Jostens, Inc. v. Herff Jones, LLC

• Decision Date: 24 April 2020
• Docket Number: 1180808
• Citation: 308 So.3d 10
• Parties: JOSTENS, INC., John Wiggins, and Chris Urnis v. HERFF JONES, LLC, and Brent Gilbert
• Court: Alabama Supreme Court

308 So.3d 10

JOSTENS, INC., John Wiggins, and Chris Urnis

v.HERFF JONES, LLC, and Brent Gilbert

1180808

Supreme Court of Alabama.

April 24, 2020

Archibald T. Reeves IV, Forrest C. Wilson III, and J. Alexander Steadman of McDowell Knight Roedder & Sledge, LLC, Mobile, for appellant Jostens, Inc.; Sarah B. Dorger of The Dorger Law Firm, LLC, Spanish Fort, for appellant John Wiggins ; and S. Russ Copeland of Hedge Copeland, P.C., Mobile, for appellant Chris Urnis.

Forrest S. Latta and Christopher S. Burkhalter of Burr & Forman LLP, Mobile; Cecily L. Kaffer of the Kullman Firm, PLC, Mobile; and Michael Hurst, Andres Correa, and John Adams of Lynn Pinker Cox & Hurst, LLP, Dallas, Texas, for appellee Herff Jones, LLC; and Harry P. Hall II of FarmerPrice LLP, Dothan, for appellee Brent Gilbert.

MENDHEIM, Justice.

Jostens, Inc. ("Jostens"), John Wiggins, and Chris Urnis (hereinafter referred to collectively as "the defendants") appeal from the Mobile Circuit Court's denial of their renewed motions for a judgment as a matter of law following the entry of a judgment on a jury verdict in favor of Herff Jones, LLC ("Herff Jones"), and Brent Gilbert (hereinafter referred to collectively as "the plaintiffs"). We affirm.

I. Facts

Herff Jones and Jostens are nationwide competitors that manufacture scholastic-recognition products -- items such as class rings, diplomas, caps, gowns, tassels, and graduation announcements -- for high school students.¹ As the plaintiffs explain in their appellate brief:

"The scholastic achievement market is unlike most other consumer markets because it is entirely dependent on schools. That is, although students and their parents are typically the end consumers, it is the schools who decide which company's products will be offered for sale to the students. Each graduating class in most schools might be offered products from either Herff Jones or Jostens, but not both. School administrators are thus key decision makers, deciding whether Herff Jones or Jostens will have the opportunity to sell to its students. Herff Jones and Jostens compete to ‘win’ schools."

Plaintiffs' brief, pp. 5-6. Decisions about which manufacturer of scholastic-recognition products to choose are typically made each year before the start of the upcoming academic school year.

The competing manufacturers sell their products to schools through independent-contractor small businesses that are located in the schools' territories. These small businesses purchase from a manufacturer of scholastic-recognition products the exclusive right to sell that manufacturer's products within a certain geographic territory. For example, Brent Gilbert's business is GradPro Recognition Products, Inc. ("GradPro"), and he has worked with Herff Jones for over 30 years, both as a sales representative for his father and as the current owner of GradPro. Gilbert's father purchased from Herff Jones much of the territory in Alabama when Gilbert was a child, and Gilbert purchased his father's territory in July 2004, paying $400,000 over 10 years to acquire it. Gilbert operates primarily out of Dothan for servicing his Alabama territory.

All the parties agree that the scholastic-recognition-products business is highly competitive and that sales representatives ostensibly working for each manufacturer pitch their products to schools in their territories every year in an effort to "win" schools for their respective manufacturer. The parties also agree that the business is relationship-driven: sales representatives strive to establish cordial and lasting relationships with school administrators in an effort to secure and maintain contracts. One method manufacturers use to increase their market share of schools in a territory is to entice a competitor's sales representatives to switch employers. In order to discourage such switching of employers, it is common practice in the scholastic-recognition-products industry for sales representatives, as a stipulation of employment, to sign noncompetition agreements, agreeing not to compete against their former employers for a specified period and/or in a specified location.

Wiggins worked for an independent distributor of Jostens from 2000 to late 2003, selling Jostens products to schools in southwest Alabama and in the Florida panhandle. Urnis worked for an independent distributor of Jostens from 2001 to 2005, selling Jostens products to schools in central Alabama. In 2004 and 2006, respectively, Gilbert hired Wiggins and Urnis away from Jostens to be sales representatives for GradPro and, ostensibly, for Herff Jones. Before joining Gilbert in working on behalf of Herff Jones, Wiggins and Urnis each spent one year away from the industry to honor their noncompetition agreements. Wiggins spent his year away fishing and volunteering at his church, and he began selling Herff Jones products to schools in southwest Alabama in August 2004. Urnis spent his year away volunteering in youth sports organizations, and he began selling Herff Jones products to schools in central Alabama in June 2006. It is undisputed that neither Wiggins nor Urnis violated his noncompetition agreement during his respective year after leaving the Jostens distributor and coming to work for GradPro and Herff Jones. Testimony at trial indicated that, during the respective year that each did not work, one school account that had belonged to Wiggins when he worked with Jostens switched to Herff Jones and six school accounts that had belonged to Urnis when he worked with Jostens switched to Herff Jones.

As part of their employment arrangement, Gilbert gave Wiggins and Urnis each part ownership in GradPro and they, in turn, each signed an employment agreement that contained a section providing that they agreed not to compete in the respective territory each was assigned to cover for a period of one year after leaving employment with GradPro. Those noncompetition agreements provided, in part:

"Employee covenants and agrees that as long as he is employed by [Gilbert] under the terms of this Agreement and for a period of one year after Employee's relationship with [Gilbert] is terminated and after Employee ceases selling Herff Jones Products, he shall not compete in the Territory, directly or indirectly (nor receive, in any form, benefits from a competitor of [Gilbert] or Herff Jones), with [Gilbert's] Business of soliciting orders for the Products and/or with Herff Jones's business of manufacturing and/or selling the Products. To ‘compete’ as used herein shall include, among other things, the servicing of customer accounts, soliciting of sales from customers, supervision of such sales, the recommendation of a supplier of Products other than [Gilbert] and/or Herff Jones or conducting himself in such a manner that Representative's and/or Herff Jones's goodwill with customers is diminished.

"Employee acknowledges that, by virtue of his activities for [Gilbert] on behalf of Herff Jones, regardless of any limitations in the assignment of Products or coverage of Territory, he has had contact with or otherwise gained valuable knowledge of school decision makers and the requirements and practices relating to the purchase of Products or similar products by students of all schools within the Territory through which Herff Jones has done or had sought to do business. Employee, therefore, acknowledges that the foregoing covenant is reasonable in time and area and that it is necessary for the reasonable protection of the interests of Herff Jones and [Gilbert].

"Employee further agrees, during his employment and for one year after, not to use or disclose, directly or indirectly, any of [Gilbert]'s and/or Herff Jones's price lists, records, customer lists, statistics or other information acquired by him in the course of his employment, nor to aid or be party to any actions which would tend to divert, diminish or prejudice the goodwill of [Gilbert] or Herff Jones...."

At trial, the plaintiffs presented testimony and evidence indicating that, before 2014, Jostens's nationwide sales had been in a 10-year decline but that, beginning in that year, under the direction of chief operating officer John Biebault, Jostens engaged in strategies aimed at reversing that decline. The plaintiffs introduced into evidence a Jostens confidential business document produced in December 2015 titled "Scholastic Strategic Plan Summary (2016-2019)." In that document, Jostens listed one of its "Key Growth Initiatives" as being "Rep Acquisition," which included seeking to take advantage of "[i]nterest from strong performing external independent rep groups in joining Jostens (particularly from Herff Jones )." (Emphasis added.) This initiative also noted that those strategies "[m]ay provide access to reps with $20M and $15M accounts" and that there was a "[n]eed to navigate two-year non-compete reps have in their territories." Jostens countered this evidence with testimony from Louis Kruger, Jostens's national sales director at the time the document was produced, who stated that the "Key Growth Initiatives" specifically mentioned Herff Jones representatives only because several sales representatives from Herff Jones had expressed interest in joining Jostens. He also testified that the money figures referred to "two groups that were with Balfour" in Atlanta and Louisiana and that those two groups had two-year noncompetition agreements "that we have to adhere to."

Sometime in December 2015 or January 2016, Kruger began communicating with Wiggins while Wiggins was still working for GradPro. On January 4, 2016, Wiggins, using his wife's e-mail address, sent an e-mail to Kruger's wife's e-mail address that was intended for Kruger. In the e-mail, Wiggins sought to provide Kruger with

"the 10 most important items ... I'd like to request in the event of a transition. These are the things that would make me feel as though Jostens is committed to the long-term success and market domination of my current territory.

While I'm

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