Axia Energy, the energy trading company formed by subsidiaries of Koch Industries and Entergy, has filed suit against Hess Energy Trading Co. (HETCO) in the U.S. District Court for the Southern District of Texas, in Houston. In the civil action, filed May 8, Axia charges that HETCO conspired with two former Koch employees--who were later hired by HETCO--to obtain proprietary weather derivatives information from Axia. Stephen Semlitz, managing director of HETCO in New York, said the charges are without validity. "We are not using anything that's proprietary to Axia, nor are any of our employees." Officials at Axia declined all comment.
Axia alleges that Scott Putnam, a HETCO weather derivatives trader previously with Koch, copied a pricing model, named PortDrift. "PortDrift is the most important tool Plaintiff has to price weather derivatives and gave Plaintiff a competitive advantage in the weather derivatives market," according to the suit. This methodology was "willfully and maliciously transported to HETCO by Putnam with HETCO's encouragement and acquiescence." Putnam was traveling last week and could not be reached.
Last year Koch Energy Trading filed a suit against four former employees in its weather derivatives team, including Putnam, who joined HETCO (DW, 4/10/00). Axia is understood to have filed the second suit hours before reportedly losing the first some two weeks ago in the Sedgwick County District Court in Wichita, Kan., according to officials familiar with the matter. An attorney familiar with the matter said the case is under seal.
Calls to Judge David Hittner, the presiding judge in Houston, were referred to his case manager, who declined comment. Ken Peterson, an attorney representing the plaintiff at Morris, Laing, Evans, Brock & Kennedy in Wichita, Kan., did not return calls by press time.
Several weather derivatives professionals expressed dismay that Axia is pursuing the case after apparently losing the first suit. "It makes you wonder how many voodoo dolls they have in the building," commented one trader.
For the complete lawsuit in pdf format, please click here.
