IBP Confidential Business Documents Litigation, In re
| Citation | 797 F.2d 632 |
| Decision Date | 11 September 1986 |
| Docket Number | No. 83-1894,83-1894 |
| Parties | , 13 Media L. Rep. 1113 In re IBP CONFIDENTIAL BUSINESS DOCUMENTS LITIGATION. Hughes A. BAGLEY, Appellee, v. IOWA BEEF PROCESSORS, INC., Appellant. |
| Court | United States Courts of Appeals. United States Court of Appeals (8th Circuit) |
Don H. Reuben, Chicago, Ill., for appellant.
William J. Rawlings, Sioux City, Iowa, for appellee.
Before LAY, Chief Judge, and HEANEY, BRIGHT, * ROSS, McMILLIAN, ARNOLD, John R. GIBSON, FAGG, and BOWMAN, Circuit Judges, En Banc.
Iowa Beef Processors, Inc. (IBP) appeals from the judgment of the district court awarding Hughes A. Bagley, a former IBP employee, $7 million in compensatory and punitive damages as well as $2.33 million in prejudgment interest. That judgment was entered on three distinct claims: (1) libel; (2) tortious interference with present employment; and (3) tortious interference with future employment opportunities.
IBP's challenge to the district court's judgment has previously been considered by a panel of this court. Bagley v. Iowa Beef Processors, Inc., 755 F.2d 1300 (8th Cir.1985). Given the important issues raised by this case, however, IBP's appeal has now been considered by the court en banc. After carefully considering each of the issues raised by IBP, we affirm in part, reverse in part, and remand Bagley's libel claim to the district court for a new trial.
Late in 1977, the Subcommittee on General Small Business Problems of the House of Representatives Committee for Small Business (the Subcommittee) initiated an investigation into various aspects of the meat industry. The Subcommittee's goal in undertaking the investigation was essentially two-fold. First, the Subcommittee hoped to identify business practices employed in the meat industry that affect adversely the competitive position of small meatpackers. Second, and more important, the Subcommittee hoped to determine whether existing laws were sufficient to ensure the continued presence of healthy competition in the meat industry.
During its investigation, the Subcommittee closely examined the activities of various meatpackers. Over the course of its investigation, however, the Subcommittee's interest came to focus most sharply on the activities of one particular meatpacker. That meatpacker was IBP.
The Subcommittee's interest in IBP was hardly surprising. Over the course of a relatively few years, IBP had grown into the largest processor of beef in the United States, and by the very nature of its size, IBP was viewed by many to be in a position to influence significantly the overall structure and development of the meat industry. Further, and equally as significant to the Subcommittee were various IBP business activities that in the past had attracted substantial public attention. These activities, while often innovative, had at times also been highly controversial. In fact, IBP on a number of occasions had found itself the target of antitrust litigation, adverse publicity, and violent union confrontation.
In the course of its activities, the Subcommittee conducted a number of public hearings. During these hearings, a variety of witnesses appeared and testified concerning IBP and its impact on the meat industry. Several of these witnesses specifically accused IBP of engaging in anticompetitive practices.
As part of its overall investigation, the Subcommittee, in November of 1978, subpoenaed a large number of documents then under protective order in the United States District Court for the Southern District of Iowa. At that time, the ownership of these documents was at the center of a lawsuit filed by IBP against Hughes A. Bagley, a former IBP executive vice president. See IBP, Inc. v. Bagley, 754 F.2d 787 (8th Cir.1985).
Bagley, an individual with thirty years experience in the meat industry, had been an executive with IBP from December of 1971 until July of 1975. In July of 1975, Bagley was abruptly fired by IBP and was ordered to leave immediately. Bagley left immediately, but in so doing took with him from his personal files the documents that three years later became the focus of IBP's lawsuit against him. These documents, numbering many thousands of pages, included IBP weekly profit and loss statements, IBP monthly production and sales reports, confidential legal memoranda, and memoranda outlining IBP's goals, marketing strategies, and pricing formulas.
The events leading to IBP's lawsuit against Bagley took place in late 1977 and early 1978. During that period, Bagley met privately with and in several cases provided IBP documents to a number of individuals, including several attorneys who at that time were involved in (or hoped to become involved in) extensive antitrust litigation against IBP and several other meatpackers. Shortly after these meetings and during the course of the antitrust litigation, IBP learned of Bagley's activities and of his possession of internal IBP documents. See Meat Price Investigators Association v. Iowa Beef Processors, Inc., 448 F.Supp. 1, 2-4 (S.D.Iowa 1977), aff'd, 572 F.2d 163, 164-65 (8th Cir.1978).
At that point, IBP instituted its action against Bagley. In that action, IBP sought to recover possession of the documents. IBP also accused Bagley of violating a termination agreement that had been entered into by Bagley with IBP following Bagley's departure from IBP.
As part of IBP's lawsuit, the district court placed a protective order on the IBP documents in Bagley's possession. That order was in place when the Subcommittee's subpoena duces tecum was issued to Bagley. On Bagley's motion, the district court partially lifted the protective order to enable Bagley to comply with the Subcommittee subpoena. See Iowa Beef Processors, Inc. v. Bagley, 601 F.2d 949 (8th Cir.), cert. denied, 441 U.S. 907, 99 S.Ct. 1997, 60 L.Ed.2d 376 (1979).
After examining the subpoenaed documents, the Subcommittee, in January of 1979, subpoenaed Bagley personally. Under subpoena, Bagley met with Subcommittee investigators in January and answered questions concerning the subpoenaed documents. Bagley was also subpoenaed to testify before the Subcommittee, and in July of 1979, Bagley again met with Subcommittee investigators to answer additional questions concerning the IBP documents.
Prior to the hearings at which Bagley was scheduled to testify, Subcommittee Chairman Neal Smith of Iowa sent a letter on behalf of the Subcommittee to IBP President Robert Peterson. In that letter, Congressman Smith invited IBP to send a representative to Washington to testify before the Subcommittee during its July hearings.
Congressman Smith stated that any representative sent by IBP would appear "under oath" and would have an opportunity to present a "written statement" as well as make an "oral presentation of reasonable length." Following that presentation, IBP's representative would be "questioned" by the members of the Subcommittee. See Small Business Problems in the Marketing of Meat and Other Commodities: Hearings Before the Subcommittee on SBA and SBIC Authority and Small Business Problems of the House Committee on Small Business, 96th Cong., 1st Sess. 3 (1979).
In his letter, Congressman Smith also specifically identified those topics of central interest to the Subcommittee. The topics mentioned by Congressman Smith included matters raised by the so-called "Bagley documents," the reported expansion efforts of IBP into the western portion of the United States, matters involving the labor and transportation practices and relationships of IBP, activities of IBP in the areas of meat pricing and cattle futures, the procurement practices of IBP in obtaining live cattle for slaughter and other possible topics.
Id. In essence, these topics touched upon the various concerns regarding IBP's activities that had been raised during the course of the Subcommittee's investigation.
In closing the letter, Congressman Smith emphasized the seriousness of the Subcommittee's investigation, stating:
As you know, a great deal of testimony received by the Subcommittee has been in regard to Iowa Beef Processors. If new legislation or rules are enacted to limit dominance by any companies in the meat industry or to ensure that enough competition remains in the industry to prevent undesirable economic consequences, it is clear that Iowa Beef Processors will be one of the companies most affected.
The Subcommittee reconvened on July 23, 1979. During two days of hearings, Bagley was the only witness to appear and testify. In his two days of testimony, Bagley (under questioning) addressed a number of topics related to various IBP business practices. These topics included IBP's company goals, IBP's pricing practices, and IBP's dealings with other meatpackers.
One topic discussed by Bagley during his testimony is particularly relevant to the present dispute. That topic concerned an IBP quantity discount program offered on its Cattle-Pak boxed beef product. In general terms, boxed beef is a method of processing and marketing beef in which IBP, rather than the retailer, fully processes the beef carcass into primal and subprimal cuts. These cuts are then individually packed in vacuum-sealed plastic bags and shipped individually or in units (as is the case with Cattle-Pak) to retailers. Not only is this an efficient method of processing beef, but because much of the bone and fat that would otherwise be shipped to retailers is removed by IBP during processing, shipping costs are substantially reduced.
Bagley testified that in its inception, the Cattle-Pak discount program, which, according to Bagley, was offered only to IBP's biggest customers, was intended to reflect and pass on a portion of the cost savings realized by IBP from high volume sales. Bagley stated, however, that the corporation failed to justify or document the supposed cost reductions prior...
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