Green Bay Packaging, Inc. v. Preferred Packaging, Inc.

• Decision Date: 29 October 1996
• Docket Number: No. 83343,83343
• Citation: 1996 OK 121,932 P.2d 1091
• Parties: 12 IER Cases 318, 1996 OK 121 GREEN BAY PACKAGING, INC., Appellant, v. PREFERRED PACKAGING, INC., Mark Alan Wojciehowski, and Terry Jenkins, Appellees.
• Court: Oklahoma Supreme Court

Page 1091

932 P.2d 1091

12 IER Cases 318, 1996 OK 121

GREEN BAY PACKAGING, INC., Appellant, v. PREFERRED PACKAGING, INC., Mark Alan Wojciehowski, and Terry Jenkins, Appellees.

No. 83343.

Supreme Court of Oklahoma.

Oct. 29, 1996.

As Corrected Nov. 18 and Dec. 11, 1996.

Anton J. Rupert, Crowe & Dunlevey, Oklahoma City, Allen B. Mitchell, Sapulpa, for Appellant.

W.C. Sellers, W.C. Sellers, Jr., Tom C. Lane, Sr., Sapulpa, Mike Jones, Bristow, for Appellees Preferred Packaging, Inc. and Terry Jenkins.

James W. Keeley, Gill & Keeley, Tulsa, for Appellee Mark Alan Wojciehowski.

Brad Smith, Tulsa, for all Appellees.

HODGES, Justice.

This matter concerns review of the trial court's judgment on a jury verdict in favor of Appellees on counterclaims for unpaid wages, interference with business relations, and defamation. It raises several fact-specific issues concerning the jury's verdict and the attorney fees awarded by the trial court.

Appellees Terry Jenkins and Mark Wojciehowski were employees of a corrugated cardboard box manufacturer at a facility in Creek County, Oklahoma. The company was incorporated in 1972 under the name South West Packaging, Inc. (South West). The corporation's three directors developed an impressive sales staff that provided the company with gross sales of about twenty million dollars per year by 1986.

South West's approach to sales seems to have reflected an attitude of letting the sales staff service their accounts as the staff saw fit with minimal interference from management. In fact, some of the salesman were allowed to form their own companies to provide products related to the corrugated box industry. At least one salesman actually manufactured boxes and split the profits with his employer. The main emphasis of South West's approach to sales was "the customer is King." The sales staff was urged to become like family to the customer. With this sales philosophy, South West saw its sales grow steadily and substantially over the years.

Terry Jenkins was one of the original sales staff who began working for South West in 1972. He was promoted to sales manager in 1981. In 1986, he became vice president for sales and marketing. Jenkins had hoped to one day run the facility.

Mark Wojciehowski began working as a salesman for South West in 1980. By 1987, he had several regular accounts. He also had an outside interest in his own company, Wojo Enterprises, through which he brokered boxes. South West knew of the venture and had no problem with it.

In January, 1987, South West announced that it had been purchased by Green Bay Packaging, Inc. (Green Bay), a Wisconsin corporation. In reality, the two companies had merged. South West had always been a wholly owned subsidiary of Green Bay. This fact was not known to South West's customers, employees, or the public in general.

When Jenkins learned that Green Bay was taking over operations of the Creek County facility, he saw an opportunity to become a national accounts manager for Green Bay. His plan was for Green Bay to service the glass industry nationwide as South West had serviced the local glass industry. Jenkins submitted a proposal to his new boss in Wisconsin but that plan was set aside and never acted upon.

At this point, the facts become disputed. Jenkins testified that he decided to pay for some accounting projections in August, 1987, for a "high speed, super sheet plant" to manufacture boxes. He would split the profits evenly with Green Bay. He also testified that he never went forward with the plan because it would have required one and one half million dollars in capital to do so. Later, Green Bay contended that these projections were actually a plan Jenkins made to form Preferred while he was still an employee of Green Bay.

By October, 1987, things had changed dramatically at the Creek County facility. Some management decisions were no longer made locally. Green Bay began to lose sales staff at the facility. Jenkins testified that he saw no future with Green Bay and decided to move on. He tendered his resignation on October 23, 1987, effective November 25th of that year.

Jenkins formed Preferred Packing, Inc. (Preferred), in February, 1988, with one $60,000.00 investor. Jenkins was Preferred's president. He held 51 per cent of Preferred's stock and the investor held the other 49 per cent.

Wojciehowski remained at Green Bay until November, 1988. He then began brokering boxes through Preferred. He was not, however, one of Preferred's employees.

When Wojciehowski left Green Bay it withheld approximately $10,000.00 in commissions he had earned. Green Bay claimed he had falsified invoices to increase his commissions. Green Bay also claimed that Wojciehowski had taken certain cutting and printing dies used to manufacture boxes.

In June, 1989, Green Bay filed this lawsuit. It brought claims for damages against Jenkins, Wojciehowski, and Preferred for conversion, fraud, interference with business relations, conspiracy, and misappropriation of trade secrets and proprietary information. In doing so, Green Bay alleged a conspiracy by which Wojciehowski would take certain cutting and printing dies. Jenkins and Preferred would then use them to manufacture boxes to be sold to Green Bay's current and former customers. Green Bay also claimed that the defendants had misappropriated trade secrets and proprietary information it owned. In addition, Green bay alleged that Jenkins had cheated on expense reports while at Green Bay and that Wojciehowski had falsified invoices to raise his rate of commissions. Green Bay sought actual and punitive damages.

Jenkins, Wojciehowski and Preferred brought separate counterclaims against Green Bay for fraud, failure to pay wages, conversion, defamation, interference with business relations, and intentional infliction of emotional distress. They urged that Green Bay was engaged in a smear campaign designed to drive them out of business. They too sought actual and punitive damages.

It took four and one half years for this case to come to trial. Preferred had enjoyed sales of $2.5 million in 1988, and $6.1 million in 1989. But by April, 1991, Preferred's economic situation was such that it was forced to cease manufacturing and remain a marketing and distribution center. At the time of trial, in January, 1994, neither Jenkins nor his investor owned any interest in Preferred.

The jury trial of this case took ten days. The jury found against Green Bay on every theory it had asserted against the defendants. But the jury found for the defendants on some of the counterclaim theories they had asserted against Green Bay. The trial court entered judgment on the jury's verdict for Wojciehowski in the amount of $10,000.00 on his claim for unpaid wages. Judgment was also entered on the jury's verdict for Jenkins in the amount of $1.5 million actual damages and $1.5 million punitive damages on his claim for interference with business relations. Those same amounts were entered for Jenkins on his defamation claim. Thus, the jury's total award to Jenkins was $6 million.

Following a hearing, the trial court awarded attorney fees to Wojciehowski in the amount of $103,200.00. Jenkins received a total fee award of $912,000.00.

The Court of Appeals reversed finding no competent evidence to support the jury's verdict. It also reversed portions of the attorney fee awards. This Court granted certiorari review of that decision. The Court of Appeals opinion in this matter is vacated and the issues raised on certiorari will now be addressed.

I. Filing of lawsuit as evidence of interference with business relationships

Green Bay asserts error in the trial court's refusal to instruct the jury that the filing of this lawsuit was absolutely privileged as to Appellees' counterclaims for interference with their business relationships. As a result, the jury was permitted to consider the filing of the suit as evidence of interference. Green Bay argues that the interference counterclaim was thus transformed into a premature malicious prosecution action. It notes that a malicious prosecution action cannot be maintained before termination of the "malicious" suit in favor of one defending it.

The appropriateness of the trial court's refusal to instruct the jury on "absolute privilege" depends on whether such a privilege applies to an interference with business relations theory. Thus, the issue presents a question of law for this Court's determination.

Appellees cite Morrow Development Corp. v. American Bank & Trust Co., 875 P.2d 411 (Okla.1994), as authority that there is only a qualified privilege to bring a lawsuit against a competitor. Morrow involved interference with contractual relations. There, this Court recited the elements of a cause of action for malicious interference with contract or business relations. In order to recover a plaintiff must prove:

1. That it had a business or contractual right with which there was interference.

2. That the interference was malicious and wrongful, and that such interference was neither justified, privileged nor excusable.

3. That damage was proximately sustained as a result of the complained-of interference.

Id. at 416 (footnote omitted). See also Mac Adjustment, Inc. v. Property Loss Research, 595 P.2d 427, 428 (Okla.1979). Morrow held that an actor's course of conduct is privileged only if its "primary focus" was protection of the actor's legitimate economic interests rather than interference. 875 P.2d at 417. Thus, the privilege described in Morrow and other interference cases is not absolute. It can be lost when the underlying motive is principally to harm another.

In the present dispute, Appellees presented evidence that the filing of the petition was part of an effort whose underlying motive was to put Jenkins and his company out of business. The trial court gave the following instruction concerning whether the parties acted properly:

The determination of whether a Party's...