Cooper Tire & Rubber Co. v. Farese

• Decision Date: 23 August 2005
• Docket Number: No. 04-60774.,04-60774.
• Citation: 423 F.3d 446
• Parties: COOPER TIRE & RUBBER CO., Plaintiff-Appellant, v. John Booth FARESE, Farese, Farese & Farese Professional Association, John Does A-A, Clyde Tab Turner, Turner & Associates P.A., Bruce R. Kaster, Bruce Kaster, P.A., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

423 F.3d 446

COOPER TIRE & RUBBER CO., Plaintiff-Appellant, v. John Booth FARESE, Farese, Farese & Farese Professional Association, John Does A-A, Clyde Tab Turner, Turner & Associates P.A., Bruce R. Kaster, Bruce Kaster, P.A., Defendants-Appellees.

No. 04-60774.

United States Court of Appeals, Fifth Circuit.

August 23, 2005.

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Randall Alan Smith (argued), Laura Hawkins Davis, Smith & Fawer, New Orleans, LA, Stephan Land McDavid, McDavid & Associates, Oxford, MS, Scott Burnett Smith, Bradley, Arant, Rose & White, Huntsville, AL, for Plaintiff-Appellant.

Dana Jan Swan (argued), Chapman, Lewis & Swan, Clarksdale, MS, Guthrie Turner Abbott, University of Mississippi, School of Law, Oxford, MS, for John Booth Farese and Farese, Farese & Farese Professional Ass'n.

Grady F. Tollison, Jr. (argued), Amanda Povall Tailyour, Tollison Law Firm, Oxford, MS, for Bruce R. Kaster and Bruce R. Kaster P.A.

Before HIGGINBOTHAM, BARKSDALE and CLEMENT, Circuit Judges.

RHESA HAWKINS BARKSDALE, Circuit Judge:

For this diversity action to which Mississippi law applies, Cooper Tire & Rubber Co. contests the summary judgment awarded John Booth Farese, Bruce Kaster, and their law firms against Cooper Tire's claims for tortious interference with contract and business relations and for civil conspiracy. Cooper Tire alleges: Cathy Barnett, upon ending her employment at Cooper Tire, signed a separation agreement that contained a non-disparagement clause; nevertheless, she executed an affidavit, prepared with Farese, containing false and disparaging statements about Cooper Tire; despite knowledge of the separation agreement, Farese provided Barnett's affidavit to another attorney, who provided it to Kaster, for use in pending litigation in Arkansas against Cooper Tire; despite knowledge of the separation agreement, Kaster leaked the affidavit to the media; as a result, Cooper Tire sustained extremely substantial losses to its stock value; and Kaster paid Farese $50,000 after the Arkansas litigation was settled. The district court erred in holding that, as a matter of law, the separation agreement is void for illegality and unconscionability; in addition, material fact issues preclude summary judgment. VACATED and REMANDED.

I.

This litigation springs from the affidavit by Barnett, a former Cooper Tire employee at its plant in Tupelo, Mississippi. When the affidavit was prepared with Farese, Barnett was in the process of having her employment terminated for allegedly embezzling gift certificates and college football tickets from Cooper Tire's company picnic fund. In exchange for its not filing criminal charges, Cooper Tire required Barnett to execute the separation agreement, which, inter alia, contained the following non-disparagement clause:

I agree (a) not to make any public statement or statements to the media or, directly or indirectly, provide information of any kind, whether written or nonwritten, to, or otherwise collaborate in any way in the taking of any action with, any third party concerning Cooper Tire, without first receiving the written approval of Cooper Tire; and (b) not to take action or make any statements which could cause Cooper Tire any embarrassment or humiliation or otherwise reflect negatively on Cooper Tire or cause Cooper Tire to be held in disrepute. In the event of a violation of the terms and conditions of this Section, I agree Cooper Tire shall have the right to seek any injunctive, equitable and other legal relief available to it.

(Emphasis added.)

The separation agreement, which was prepared on or about 4 October 2001, advised Barnett to seek legal representation before signing it. Barnett retained Farese of Farese, Farese & Farese, P.A., in Ashland, Mississippi. During their initial meeting on 12 October 2001, Barnett informed Farese that she and another employee, Sheila Hall, had burned documents at the behest of Hogan Cooper, her manager at Cooper Tire; the documents were allegedly discoverable in pending litigation in Arkansas. See Whitaker v. Cooper Tire & Rubber Co., No. 2:99CV00220 (E.D.Ark. 2002).

While Barnett was still at Farese's office, and without her knowledge, Farese telephoned Tab Turner, a products liability lawyer in Arkansas who, Farese remembered, had recently obtained a large verdict against Cooper Tire in Mississippi. The telephone conversation lasted approximately 40 minutes. Turner suggested that Farese acquire "a lot" of detailed information from Barnett.

After Farese had talked with Turner, he drafted an affidavit for Barnett, containing her document-burning statements. She executed it that day. Almost immediately after it was executed, Farese telephoned Turner and read the affidavit to him.

A few days later (16 October), Cooper Tire emailed to Farese its proposed separation agreement (prepared initially on or about 4 October). Among changes proposed by Farese, he made the following to its non-disparagement clause, in order to: (1) shift the separation agreement's effective date from 4 to 31 October; and (2) make the clause prospective, by inserting "hereafter" before its operative language. Farese emailed the revised separation agreement to Cooper Tire on 18 October.

Almost immediately after emailing his proposed revisions to Cooper Tire, and without Barnett's knowledge, Farese faxed her affidavit to Tab Turner; the cover sheet stated "Tab (a/k/a Lucky Dog): attached is a copy of the affidavit". Prior to this email, Farese had never addressed Turner as "Lucky Dog". (As developed in subsequent discovery, Farese believed that, had he provided the affidavit to Turner after Barnett signed the separation agreement, "we would have breached the separation agreement".)

Cooper Tire rejected Farese's proposed changes to the non-disparagement clause and the separation agreement's effective date, but did acquiesce in a number of other changes. Executed by Barnett on 23 October 2001, the separation agreement states, inter alia: "I hereby voluntarily resign from employment at Cooper Tire effective October 4, 2001 . . . ."; "This Agreement does not become effective or enforceable until seven (7) days from the date on which I execute this Agreement (the `Effective Date')"; and, at the bottom of the final page, "Effective Date: October 4, 2001". (Emphasis added.)

On 22 October 2001 (the day before Barnett executed the separation agreement), Turner emailed Kaster and Paul Byrd, plaintiffs' counsel in the Arkansas Whitaker action, to inform them of the existence of Barnett's affidavit, but did not disclose her identity, stating: "She is not yet ready to come forward due to a pending employment problem, but is very concerned about what she has done". On the other hand, Turner did provide Kaster and Byrd with a general overview of the affidavit's contents and ended by stating:

I thought you should know about this so you can ask some questions to set the situation up. I would suggest that you be VERY careful about how you do this so as not to tip anyone off about what you might know.

Subsequent to this email, Byrd and his partner, James Swindoll, telephoned Turner repeatedly, asking whether the affiant was ready to come forward. By a 5 March 2002 email, Turner disclosed Barnett's identity to Byrd. Swindoll soon obtained a copy of the affidavit from Turner and provided it to Kaster.

The week after obtaining the affidavit, Byrd met with Farese at his law office in Ashland, Mississippi, where they discussed Barnett, her affidavit, and what Farese knew about Sheila Hall (as noted, she is identified in Barnett's affidavit as having burned documents with Barnett). At his deposition in this action, Byrd testified that Farese informed him he would have to subpoena Barnett if he wanted to depose her. (Cooper Tire asserts Farese did this in order to "get around the language of the separation agreement".)

Cooper Tire learned from Kaster of the affidavit's existence during a 13 March 2002 hearing in the Whitaker litigation. Kaster initially resisted Cooper Tire's requests to reveal Barnett's name and for a copy of the affidavit. The district court in Arkansas reviewed the affidavit in camera and, in mid-April 2002, ordered Kaster to produce it to Cooper Tire.

On 11 April 2002, the Whitaker plaintiffs noticed Barnett's deposition for 23 April. The record does not reflect whether she was subpoenaed. Byrd testified in his deposition in the instant action that he did so; but, he changed his testimony on the deposition errata sheet, stating he could not remember whether he had. Farese never determined the validity of the subpoena (assuming Barnett was subpoenaed); nor, prior to Barnett's deposition being noticed, did he tell her that he had been in contact with the Whitaker plaintiffs' counsel.

By a faxed 22 April 2002 letter, Farese notified Greg Meyers, Cooper Tire's counsel, of Barnett's deposition, set for 23 April. Farese asked if Meyers believed the separation agreement prevented Barnett's testifying; advised Barnett had done nothing since the execution of the separation agreement to violate it; and claimed the separation agreement became effective 31 October 2001.

By a faxed 23 April letter, Meyers responded that the separation agreement did not prevent Barnett from being deposed pursuant to a valid federal court subpoena. Meyers took exception, however, to Farese's assertion that Barnett had done nothing since the execution of the separation agreement that would violate its terms. Meyers asserted: the separation agreement stated the effective date was 4 October 2001; the affidavit was in violation of the agreement; and if Barnett had executed the affidavit prior to executing the agreement, then it was bad faith not to disclose this to Cooper Tire.

By a faxed 24 April letter, Farese replied to Meyers: "You are correct about the effective date of the agreement; it was October 4, 2001". (Emphasis added.) He stated, however, that the...