Farm Credit Servs. of Am. v. Mens
| Decision Date | 21 April 2020 |
| Docket Number | 8:19-CV-14 |
| Citation | 456 F.Supp.3d 1173 |
| Parties | FARM CREDIT SERVICES OF AMERICA, FLCA, Plaintiff, v. Kathy MENS, Defendant. |
| Court | U.S. District Court — District of Nebraska |
Christopher R. Hedican, David P. Kennison, Baird, Holm Law Firm, Omaha, NE, for Plaintiff.
Kathryn A. Dittrick, Rhianna A. Kittrell, Fraser, Stryker Law Firm, Omaha, NE, for Defendant.
This case arises out of an employment relationship and covenant not to compete between Farm Credit Services of America, FLCA ("Farm Credit") and its former employee, Kathy Mens. See Filing 1. Farm Credit, a crop insurance broker, employed Mens to sell crop insurance policies. Filing 1 at 2. After Mens no longer worked for Farm Credit, Farm Credit filed this action seeking damages for Mens's alleged breach of the covenant not to compete and enforcement of the same via both preliminary and permanent injunctions. Filing 1 at 7-8. Mens counterclaimed alleging Farm Credit terminated her because of her age and sex. Filing 39 at 8-10. This matter now comes before the Court on (1) Mens's Motion for Partial Summary Judgment (Filing 46) seeking dismissal of Farm Credit's Complaint, (2) Farm Credit's Motion for an Order of Civil Contempt (Filing 41), and (3) Mens's Motion to Stay (Filing 54) any contempt decision pending resolution of her summary judgment motion.
In summary, Mens argues the covenant not to compete is unenforceable because it is overbroad and also that Farm Credit cannot show any damages resulting from any breach of the covenant not to compete. Farm Credit responds that the covenant not to compete is enforceable, and Mens's breach thereof has caused it damages or that the causation of damages is at least disputed. Also, Farm Credit requests the Court find Mens in contempt for violation of the Court's preliminary injunction orders.
The Court finds that the covenant not to compete is valid and enforceable. The Court also finds that there is a dispute of material fact as to causation of damages except as related to a select few customers. Thus, the Court denies in part and grants in part Mens's Motion for Partial Summary Judgment. Based on the valid covenant not to compete and Mens's actions, the Court also finds Mens in contempt of the Court's prior order, but because of the circumstances, declines to award any damages or to impose sanctions.
Mens sells crop insurance in Iowa and obtained her license to do so in 1988. Filing 49-2 at 3. She then began selling crop and personal insurance for Midwest Insurance Corporation ("Midwest"), formally known as Agri Business Insurance Consultants, as an insurance sales agent. Filing 49-2 at 4. At one point, Mens ran Midwest's crop insurance department. Filing 49-2 at 7. During her time at Midwest, Mens developed business relationships with many customers through her personal contacts and community connections. Filing 49-2 at 5; Filing 66-1 at 2-4. Mens worked for Midwest for twenty-four years until 2012. Filing 49-2 at 4.
During her insurance career, Mens learned that the federal government regulates crop insurance and effectively sets crop insurance prices. Filing 49-2 at 13. The government sets prices for the majority of crops in February prior to the upcoming season.2 Filing 49-2 at 13. Insurance policies must be purchased by March 15 and the majority of insurance policies are sold between February 1 and March 15 each year. Filing 49-2 at 13.
In 2012, Mens left Midwest and began working for Farm Credit as a crop insurance agent. Filing 49-2 at 4. Farm Credit is a federal Farm Credit System affiliate that provides credit and financial services, including various forms of crop insurance, to farmers and ranchers. Filing 1 at 2. After Mens began working for Farm Credit, approximately fifty customers, with whom she had developed relationships prior to and while working at Midwest, transferred their business to Farm Credit. Filing 49-2 at 16, 23, 26. Those customers included Bud Robey ("Robey"), Melissa Eshelman, Jared Eshelman, Audrey Eshelman, and Clay Ag Enterprises, all of whom chose to transfer their business to Farm Credit due to their longstanding relationship with Mens.3 Filing 49-2 at 30, 34, 37-38. At least several of these customers had no prior relationship with Farm Credit. Filing 49-3 at 2; Filing 49-4 at 1. Farm Credit did not directly compensate Mens for the customers that followed her to Farm Credit. Filing 57 at 3. Mens also worked with customers who did not follow her from Midwest; including the fifty customers that left Midwest to follow Mens, Mens serviced approximately 110 customers. Filing 49-2 at 23-24.
In 2015 Mens had the opportunity to participate in Farm Credit's incentive bonus program if she signed an Assignment, Nonsolicitation, and Nondisclosure Agreement (the "Agreement"). Filing 49-2 at 22; Filing 1-1 at 1. Mens understood she had to sign the Agreement if she wanted the bonuses, and she signed the Agreement. Filing 49-2 at 21-22; Filing 1-1 at 3. The relevant provisions of the Agreement state as follows:
For a period of two (2) years following the termination (voluntary or involuntary, for any reason or no reason) of [Mens's] employment with [Farm Credit], [Mens] shall not, seek or accept employment with, and will not call on or solicit the business of, or sell to, or service (directly or indirectly, on [Mens's] own behalf or in association with or on behalf of any other individual or entity), any of the customers of [Farm Credit] with whom [Mens] actually did business and had personal contact while employed by [Farm Credit], except to the extent such activities are unrelated to and not competitive with the business, products or services that [Mens] offered or provided on behalf of [Farm Credit] and cannot adversely affect the relationship or volume of business that [Farm Credit] [has] with such customers.
Because she signed the Agreement, Mens was eligible for and received roughly $25,000 in bonuses in 2015, 2016, and 2017 totaling approximately $75,000. Filing 49-2 at 22. In addition to paying Mens and providing bonuses, Farm Credit paid for Mens to do the following: attend annual training with the companies that underwrote the insurance she sold, attend industry trade shows, obtain continuing education and ethics credits for her licensure, and cultivate customer relationships. Filing 49-2 at 17-18. Related to cultivating customers, Farm Credit gave Mens a credit card and paid for her to purchase meals for her customers, paid for her hotel rooms while she traveled to meet customers, and even paid for a company car and gas to meet with customers. Filing 49-2 at 18-19. Farm Credit also provided Mens with "schwag," including t-shirts, koozies, and other promotional materials to give to customers. Filing 49-2 at 19. Lastly, some of the customers Mens worked with attended Farm Credit's annual "Growing On" meeting that boasted a lineup of speakers who provided crop insurance updates, other farming information, and training for customers. Filing 49-2 at 19-20.
In May of 2018, Farm Credit terminated all of its retail division employees, including Mens, as part of a company-wide restructuring initiative designed to "improve Farm Credit's business model." Filing 49-2 at 52; Filing 57-4 at 2. Several of Mens's customers, specifically Robey and the Eshelmans, were upset or angry upon learning that Mens was no longer working for Farm Credit. Filing 49-2 at 5; Filing 49-3 at 2; Filing 49-4 at 2. Robey and the Eshelmans had no intent to stay with Farm Credit once Mens stopped being an employee, and they planned to purchase crop insurance from Mens "regardless of the entity at which she [was] employed." Filing 49-3 at 2-3; Filing 49-4 at 2. Once Mens no longer worked for Farm Credit, forty of the customer accounts she had worked with left Farm Credit. Filing 49-5 at 2.
Approximately six months after leaving Farm Credit, Mens began working for Farmers Business Network ("FBN") as a crop insurance agent in November of 2018. Filing 21-1 at 1. FBN competes with Farm Credit by selling the same or similar products within the same geographic area. Filing 49-2 at 28-29. Upon learning that Mens was again working as a crop insurance agent, Robey and the Eshelmans contacted Mens and insisted she serve as their crop insurance agent based on their longstanding relationships with her. Filing 49-2 at 30, 34; Filing 49-3 at 2-3; Filing 49-4 at 2. Mens then executed an insurance contract with Robey on November 30, 2018. Filing 49-2 at 32. Mens executed insurance contracts with the Eshelmans sometime in January of 2019. Filing 49-2 at 37. Mens further maintains that she did not solicit any of the customers she worked with at Farm Credit upon leaving Farm Credit. Filing 49-2 at 29, 34-35.
On January 11, 2019, Farm Credit filed a Verified Complaint for Preliminary and Permanent Injunction and Damages and Demand for Jury Trial (the "Complaint") seeking damages from Mens's alleged breach of the Agreement and enforcement of the same via both preliminary and permanent injunctions. Filing 1. "That same day Farm Credit filed a Motion for Temporary Restraining Oder [sic]" and preliminary injunction. Filing 4. On January 18, the Court4 held a hearing on the motion with counsel for both parties present. Filing 16 at 1. After the hearing, the Court issued a preliminary injunction granting Farm Credit's motion. Filing 16 at 11-13. In the preliminary injunction, the Court analyzed the Agreement and determined it was valid after finding (1) it was not injurious to the public, (2) Farm Credit showed a legitimate business interest in protecting its goodwill, and (3) the Agreement was not unduly harsh upon consideration of all relevant factors. Filing 16 at 6-8. As a result, the Court stated as follows:
To continue reading
Request your trial