Pfs Distribution Co. v. Raduechel
| Decision Date | 28 July 2009 |
| Docket Number | No. 08-1701.,No. 08-1789.,08-1701.,08-1789. |
| Citation | 574 F.3d 580 |
| Parties | PFS DISTRIBUTION COMPANY; Pilgrim's Pride Corporation, Appellants/Cross-Appellees, v. Darrell RADUECHEL; Barry Spain, Appellees/Cross-Appellants, Richard R. Donohue; Theobald Donohue & Thompson, P.C.; MidWestOne Bank and Trust; Steven P. Hicks, Appellees/Defendants, John Pothoven; D & B Solutions, Inc., Defendants. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Deborah Marie Tharnish, argued, Stanley J. Thompson, Megan Manning Antenucci, Glenn L. Smith, John H. Moorlach, Eric Gregory Hoch, I, on the brief, Des Moines, IA, for appellees Richard Donohue, Theobald Donohue & Thompson, P.C., MidwestOne Bank & Trust and Steven P. Hicks.
Gordon R. Fisher, argued, Des Moines, IA, for appellees Darrell Raduechel and Barry Spain.
Before WOLLMAN, BYE, and RILEY, Circuit Judges.
PFS Distribution Company (PFS Distribution) and Pilgrim's Pride Corporation (Pilgrim's Pride) (collectively, PFS) sued Darrell Raduechel (Raduechel) and Barry Spain (Spain) for breach of fiduciary duties and copyright infringement in connection with the formation and operation of Raduechel's and Spain's company, D & B Solutions, Inc. (D & B Solutions). PFS also sued Raduechel; Spain; D & B Solutions; John Pothoven (Pothoven); Richard Donohue (Donohue) and Theobald Donohue & Thompson, P.C. (TD & T) (collectively, Accounting Defendants); and Steven Hicks (Hicks) and MidWestOne Bank and Trust (MidWestOne) (collectively, Banking Defendants) for civil conspiracy, constructive trust and unjust enrichment, misappropriation of trade secrets, and aiding and abetting. D & B Solutions was also added to PFS's copyright infringement claim. Raduechel counterclaimed against PFS for payment of a salary bonus.
The district court1 dismissed Raduechel's counterclaim, and granted summary judgment to PFS on the issue of Raduechel's and Spain's liability for breach of fiduciary duties and misappropriation of trade secrets. The district court left for trial the remaining claims, as well as the issues of causation and damages for Raduechel's and Spain's breach of fiduciary duties and misappropriation of trade secrets. A jury returned a verdict in favor of all defendants on all of PFS's remaining claims. PFS then moved for equitable relief and a new trial. The district court denied both motions.
PFS now challenges the district court's (1) denial of PFS's motion for a new trial; (2) jury instructions on the civil conspiracy, and aiding and abetting claims; (3) expert witness rulings; and (4) denial of equitable relief. Raduechel cross appeals the district court's dismissal of his counterclaim, and Raduechel and Spain challenge the district court's summary judgment ruling. We affirm.
PFS owned and operated a food distribution center in Oskaloosa, Iowa (PFS Oskaloosa). PFS Oskaloosa was originally owned by a private individual, and was bought by ConAgra Poultry Company (ConAgra Poultry) in 1975. In November 2003, Pilgrim's Pride bought ConAgra Poultry and acquired PFS Oskaloosa.
Raduechel began working at PFS Oskaloosa in 1979, and became general manager around 1991. Spain began working at PFS Oskaloosa in 1987, and was promoted to sales manager in 1996 or 1997. While Raduechel and Spain worked at PFS Oskaloosa, two of PFS Oskaloosa's largest customers for poultry sales were Affiliated Foods (Affiliated) and Fareway Stores (Fareway). Raduechel handled all sales to Affiliated, and Spain handled all sales to Fareway.
When Pilgrim's Pride acquired ConAgra Poultry, Pilgrim's Pride assumed Raduechel's compensation agreement with ConAgra Poultry, which included a base salary and an incentive plan. The incentive plan provided Raduechel would receive a bonus in an amount tied to a percentage of PFS Oskaloosa's profits, but also included a provision that allowed reduction of the bonus, down to zero in "extreme conditions," if Raduechel's "general job performance [was] unsatisfactory, or [Raduechel's] managerial attitude [was] not in the best interest of the Company." Under the incentive plan, Raduechel's 2003 salary was approximately $295,000-$45,000 in base salary and approximately $250,000 in bonus. Raduechel's compensation agreement was effective until May 30, 2004.
In December 2003, Raduechel attended a PFS managers meeting in Dallas, Texas. Although compensation was not formally discussed at the meeting, Raduechel became concerned that his compensation and business at PFS Oskaloosa would be reduced. Raduechel, however, left the meeting thinking PFS would have a proposed compensation package for him by the end of January 2004.
Raduechel told Spain about the concerns Raduechel was having regarding potential compensation and business reduction at PFS Oskaloosa. Raduechel and Spain began to formulate a "Plan B" in the event "things [did not] work out" at PFS Oskaloosa. "Plan B" entailed Raduechel and Spain starting their own distribution company, D & B Solutions, to compete with PFS Oskaloosa.
In late January 2004, Raduechel and Spain met with Pothoven at MidwestOne to discuss financing for D & B Solutions. Pothoven advised Raduechel and Spain to create a business plan, and Pothoven recommended several accountants to assist Raduechel and Spain. Raduechel and Spain then contacted Donohue at TD & T, and met or corresponded with Donohue several times during late January and early February 2004 to discuss and prepare a business plan. During one of the meetings, Raduechel and Spain gave Donohue financial documents from PFS Oskaloosa. Upon seeing the documents, Donohue expressed concern that the documents were confidential, and told Raduechel and Spain to seek legal advice regarding the documents. Although Donohue inadvertently retained the documents, neither Raduechel, Spain, nor Donohue used the documents or showed them to anyone after the documents were initially disclosed.
In early March 2004, Bobby Matkin (Matkin), a PFS executive, visited PFS Oskaloosa. During the visit, Matkin told Raduechel that PFS did not yet have a proposed compensation package for Raduechel. Raduechel was told a proposed compensation package would be provided to him by April 1, 2004. Raduechel became frustrated, and continued to work on financing for D & B Solutions at MidWestOne with Hicks. PFS did not provide Raduechel with a proposed compensation package on April 1, 2004.
On May 21, 2004, MidWestOne extended a line of credit, a real estate loan, and a commitment on a letter of credit to Raduechel and Spain for operation of D & B Solutions. Around May 26, 2004, Matkin provided Raduechel with a proposed compensation agreement. The agreement provided for a base salary of $150,000 and required Raduechel to manage both PFS Oskaloosa and PFS's Green Bay office. Raduechel rejected the offer. Matkin then offered Raduechel a base salary of $150,000 to manage only PFS Oskaloosa. Raduechel rejected Matkin's amended offer and resigned from PFS Oskaloosa on June 7, 2004.
After Raduechel resigned, Matkin inquired into Spain's interest in becoming the branch manager at PFS Oskaloosa. On June 14, 2004, Spain was offered the branch manager job for a base salary of $110,000. Spain rejected the offer on June 15, 2004, and resigned that same day. Raduechel and Spain started operating D & B Solutions after Spain resigned, and Affiliated and Fareway began buying poultry from D & B Solutions around late June to early July 2004.
On June 21, 2004, PFS filed a complaint in the district court against Raduechel, Spain, and D & B Solutions seeking damages and injunctive relief for breach of fiduciary duties, civil conspiracy, and unjust enrichment and constructive trust. PFS subsequently added copyright infringement and misappropriation of trade secret claims, and the district court granted a preliminary injunction against the operation of D & B Solutions on August 11, 2004. After the preliminary injunction was entered, D & B Solutions stopped operation; however, Fareway and Affiliated did not return to PFS Oskaloosa as customers, and instead began buying poultry directly from the companies' preferred poultry suppliers.
On August 30, 2004, PFS sent a letter to Raduechel explaining PFS would not pay Raduechel the bonus which was due under Raduechel's ConAgra Poultry compensation agreement and incentive plan that expired on May 30, 2004. PFS stated Raduechel was not entitled to the bonus under the terms of the incentive plan due to PFS's complaint against Raduechel and the district court's grant of a preliminary injunction. As a result, Raduechel filed a counterclaim against PFS for payment of the bonus alleging (1) violation of the Iowa Wage Payment Collection Act (IWPCA), (2) breach of oral contract, (3) breach of written contract, and (4) promissory estoppel.
PFS amended its complaint, adding Donohue, TD & T, MidWestOne, Hicks, and Pothoven as defendants on the civil conspiracy, constructive trust and unjust enrichment, and misappropriation of trade secrets claims. PFS also added a claim for aiding and abetting against all defendants.
On February 7, 2005, PFS moved to dismiss Raduechel's counterclaim under Fed.R.Civ.P. 12(b)(6). The district court granted the motion on August 9, 2005. Raduechel then moved the district court to reconsider its ruling on PFS's motion to dismiss. The district court denied Raduechel's motion for reconsideration on January 17, 2006.
On January 8, 2007, the district court addressed summary judgment motions from Pothoven, MidWestOne, Hicks, PFS, Donohue, and TD & T. The district court (1) granted Pothoven's motion for summary judgment and dismissed Pothoven from the action; (2) granted Donohue's and TD & T's motion on the constructive trust and unjust enrichment claim, and (3) granted partial summary judgment...
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