and led by Baker McKenzie partner C. Thomas Kruse tried to verdict a case initiated in February 2016 against Mr. Russo, Mr. LeBlanc, and numerous other alleged co-conspirators shortly after Superior Energy initiated its investigation into several potential conflict-of-interest transactions involving several Stabil Drill vendors. After over two years of litigation discovery—including overcoming an appeal by Mr. Russo relating to his Fifth Amendment self-incrimination assertions as to key case documents—the trial team discovered numerous complex schemes that Mr. Russo and Mr. LeBlanc used to secretly profit at the expense of Stabil Drill. The schemes included setting up several corporate entities to conceal direct payments from steel and component-part vendors of Stabil Drill, as well as profiting from various other undisclosed conflict-of-interest transactions involving real estate sales with Stabil Drill.
The trial team tried the case before a jury for six weeks. At the conclusion of the evidence, the court charged the jury with its instructions on December 3, 2018, and included an instruction that the jury may, but was not required to, take an adverse inference from Mr. Russo’s refusal to answer questions based on grounds that it may incriminate him. On December 5, 2018, the jury returned a unanimous verdict finding that both Mr. Russo and Mr. LeBlanc breached their fiduciary duties owed to Stabil Drill, committed fraud, and misappropriated Stabil Drill’s trade secrets, among other things. The court accepted the jury verdict and, on April 9, 2019, entered a judgment in favor of Stabil Drill.
Based on the unanimous verdict and after accounting for prior settlement credits, the Texas district court awarded Stabil Drill over $23 million in damages against Mr. Russo and several entities he was responsible for and over $7 million in damages against Mr. LeBlanc and two entities he was responsible for. The court further awarded Stabil Drill over $27 million as disgorgement of Mr. Russo’s profits from the various schemes and over $3 million as disgorgement of Mr. LeBlanc’s profits. The court further awarded Stabil Drill over $10 million in prejudgment interest. Finally, the Court awarded Stabil Drill $50,000 as damages based on a prior confession of judgment signed by co-conspirator Perry McGraw.
Baker McKenzie attorneys on the trial team included C. Thomas Kruse, Larry Finder, Alexander Burch, Katie Zinecker, and Rick Taylor. Co-counsel Baker Hostetler attorneys on the trial team included Matthew Caligur, Tom Donaho, Sushant Mohan, and George Boos.
Cause No. 2016-24818; Superior Energy Services, Inc., et al. v. Christopher J. Russo, et al., in the 295th Judicial District Court, Harris County, Texas.