Staples et al v. H Walker Enterprises LLC et al
Filing
108
MEMORANDUM OPINION - For the reasons stated above, Mr. Stapless motion for summary judgment (doc. 69 ) is due to be DENIED, and Mrs. Stapless motion for summary judgment (doc. 71 ) is also due to be DENIED. Simmonss motion for summary judgment (doc . 72 ) is due to be GRANTED in PART and DENIED in PART, and HWE and RMFSs motion for summary judgment (doc. 76 ) is also due to be GRANTED in PART and DENIED in PART. HWE and RMFSs motion to strike (doc. 106 ) is due to be DENIED. The parties request for oral argument (doc. 103 ) is due to be DENIED. An Order consistent with this Opinion will be entered contemporaneously herewith. Signed by Judge L Scott Coogler on 7/24/2019. (KEK)
FILED
2019 Jul-24 AM 10:27
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
WESTERN DIVISION
KIMBERLY STAPLES, et al.,
Plaintiffs,
v.
H. WALKER ENTERPRISES, LLC,
et al.,
Defendants.
)
)
)
)
)
)
)
)
)
)
7:18-cv-00160-LSC
Memorandum of Opinion
I.
Introduction
Plaintiffs, John and Kimberly Staples (collectively “Plaintiffs”), bring this
action against Defendants, H. Walker Enterprises, LLC (“HWE”), Renaissance
Man Food Services, LLC (“RMFS”), and Simmons Food, Inc. (“Simmons”)
(collectively “Defendants”). Presently before the Court are cross motions for
summary judgment filed by all parties. Specifically, Plaintiffs have each filed a
motion for summary judgment asking the Court to grant summary judgment on
liability for all claims asserted in their Second Amended Complaint. (See Docs. 69 &
71.) Defendants have filed motions for summary judgment seeking dismissal of all of
Plaintiffs’ claims against them. (See Docs. 72 & 76.) Additionally, Defendant RMFS
Page 1 of 47
moves for summary judgment in its favor on two of the three counterclaims it has
filed against Plaintiffs. (See Doc. 76.) Defendants HWE and RMFS also ask that this
Court strike an affidavit submitted as part of Plaintiffs’ evidentiary submissions.
(Doc. 106.) Finally, the parties have filed a Joint Status Report requesting that the
Court schedule an oral argument to consider these pending motions. (Doc. 103.)
These motions have been fully briefed and are ripe for decision.1 For the
reasons that follow, Plaintiff John Staples’s (“Mr. Staples’s”) motion (doc. 69) is
due to be DENIED, and Plaintiff Kimberly Staples’s (“Mrs. Staples’s”) motion
(doc. 71) is also due to be DENIED. Defendant Simmons’s motion (doc. 72) is due
to be GRANTED in PART and DENIED in PART, and Defendants HWE and
RMFS’s motion (doc. 76) is also due to be GRANTED in PART and DENIED in
PART. Defendants HWE and RMFS’s motion to strike (doc. 106) is due to be
DENIED. The parties’ request for oral argument (doc. 103) is due to be DENIED.
II.
Background2
1
Although afforded an opportunity to do so, Plaintiffs did not file reply briefs to support
their motions for summary judgment.
2
The majority of these facts are taken from the parties’ “Agreement Concerning
Undisputed Facts” section of their Joint Status Report, which was filed on February 4, 2019. (Doc.
66.) Other relevant facts gleaned from the parties’ motions for summary judgment are also
included. The Court “view[s] the materials presented and all factual inferences in the light most
favorable to the nonmoving party.” Animal Legal Def. Fund v. U.S. Dep’t of Agric., 789 F.3d 1206,
1213–14 (11th Cir. 2015) (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970)). Because the
parties at some points move for summary judgment on the same issues, it is impossible for the
Court to recount all facts in the light most favorable to the nonmoving party. In the discussion
Page 2 of 47
This case involves claims surrounding the termination of John Staples (“Mr.
Staples”) as well as Defendants’ alleged interference with the relationship between
his wife, Kimberly Staples (“Mrs. Staples”), and her employer DSM Sales and
Marketing, LLC (“DSM3”). In 2009, Mr. Staples began his employment with
Defendant Simmons, a food services industry business. During Mr. Staples’s
employment, Simmons provided him with written employment rules related to job
performance, progressive discipline, and fair treatment. However, the parties
dispute whether Simmons ever made any representations to Mr. Staples that his
employment would only be terminated for cause. Although Simmons was Mr.
Staples’s direct employer, his job duties included serving as the general manager of
Defendant RMFS, an entity that buys chicken from Simmons. RMFS would refund
Simmons for Mr. Staples’s compensation. Defendant HWE, which is owned by
Herschel Walker (“Walker”), is the sole owner of RMFS. Under a profit-sharing
agreement between HWE and Simmons, Simmons receives 35% of the profits
generated by RMFS. Additionally, Simmons provides the back-office accounting
functions for RMFS.
section below, the Court will indicate where necessary the material facts taken in the light most
favorable to the nonmoving party.
Page 3 of 47
DSM3 is a company owned by Mrs. Staples and Julie Blanchard
(“Blanchard”), who is also employed by HWE. DSM3 had a brokerage agreement
with RMFS to broker the sale of RMFS’s product. Mr. Staples signed the brokerage
agreement on behalf of RMFS, and Mrs. Staples signed the agreement on behalf of
DSM3. As part of its performance of administrative functions for RMFS, Simmons
would send DSM3 commission checks representing the amount of commissions
RMFS owed DSM3 under the brokerage agreement. These checks would be mailed
to Mrs. Staples who would then deposit them in a DSM3 bank account. In addition
to her ownership interest in DSM3, Mrs. Staples received an $85,000 annual salary
from the company. DSM3 paid Mr. Staples $40,000 per year to work as a consultant
for it.
On December 27, 2017, Mr. Staples lost his position as general manager of
RMFS. The next day, on December 28, 2017, Mr. Staples’s employment with
Simmons was terminated. Around the same time period, on December 30, 2017,
RMFS terminated its brokerage agreement with DSM3. Additionally, in either
December 2017 or January 2018, Simmons withheld commission payments RMFS
owed DSM3. Plaintiffs contend that these actions were taken in a concerted effort to
sever their relationships with HWE, RMFS, Simmons, and DSM3. As evidence of
this, Plaintiffs point to a memo sent to Walker on December 21, 2017. In the memo,
Page 4 of 47
Ronald Eisenman (“Eisenman”), an attorney who represented Walker and prepared
the paperwork necessary to form DSM3, detailed two proposals concerning
Plaintiffs’ future with these business entities. According to the memo, the proposals
were discussed during a meeting held between Simmons’s President and Walker on
December 12, 2017.
Under Proposal A, which contemplated Plaintiffs going along with the
proposal, Mr. Staples would agree to terminate his employment as general manager
of RMFS, and his role as paid consultant to DSM3 would end. He would then sign a
one-year consultant agreement with RMFS. Mrs. Staples would resign from her
position with DSM3 and sign over her ownership interest in the company to
Blanchard. Under Proposal B, which contemplated Plaintiffs refusing to cooperate
with Proposal A, Simmons would terminate Mr. Staples’s employment and RMFS
would end its brokerage agreement with DSM3. Plaintiffs did not accept Proposal A,
which they argue led to the actions taken by Simmons and RMFS in late December
2017. Mr. Staples testified that he believes that Defendants took these actions against
him and his wife because he raised ethical concerns as to whether Simmons should
be paying an invoice on behalf of RMFS for waffle packaging that Mr. Staples asserts
was being sold through HWE rather than RMFS.
Page 5 of 47
RMFS contends that it was Mr. Staples who acted unethically during his
tenure as RMFS’s general manager. RMFS asserts that while it employed Mr.
Staples he: (1) sent an email to a competitor which contained confidential
information concerning RMFS’s sales and volume revenue; (2) caused RMFS to
enter into a broker arrangement with Diversified Sales & Marketing, an entity that
Mrs. Staples had a 60% ownership interest in; (3) paid unauthorized commissions on
behalf of RMFS to DSM3; (4) asked a prospective broker for RMFS to hire Mrs.
Staples and his daughter as a quid pro quo for RMFS’s business; and (5) approved
reimbursement of his personal expenses by RMFS.
At some point, Walker contacted Kristin Caffey (“Caffey”), a professional
within the food services industry, to complain about Mr. Staples. Mr. Staples
contends that at the time this conversation took place Sysco Corporation (“Sysco”)
employed Caffey. HWE and RMFS assert that Caffey was employed by Radian,
another food services industry business. According to Caffey, Walker made
disparaging remarks about Mr. Staples and told her that Mr. Staples had “stolen
money from him or his business.” (See Doc. 70-8 at 4.) Caffey then began to hear
from others in the food services industry who reported receiving similar calls from
Walker about Mr. Staples.
Page 6 of 47
The parties agree that Mr. Staples’s employment relationship with Simmons
arose in Arkansas. Around May 2015, Mrs. Staples moved from Arkansas to
Alabama. Mr. Staples followed Mrs. Staples to Alabama in either August or
September of 2015 and worked remotely for Simmons until his termination. Thus,
at the time of the events giving rise to this lawsuit, Plaintiffs were full-time residents
of Alabama.
III.
Standard
Summary judgment is appropriate “if the movant shows that there is no
genuine dispute as to any material fact 3 and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a). A dispute is genuine if “the record taken as a
whole could lead a rational trier of fact to find for the nonmoving party.” Hickson
Corp. v. N. Crossarm Co., Inc., 357 F.3d 1256, 1260 (11th Cir. 2004). A genuine
dispute as to a material fact exists “if the nonmoving party has produced evidence
such that a reasonable factfinder could return a verdict in its favor.” Greenberg v.
BellSouth Telecomms., Inc., 498 F.3d 1258, 1263 (11th Cir. 2007) (quoting Waddell v.
Valley Forge Dental Assocs., 276 F.3d 1275, 1279 (11th Cir. 2001)). The trial judge
should not weigh the evidence, but determine whether there are any genuine issues
3
A material fact is one that “might affect the outcome of the case.” Urquilla-Diaz v. Kaplan
Univ., 780 F.3d 1039, 1049 (11th Cir. 2015).
Page 7 of 47
of fact that should be resolved at trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
249 (1986).
In considering a motion for summary judgment, trial courts must give
deference to the non-moving party by “view[ing] the materials presented and all
factual inferences in the light most favorable to the nonmoving party.” Animal Legal
Def. Fund, 789 F.3d at 1213–14 (citing Adickes, 398 U.S. at 157. However,
“unsubstantiated assertions alone are not enough to withstand a motion for
summary judgment.” Rollins v. TechSouth, Inc., 833 F.2d 1525, 1529 (11th Cir. 1987).
Conclusory allegations and “mere scintilla of evidence in support of the nonmoving
party will not suffice to overcome a motion for summary judgment.” Melton v.
Abston, 841 F.3d 1207, 1219 (11th Cir. 2016) (per curiam) (quoting Young v. City of
Palm Bay, Fla., 358 F.3d 859, 860 (11th Cir. 2004)). In making a motion for summary
judgment, “the moving party has the burden of either negating an essential element
of the nonmoving party’s case or showing that there is no evidence to prove a fact
necessary to the nonmoving party’s case.” McGee v. Sentinel Offender Servs., LLC,
719 F.3d 1236, 1242 (11th Cir. 2013). Although the trial courts must use caution when
granting motions for summary judgment, “[s]ummary judgment procedure is
properly regarded not as a disfavored procedural shortcut, but rather as an integral
part of the Federal Rules as a whole.” Celotex Corp. v. Catrett, 477 U.S. 317, 327
Page 8 of 47
(1986). This standard does not change when a court is presented with cross-motions
for summary judgment. See Griffis v. Delta Family-Care Disability, 723 F.2d 822, 824
(11th Cir. 1984).
IV.
Discussion 4
The parties’ summary judgment motions involve several discrete issues.
Central to the parties’ dispute is whether Alabama or Arkansas law applies to several
of the claims asserted. The Court will first address which state’s substantive law
applies. After disposing of this choice of law issue, the Court will then address the
claims brought by Plaintiffs in their Second Amended Complaint. The Court will
finally address whether RMFS is entitled to summary judgment on its counterclaims.
A.
Choice of Law
The parties dispute whether Arkansas or Alabama law governs Mr. Staples’s
claims for wrongful termination and tortious interference with his employment
relationship with Simmons.5 A federal court sitting in diversity must apply the choice
of law rules of the state in which it sits. U.S. Fid. & Guar. Co. v. Liberty Surplus Ins.
4
The parties have requested that the Court schedule an oral argument to consider their
motions for summary judgment. (Doc. 103.) The parties’ written briefs adequately address the
issues presented by their motions. Thus, the Court does not require additional argument, and the
parties’ request for oral argument is due to be denied.
5
The parties are in agreement that Alabama law governs the other claims asserted by
Plaintiffs. As such, at this summary judgment stage, the Court will assume without deciding that
Alabama law does indeed apply to those claims.
Page 9 of 47
Corp., 550 F.3d 1031, 1033 (11th Cir. 2008) (citing Klaxon Co. v. Stentor Elec. Mfg.
Co., 313 U.S. 487, 496 (1941)). “Alabama law follows the traditional conflict-of-law
principles of lex loci contractus and lex loci delicti.” Precision Gear Co. v. Cont’l Motors,
Inc., 135 So. 3d 953, 956 (Ala. 2013) (quoting Lifestar Response of Ala., Inc. v. Admiral
Ins. Co., 17 So. 3d 200, 213 (Ala. 2009)). Under these principles, a contract is
governed by the law of the place where the contract is made, and tort claims are
governed according to the law of the state where the injury occurred. See id.
Accordingly, to determine which state’s substantive law applies, the Court must first
determine whether these claims sound in contract or in tort.
Regardless of whether a tort claim arose from a business relationship, it is still
treated as a tort claim for the purposes of Alabama’s conflict-of-law precedent. See
Batey & Sanders, Inc. v. Dodd, 755 So. 2d 581, 583 (Ala. Civ. App. 1999). Thus, Mr.
Staples’s claim for tortious interference with his business relationship with Simmons
sounds in tort and is governed by the law of the state where Mr. Staples’s alleged
injury occurred.
Mr. Staples argues that Arkansas law governs this claim because his
employment relationship with Simmons was based in Arkansas. However, under lex
loci delicti, “it is not the site of the alleged tortious act that is relevant, but the site of
the injury, or the site of the event that created the right to sue.” Glass v. S. Wrecker
Page 10 of 47
Sales, 990 F. Supp. 1344, 1347 (M.D. Ala. 1998). Where a plaintiff’s damages are
primarily financial in nature “the ‘injury’ for choice of law purposes occurs in the
jurisdiction where those economic damages are felt.” See Doug’s Coin & Jewelry, Inc.
v. Am.’s Value Channel, Inc., No. 2:12-cv-1095-MHH, 2015 WL 3632228, at *8
(N.D. Ala. June 10, 2015) (citing Fitts v. Minn. Mining & Mfg. Co., 581 So. 2d 819,
820 (Ala. 1991)). Consistent with this principle, federal courts applying lex loci delicti
to tortious interference claims have repeatedly concluded that those claims are
governed by the law of the state in which the plaintiff suffered an economic impact.
See, e.g., Chambers v. Cooney, No. 07-0373-WS-B, 2007 WL 2493682, at *11 (S.D.
Ala. Aug. 29, 2007); Bradbury Co. v. Teissier-duCros, 387 F. Supp. 2d 1167, 1173 (D.
Kan. 2005).
Here, the tortious interference with business relationship claim at issue is
based on Mr. Staples’s assertion that HWE and RMFS took actions that caused
Simmons to terminate his employment. The damage that Mr. Staples alleges to have
suffered from this interference is loss of income. Because this injury is financial in
nature, the Court concludes that the law of the place where Mr. Staples suffered the
economic impact of HWE and RMFS’s alleged actions should be applied to this
claim. It is undisputed that at the time of his termination and the alleged interference
with his employment Mr. Staples resided in Alabama. Therefore, Mr. Staples’s
Page 11 of 47
financial injury from his loss of employment was necessarily felt in Alabama rather
than Arkansas. Thus, Alabama law governs this claim.
Mr. Staples’s wrongful termination claims are brought under three different
theories of liability: (1) breach of express contract; (2) breach of the implied covenant
of good faith and fair dealing; and (3) termination in violation of public policy. (See
Doc. 70 at 24–30.) Mr. Staples’s claims for breach of the implied covenant of good
faith and fair dealing and termination in violation of public policy are essentially
claims for retaliatory discharge. This is evidenced by the cases Mr. Staples cites to
support these claims. See, e.g., Smith v. Am. Greetings Corp., 804 S.W.2d 683, 684–
85 (Ark. 1991) (noting that under Arkansas law there is an implied covenant of good
faith and fair dealing which includes a prohibition on discharges “which
contravene[ ] public policy”); Scholtes v. Signal Delivery Serv., Inc., 548 F. Supp.
487, 494 (W.D. Ark. 1982). Similar to retaliatory discharge claims, which in Alabama
are recognized when an employer terminates an employee for seeking to recover
workers’ compensation benefits, see Ala. Code § 25-5-11.1, the principles discussed
in these cases apply to situations where an employee is fired for refusing to commit
a wrong, for exercising a statutory right, or for otherwise seeking to “further the
public good.” See Smith, 804 S.W.2d at 684–85.
Page 12 of 47
Under Alabama choice of law principles, “a claim alleging retaliatory
discharge sounds in tort, not in contract.” Batey, 755 So. 2d at 583. Thus, these
claims are also governed by the law of the place of Mr. Staples’s injury. Simmons
asserts that, as with Mr. Staples’s interference with business relationship claim,
Alabama law should control Mr. Staples’s wrongful termination claims because it is
where he felt the economic impact of his termination. The Court disagrees. The
Alabama Supreme Court has cautioned against utilizing a broad test where the place
of financial harm is always determinative as to where a plaintiff’s alleged injury
occurred. See Ex parte U.S. Bank Nat’l Ass’n, 148 So. 3d 1060, 1071–72 (Ala. 2014).
Instead, the court has reiterated that under lex loci delicti “the place of injury is in the
state where the ‘fact which created the right to sue’ occurs.” See id. at 1070 (quoting
Ala. Great S. R.R. v. Carroll, 11 So. 803, 806 (Ala. 1892)). Thus, to determine
whether it should apply the law of the place of financial harm a court must first look
to the nature of the particular claim at issue. See id. (distinguishing malicious
prosecution and bad faith insurance claims from tortious interference and fraud
claims where federal courts sitting in Alabama have looked to the law of the state of
plaintiffs’ financial injuries).
Applying these principles, the Court concludes that the law of the place of
termination should control Mr. Staples’s wrongful discharge claims. Unlike with
Page 13 of 47
tortious interference and fraud claims, retaliatory discharge claims do not require
plaintiffs to prove, as an element of those claims, financial injury. See Ala. Power Co.
v. Aldridge, 854 So. 2d 554, 563 (Ala. 2002) (noting that pursuant to Ala. Code § 255-11.1 a prima facie case of retaliatory discharge requires a showing of: “(1) an
employment relationship, (2) an on-the-job injury, (3) knowledge on the part of the
employer of the on-the-job injury, and (4) subsequent termination of employment
based solely upon the employee’s on-the-job injury and the filing of a workers’
compensation claim”). As such, although the place where a plaintiff suffered
financial injury from an alleged retaliatory discharge and the location of the plaintiff’s
termination are typically the same, Alabama courts have mainly focused on where
the plaintiff was terminated when conducting a choice of law analysis on these types
of claims. See, e.g., Batey, 755 So. 2d at 583 (“It is undisputed that [plaintiff’s]
employment was terminated in Georgia. Because the wrong complained of occurred
in Georgia, the law of Georgia applies.”). Here, the record reflects that Simmons
terminated Mr. Staples in Arkansas. Thus, the Court will apply Arkansas law to his
retaliatory discharge claims. 6 Any contract that existed between Simmons and Mr.
6
Simmons contends that this result is inconsistent with the Second Amended Complaint’s
assertion that venue is proper in this Court because “the acts giving rise to liability occurred in
the counties located in the Western Division of the Northern District of Alabama.” (See Doc. 38
¶ 23.) The Court finds this argument unpersuasive. The venue statute provides that venue is
proper in “a judicial district in which a substantial part of the events or omissions giving rise to
the claim occurred.” See 28 U.S.C. § 1391(b)(2). It does not require all acts giving rise to a
Page 14 of 47
Staples was made in Arkansas. Accordingly, Arkansas law governs Mr. Staples’s
claims for breach of express contract as well.
B.
Count One: Interference with Business Relationship of Mr.
Staples and Simmons
In Count One, Mr. Staples alleges that HWE and RMFS tortiously interfered
with his employment relationship with Simmons by seeking to have Simmons
terminate his employment. Under Alabama law, the elements of a claim for wrongful
interference with a business relationship are: “(1) the existence of a [protectable]
business relationship; (2) of which the defendant knew; (3) to which the defendant
was a stranger; (4) with which the defendant intentionally interfered; and (5)
damage.” White Sands Grp., LLC, v. PRS II, LLC, 32 So. 3d 5, 14 (Ala. 2009). A
defendant is a participant in rather than a stranger to a business relationship if “(1)
[it] is an essential entity to the purported business relations; (2) the allegedly injured
relations are inextricably a part of or depend upon [its] contractual or business
relations; (3) [it] would benefit economically from the alleged injured relations; or
(4) both [it] and the plaintiff are parties to a comprehensive interwoven set of
contracts or relations.” Waddell & Reed, Inc. v. United Inv’rs Life Ins. Co., 875 So. 2d
plaintiff’s claims to occur in that judicial district. Here, many of the acts complained of by
Plaintiffs did in fact occur in this judicial district. It just so happens that “the act which created
the right to sue” on Mr. Staples’s wrongful termination claims occurred in Arkansas. Thus,
under lex loci delicti, Arkansas law applies to those claims.
Page 15 of 47
1143, 1156 (Ala. 2003) (quoting Britt/Paulk Ins. Agency, Inc. v. Vandroff Ins. Agency,
Inc., 952 F. Supp. 1575, 1584 (N.D. Ga. 1996)).
Here, HWE and RMFS were participants in Mr. Staples’s employment
relationship with Simmons. Although Simmons was Mr. Staples’s direct employer,
Mr. Staples performed work for RMFS through Simmons. Indeed, it is undisputed
that Mr. Staples’s job duties for Simmons included serving as RMFS’s general
manager. Additionally, as part of the business relationship between Simmons and
RMFS, RMFS would reimburse Simmons for the compensation it paid Mr. Staples.
Therefore, Mr. Staples’s employment relationship with Simmons was “inextricably
a part of or depend[ed] upon” Simmons’s relationship with RMFS. Id. As it is
undisputed that HWE is the sole owner of RMFS, RMFS only existed because of
HWE. Thus, without HWE, there would be no RMFS for Mr. Staples to manage.
The fact that HWE and Simmons have a profit-sharing agreement where they split
the profits generated by RMFS further demonstrates that these entities were
interdependent and that HWE was not a stranger to Mr. Staples’s employment
relationship with Simmons. Mr. Staples acknowledges that HWE and RMFS were
parties to what he refers to as “the Joint Venture [that he] managed.” (See Doc. 87
at 15.) Based on these facts, it is apparent that Mr. Staples, Simmons, HWE, and
Page 16 of 47
RMFS were all “parties to a comprehensive interwoven set of . . . [business
relations]” connected to Mr. Staples’s employment. See Waddell, 875 So. 2d at 1156.
Simply put, HWE, RMFS, and Simmons were all working together to
generate profits from RMFS’s sales. Simmons employed Mr. Staples to help
generate profits for these three business entities. Accordingly, HWE and RMFS
were not strangers to Mr. Staples’s employment relationship with Simmons. Thus,
with respect to Count One, Mr. Staples’s motion for summary judgment is due to be
denied, and HWE and RMFS’s motion for summary judgment as to this Count is
due to be granted.
C.
Count Two: Interference with Business Relationship of Mr.
Staples and DSM3
In Count Two, Mr. Staples alleges that RMFS and HWE wrongfully
interfered with his consulting agreement with DSM3. 7 As with Count One, this claim
fails because HWE and RMFS were participants in Mr. Staples’s relationship with
DSM3. Mr. Staples argues that HWE and RMFS were strangers to his relationship
with DSM3 because neither entity was a party to his consulting agreement with
7
In his motion for summary judgment, Mr. Staples contends that Simmons is also liable for
interfering with his consulting agreement with DSM3. (See Doc. 70 at 32–33.) This claim is not
asserted against Simmons in Plaintiffs’ Second Amended Complaint. (See Doc. 38.) Because
Plaintiffs’ Second Amended Complaint, which is the operative complaint, does not bring a claim
against Simmons for interference with Mr. Staples’s consulting agreement with DSM3, Mr.
Staples’s motion for summary judgment against Simmons on this claim is due to be denied.
Further, any such asserted claim against Simmons is struck and dismissed.
Page 17 of 47
DSM3. However, the test for whether or not a defendant was a stranger to a business
relationship is not this narrow. Instead, a defendant is a participant in a business
relationship if the defendant “has any beneficial or economic interest in, or control
over, that relationship.” Tom’s Foods, Inc. v. Carn, 896 So. 2d 443, 454 (Ala. 2004)
(citation omitted).
Here, the brokerage agreement between RMFS and DSM3 provided that
DSM3 was to broker the sale of RMFS’s products. Because DSM3 was RMFS’s
broker, RMFS had an economic interest in DSM3’s success. This included the
success of its relationship with its consultants, such as Mr. Staples. As HWE is
entitled to the majority of profits generated by RMFS, it too had an economic interest
in Mr. Staples’s success as a DSM3 consultant. Moreover, DSM3, Mr. Staples,
HWE, and RMFS were all parties to a “comprehensive set of interwoven
contracts.” See Waddell, 875 So. 2d at 1156. As RMFS and HWE note, under the
brokerage agreement, DSM3 received commissions from RMFS in exchange for
selling RMFS’s products. These commissions produced income for DSM3, which
allowed it to pay Mr. Staples’s consulting fee. Thus, Mr. Staples’s ability to receive
his $40,000 consultant fee was directly tied to RMFS’s, and by extension HWE’s,
relationship with DSM3. Accordingly, HWE and RMFS were not strangers to Mr.
Staples’s consulting arrangement with DSM3. Therefore, with respect to Count
Page 18 of 47
Two, Mr. Staples’s motion for summary judgment is due to be denied, and HWE
and RMFS’s motion for summary judgment as to this Count is due to be granted.
D.
Count Three: Civil Conspiracy – Interference with Business
Relationship of Mr. Staples and DSM3
In Count Three, Mr. Staples asserts a civil conspiracy claim against HWE and
RMFS, alleging that they conspired to interfere with his relationship with DSM3.8
The tort of civil conspiracy consists of “the combination of two or more persons to
do (a) something that is unlawful, oppressive, or immoral; or (b) something that is
not unlawful, oppressive or immoral, by unlawful, oppressive, or immoral means; or
(c) something that is unlawful, oppressive, or immoral, by unlawful, oppressive, or
immoral means.” Johnson v. Shirley, 539 So. 2d 165, 169 (Ala. 1988). “Conspiracy
itself furnishes no civil cause of action. Therefore, a conspiracy claim must fail if the
underlying act itself would not support an action.” Triple J Cattle, Inc. v. Chambers,
621 So. 2d 1221, 1225 (Ala. 1993) (internal citations omitted). As stated above, Mr.
Staples’s claim that HWE and RMFS interfered with his relationship with DSM3
fails as a matter of law. Accordingly, with respect to Count Three, Mr. Staples’s
8
Mr. Staples argues that Simmons is also liable for conspiring to interfere with his
relationship with DSM3. (See Doc. 70 at 34–36.) But, as with Count Two, Mr. Staples did not bring
this claim against Simmons in his Second Amended Complaint. (See Doc. 38.) Therefore, Mr.
Staples’s motion for summary judgment against Simmons on this claim is due to be denied.
Further, any such asserted claim against Simmons is struck and dismissed.
Page 19 of 47
motion for summary judgment is due to be denied, and HWE and RMFS’s motion
for summary judgment as to this Count is due to be granted.
E.
Count Four: Intentional Interference with Business Relationship
and Employment of Mrs. Staples
In Count Four, Mrs. Staples brings an intentional interference with business
relationship claim against all three Defendants, asserting that they interfered with
her ownership interest and employment status with DSM3. Mrs. Staples’s
intentional interference with business relationship claim is based on the actions taken
by Defendants towards DSM3 in December 2017 and January 2018. Specifically,
Mrs. Staples points to Simmons’s withholding of the commissions owed DSM3 and
RMFS’s termination of the brokerage agreement.
Though none of the Defendants had a direct contractual relationship with
Mrs. Staples, they were not strangers to her allegedly injured relations with DSM3.
As stated above, due to the brokerage agreement between RMFS and DSM3, RMFS
and HWE had an economic interest in DSM3’s business relationships. This included
its relationship with Mrs. Staples. Moreover, Simmons also derived an economic
benefit from DSM3’s financial wellbeing. Because Simmons was entitled to a share
of RMFS’s profits, Simmons necessarily stood to benefit from any sales brokered by
DSM3 on behalf of RMFS. Additionally, like Mr. Staples’s consulting fee, Mrs.
Staples’s salary and the profits she earned from DSM3 were directly tied to
Page 20 of 47
Defendants’ business relationships. Because of the brokerage agreement, RMFS
paid DSM3 commissions. DSM3 depended on Simmons to send it these
commissions and used these commissions to help pay Mrs. Staples’s salary. Thus,
Defendants were participants in Mrs. Staples’s relationship with DSM3.
The record also reflects that Mrs. Staples’s ownership interest and
employment with DSM3 were “inextricably a part of or dependent upon”
Defendants’ relationships with DSM3. See Waddell, 875 So. 2d at 1156. The gist of
Mrs. Staples’s interference claim is that RMFS’s termination of the brokerage
agreement with DSM3 and Simmons’s withholding of the commissions were meant
to end her ownership of DSM3 and employment status with the company. 9 Mrs.
Staples admits that her claim is that Defendants terminated the brokerage agreement
to “force or coerce [her] to sell her interest in and give up her employment in
DSM3.” (See Doc. 85 at 5.) If Defendants’ relationships with DSM3 were such that
suspension of those relationships would directly result in Mrs. Staples’s relationship
9
Mrs. Staples also contends that Defendants poached employees from DSM3. (See Doc. 85
at 7.) However, after review of the evidentiary submissions referenced by Plaintiffs, the Court was
unable to find any evidence that this occurred. There is evidence that due to Defendants’ actions
Mrs. Staples could no longer pay DSM3’s employees. But this evidence merely reiterates that Mrs.
Staples’s ownership interest in DSM3 was dependent upon Defendants’ relationship with DSM3.
Evidence that Simmons fired Mrs. Staples’s daughter around this same time period is also
insufficient to support her interference claim. Mrs. Staples has failed to explain how her daughter’s
termination interfered with her relationship with DSM3. Moreover, as Simmons was the entity
that employed Mrs. Staples’s daughter, Mrs. Staples can hardly say that it was a stranger to that
relationship.
Page 21 of 47
with DSM3 ending, they were not strangers to Mrs. Staples’s relationship with
DSM3. Instead, this suggests that the only reason Mrs. Staples was able to maintain
her relationship with DSM3 was because of DSM3’s business relationships with
Defendants. Thus, Mrs. Staples’s interference claim fails as a matter of law.
Mrs. Staples’s interference claim with respect to termination of the brokerage
agreement also fails because RMFS had the right to terminate its brokerage
agreement with DSM3. Tortious interference cannot be based upon a party doing
what it has the right to do. See Colonial Bank v. Patterson, 788 So. 2d 134, 139 (Ala.
2000), overruled on other grounds by White Sands, 32 So. 3d at 12. Mrs. Staples admits
that RMFS had the right to terminate the brokerage agreement for any reason. (See
Doc. 75-3 at 8.) Additionally, the record reflects that RMFS had previously
terminated two other brokerage agreements under similar provisions. (See id.) This
demonstrates that termination of the brokerage agreement was justified, and thus,
Defendants cannot be held liable for tortious interference for doing so. See White
Sands, 32 So. 3d at 18 (maintaining that justification is an affirmative defense but
noting that in certain circumstances defendants could be entitled to judgment as
matter of law on defense of justification). Accordingly, with respect to Count Four,
Page 22 of 47
Mrs. Staples’s motion for summary judgment is due to be denied, and Defendants’
motions for summary judgment as to this Count are due to be granted. 10
F.
Count Five: Breach of Fiduciary Duty
In Count Five, Mrs. Staples brings a breach of fiduciary duty claim against
HWE and RMFS. The elements of a breach of fiduciary duty claim are “the
existence of a fiduciary duty, a breach of that duty, and damage suffered as a result
of that breach.” Aliant Bank. v. Four Star Invs., Inc., 244 So. 3d 896, 907 (Ala. 2017).
Fiduciary relationships typically arise in one of four scenarios:
(1) when one person places trust in the faithful integrity of another, who
as a result gains superiority or influence over the first, (2) when one
person assumes control and responsibility over another, (3) when one
person has a duty to act for or give advice to another on matters falling
within the scope of the relationship, or (4) when there is a specific
relationship that has traditionally been recognized as involving fiduciary
duties, as with a lawyer and a client or a stockbroker and a customer.
Id. at 916 (quoting Swann v. Regions Bank, 17 So. 3d 1180, 1193 (Ala. Civ. App.
2008)).
10
In her response to Simmons’s motion for summary judgment on this claim, Mrs. Staples
cites to Arkansas law, stating that Simmons is vicariously liable for HWE and RMFS’s interference
in her relationship with DSM3. (See Doc. 85 at 6.) However, as Mrs. Staples has previously
conceded, Alabama law applies to her interference with business relationship claim. Any injury
Mrs. Staples suffered as a result of Defendants’ actions occurred in Alabama as she does not
dispute: (1) that at the time of Defendants’ actions she was a full-time resident of Alabama; (2) that
Simmons would send the commission checks RMFS owed DMS3 to her Alabama address; and (3)
that she operated DSM3 from her home in Alabama.
Page 23 of 47
Mrs. Staples bases her breach of fiduciary duty claim on her assertion that both
Eisenman and Blanchard were participants in the plan to force her out of DSM3.
According to Mrs. Staples, due to Eisenman’s position as the attorney who helped
form DSM3 and Blanchard’s position as a co-member of DSM3, their participation
in this plan breached fiduciary duties owed her, and they did so as agents for HWE
and RMFS.
Mrs. Staples’s motion for summary judgment on her breach of fiduciary duty
claim is due to be denied. While the Court agrees with Mrs. Staples that her
relationship with Blanchard, as co-members of DSM3, is the type of relationship
from which a fiduciary duty would normally attach, DSM3’s LLC Agreement
includes a provision that states that its members “waive to the fullest extent
permitted . . . any duty or other obligation, if any, that a Member may have to the
Company or another Member, (including fiduciary duties).” (See Doc. 95-5 at 41.)
Viewing this evidence in the light most favorable to HWE and RMFS, Blanchard did
not breach any duty by participating in plans to force Mrs. Staples out of her position
with DSM3. Furthermore, at this summary judgment stage, the Court cannot
conclusively determine whether Eisenman owed Mrs. Staples any fiduciary duties.
As one of two members in a LLC that Eisenman helped form, it may have been
reasonable for Mrs. Staples to place trust in Eisenman and assume that he would act
Page 24 of 47
in her best interest in his dealings related to that LLC. However, HWE and RMFS
have presented evidence that casts doubt as to whether Eisenman’s relationship with
Mrs. Staples rose to the level of a fiduciary. Specifically, Eisenman testified that
“[i]n creating the DSM3 LLC Agreement, I acted solely as counsel to RMFS” and
stated that he never communicated with Mrs. Staples about the DSM3 LLC
Agreement, but instead, performed the legal work necessary to form DSM3 at the
behest of Walker. (See Doc. 95-4 at 3.) Accordingly, Mrs. Staples is not entitled to
summary judgment on her breach of fiduciary duty claim.
HWE and RMFS contend that they are entitled to summary judgment on this
claim because any fiduciary duties Blanchard and Eisenman owed Mrs. Staples fell
outside the scope of their agency relationships with HWE and RMFS. “The test to
be applied in determining the existence of an agency relationship under the doctrine
of respondeat superior is whether the alleged principal reserved a right of control
over the manner of the alleged agent’s performance.” Wood v. Shell Oil Co., 495 So.
2d 1034, 1036 (Ala. 1986). “Summary judgment on the issue of agency is generally
inappropriate because this issue is a question of fact to be determined by the trier of
fact.” See id. at 1035.
A question of fact exists on the issue of whether Eisenman and Blanchard’s
relationship with Mrs. Staples arose out of their roles as agents for HWE and RMFS.
Page 25 of 47
According to Mrs. Staples, Blanchard told her that “she worked for the parent
company [HWE]” and appeared to have no “interest in helping out [DSM3] or
being involved in the business.” (See Doc. 73-1 at 11.) Moreover, Mr. Staples testified
that Blanchard “constantly told us she worked for HWE” and “refused to even take
a [DSM3] email address.” (See Doc. 70-1 at 21.) Viewing this evidence in the light
most favorable to Mrs. Staples, Blanchard’s role as a member of DSM3, and the
duties she incurred due to this role, fell within the scope of her agency relationship
with HWE. Additionally, there is evidence that Eisenman’s relationship with Mrs.
Staples grew out of his relationship with HWE and RMFS. It appears from the record
that Eisenman has a long-standing relationship with Walker and his companies and
that he has performed various legal work for Walker throughout the years. Moreover,
as stated, Eisenman testified that Walker was the person who directed him to prepare
the necessary papers for the creation of DSM3 and that he believed he was acting
solely as counsel to RMFS. Based on this evidence, a rational jury could conclude
that Eisenman was acting as an agent of RMFS when he arguably assumed fiduciary
obligations towards Mrs. Staples and subsequently breached those duties.
Therefore, RMFS and HWE’s motion for summary judgment on Mrs. Staples’s
breach of fiduciary duty claim is also due to be denied.
Page 26 of 47
G.
Count Six: Mrs. Staples’s Civil Conspiracy Claim
In Count Six, Mrs. Staples claims that Defendants conspired to harm her
relationship with DSM3. The underlying torts that she says supports this claim are
her intentional interference with business relationship and breach of fiduciary duty
claims. Because Mrs. Staples’s interference claim fails as a matter of law, she cannot
use that claim to support a claim for civil conspiracy. See Triple J Cattle, Inc., 621 So.
2d at 1225. However, as stated above, a question of fact remains as to whether HWE
and RMFS can be held liable for breach of fiduciary duty. Therefore, HWE and
RMFS’s motion for summary judgment as to Count Six is due to be denied.
Moreover, it is at least arguable that Simmons’s withholding of the commission
checks and alleged participation in the proposals outlined by Eisenman demonstrates
that Simmons agreed to assist HWE, RMFS, and their agents in breaching the
asserted fiduciary obligations. Thus, Simmons is not entitled to summary judgment
on Count Six. Because, viewing the evidence in the light most favorable to
Defendants, a rational jury could find that there was no breach of fiduciary duty, Mrs.
Staples’s motion for summary judgment as to Count Six is also due to be denied.
Page 27 of 47
H.
Counts Seven & Eight: Wrongful Termination
In Counts Seven and Eight, Mr. Staples brings claims for wrongful
termination under several different theories of liability. The Court will address each
in turn.
1.
Express Contract
Mr. Staples states that his claims for breach of express contract are based on
the following: (1) multiple assurances made to him by Simmons about his
employment; and (2) written employment rules Simmons provided him related to
job performance, progressive discipline, and fair treatment.
As an initial matter, Simmons argues that the Court should not consider Mr.
Staples’s claims for breach of express contract because they were made for the first
time in his motion for summary judgment. The Court disagrees with Simmons’s
contention that it was not on notice that Mr. Staples’s breach of contract claims were
at least partly based on what Mr. Staples alleges were express representations made
by Simmons. While Count Seven of the Second Amended Complaint is labeled as a
claim for breach of “[i]mplied contract and [p]romissory [e]stoppel,” the allegations
contained within that count assert that Simmons’s representatives “stated,
represented, and promised Mr. Staples that in exchange for [his] promise or
agreement to . . . come to work for Simmons and ‘run’ the special Simmons, HWE,
Page 28 of 47
and/or RMFS relationship, Simmons would employ him indefinitely except for good
cause.” (See Doc. 38 ¶ 69.) Mr. Staples further alleged that “[b]ased on . . .
statements, representations, and promises” from Simmons he entered into an
employment relationship with Simmons. (See id. ¶ 70.) These allegations show that
the essence of Mr. Staples’s wrongful termination claim remains the same—that
Simmons violated express representations made about his job security. Thus, the
Court will consider whether Mr. Staples is entitled to summary judgment on his
claim that Simmons terminated him in breach of its previous assurances.
Mr. Staples’s motion for summary judgment under this theory of liability is
due to be denied. Under Arkansas law, “an at-will employee may be discharged for
good cause, no cause, or even a morally wrong cause.” Smith, 804 S.W.2d at 684.
Although Mr. Staples testified that Simmons told him that he would only be
terminated for cause, (doc. 70-1 at 22), Simmons has presented conflicting evidence
that suggests that Mr. Staples was actually an employee terminable at-will. For
example, Mr. Staples’s offer letter stated that Mr. Staples’s employment with
Simmons was at-will, and Simmons’s President testified that Mr. Staples was never
told that he could only be fired from Simmons for good cause. Thus, viewing the
evidence in the light most favorable to Simmons, it did not need good cause to
terminate Mr. Staples.
Page 29 of 47
However, “when an employer makes definitive statements about what its
conduct will be, an employee has a contractual right to expect the employer to
perform as promised.” Crain Indus., Inc. v. Cass, 810 S.W.2d 910, 915 (Ark. 1991).
Thus, Arkansas courts have held that the employment at will doctrine does not apply
“where there is an agreement that the employment is for a specified time, in which
case firing may only be for cause, or where an employer’s employment manual
contains an express provision stating that the employee will only be dismissed for
cause and that provision is relied upon by the employee.” Id. at 913.
As stated, there is at least a question of fact as to whether Simmons ever
represented to Mr. Staples that he would only be fired for cause. Moreover, the
Court does not read the written employment rules provided to Mr. Staples to be so
definite to, as a matter of law, demonstrate that Simmons breached an agreement it
made with Mr. Staples regarding his employment. The first provision Mr. Staples
points to states that “each employee will receive a fair hearing and fair treatment”
when he “bring[s] concerns and issues to the attention of Simmons Leadership.”
(Doc. 70-11 at 2.) Mr. Staples also points to Simmons’s policy on disciplinary
actions, which states that unsatisfactory job performance will be addressed through
disciplinary actions, including “verbal warnings, written warnings, suspension, or
termination of employment.” (Id. at 5.) The policy goes on to state that “[t]he
Page 30 of 47
proper disciplinary action to use is dependent on the seriousness, cost, potential cost,
safety factor, and the number of times of the infraction.” (Id.) These assurances are
insufficient to warrant summary judgment in favor of Mr. Staples on his wrongful
termination claim.
2.
Implied Covenant of Good Faith and Fair Dealing
Mr. Staples’s motion for summary judgment on his wrongful termination
claim under a theory of implied contract is also due to be denied. In Arkansas, even
employment relationships terminable at-will contain an implied covenant of good
faith and fair dealing, which under limited circumstances, allows at-will employees
to bring a wrongful termination claim. See Smith, 804 S.W.2d at 684. According to
Mr. Staples, Simmons breached this implied covenant of good faith and fair dealing
by: (1) telling Mr. Staples the day before it allegedly met with the other Defendants
to plan his ouster that Mr. Staples would lead Simmons’s efforts to begin selling its
products directly; (2) never indicating that it would terminate Mr. Staples’s
employment; and (3) going silent and allowing Mr. Staples to be terminated. (See
Doc. 70 at 28.) Mr. Staples has failed to show that these are the types of
circumstances that would lead an Arkansas court to hold that, as a matter of law,
Simmons breached the implied covenant of good faith and fair dealing between them.
Page 31 of 47
Therefore, Mr. Staples is not entitled to summary judgment under this theory of
liability.
Simmons asserts that it is entitled to summary judgment because the
undisputed evidence demonstrates that it fired Mr. Staples for cause. According to
Simmons, because most of Mr. Staples’s job duties involved tasks for RMFS, it had
no need for his services once RMFS relieved him of his duties, and thus, was justified
in terminating his employment. The Court is unconvinced that these facts entitle
Simmons to summary judgment on this claim. Although it is true that Simmons
waited to fire Mr. Staples until after RMFS had relieved him of his duties as general
manager, there is evidence that Simmons was in discussions with RMFS regarding
plans to terminate Mr. Staples several days before RMFS ended Mr. Staples’s role
as general manager. Indeed, it is arguable that Simmons was not a bystander to
RMFS’s decision to sever its ties with Mr. Staples, but instead, a willing participant
in that decision. Viewing this evidence in the light most favorable to Mr. Staples, a
rational jury could conclude that something other than RMFS’s decision to end its
relationship with Mr. Staples motivated Simmons to terminate his employment. As
Simmons makes no other argument as to why, under Arkansas law, it should be
granted summary judgment on this theory of liability, Simmons’s motion for
summary judgment on this claim is due to be denied.
Page 32 of 47
3.
Public Policy Exception
Under the public policy exception to Arkansas’s at-will employment doctrine,
an employer may be liable for wrongful termination in:
(1) cases in which the employee is discharged for refusing to violate a
criminal statute; (2) cases in which the employee is discharged for
exercising a statutory right; (3) cases in which the employee is
discharged for complying with a statutory duty; and (4) cases in which
employees are discharged in violation of the general public policy of the
state.
Sterling Drug, Inc. v. Oxford, 743 S.W.2d 380, 383 (Ark. 1988) (quoting Scholtes, 548
F. Supp. at 494).
According to Mr. Staples, his termination falls within the public policy
exception because he was terminated only after he raised ethical concerns regarding
whether Simmons should be paying an invoice on behalf of RMFS for waffle
packaging that Mr. Staples believed was being sold solely through HWE. Simmons
has presented evidence that it terminated Mr. Staples for different reasons. Namely,
that, after Walker decided he no longer wanted Mr. Staples to serve as the general
manager of RMFS, Simmons determined that Mr. Staples’s job duties would
essentially be eliminated. Therefore, Mr. Staples’s motion for summary judgment
on his claims brought under the public policy exception to Arkansas’s at-will
employment doctrine is due to be denied.
Page 33 of 47
Simmons contends that it is entitled to summary judgment on this claim
because Mr. Staples’s proffered reason for his termination is illogical. As Simmons
notes, it appears that Mr. Staples’s instructions that Simmons not pay the disputed
invoices would save Simmons money. Nonetheless, the Court concludes that there
is a question of fact as to whether Simmons terminated Mr. Staples due to the issues
he raised regarding the payment of the waffle packaging invoices. Although it
appears that Simmons would save some money by not paying these invoices, the
record reflects that much of Simmons’s profitability was dependent on its
relationships with RMFS, HWE, and Walker. Thus, a reasonable jury could find that
it was actually more beneficial for Simmons to turn a blind-eye to the invoices so that
it could stay in Walker’s good graces and maintain its business relationship with his
companies.
Moreover, Mr. Staples has presented evidence that, during the time period
leading up to his firing, his objections to the invoices were widely discussed. This
includes evidence that, the day before Simmons’s President met with Walker about
the future of their companies’ relationship, he discussed this issue with Mr. Staples
and told Mr. Staples that he would try to bring clarity to the invoice issue at the
meeting. Based on this evidence, the Court concludes that Simmons’s argument as
to why it cannot be held liable under Arkansas’s public policy exception to the at-will
Page 34 of 47
employment doctrine fails. Accordingly, Simmons’s motion for summary judgment
on this claim is due to be denied.
4.
Joint Venture Liability
In his motion for summary judgment, Mr. Staples claims that HWE and
RMFS are liable for wrongful termination based on the theory of joint venture
liability. However, Mr. Staples did not include a claim for wrongful termination
against HWE or RMFS in his Second Amended Complaint. (See Doc. 38.) Instead,
it appears that he asserted this claim for the first time in the parties’ Joint Status
Report, which was filed on February 4, 2019. This was well after the Scheduling
Order’s August 1, 2018 deadline for adding new causes action. (See Doc. 43 at 1.)
Mr. Staples has given no reason why the Court should allow him to amend his
complaint to include wrongful termination claims against HWE and RMFS at this
late stage in the litigation. Thus, the Court concludes that Mr. Staples is not entitled
to amend his complaint to include a wrongful termination claim against HWE or
RMFS. See Sosa v. Airprint Sys., Inc., 133 F.3d 1417, 1419 (11th Cir. 1998) (noting that
under Federal Rule of Civil Procedure 16(b) a plaintiff must demonstrate good cause
before being allowed to amend his complaint after the scheduling order’s deadline to
do so has passed). As this claim is not properly before this Court, Mr. Staples’s
motion for summary judgment against HWE and RMFS on his newly asserted
Page 35 of 47
wrongful termination claim against them is due to be denied. Further, any such
asserted claim is struck and dismissed.
I.
Count Nine: Civil Conspiracy – Wrongful Termination
In Count Nine, Mr. Staples brings a civil conspiracy claim against all three
Defendants.11 The underlying acts that Mr. Staples says support this claim are the
acts that he points to as supporting the wrongful termination claims that he brings in
Counts Seven and Eight. Simmons asserts that summary judgment is due to be
granted on this claim because it is the only party named a Defendant to these
underlying counts. Simmons is correct in that conspiracy requires “concerted action
between two or more persons.” AmSouth Bank, N.A. v. Spigener, 505 So. 2d 1030,
1040 (Ala. 1986) (quoting Snyder v. Faget, 326 So. 2d 113, 119 (1976)). However, “[a]
11
Although the parties have stated that they are in agreement that Alabama law applies to this
claim, Mr. Staples and Simmons have, at various points, cited to both Alabama and Arkansas law
when discussing Count Nine. Due to the Court’s determination that Arkansas law governs Mr.
Staples’s wrongful termination claims, it questions whether Alabama law should apply to Mr.
Staples’s claim that Defendants conspired to terminate him. However, this distinction is of no
moment because claims for civil conspiracy under Alabama and Arkansas law include the same
elements. Compare Johnson, 539 So. 2d at 169 (noting that civil conspiracy consists of “the
combination of two or more persons to do (a) something that is unlawful, oppressive, or immoral;
or (b) something that is not unlawful, oppressive or immoral, by unlawful, oppressive, or immoral
means; or (c) something that is unlawful, oppressive, or immoral, by unlawful, oppressive, or
immoral means.”) with Chambers v. Stern, 64 S.W.3d 737, 743 (Ark. 2002) (“[I]n order to prove a
civil conspiracy, [one] must show a combination of two or more persons to accomplish a purpose
that is unlawful or oppressive or to accomplish some purpose, not in itself unlawful, oppressive or
immoral, by unlawful, oppressive or immoral means, to the injury of another.” (internal quotations
and citations omitted)). As under Alabama law, Arkansas law provides that “conspiracy is not
actionable in and of itself, but recovery may be had for damages caused by acts committed pursuant
to the conspiracy.” See id. Thus, as to Count Nine, the Court cites to Alabama law with the
understanding that its analysis applies equally under Arkansas law.
Page 36 of 47
civil conspiracy claim operates to extend, beyond the active wrongdoer, liability in
tort to actors who have merely assisted, encouraged, or planned the wrongdoer’s
acts.” DGB, LLC v. Hinds, 55 So. 3d 218, 234 (Ala. 2010) (quoting 16 Am. Jur. 2d
Conspiracy § 57 (2009)). Thus, as long as a plaintiff shows that a defendant worked
together with others to engage in unlawful conduct, it may bring a civil conspiracy
claim against that defendant. See id.
Here, Simmons has failed to establish that it cannot be held liable for Mr.
Staples’s claims of wrongful termination. Moreover, it is at least arguable that the
proposals outlined in Eisenman’s memorandum demonstrate that HWE and RMFS
assisted, encouraged, and planned Simmons’s termination of Mr. Staples’s
employment. Accordingly, Defendants’ motions for summary judgment as to Count
Nine are due to be denied. Mr. Staples’s motion for summary judgment as to this
Count is also due to be denied because, as stated above, questions of fact remain as
to whether he has a valid claim for wrongful termination.
J.
Count Ten: Defamation
In Count Ten, Mr. Staples brings a defamation claim against HWE and
RMFS. To make out a defamation claim under Alabama law, “the plaintiff must
show that the defendant was at least negligent, in publishing a false and defamatory
statement to another concerning the plaintiff, which is either actionable without
Page 37 of 47
having to prove special harm (actionable per se) or actionable upon allegations and
proof of special harm (actionable per quod).” Nelson v. Lapeyrouse Grain Corp., 534
So. 2d 1085, 1091 (Ala. 1998) (internal citations and footnote omitted). “Spoken
words that impute to the person of whom they are spoken the commission of an
indictable criminal offense involving infamy or moral turpitude constitute slander
actionable per se.” Id. (citing Ceravolo v. Brown, 364 So. 2d 1155 (Ala. 1978)). If a
statement constitutes slander per se, a plaintiff may succeed on his defamation claim
even if he cannot prove actual harm to his reputation. See Delta Health Grp., Inc. v.
Stafford, 887 So. 2d 887, 897 (Ala. 2004).
Mr. Staples’s defamation claim is based on the testimony by Caffey that, at
some point after the fall of 2017, Walker told her that Mr. Staples “had stolen money
from him or his business.” (See Doc. 70-8 at 4.)12 HWE and RMFS’s sole argument
in support of their motion for summary judgment on Mr. Staples’s defamation claim
is that Mr. Staples is unable to show that this statement harmed his reputation. This
argument, however, ignores the fact that Mr. Staples is not required to demonstrate
that Walker’s comments actually harmed his reputation because an accusation that
12
Well after the briefing period had expired, HWE and RMFS filed a motion to strike
Caffey’s affidavit. (See Doc. 106.) The motion asserts that Caffey’s deposition revealed that the
affidavit was not actually acknowledged before a notary public and that Caffey now admits that she
cannot recall the exact statements made by Walker. (See id.) This motion is due to be denied
because it essentially asks the Court to strike Caffey’s affidavit based on evidence obtained after
the discovery and dispositive motion deadlines had passed.
Page 38 of 47
Mr. Staples stole from Walker would constitute slander per se. See Nelson, 534 So.
2d at 1091–92 (“An oral publication imputing a crime of larceny falls within [the
definition of slander per se].”). It is enough for Mr. Staples to present evidence that
Walker negligently made this defamatory statement to Caffey. As he has done so,
HWE and RMFS’s motion for summary judgment on Mr. Staples’s defamation
claim is due to be denied.
Mr. Staples’s motion for summary judgment on his defamation claim is also
due to be denied. Walker denies making any defamatory statements about Mr.
Staples. (See Doc. 95-1 at 8.) Thus, there is a question of material fact as to whether
Walker ever told Caffey that Mr. Staples had stolen from him.
K.
Count Eleven: Tortious Interference with Business Relationship
with Sysco
In Count Eleven, Mr. Staples brings a tortious interference claim against
HWE and RMFS, alleging that Walker’s defamatory statements about him
interfered with his business relationship with Sysco. This claim fails because Mr.
Staples has not presented evidence that Walker’s allegedly defamatory statements
actually interfered with any of his relationships within the food services industry. See
White Sands, 32 So. 3d at 14 (noting that for a plaintiff to succeed on a wrongful
Page 39 of 47
interference with a business relationship claim he must show intentional interference
with a protectable business relationship and damages). 13
The only person connected to Sysco who testified that Walker made
defamatory statements about Mr. Staples was Caffey. Mr. Staples has presented no
evidence that Caffey ever repeated Walker’s comments to Sysco employees or
attempted to block Mr. Staples from working with Sysco due to these comments. In
fact, according to her affidavit, Caffey disbelieved these comments, and they did not
cause her to lower her opinion of Mr. Staples.
Mr. Staples also points to Caffey’s testimony that other food industry
professionals, including Sysco employees, called her and “indicated . . . that Mr.
Walker had been calling them making similar defamatory statements” about Mr.
Staples. (See Doc. 70-8 at 5.) But this evidence does not save Mr. Staples’s tortious
interference claim because it fails to show that any of these individuals took any
adverse action against Mr. Staples as a result of Walker’s statements. Caffey stated
that it was her opinion that Walker contacted these individuals because he “intended
to harm Mr. Staples’[s] reputation and business relationships in the food industry.”
13
The parties agree that Alabama law applies to Count Eleven. (See Doc. 66 at 7.) Even if
Arkansas law applied, Mr. Staples’s failure to demonstrate that Walker’s comments harmed his
business relationships would be fatal to this claim. See Stewart Title Guar. Co. v. Am. Abstract &
Title Co., 215 S.W.3d 596, 601 (Ark. 2005) (noting that elements of tortious interference claim
include “intentional interference [that] induc[es] or caus[es] a breach or termination of the
relationship or expectancy.”).
Page 40 of 47
(See id.) However, she did not testify that she was aware that Walker’s statements
actually harmed any of Mr. Staples’s business relationships.
HWE and RMFS have presented evidence that Mr. Staples’s business
relationships within the food industry were not harmed. Mr. Staples testified that he
has not sought employment with Sysco since his termination from Simmons. (See
Doc. 70-1 at 28.) He additionally testified that he had received no indication from
Radian, the entity that HWE and RMFS contend employs Caffey, that its lack of
interest in hiring him was based upon Walker’s comments. (See id. at 29.) No other
food services entity that Mr. Staples sought employment from directly asked him
about Walker’s comments. (See id.) Absent evidence that Walker’s statements cost
Mr. Staples employment opportunities or affected any other protectable business
interest, Mr. Staples’s tortious interference claim based upon those comments fails
as a matter of law. Accordingly, with respect to Count Eleven, Mr. Staples’s motion
for summary judgment is due to be denied, and HWE and RMFS’s motion for
summary judgment as to this Count is due to be granted. 14
14
HWE and RMFS object to Caffey’s statement that other people within the food industry
informed her that Walker had made defamatory statements about Mr. Staples, arguing that this
constitutes inadmissible hearsay. (See Doc. 93 at 22.) Because the introduction of this evidence
does not change the result of this Opinion, HWE and RMFS’s objections to Mr. Staples’s use of
this evidence are moot.
Page 41 of 47
L.
RMFS’s Counterclaims
In addition to asserting that it is entitled to summary judgment on all of
Plaintiffs’ claims against it, RMFS contends that it is entitled to summary judgment
on: (1) its breach of fiduciary duty counterclaim against Mr. Staples; and (2) its aiding
and abetting breach of fiduciary duty counterclaim against Mrs. Staples.
1.
Federal Rule of Civil Procedure 8(b)(6)
As a threshold matter, the Court will address RMFS’s contention that
Plaintiffs have, by default, admitted the majority of the factual allegations RMFS
pled to support its counterclaims. Federal Rule of Civil Procedure 8(b)(6) provides
that “[a]n allegation . . . is admitted if a responsive pleading is required and the
allegation is not denied.” Fed. R. Civ. P. 8(b)(6). Here, Plaintiffs failed to respond
to paragraphs 23–70 of the counterclaims RMFS filed in response to the Second
Amended Complaint. Relying on the Eleventh Circuit’s decision in Ashley v.
Jaipersaud, 544 F. App’x 827 (11th Cir. 2013), RMFS asserts that due to this
omission the Court should consider Plaintiffs to have admitted all of the facts
contained within these paragraphs. Plaintiffs, for their part, do not present any
argument as to why Rule 8(b)(6) does not apply.
Nonetheless, the Court declines to deem Plaintiffs to have admitted the facts
set forth in paragraphs 23–70 of RMFS’s counterclaims. The Supreme Court has
Page 42 of 47
admonished that “[t]he Federal Rules reject the approach that pleading is a game of
skill in which one misstep by counsel may be decisive to the outcome and accept the
principle that the purpose of pleading is to facilitate a proper decision on the merits.”
United States v. Hougham, 364 U.S. 310, 317 (1960). Thus, several federal courts have
reasoned that “[t]he failure to deny the same allegations in an amended complaint
does not constitute an admission . . . where the original complaint contained
substantially the same allegations and the defendant denied them in answer to that
complaint.” See Peak v. ReliaStar Life Ins. Co., No. 1:16-cv-3491-AT, 2018 WL
6380772, *2 (N.D. Ga. Sept. 28, 2018) (quoting In re Izaguirre, 166 B.R. 484, 489
(Bankr. N.D. Ga. 1994)); Daniel v. Dekalb Cty. Sch. Dist., No. 1:10-CV-3455-SCJLTW, 2013 WL 12095217, at *4 (N.D. Ga. Dec. 23,2013), report and recommendation
adopted, 2014 WL 12519801 (N.D. Ga. Feb. 26, 2014), aff’d, 600 F. App’x 632 (11th
Cir. 2014) (“[W]hen the defendant answers an original complaint and the amended
complaint makes substantially the same allegations, the denials in the original
complaint suffices as a denial to substantially similar averments in the amended
complaint and in such circumstances, a default judgment is not appropriate.”).
Here, although, as RMFS notes, Plaintiffs did not respond to paragraphs 23–
70 of their amended counterclaims, Plaintiffs did respond to substantially similar
allegations contained within RMFS’s original counterclaims. (See Doc. 31.) This
Page 43 of 47
distinguishes this case from Ashley where, while the Eleventh Circuit noted that the
defendant had answered the original complaint, it did not discuss whether the factual
allegations made in the amended complaint were substantially similar to those made
in the original complaint. See Ashley, 544 F. App’x at 829 & n.3. Moreover,
ultimately, the Eleventh Circuit’s holding in Ashley did not turn on the defendant’s
failure to respond to the plaintiff’s amended complaint, but instead, was based on
the court’s conclusion that the defendant had failed to raise the arguments made on
appeal before the district court. See id. at 829–30. As the factual allegations that
Plaintiffs answered in their response to RMFS’s original counterclaims are nearly
identical to those made in RMFS’s amended counterclaims, the Court concludes
that it would be inappropriate to deem Plaintiffs’ failure to respond to those claims
as judicial admissions.
2.
Breach of Fiduciary Duty
RMFS argues that Mr. Staples breached fiduciary obligations he owed it when
he: (1) sent an email to a competitor which contained confidential information
concerning RMFS’s sales and volume revenue; (2) caused RMFS to enter into a
broker arrangement with Diversified Sales & Marketing, an entity that Mrs. Staples
had a 60% ownership interest in; (3) paid unauthorized commissions on behalf of
RMFS to DSM3; (4) asked a prospective broker for RMFS to hire Mrs. Staples and
Page 44 of 47
his daughter as a quid pro quo for RMFS’s business; and (5) approved
reimbursement of his personal expenses by RMFS. (See Doc. 77 at 34–37.) RMFS
contends that Mrs. Staples is liable for aiding and abetting Mr. Staples’s breach of
fiduciary duty because she knew that he owed RMFS a duty of loyalty and care and
profited from Mr. Staples’s actions.
Because the Court has concluded that RMFS’s failure to respond to these
allegations did not constitute judicial admissions, RMFS is not entitled to summary
judgment based on these unverified allegations. Mr. Staples has presented evidence
that casts doubt as to whether he breached any fiduciary obligation owed RMFS. For
example, he testified that Walker understood that Mrs. Staples would have an
ownership interest in Diversified Sales & Marketing, and his daughter Blair’s
testimony contradicts RMFS’s assertion that Mr. Staples used images of Walker
without Walker’s permission. Other evidence suggests that during his time as
general manager Mr. Staples provided RMFS with documentation about the
expenses he was approving on behalf of the company. Though Plaintiffs do not
appear to dispute that Mr. Staples emailed RMFS’s competitor or asked a
prospective broker to hire his family members, RMFS has failed to sufficiently
demonstrate that it suffered damages as a result of these actions. Thus, the Court
cannot say, as a matter of law, that Mr. and Mrs. Staples are liable to RMFS on these
Page 45 of 47
counterclaims. Accordingly, RMFS’s motion for summary judgment on its breach
of fiduciary duty counterclaims is due to be denied. As there are unresolved factual
disputes surrounding these claims and Plaintiffs have not moved for summary
judgment on RMFS’s counterclaims, the Court declines to address, at this time,
Plaintiffs’ arguments that RMFS’s claims are time-barred and that the defenses of
estoppel and waiver apply.
V.
Conclusion
For the reasons stated above, Mr. Staples’s motion for summary judgment
(doc. 69) is due to be DENIED, and Mrs. Staples’s motion for summary judgment
(doc. 71) is also due to be DENIED. Simmons’s motion for summary judgment (doc.
72) is due to be GRANTED in PART and DENIED in PART, and HWE and
RMFS’s motion for summary judgment (doc. 76) is also due to be GRANTED in
PART and DENIED in PART. HWE and RMFS’s motion to strike (doc. 106) is due
to be DENIED. The parties’ request for oral argument (doc. 103) is due to be
DENIED. An Order consistent with this Opinion will be entered contemporaneously
herewith.
Page 46 of 47
DONE and ORDERED on July 24, 2019.
_____________________________
L. Scott Coogler
United States District Judge
194800
Page 47 of 47
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?