960 F.3d 499
8th Cir.2020Background
- CRST runs an in-house CDL training program: it advances training costs in exchange for drivers signing a pre-employment/employment contract with a 10-month "Restrictive Term" and a non-compete forbidding work for a "CRST Competitor" during any remaining Restrictive Term; drivers are paid below market during that term.
- 167 drivers subject to those CRST contracts left CRST and were hired by TransAm, a competitor that recruits via national advertising and can pay market rates immediately (TransAm’s reimbursement program excludes drivers trained by other carriers).
- CRST sent employment-verification notices, warning letters, and a cease-and-desist to TransAm; CRST then sued TransAm for intentional interference with contract, interference with prospective economic advantage, and unjust enrichment.
- District court denied TransAm’s Rule 19 motion to dismiss (drivers not indispensable), granted TransAm summary judgment (finding insufficient evidence on causation for intentional interference and no unjust enrichment), and dismissed CRST’s claims; both sides appealed.
- The Eighth Circuit: (1) reversed the grant of summary judgment as to intentional interference and unjust enrichment, finding genuine disputes on causation and improper inducement and that TransAm received a benefit from hiring CRST-trained drivers; (2) affirmed that the drivers are not indispensable parties and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument (CRST) | Defendant's Argument (TransAm) | Held |
|---|---|---|---|
| Did TransAm's conduct cause drivers to breach CRST contracts (causation element of intentional interference)? | TransAm knowingly offered superior terms to drivers who were under contract and thus induced breaches. | No evidence TransAm induced breach or that drivers wouldn’t have left absent TransAm. | Reversed summary judgment: genuine dispute on causation exists. |
| Was there a valid, enforceable CRST contract (non-compete) for purposes of the interference claim? | CRST: employment contracts (including non-competes) are valid and enforceable. | TransAm: non-compete is unenforceable (overbroad, lifetime ban) so contract is void. | Contract valid for purposes of the claim; non-compete is not a lifetime ban and is enforceable/severable under Iowa law. |
| Did TransAm receive an unjust enrichment from hiring CRST-trained drivers? | TransAm benefited (avoided training costs) and retaining that benefit may be unjust given possible tortious interference. | No cognizable benefit at CRST's expense; unjust enrichment depends on proving tort. | Reversed summary judgment: fact issues exist as to benefit and injustice—claim survives. |
| Were the drivers indispensable parties under Rule 19(b)? | TransAm: drivers are indispensable because only they can challenge non-competes and they would be prejudiced. | CRST: drivers are not indispensable; TransAm shares drivers’ interests and non-joinder does not prejudice. | Affirmed district court: drivers are not indispensable; court did not abuse discretion. |
Key Cases Cited
- Green v. Racing Ass'n of Cent. Iowa, 713 N.W.2d 234 (Iowa 2006) (elements and improper-motive focus for intentional interference)
- Kern v. Palmer Coll. of Chiropractic, 757 N.W.2d 651 (Iowa 2008) (Iowa adopts Restatement approach to interference claims)
- State Dep't of Human Servs. ex rel. Palmer v. Unisys Corp., 637 N.W.2d 142 (Iowa 2001) (scope and elements of unjust enrichment)
- Orkin Exterminating Co. v. Burnett, 146 N.W.2d 320 (Iowa 1966) (upholding reasonable non-compete duration as enforceable)
- Farm Bureau Serv. Co. of Maynard v. Kohls, 203 N.W.2d 209 (Iowa 1972) (courts may limit/partially enforce unreasonable covenants)
- Ehlers v. Iowa Warehouse Co., 188 N.W.2d 368 (Iowa 1971) (non-competes contrary to public policy may be void)
- DuTrac Cmty. Credit Union v. Radiology Grp. Real Estate, L.C., 891 N.W.2d 210 (Iowa 2017) (contract interpretation based on four corners of the document)