840 N.W.2d 465
Neb.2013Background
- Arlene Easter worked for First Express as a crop-insurance agent under a written agreement that referenced an Exhibit A (a customer list) that was never attached; agreement contained confidentiality and noncompete/nonsolicitation language (noncompete later redacted at trial).
- On resigning, Arlene downloaded an agency commission/customer list from First Express’s carrier portal and shortly thereafter moved most of her customers to her son Mark’s competing agency.
- First Express sued Arlene for breach of contract and sued Arlene, Mark, and Mark’s agency for misappropriation of trade secrets and unjust enrichment. A jury awarded damages on all claims.
- District court entered judgment apportioning liability: Arlene individually for the bulk of the contract award and joint-and-several liability with Mark and his agency for the trade-secret and unjust-enrichment awards.
- On appeal the Nebraska Supreme Court considered (1) whether Arlene preserved arguments that the contract was unenforceable, (2) whether the customer list was a trade secret under Nebraska’s Trade Secrets Act, (3) whether unjust enrichment could apply alongside breach of contract, and (4) whether Mark could be personally liable for unjust enrichment without piercing the corporate veil.
Issues
| Issue | Plaintiff's Argument (First Express) | Defendant's Argument (Arlene / Mark) | Held |
|---|---|---|---|
| Enforceability of underlying contract (Exhibit A / completeness) | Contract is valid and Arlene breached its confidentiality provisions | Arlene: no meeting of the minds about Exhibit A and other provisions, so contract unenforceable | Arlene failed to preserve argument in district court; appellate court refused to consider it and affirmed breach finding |
| Whether customer list is a trade secret under Neb. Rev. Stat. §87-502(4) | List is proprietary, compiled, and economically valuable | Arlene/Mark: information is ascertainable by proper means and not a trade secret | List not a trade secret as a matter of law because customers’ identities/contact and other data were obtainable by proper means; trade-secret verdicts reversed |
| Unjust enrichment as alternate recovery alongside breach of contract | First Express can plead alternate theories; jury awarded on both contract and unjust enrichment | Arlene: unjust enrichment cannot apply when express contract governs same conduct | Liability under contract displaces unjust enrichment; Arlene cannot be liable on unjust-enrichment claim for the same conduct; unjust-enrichment portion vacated as to Arlene |
| Personal liability of Mark for unjust enrichment (corporate-shareholder benefits) | First Express: Mark personally benefited (ownership increase, payoff to shareholder) | Mark: any benefit flowed to corporation; personal liability requires piercing corporate veil | Verdict against Mark reversed: no evidence of personal unjust enrichment nor grounds to pierce corporate veil; corporate-profits protection applies |
Key Cases Cited
- Home Pride Foods v. Johnson, 262 Neb. 701 (Neb. 2001) (customer lists not protected when information is publicly ascertainable)
- Washa v. Miller, 249 Neb. 941 (Neb. 1996) (unjust enrichment cannot be double-counted alongside contract remedy)
- City of Scottsbluff v. Waste Connections of Neb., 282 Neb. 848 (Neb. 2011) (contract liability displaces unjust enrichment)
- Bigio v. Coca-Cola Co., 675 F.3d 163 (2d Cir. 2012) (courts generally require veil-piercing evidence before imposing shareholder liability for corporate gains)