Tension Envelope Corporation v. JBM Envelope Company
876 F.3d 1112
| 8th Cir. | 2017Background
- Tension Envelope bought specialized "small, open-end" envelopes from JBM beginning in 2000–2001; three customers represented a large share of Tension’s sales.
- JBM allegedly assured Tension it would not sell directly to Tension’s customers but repeatedly refused to sign a non-compete; Tension continued placing purchase orders and leased manufacturing equipment to JBM.
- New JBM management (from ~2011) pursued direct sales; by 2014 JBM had obtained two of Tension’s three major customers and sought the third.
- Tension sued in 2014 asserting breach of contract (requirements contract), promissory estoppel, fraudulent misrepresentation, fraudulent nondisclosure, tortious interference, unfair competition, and trade-secret misappropriation; district court dismissed the trade-secret claim on the pleadings and granted summary judgment for JBM on the remainder.
- The Eighth Circuit reviewed de novo and affirmed summary judgment/dismissal on all claims, applying Missouri substantive law and the Missouri statute of frauds where relevant.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract (requirements contract) | An enforceable requirements/ exclusivity agreement existed (JBM promised to use best efforts and give reasonable notice). | No written agreement satisfies Missouri statute of frauds for goods ≥ $500; documents only reference a "partnership," not exclusivity or quantity terms. | No enforceable requirements contract; statute of frauds bars contract. |
| Promissory estoppel | Oral assurances and conduct created enforceable promise despite lack of writing. | Statute of frauds bars contract claims—Missouri bars promissory estoppel to circumvent statute except in extraordinary cases. | Barred by statute of frauds; no extraordinary circumstances. |
| Fraudulent misrepresentation | JBM made false statements ("trade-only manufacturer," promises to be a good partner, agree to copy communications) with present intent not to perform. | Statements were vague or true in context; Tension knew JBM sold to some end users and repeatedly sought a non-compete, undermining justifiable reliance. | Summary judgment for JBM: Tension failed to show falsity or reasonable right to rely. |
| Fraudulent nondisclosure | JBM had a duty to disclose plans to pursue direct sales. | No duty to disclose business strategy absent special circumstances; consummation-related Restatement provisions inapplicable; Tension lacked right to rely. | Summary judgment for JBM: no duty to disclose and reliance unjustified. |
| Tortious interference | JBM induced breaches and used improper means (alleged disparagement and use of confidential shipping info). | Economic interest justified competition; evidence does not support assertions of disparagement or improper means. | Summary judgment for JBM: insufficient evidence of improper means or induced breach. |
| Unfair competition | JBM’s scheme to "steal" customers was unfair and deceptive. | Competitive conduct alone is lawful; no deceptive act shown. | Summary judgment for JBM: no actionable unfair competition. |
| Trade-secret misappropriation | Customer identities and unique customer requirements are trade secrets misappropriated by JBM. | Customer identities/requirements are not protectable trade secrets under Missouri law. | Rule 12(b)(6) dismissal affirmed: customer identities and requirements are not trade secrets under controlling Missouri precedent. |
Key Cases Cited
- Essco Geometric v. Harvard Indus., 46 F.3d 718 (8th Cir. 1995) (defines requirements contract and explains statute-of-frauds implications)
- Freitas v. Wells Fargo Home Mortg., Inc., 703 F.3d 436 (8th Cir. 2013) (elements of fraudulent misrepresentation and reliance analysis)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S. 1986) (standard for summary judgment and reasonable jury inference)
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (summary judgment burden-shifting principles)
- Western Blue Print Co. v. Roberts, 367 S.W.3d 7 (Mo. 2012) (customer identities are not trade secrets under Missouri law)
- Empire Gas Corp. v. Small’s LP Gas Co., 637 S.W.2d 239 (Mo. Ct. App. 1982) (mutual recognition of uncertainty and lack of justified reliance when parties insist on protective agreements)
- Nazeri v. Mo. Valley Coll., 860 S.W.2d 303 (Mo. 1993) (elements and defenses for tortious interference)