Thomas Kmak v. American Century Companies
754 F.3d 513
| 8th Cir. | 2014Background
- Kmak was hired in 1990 to develop American Century's Retirement Plan Services division and bought 238,000 shares via stock option plans in 2003 and 2005.
- Stock Restriction Agreements gave American Century a continuing right to call shares for cash value after certain events, including retirement or termination.
- From 1998–2003 the division operated as a JPMorgan joint venture; JPMorgan later bought it, and Kmak left for JPMorgan.
- Kmak testified in JPMorgan arbitration in March 2011; American Century allegedly treated that testimony unfavorably.
- In May 2011 American Century reminded Kmak it could call his shares; after arbitration concluded in December 2011, it called only Kmak's shares on December 9, 2011, depriving him of two 2011 dividends.
- Kmak sued in August 2012 for breach of the implied covenant of good faith and fair dealing; the district court dismissed for failure to state a claim under Rule 12(b)(6).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the complaint states a public-policy-based breach of the implied covenant. | Kmak (Kmak) alleges retaliation for truthful testimony violated public policy. | American Century claims discretionary call rights were unqualified contractual rights not overridden by policy. | Yes; adequate for Rule 12(b)(6) alleging public-policy breach. |
| Whether Nemec v. Shrader controls dismissal. | Nemec supports public-policy relief when retaliation is alleged. | Nemec is inapplicable because it involved economically advantageous timing, not retaliation. | Nemec inapplicable; retaliation here supports plausible claim. |
| Whether Kmak adequately alleged causation and damages. | Allegations show retaliation linked to testimony and resulting damages (dividends lost). | Defense argues no public-policy breach; causation not shown. | Adequate at pleading stage to infer causation and damages. |
| Whether the district court properly dismissed portion not tied to public policy. | If any alleged conduct violated public policy, it survives. | Non-policy-based acts may be dismissed. | Dismissal reversed to the extent based on non-policy grounds; remand for further proceedings. |
Key Cases Cited
- Nemec v. Shrader, 991 A.2d 1120 (Del. 2010) (public policy retaliation distinguishes from mere economic disadvantage)
- Bishop v. Shelter Mut. Ins. Co., 129 S.W.3d 500 (Mo. Ct. App. 2004) (public policy breach requires violation of public policy or statute; at-will terminations may be excepted)
- Drury v. Mo. Youth Soccer Ass'n, 259 S.W.3d 558 (Mo. Ct. App. 2008) (witness protection public policy in retaliation claims)
- Lucero v. Curators of Univ. of Mo., 400 S.W.3d 1 (Mo. Ct. App. 2013) (breach of implied covenant requires acting contrary to good faith and fair dealing)
- Mo. Consol. Health Care Plan v. Cmty. Health Plan, 81 S.W.3d 34 (Mo. Ct. App. 2002) (breach case requires showing defendant exercised discretion contrary to public policy)