West Plains, LLC v. Retzlaff Grain Company Inc.
870 F.3d 774
| 8th Cir. | 2017Background
- Bryce Wells sold his company but eight months later formed a competing freight broker, RFG Logistics, recruiting CT Freight leaders and staff and paying some for consulting; ten CT Freight employees resigned en masse on February 5, 2013.
- CT Freight (a division of West Plains, L.L.C.) derived ~90% of revenue from the bulk hopper industry and its top 20 customers produced ~70–75% of revenue.
- Defendants took customer lists, documents, and confidential information and coordinated a simultaneous departure intended to move customer business to RFG.
- West Plains obtained a TRO and preliminary injunction prohibiting defendants from soliciting CT Freight customers until April 5, 2013, then sued for misappropriation of trade secrets, tortious interference with business relationships, breach of duty of loyalty, civil conspiracy, and other claims.
- After a jury trial, verdicts favored West Plains on tortious interference (most defendants), breach of duty of loyalty (all employee defendants), and civil conspiracy, awarding $1,513,000 in compensatory damages and ordering forfeiture of portions of employee compensation.
- The district court denied renewed JMOL and new-trial motions; the Eighth Circuit affirmed, holding the evidence supported unjustified interference, proximate causation of post-injunction losses, liability for breaches of loyalty, and the damages award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether defendants committed unjustified tortious interference with CT Freight’s business relationships | Wells and employee defendants conspired to recruit leadership, seize workforce, and divert customers; actions were intentional and unjustified under Restatement §767 factors | Recruitment and solicitation were lawful competition; injunction limited harm period and damages beyond April 5, 2013 are not proximately caused by defendants | Affirmed: evidence supported unjustified, concerted interference and proximate causation of continued losses after injunction lifted |
| Whether employee defendants breached duty of loyalty while employed | Employees provided confidential info to Wells, signed consultative agreements, planned mass resignation to move customers—conduct substantially hindered employer | Employees left at will; same acts supporting interference cannot also support loyalty breach | Affirmed: jury reasonably found breaches of loyalty based on concerted, disloyal planning and transfers of confidential info |
| Proper measure and admissibility of damages (total loss/market value vs. lost profits) | West Plains presented expert valuing CT Freight and evidence of major customer loss to RFG; jury may consider total value or lost profits as supported by evidence | Defendants argued total-loss valuation improper where business not completely destroyed; expert testimony and damages instruction prejudiced defendants | Affirmed: expert sufficiently founded; Nebraska law permits lost-profits/market-value evidence; jury instructions adequate; damages not excessive |
| Forfeiture of employee compensation for disloyal periods | Plaintiff sought forfeiture for periods of disloyalty; jury allocated forfeiture by employee based on involvement | Defendants argued forfeiture excessive and amounted to windfall including loyal-period pay | Affirmed: forfeitures supported by evidence of scope and timing of disloyal conduct; amounts reasonable for jury to award |
Key Cases Cited
- Huff v. Swartz, 606 N.W.2d 461 (Neb. 2000) (elements and framework for tortious interference with business relationships)
- Koster v. P & P Enters., 539 N.W.2d 274 (Neb. 1995) (related authority on interference elements)
- Vigoro Indus., Inc. v. Crisp, 82 F.3d 785 (8th Cir. 1996) (discusses limits on damages for pre-resignation solicitation and lost-profit theories)
- Synergetics, Inc. v. Hurst, 477 F.3d 949 (8th Cir. 2007) (same wrongful conduct can support multiple tort theories)
- ACI Worldwide Corp. v. Baldwin Hackett & Meeks, Inc., 896 N.W.2d 156 (Neb. 2017) (Nebraska precedent upholding large lost-profits awards where supported by evidence)