American Builders & Contractors Supply Co. v. Roofers Mart, Inc., No. 1:11-CV-19 (CEJ)

CourtUnited States District Courts. 8th Circuit. United States District Court (Eastern District of Missouri)
Writing for the CourtCAROL E. JACKSON
PartiesAMERICAN BUILDERS & CONTRACTORS SUPPLY CO., INC., Plaintiff, v. ROOFERS MART, INC., et al., Defendants.
Docket NumberNo. 1:11-CV-19 (CEJ)
Decision Date24 July 2012

AMERICAN BUILDERS & CONTRACTORS SUPPLY CO., INC., Plaintiff,
v.
ROOFERS MART, INC., et al., Defendants.

No. 1:11-CV-19 (CEJ)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MISSOURI SOUTHEASTERN DIVISION

Date: July 24, 2012


MEMORANDUM AND ORDER

Before the Court are the separate motions of defendant Bernard Miller and defendant Roofers Mart, Inc. for summary judgment. Plaintiff opposes the motions and the issues have been fully briefed.

I. Background

Plaintiff is a construction supply company that distributes and sells exterior building products. Miller was the manager of plaintiff's Cape Girardeau branch and was responsible for the day-to-day operations of the facility. As a member of the plaintiff's Managing Partner Program, Miller signed an agreement that contained a number of restrictive covenants. The covenants prohibited Miller---during his employment and for one year after termination of his employment---from soliciting plaintiff's customers; inducing or encouraging plaintiff's employees to resign; inducing or encouraging customers or vendors to terminate or modify their relationship with plaintiff; competing within 25 miles of the Cape Girardeau branch; and disclosing or using plaintiff's confidential information. The agreement also provided that "promptly" after any

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termination of his employment, Miller was to return all customer lists, records, and product information he acquired during his employment.

Defendant Roofers Mart is also in the construction supply business and is a competitor of plaintiff's in the Cape Girardeau area. At all relevant times, Jared Cruzen was the general manager of Roofers Mart. Cruzen was a close friend of Miller's; he also knew several other employees of plaintiff from college. In October 2010, Cruzen approached Miller about the possibility of coming to work for Roofers Mart. A tour of Roofers Mart's St. Louis facility was arranged for Miller who invited defendant Michael Burger to come along. Burger was an outside salesman that Miller supervised. Burger did not have a written contract with plaintiff and was not subject to any restrictive covenants or to a non-compete agreement. Cruzen had met Burger previously and knew of his reputation as a salesman. Thus, Cruzen expanded his recruitment efforts to include Burger. After a number of conversations and meetings, Roofers Mart extended job offers to Miller and Burger.

In mid-January 2011, Cruzen contacted the three employees of plaintiff's that he knew from college to talk to them about coming to work for Roofers Mart. With Burger's assistance, Cruzen arranged to meet with two additional employees. All five employees were hourly-wage workers; they did not have written employment contracts with plaintiff and they were not bound by any restrictive covenants. The five employees and Burger attended a dinner meeting with Cruzen and Bill Vierling, the owner of Roofers Mart, to discuss job opportunities. Ultimately, Roofers Mart extended offers of employment to the five employees.

On January 19, 2011, Burger told Miller that he had accepted the job offer from Roofers Mart. At Miller's request, Burger came into the office the next day and

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tendered his formal resignation. The five employees recruited by Roofers Mart also tendered their resignations on January 20, 2011. On January 21, Miller notified plaintiff that he, Burger and the five employees were resigning. Burger and the other employees began working at Roofers Mart's Cape Girardeau location on January 24, 2011. Miller began working as the branch manager of Roofers Mart's branch in Marion, Illinois.

On January 10, 2011, prior to his resignation, Miller copied computer files that contained pricing and historical sales data from plaintiff's computer onto a flash drive. Miller took the flash drive with him when he resigned. On January 25, 2011, after learning that Miller had taken the files, plaintiff sent a letter demanding that Miller return its proprietary information. Miller forwarded the letter to Roofers Mart, and it was at that point that Roofers Mart first learned of the flash drive. Miller accessed the files on January 24, 2011 and January 28, 2011, before handing over the flash drive to his attorney pursuant to a stipulated temporary restraining order entered by the Court on February 15, 2011.

Plaintiff brings this actions asserting claims of misappropriation of trade secrets, breach of duty of loyalty and fiduciary duty, breach of contract, unfair competition, civil conspiracy, and tortious interference with a contract. During discovery it was learned that Miller had used his personal laptop computer to access the flash drive. Miller refused to produce the laptop until he was ordered to do so on November 28, 2011. By that time, however, Miller had reinstalled the laptop's operating system, thus over-writing some of the data on the hard drive.

Plaintiff filed a motion for sanctions against Miller and Roofers Mart for spoliation of evidence. The Court granted the motion as to Miller after concluding that he had

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reinstalled the operating system to prevent plaintiff from determining the contents of the laptop's hard drive. The Court ruled that an adverse inference instruction was the appropriate sanction to remedy the loss of evidence caused by Miller. The adverse inference instruction allows the trier of fact to infer from Miller's destruction of evidence that the lost evidence was beneficial to plaintiff's claims against Miller. The inference is also rebuttable in that defendants may present evidence that the lost evidence was not prejudicial. No sanction was imposed against Roofer's Mart.

II. Legal Standard

Rule 56(a) of the Federal Rules of Civil Procedure provides that summary judgment shall be entered if the moving party shows "that there is no genuine dispute as to any material fact and the movant is entitled to a judgment as a matter of law." In ruling on a motion for summary judgment the court is required to view the facts in the light most favorable to the non-moving party and must give that party the benefit of all reasonable inferences to be drawn from the underlying facts. AgriStor Leasing v. Farrow, 826 F.2d 732, 734 (8th Cir. 1987). The moving party bears the burden of showing both the absence of a genuine issue of material fact and its entitlement to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986); Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). Once the moving party has met its burden, the non-moving party may not rest on the allegations of his pleadings but must set forth specific facts, by affidavit or other evidence, showing that a genuine issue of material fact exists. United of Omaha Life Ins. Co. v. Honea, 458 F.3d 788, 791 (8th Cir. 2006) (quoting Fed. R. Civ. P. 56(e)). Rule 56 "mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish

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the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corporation v. Catrett, 477 U.S. 317, 322 (1986).

III. Discussion

A. Claims Against Miller

1. Trade Secret Misappropriation, Breach of Duty of Loyalty, Breach of Contract and Civil Conspiracy

In light of the adverse inference sanction against Miller, combined with the evidence in the record, the Court finds that Miller is not entitled to summary judgment on plaintiff's claims of misappropriation of trade secrets (Count I), breach of contract (Count II), breach of the duty of loyalty (Count III), and civil conspiracy (Count V). Miller's argues that lack of evidence would preclude a reasonable juror from finding at least one of the elements required for each of plaintiff's claims. This argument fails when the adverse inference sanction is considered. Although the electronic data lost though Miller's spoliation was crucial to plaintiff's trade secrets claim, the email fragment recovered from the unallocated portion of the hard drive also reasonably suggests that information beneficial to plaintiff's other claims was erased from the hard drive. The reasonable inferences that could be drawn from the Miller's spoliation, in combination with the evidence submitted by plaintiff, preclude summary judgment in favor of Miller on these claims.

2. Breach of Fiduciary Duty

In Count III, plaintiff asserts a claim of breach of fiduciary duty in...

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