On the evening of Jan. 6, EQT Corp. sent an email to some 100 employees summoning them to an 8 a.m. meeting the next morning.
It wasn’t hard to deduce that the chosen recipients were about to get laid off.
Two of those employees, according to EQT, used their 14-hour warning to log onto the company’s computers and steal its secrets.
In a pair of lawsuits filed in federal and state court on Monday, the Downtown-based company said Jeffrey Lo and Charles Cunningham took with them thousands of proprietary documents, ranging from emails to a mission-critical program that keeps track of all of EQT’s wells.
Mr. Lo and Mr. Cunningham could not be reached for comment on Wednesday.
The complaint against Mr. Lo begins like a paperback mystery.
“Sensing his employment with EQT was nearing its end, natural gas reservoir engineer Lo entered EQT headquarters in the dark of night … with a singular purpose: to steal EQT’s trade secrets,” reads the document filed in the U.S. District Court for the Western District of Pennsylvania.
“Lo’s attack on EQT cuts deep and spans several months, likely dating back to the date he joined the company in November 2017.”
That’s the date EQT completed its acquisition of Canonsburg-based Rice Energy Inc., where Mr. Lo had been working. Up until Wednesday, his LinkedIn photo pictured him in a “Shalennial” T-shirt, a term coined by Rice Energy to refer to tech-savvy millennials working in shale. The LinkedIn profile was deleted Wednesday night.
At Rice, Mr. Lo said he helped take the company from “Excel to big data” and was awarded “wizard” status by the COO, presumably Toby Rice, according to the now deleted LinkedIn profile. When he joined EQT, Mr. Lo was put in charge of integrating EQT’s well data into a Well Analysis Records (WAR) program originally created by Rice, the court filing said.
In fact he was one of just three employees who could alter the program, which is both a warehouse of well information data and a system for crunching that data to inform operations and business decisions, EQT said in its filing.
After Mr. Lo left EQT, the company found it couldn’t access the WAR program.
A forensic audit of Mr. Lo’s digital fingerprints at EQT showed that he had been feeding data into a hard drive for months and that at 2:32 a.m. on the morning of his termination, Mr. Lo went into the office and took the storage device “containing a treasure trove of EQT’s proprietary software and business-critical information,” EQT said in its court filing.
Mr. Lo also downloaded all of his email files and took information about EQT compensation and corporate and governance information, the company alleged in the court documents.
EQT’s director of compliance and communication, Gareth Elliot, said Wednesday the company isn’t commenting on the litigation but stressed the data and technology in question are “competitively sensitive and would be very valuable to others operating in the Marcellus basin.”
It’s not hard to imagine that EQT’s concern might have something to do with Toby and Derek Rice, the duo that’s vying to take over the management of EQT in what is looking like an imminent proxy battle.
In fact, along with its $6.7 billion acquisition of Rice — a company started by the Rice brothers in 2007 — EQT also inherited a wrongful termination lawsuit lodged by Kevin Wutherich which mentioned Mr. Lo.
In his complaint filed in the U.S. District Court for the Western District of Pennsylvania, Mr. Wutherich said that while employed at Rice, he’d overheard Mr. Lo telling Derek Rice about a trove of data Mr. Lo had taken from his previous employer, EOG Resources Inc. The information disclosed the Texas company’s proprietary well designs and oil and gas production information, he said.
Mr. Wutherich, in his complaint, said he confronted Mr. Lo and told him he could go to jail for stealing corporate secrets.
Then, he alleged, “instead of reporting the theft of trade secrets to shareholders, Rice Energy chose to use the stolen data.”
In a reply to his claims last year, EQT denied “any theft of EOG data” and said Rice fired Mr. Wutherich, not for whistleblowing on this and other matters, but for not disclosing the extent of his work with another company. The matter is now in mediation. EQT declined to comment on it.
‘A swift and highly damaging raid’
The subject of EQT’s second lawsuit, Charles Cunningham, had a different path.
According to Mr. Cunningham’s LinkedIn profile, EQT was the only company where he has ever worked. After a few internships there, he joined full time after graduating from college in 2009. Over the years, he rose to the rank of manager of production engineering.
When EQT acquired Rice, “Cunningham held a key role in facilitating that merger,” states the complaint against him, filed in the Allegheny County Court of Common Pleas.
He, too, was laid off on Jan. 7.
EQT launched an investigation into Mr. Cunningham “based on suspicious messages that (he) sent and other concerning behavior” shortly before his layoff, the company’s complaint states.
Less than two weeks after the mass layoff, EQT contracted with a New York-based digital forensic firm — the same one that investigated Mr. Lo. The forensic experts found evidence of “a swift and highly damaging raid of confidential information” hours before he was laid off.
Mr. Cunningham downloaded some 13.4 gigabytes of data to a USB drive, naming the folder “Backup Jan 19,” the company found. Some data was also sent to his private email, the complaint alleged.
Both Mr. Lo and Mr. Cunningham broke the terms of their employment and separation agreements, EQT claims.
In both cases, EQT wants the defendants to return all the data the company alleges they took and disclose with whom they might have shared the information.
Anya Litvak: alitvak@post-gazette.com or 412-263-1455.
First Published: February 21, 2019, 4:47 p.m.