Rusch v. Midwest Industries Inc et al
Filing
49
MEMORANDUM Opinion and Order granting in part and denying in part 26 Motion for Summary Judgment (See Order Text). Telephonic Motion Hearing set on 47 MOTION to Continue Trial for 5/4/2012 11:00 AM before Senior Judge Donald E OBrien (See Order Text for instructions to participate). Signed by Senior Judge Donald E OBrien on 5/1/2012. (des)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
WESTERN DIVISION
DONALD C. RUSCH,
Plaintiff,
No. 10-CV-4110-DEO
MIDWEST INDUSTRIES INC., et
al.,
Memorandum and Opinion Order
v.
Defendant.
____________________
I.
INTRODUCTION AND BACKGROUND
Currently before this Court is Defendants’1 motion for
summary
judgment
against
Plaintiff
Donald
C.
Rusch’s
Complaint.
Docket No. 26.
Plaintiff alleges the following
causes
action:
intentional
of
prospective
business
(1)
relations,
(2)
interference
breach
of
with
fiduciary
duties, (3) civil conspiracy, and (4) Employment Retirement
Benefits Income Security Act (ERISA) violation.
In 1954, Byron L. Godbersen founded Midwest Industries,
Inc. (hereinafter “Midwest Industries”) in Ida Grove, Iowa.
1
The Defendants are Midwest Industries Inc., Midwest
Industries Inc. Supplemental Executive Retirement Plan, Susan
Godbersen (f/k/a Susan Rusch), Lajune Godbersen, Bruce
Godbersen, Beverly L. Corr, Ryan Bruce Godbersen, Jason Buns,
Jon W. Devitt, Linda Harriman, and Andrew Brosius.
Docket No. 26-2, 1 and Docket No. 31-3, 1. Midwest Industries
is incorporated in Delaware and “manufactures and markets boat
trailers, lift, and dock products.”
In
1987,
Originals”)
Byron
was
Originals,
formed
as
a
Id.
Inc.
sister
(hereinafter
company
of
“Byron
Midwest
Industries and began manufacturing “fuel for use in remotely
operated model aircraft and cars,” as well as “plastic molded
parts.”
Id.
Donald C. Rusch, Plaintiff, was an employee of Midwest
Industries, Inc., for 35 years, until he was terminated on
April 3, 2009.
Docket No. 31-2, 1 and Docket No. 39-1, 1.
When terminated, Plaintiff was Vice President of Marketing of
Midwest Industries, as well as “an officer, shareholder, and
voting
director
Originals.”
of
both
Midwest
[Industries]
and
Byron
Id.
Midwest Industries is a family owned corporation which
Plaintiff became associated with through his marriage to Susan
Godbersen, Byron Godbersen’s, founder of Midwest Industries,
daughter.
Docket No. 26-2, 1.
Defendants Lajune Godbersen,
Bruce Godbersen, Beverly L. Corr, Ryan Bruce Godbersen, Jason
Buns, Jon W. Devitt, Linda Harriman, and Andrew Brosius are
also family members, as well as shareholders and board members
2
of Midwest Industries.2
Id. at 2-5.
In addition, some of the
Defendants are officers of either Midwest Industries or Byron
Originals: Andrew Brosius is the President and CEO of Midwest
Industries; Jon W. Devitt is the Vice President of Engineering
of Midwest Industries; Jason Bun is the Vice President of
Operations of Midwest Industries, Bruce Godbersen is the
President and CEO of Byron Originals, and Ryan Godbersen is
the Chief Operating Officer, Secretary, and Treasurer of Byron
Originals.
Id.
“In 2008 through at least 2009, Midwest Industries was”
going through “a financial crisis.”3
Docket No. 31-2, 2.
Also during this period, Plaintiff and his wife, Defendant
Susan Godbersen (hereinafter “Susan”), began to have marital
difficulties.
Id.
In December of 2008, Plaintiff, with
permission from his boss, Defendant Andrew Brosius, began
attending marriage counseling in Des Moines, Iowa.
Around
2
LaJune Godbersen was married to the late Byron
Godbersen; Bruce Godbersen is Byron and LaJune’s son; Beverly
L. Corr is Byron and LaJune’s grandaughter; Ryan Bruce
Godbersen is Byron and LaJune’s grandson; Jason Buns is Byron
and LaJune’s grandson in-law; Jon W. Devitt is also Byron and
LaJune’s grandson in-law; and Linda Harriman is Byron and
LaJune’s daughter. Docket No. 26-2, 2-5.
3
“In 2008, Midwest announced it would not pay bonuses
to its executives, would not pay dividends, and was cutting
the salary of its executives by ten percent.” Docket No. 312, 3.
3
this time, Plaintiff alleges that Susan “falsely told her”
family members, as well as Plaintiff’s co-workers, fellow
directors and boss that Plaintiff “was having an extra-marital
affair.”4
Docket No. 31-2, 3.
It is also undisputed that
around this time, there were rumors within the family that
Plaintiff had made comments such as, “I hate my job . . .
I
[d]on’t care about [Midwest Industries] . . .
They can fire
me,”
and
and
an
assortment
insubordinate statements.
of
other
negative
Docket No. 31-4, 18.
arguably
Plaintiff
denies ever making these comments.
On January 28, 2009, Brosius, Susan, and Plaintiff had a
meeting at Midwest Industries.
Plaintiff was placed on “a
paid leave of absence with full pay and benefits” until March
28, 2009.
Docket No. 26-2, 5 and Docket No. 31-2, 5.
Brosius
and other Defendants claim Plaintiff was placed on a leave of
absence because of performance issues, including a general
lack of engagement at work, excessive absences, difficulty
with
customers,
poor
decision
making,
failure
to
meet
deadlines, general lack of leadership, and strained
4
In a deposition, Andrew Brosius testified that Plaintiff
initially denied having an affair but later told him that he
had been lying to his family and other people he was close to
about the affair, which Mr. Brosius took as an admission that
Plaintiff was in fact having an affair. Docket No. 31-4, 19.
4
work relations due to his marital problems with Susan.5
Docket No. 31-2, 5-6 and Docket No. 39-1, 5.
While on his leave of absence, Plaintiff was instructed
to develop a strategic marketing plan, think about how he
might correct his damaged relationships with his co-workers
and
family
members,
and
come
up
with
ideas
and
present
recommendations in relation to the new role he would assume at
Midwest Industries after his leave of absence. Docket No. 262, 6 and Docket No. 31-3, 3.
On February 5, 2009, six days
after Plaintiff was placed on a leave of absence, Susan filed
for divorce.
On
March
Docket No. 31-2, 8.
2,
2009,
Defendants
held
a
shareholders’
meetings for both Midwest Industries and Byron Originals in
which a new board of directors was elected.
Docket No. 31-2.
In both elections, Plaintiff was not included in the slate of
candidates.
Id.
Other than Plaintiff, all the previous
directors were re-elected.
Id.
5
In Plaintiff’s place, the
Plaintiff and Defendants largely disagree as to whether
or not Plaintiff’s work performance was in fact suffering,
but, as Defendants note, “Plaintiff’s termination was not a
result of poor performance; rather, it was a result of
Plaintiff not moving back to or commuting to Ida Grove to
perform his job.”
Docket No. 39-1, 5.
Therefore, since
Defendant concedes Plaintiff was not terminated due to poor
performance, whether or not Plaintiff’s performance was in
fact lacking is not a material issue before this Court.
5
shareholders elected Susan.
Docket No. 31-2, 8.
The bylaws of both Midwest Industries and Byron Originals
“provide that [w]ritten or printed notice stating the place,
day, and hour of” a shareholders’ meeting “shall be delivered
personally or by mail . . . to each shareholder.’”
Docket No.
31-2, 8 (quoting Bylaws of Midwest Industries, Article II, §
4). Both parties agree that Plaintiff was not given notice of
the shareholders’ meeting of March 2, 2009, either personally
or by mail.
However, Defendants note that Plaintiff was
present at a December 15, 2008, shareholders’ meeting where it
was announced that the annual meeting would be held on March
2, 2009.
Docket No. 26-2, 11.
Defendants also note that
Plaintiff was well aware that each year, Midwest Industries
and Byron Originals held their annual shareholders’ meetings
some time from late March to early April.
11.
Docket No. 26-2,
Finally, Midwest Industries sent Plaintiff a notice of
the shareholders’ meetings via email to his work and personal
accounts.
Docket No. 26-2, 10.
6
Plaintiff contends that he
did not receive these emails because of internet access
issues.6
On
April
2,
2009,
Plaintiff
spoke
with
Brosius
and
Jeffrey Ogren, Midwest Industries’ Human Resources Director,
over the phone to discuss Plaintiff’s continued employment
with Midwest Industries.
Docket No. 31-2, 9 and Docket No.
26-2, 6. During the phone conference, both parties agree that
Plaintiff suggested “he assume a marketing consultant role
capable of being performed remotely from Des Moines,” Iowa,
where Plaintiff was then residing.7
Docket No. 39-1, 8.
Docket No. 31-2, 10 and
According to Defendants, Plaintiff
indicated he had moved to Des Moines and had no intention of
returning to Ida Grove, Iowa.
Docket No. 26-2, 6.
However,
Plaintiff contends that he merely expressed hesitancy about
living in Ida Grove during his pending divorce because of a
lack of housing options, never stated he would not move back
to Ida Grove, and was not told that he would have to return to
6
At Midwest Industries’ and Byron Original’s annual
shareholders’ meetings for 2010 and 2011, a board of directors
identical to those elected at the 2009 shareholders’ meeting
were re-elected. Docket No. 26-2, 12.
7
Plaintiff had entered into a three month lease on an
apartment in Des Moines. Docket No. 31-2, 11 and Docket No.
39-1, 9. The lease had commenced on February 19, 2009, and
ended on May 31, 2009. Docket No. 39-1, 9.
7
Ida Grove in order to keep his job.
Docket No. 31-2, 10-11.
Plaintiff also claims that Defendant Brosius inquired as to
whether Plaintiff and Susan would reconcile.
Upon learning
that Plaintiff considered reconciliation unlikely, Brosius
“stated that he was getting significant pressure from the
family to deal with” Plaintiff.8
Id. at 11.
On April 3, 2012, Plaintiff, Defendant Brosius, and Human
Resource’s Manager Ogren had another telephone conference in
which Plaintiff was terminated ostensibly due to his refusal
to return or commute to Ida Grove.
Docket No. 31-2, 12,
Docket No. 26-2, 8; Docket No. 31-2, 10; and Docket No. 39-1,
8.
Both parties agree Plaintiff had adequately complied with
the conditions of his leave of absence. Id. Defendants claim
that
Defendant
Brosius
made
the
sole
determination
to
terminate Plaintiff without participation from any of the
other Defendants, and that the decision to terminate Plaintiff
“had nothing to do with his marriage issues.”
Docket No. 26-
2, 8.
8
Defendants neither confirm nor deny this allegation.
In his deposition, Defendant Brosius stated that he does not
recall making the statement but does not dispute that he could
have made the statement. Docket No. 31-2, 12 (citing Brosius’
Deposition pgs. 159-60; Plaintiff’s App. at 33).
8
“Plaintiff’s
shares
in
Midwest
Industries
Originals were subject to” Buy-Sell Agreements.
26-2,
12;
see
also
Docket
No.
31-3,
8.
and
Byron
Docket No.
The
Buy-Sell
Agreements provide, in part, that upon termination of an
employee
whom
is
also
a
Midwest
Industries’
or
Byron
Originals’ shareholder, the Corporations shall have the option
to purchase their shares.
Docket No. 26-3, 10 and 22.
April
Industries
28,
2009,
“Midwest
and
Byron
Originals
elected to and did purchase Plaintiff’s shares.”
26-2, 13.
On
Docket No.
Plaintiff notes that some of the Corporations’
directors have expressed uncertainty as to whether purchasing
Plaintiff’s shares was a sound business decision.
31-2,
13.
The
Defendant
counters
Docket No.
that
the
director/Defendants, though they may have had concerns related
to the financial condition of the corporations, ultimately
recognized that it was important to keep the shares in the
Godbersen family and prevent the possibility of a hostile
shareholder.
Docket
No.
39-1.
The
Midwest
Buy-Sell
Agreement, which Plaintiff bound himself to, specifically
identifies that its primary purpose was “to maintain control
of
the
Corporation
within
the
continuation of the Corporation.”
9
family
and
to
insure
Docket No. 26-3, 8.
the
“While
employed
as
Industries,
Plaintiff
Industries,
Inc.
(hereinafter
the
a
was
Vice
a
Supplemental
“Midwest
Docket No. 26-2, 14.
President
beneficiary
Executive
Industries’
of
for
Midwest
the
Midwest
Retirement
Retirement
Plan”
Plan”).
The Midwest Industries’ Retirement Plan
provides for retirement benefits for a select group of Midwest
Industries’ “management and highly compensated employees.”
Docket No. 2-1, 16.
are
still
All employees covered under the Plan who
employees
at
the
age
of
60
are
entitled
to
retirement benefits. Docket No. 2-1, 16, and Docket No. 26-2,
14.
If an employee is still employed at the age of 65,
employees are entitled to an additional lump sum payment. Id.
Plaintiff claims that if he would have retired from Midwest
Industries upon reaching the age of 65, “he would have been
entitled to . . . $424,271.”
Docket No. 2-1, 16.
However, if
an employee entitled to benefits under the Plan is terminated
prior to age 60, he is entitled to nothing.
15.
Docket No. 26-2,
At the time Plaintiff was terminated, he was 56 years old
and was, therefore, no longer entitled to any benefits under
the plan.
II.
Id.
SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate only if the record shows
10
“there is no genuine issue as to any material fact and that
the movant is entitled to judgment as a matter of law.”
R. Civ. P., Rule 56(c).
Fed.
A fact is material if it is necessary
“to establish the existence of an element essential to [a]
party’s case, and on which that party will bear the burden of
proof at trial.”
(1986).
Celotex Corp. v. Catrett, 477 U.S. 317, 322
There is a genuine issue as to a material fact if,
based on the record before the court, a “rational trier of
fact” could find for the non-moving party.
Matsushita Elec.
Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587
(1986).
When considering a motion for summary judgment, a “court
must view the evidence in the light most favorable to the
nonmoving party . . . .”
Hutson v. McDonnell Douglas Corp.,
63 F.3d 771 (8th Cir. 1995).
This requires a court to draw
any reasonable inference from the underlying facts in favor of
the nonmoving party and to refrain from weighing the evidence,
making credibility determinations, or attempting to discern
the truth of any factual issue in a manner which favors the
moving party unless there is no reasonable alternative.
Matsushita,
475
U.S.
at
587;
and
Morris
v.
City
See
of
Chillicothe, 512 F.3d 1013, 1018 (8th Cir. 2008) (citing
11
Thomas v. Corwin, 483 F.3d 516, 526-27 (8th Cir. 2007).
Procedurally, the movant bears the initial burden “of
informing the district court of the basis for its motion and
identifying those portions of the record which show a lack of
a genuine issue.” Hartnagel v. Norman, 953 F.2d 394, 395 (8th
Cir. 1992) (citing Celotex, 477 U.S. at 323). Once the movant
has carried his burden, the non-moving party is required “to
go beyond the pleadings” and through “affidavits, or by the
‘depositions, answers to interrogatories, and admissions on
file,’ designate specific facts showing that there is a
genuine issue for trial.” Celotex, 477 U.S. at 423 (citing
Fed. R. Civ. P. 56(e)).
III.
INTENTIONAL
INTERFERENCE
WITH
PROSPECTIVE
BUSINESS
RELATIONS
Under Iowa law, the elements of intentional interference
with prospective business relations are:
1.
The plaintiff had
contractual relationship
person.
a prospective
with a third
2. The defendant knew of the prospective
relationship.
3.
The defendant intentionally and
improperly interfered with the relationship
in one or more particulars.
4.
The interference caused either the
12
third party not to enter into or to
continue the relationship or that the
interference prevented the plaintiff from
entering
into
or
continuing
the
relationship.
5.
The amount of damage.
Id. at 527 (citations omitted).
Plaintiff contends that Defendants, other than Midwest
Industries
and
the
Midwest
Industries’
Retirement
Plan,
“intentionally and improperly interfered with” Plaintiff’s
prospective business relationship with Midwest Industries to
the extent that
each used his or her authority as
shareholders, directors and/or officers to
interfere with [Plaintiff’s] employment and
prospective employment, strip him of his
financial ownership interest in Midwest
Industries and Byron Originals, and to
purportedly
remove
[him]
from
the
Companies’ respective Boards.
Docket No. 2-1, 10.
(A) The Purchase of Plaintiff’s Shares Pursuant to the
Buy-Sell Agreements and Plaintiff’s Purported Removal from the
Board of Directors
After a thorough review of the record, this Court is
persuaded that the purchase of Plaintiff’s shares pursuant to
the Buy-Sell agreement and the removal of Plaintiff from the
Board of Directors were legitimate actions within Defendants’
13
rights as shareholders and directors of Midwest Industries and
Byron Originals and signatories of the Buy-Sell Agreements;
and, therefore, regardless of the Defendants’ motivations,
they are not properly subject to an intentional interference
with prospective business relations claim.
In other words,
Plaintiff did not have a prospective contractual relationship
which would have entitled him to remain a shareholder or
director
of
Midwest
Industries
and
Byron
Originals,
and
Defendant’s actions were not, legally speaking, improper,
regardless of their motivations.
As an initial matter, Plaintiff was not removed from the
Board of Directors of Midwest Industries but was simply not
re-elected.
Docket No. 26-2, 9-11.
Furthermore, even if it
were assumed that Plaintiff was removed, a director may be
removed without cause at any time under Delaware law.9
Code § 141(k).
Del.
A decision whether to re-elect or remove a
board member is completely within the rights of shareholders
and, though subject to corporate law, is not subject to tort
law; so, it cannot be the basis of an intentional interference
with business relations claim.
9
Byron Originals and Midwest Industries are formed under
Delaware law, and both parties concede that Delaware law is
controlling in terms of corporate formalities.
14
In addition, once Plaintiff’s employment was terminated
at Midwest Industries, the Defendants had every right to
purchase Plaintiff’s shares under the terms of the Buy-Sell
Agreements.
Notably, Plaintiff voluntarily assented to the
Agreements, and the Agreements provided that, upon termination
of an employee whom is also a Midwest Industries’ or Byron
Originals’ shareholder, the Corporations have an option to
purchase said former employee’s shares.
Docket No. 26-2, 12;
Docket No. 31-3, 8; and Docket No. 26-3, 10 and 22.
Further,
the Midwest Industries’ Buy-Sell Agreement clearly provides
that its primary purpose is “to maintain control of the
Corporation within the family and to insure the continuation
of the Corporation,” which, in the context of a closely held
corporation, is entirely legitimate. Outside of principles of
contract law, this Court has no authority to second guess such
agreements.
However, whether or not Defendants intentionally
interfered with or conspired to intentionally interfere with
Plaintiff’s employment status is a valid question in as far as
the purchase of Plaintiff’s shares was only possible through
his termination, Plaintiff’s loss of his shares may constitute
consequential
damages.
Furthermore,
though
Defendants’
motives for purposes of a tort cause of action are immaterial
15
in the context of tort law as it relates electing directors
and
purchasing
shares
in
conformance
with
a
buy
sell
agreement, the fact that their motives may have been wrongful
may serve as evidence in support of the inference that they
intentionally and improperly interfered with, Plaintiff’s
employment status. In this case, there are no contract rights
such
as
those
created
by
the
Buy-sell
Agreements,
or
shareholder rights, such as those created under Delaware law,
protecting a decision to terminate Plaintiff for an improper
purpose.
(B)
Whether
Plaintiff’s
Termination
was
Based
on
Legitimate Business Considerations
In
order
for
a
defendant’s
actions
to
constitute
intentional and improper interference, “the defendant’s sole
motive” must have been “to financially injure or destroy the
plaintiff.” Dillon v. Ruperto, 786 N.W.2d 873, 2010 WL 238517
at 4 (Iowa Ct. App. 2010) (citations omitted).
“‘Conduct is
generally not considered improper if it is fair and reasonable
under the circumstances and done for a legitimate business
purpose.’” Id. (quoting Holdworth v. Nissly, 520 N.W.2d 332,
336 (Iowa Ct. App. 1994).
However, “[i]nterference achieved
through conduct that is dishonest, fraudulent, malicious, or
16
otherwise
wrongful
interference
is
will
support
improper.”
Kern
a
finding
that
the
v.
Palmer
College
of
Chiropractic, 757 N.W.2d 651, 663-64 (Iowa 2008).10
Both
parties’ briefs impliedly concede that if Plaintiff was fired
because of his failing relationship with Susan, he was fired
for an improper purpose.
Defendants
contend
that
Andrew
Brosius,
Plaintiff’s
superior, fired Plaintiff because Plaintiff refused to commute
or
return
to
Ida
personal reasons.
Grove,
Iowa,
rather
than
for
improper
If true, Defendant Brosius did not act out
of an improper motive; and no other Defendant, regardless of
their feelings in relation to Plaintiff, could be found the
cause of Plaintiff’s harms, and summary judgment would be
10
Some of the factors a court should consider when
determining
whether
interference
with
a
Plaintiff’s
prospective business was improper are:
(a) the nature of the actors conduct,
(b) the actor’s motive,
(c) the interests of the other with which
the actor’s conduct interferes,
(d) the interests sought to be advanced by
the actor,
(e) the social interests in protecting the
freedom of action of the actor and the
contractual interests of the other,
(f) the proximity or remoteness of the
actor’s conduct to the interference, and
(g) the relation between the parties.
Id. (citations omitted).
17
appropriate as to each Defendant.
As previously noted, Plaintiff was placed on a leave of
absence on February 2, 2009. A “Workout Plan” Brosius created
to guide Plaintiff on his leave of absence required Plaintiff
to “[d]evelop some thoughts and ideas on a new role that he
will fill when he returns to work.”
Docket No. 31-6, 176.
On April 2, 2009, Brosius, and Jeffrey Ogren, Midwest
Industries’ Human Resources Director, had a conversation with
Plaintiff via telephone concerning Plaintiff’s future role at
Midwest Industries.
6.
Docket No. 31-2, 9 and Docket No. 26-2,
Brosius admits that up to this point, Plaintiff had
successfully complied with the terms of his leave of absence.
In the phone conversation of April 2, Plaintiff suggested “he
assume a marketing consultant role capable of being performed
remotely from Des Moines,” Iowa.
Docket No. 31-2, 10 and
Docket No. 39-1, 8. Defendants claim that Plaintiff indicated
he had moved to Des Moines and had no intention of returning
to or commuting to Ida Grove.
Docket No. 26-2, 6.
Plaintiff,
however, claims that he merely expressed hesitancy about
living in Ida Grove during his pending divorce because of a
lack
of
housing
options,
never
stated
he
categorically
rejected moving back to Ida Grove, and was not told that he
18
would have to return to Ida Grove in order to keep his job.
Docket No. 31-2, 10-11. The very next day, Brosius terminated
Plaintiff over the phone, ostensibly due to his refusal to
return or commute to Ida Grove.
After careful consideration of the record, this Court is
persuaded that a reasonable jury could conclude that Brosius’
purported
justification
for
firing
Plaintiff
was
pretext meant to obfuscate Brosius’ true motives.
a
mere
There are
multiple facts of record supporting the inference that Brosius
fired Plaintiff based on improper personal considerations.
For instance, Susan, though she was in no manner actively
engaged in Midwest Industries’ business, was, along with
Brosius, the only other person present at the meeting of
February 2nd where Plaintiff was placed on administrative
leave.
Docket No. 31-2, 7.
Prior to being placed on
administrative leave, Plaintiff had never had a negative
performance report and no one had informed him that his
performance was lacking, though it was standard procedure at
Midwest
Industries
to
give
an
employee
notice
and
an
opportunity to make amends when he was performing in an
unsatisfactory manner. Docket No. 31-2, 6. In addition, just
days after Plaintiff was placed on leave, Susan filed for
19
divorce. A month prior to Plaintiff’s termination, Defendants
chose not to re-elect Plaintiff to the Board of Directors of
Midwest Industries and Byron Originals, though he and others
with jobs similar to his were re-elected as a matter of course
both in that election and in the past.
The shareholders
elected Susan instead. Furthermore, a Midwest Industries’
memorandum, written prior to the telephone conference of April
2, 2009, indicates that, “[a]lthough issues” in Plaintiff’s
personal life “may be moving towards resolution, this did not
go in the direction we had hoped it would.”
Docket No. 31-2,
10.
During both the telephone conferences of April 2, 2009,
and
April
3,
2009,
Plaintiff
claims
Defendant
Brosius
expressed dissatisfaction with Plaintiff’s marital problems
and, at one point, told Plaintiff he was getting pressure from
the family “to deal with [Plaintiff].”
Docket No. 31-2, 11-
12.
Plaintiff’s
Overall,
it
is
clear
that
as
marital
situation became progressively worse, his career at Midwest
Industries simultaneously disintegrated.
Docket No. 31-2, 2.
Based on this evidence of record, a reasonable jury could
conclude that Brosius’ decision to terminate Plaintiff was
based on improper personal considerations.
This Court is also persuaded that Brosius’ purported
20
reason for terminating Plaintiff may well be suspect and is,
therefore, a factual issue.
Assuming, as this Court must,
that Plaintiff did not flatly refuse to return to Ida Grove,
it is difficult to believe that Brosius would end Plaintiff’s
35 year tenure with Midwest Industries without first providing
Plaintiff an ultimatum to return to Ida Grove.
Further,
Plaintiff’s suggestion that he work remotely was in compliance
with the terms of the Workout Plan; that is, he was instructed
to suggest a new role he could perform when he returned, and
this is precisely what he did.
like
Plaintiff’s
An employer, if they did not
suggestion,
would
have
proposed
an
alternative or, at least, made its terms known. The fact that
Brosius expressed no ideas of his own related to Plaintiff’s
future role at the Corporation suggests the decision to
terminate
Plaintiff
had
been
conversation of April 2, 2009.
summary
judgment
based
on
made
before
the
phone
Thus, Defendant’s motion for
Plaintiff’s
termination
for
legitimate business reasons is denied.
(C) Whether Defendant Brosius is Entitled to Qualified
Immunity
Defendants
contend
that
Brosius,
as
an
employee
Midwest Industries, is entitled to qualified immunity.
21
of
In
Grimm v. US West Communications Inc., the Iowa Supreme Court
ruled that supervisors/employees are generally entitled to
qualified immunity for their roles in terminating co-workers
so long as their actions fall within the scope of their
644 N.W.2d 8, 12 (Iowa 2002).11
employment.
Only if there is
evidence that the supervisor/employee’s actions constituted
“bad
faith,
fraud,
or
improper
means”
can
a
co-
worker/plaintiff who was terminated maintain a cause of action
for
intentional
relations.
interference
with
prospective
business
Id. (Citing Bossuyt v. Osage Farmers Nat’l Bank,
360 N.W.2d 769, 778 (Iowa 1985).
After considering the relevant case law, this Court has
difficulty determining what, if any, added protection the
doctrine of supervisor/employee qualified immunity provides to
a supervisor/employee who played a role in the termination of
a colleague.
As previously noted, in order to establish a
prima facie case for intentional and improper interference
with
prospective
business
relations,
11
a
plaintiff
must
Grimm specifically dealt with intentional interference
with contract, not intentional interference with prospective
business relations. Plaintiff was not a contract employee;
however, this Court can think of no reason why a
supervisor/employee would be entitled to the defense of
qualified immunity when there is a contract involved but not
entitled to the defense of qualified immunity when the coworker terminated was an at will employee.
22
establish that a defendant sought “to financially injure or
destroy the plaintiff.”
Dillon v. Ruperto, 786 N.W.2d 873,
2010 WL 238517 at 4 (Iowa Ct. App. 2010) (citations omitted).
Furthermore, “[i]nterference achieved through conduct that is
dishonest, fraudulent, malicious, or otherwise wrongful will
support
a
“improper.”
finding
that”
the
alleged
interference
was
Kern v. Palmer College of Chiropractic, 757
N.W.2d 651, 663-64 (Iowa 2008).
Thus, qualified immunity
appears to be built into the basic elements necessary to
sustain an intentional interference with prospective business
relations claim.
As determined in the previous section of this Memorandum
and Opinion Order, a jury could reasonably conclude that
Brosius’ purported reason for terminating Plaintiff was a
pretext meant to divert attention from improper considerations
related to Plaintiff’s personal life; so, a jury could also
reasonably conclude that he did so in bad faith.
Therefore,
Defendant’s
based
motion
for
summary
judgment
supervisor/employee qualified immunity is denied.
23
on
(D) Whether Sarah Godbersen Intentionally and Improperly
Interfered with Plaintiff’s Business Relations
Defendants contend that Susan may not be held liable
because her actions did not influence Brosius’ decision; and,
even assuming they did, they were not improper under the
circumstances.
Plaintiff claims Susan exhibited “evident disdain” for
and
“used
members.”
profanity
when
discussing”
Docket No. 31-1, 8.
him
“around
family
Defendants concede that Susan
told some of the other Defendants that Plaintiff was having an
affair
and
that
those
other
Defendants
disseminated
the
allegations of the affair throughout the family and business.
Docket No. 31-2, 3-4.
Plaintiff also maintains that the
allegations of an affair were untrue.
Id.
It is also clear
that “Brosius was told that [Plaintiff] said things such as ‘I
hate my job’, ‘I don’t care about Midwest Industries’, and
‘they can fire me,’” which, some Defendants have conceded more
than likely came from Susan.
Docket No. 31-1, 9.
also maintains that he never made these statements.
in
a
sworn
affidavit
to
the
court
overseeing
Plaintiff
Finally,
Susan
and
Plaintiff’s divorce proceedings, Susan made disparaging and,
at the very least, exaggerated averments in relation to
24
Plaintiff’s work ethic and history with Midwest Industries.
Since Susan was willing to go so far as to swear to statements
which disparaged Plaintiff’s work ethic to a court of law, a
reasonable jury could conclude that she was also willing to
make the same, if not worse, statements to her family members
- Plaintiff’s colleagues.
Docket No. 31-1, 9.12
It is a forgone conclusion that divorce is often an
extremely unpleasant and upsetting event.
This Court also
understands that persons going through a divorce cannot be
expected to refrain from communicating with family.
However,
in the unfortunate event that a divorce’s family members are
also colleagues with the other person involved in the divorce,
it is unquestionably improper for them, as is alleged here, to
make false statements related to the personal and work ethics
and professionalism of that other person.
Of course, it is
not
statements
certain
that
Susan
made
false
when
communicating with Plaintiff’s colleagues, but a reasonable
12
Susan’s affidavit states: “‘[Plaintiff] has not taken
care of business at Midwest Industries;’” Plaintiff “‘failed
to show up for work in November, December [2008] and January
[2009]’ because he was ‘running around with his girlfriend or
entertaining his girlfriend;’” and Brosius told Plaintiff
“‘that under the circumstances of his recent work ethic, if
[Plaintiff] wouldn’t resign he was going to have to terminate
him.’” Docket No. 31-2, 17 (quoting Susan’s Affidavit at
Docket No. 31-4, 226).
25
jury, based on the record, could so conclude.
Finally, since
there is a genuine issue as to whether Brosius terminated
Plaintiff based on improper personal considerations, and there
is evidence suggesting Susan was primarily responsible for
interjecting personal concerns into Plaintiff’s work place, a
reasonable jury could also conclude that Susan’s alleged
conduct
was,
legally
speaking,
a
cause
of
Plaintiff’s
Bruce
Godbersen,
termination.
(E)
Defendants
LaJune
Godbersen,
Beverly L. Corr, Ryan Bruce Godbersen, Jason Buns, Jon W.
Devitt, and Linda Harriman
Plaintiff contends that the above named Defendants are
liable for intentional and improper interference based on a
conspiracy
theory.
As
previously
noted,
all
of
these
Defendants are members of the Godbersen family, as well as
directors and shareholders of Midwest Industries and Byron
Originals; and some of them are employees of either Midwest
Industries or Byron Originals.
Under Iowa civil conspiracy law,
a person becomes subject to liability for
harm caused by the tortious conduct of
another when that person:
(a) does a
tortious act in concert with the other or
pursuant to a common design with the other
(traditional conspiracy); or (b) knows that
26
the other’s conduct constitutes a breach of
duty and gives substantial assistance or
encouragement to the other in such conduct
(aiding and abetting).
Ezzone v. Riccardi, 525 N.W.2d 388, 398 (Iowa 1994) (citing
Restatement (Second) of Torts § 876).
After
thorough
review
of
the
record,
this
Court
is
persuaded that Plaintiff has failed to present sufficient
evidence to support a reasonable inference that these director
and shareholder Defendants conspired with Brosius or Susan,
that they knew that Susan’s or Brosius’ actions constituted a
breach of duty, or that, even if they knew Susan’s and
Brosius’ actions constituted a breach of duty, they aided
Susan
and
Brosius
in
breaching
their
duties.
While
a
conspiracy may be proven by direct or circumstantial evidence,
if circumstantial, as here, that evidence cannot be limited to
evidence consistent with the actions of innocent individuals
if it is to support the reasonable inference of a conspiracy.
In general, Plaintiff relies on portions of the record which
do little more than depict Defendants engaging in conduct one
would expect from family and co-workers.
For instance, Plaintiff notes that some of the Defendants
spoke
with
Brosius
prior
to
Brosius’
decision
to
place
Plaintiff on a leave of absence; after putting Plaintiff on a
27
leave of absence, Brosius e-mailed some of the Defendants; and
some
of
the
Defendants
indicated
performance issues at work.
high
level
possibility
employees
of
placing
in
a
Plaintiff
had
some
There is nothing unusual about
a
corporation
fellow
discussing
employee
on
a
leave
the
of
absence, communicating via e-mail once the decision to place
the employee on a leave of absence is made, or discussing the
performance issues of that employee.
In addition, Plaintiff
does not allege that any of these intra-company communications
directly revealed any wrongful motive or an agreement to
terminate Plaintiff for improper reasons.
In the end, these
director and shareholder Defendants discussed Plaintiff’s
employment
status
through
normal
channels
and
in
an
appropriate manner entirely consistent with their jobs.
Plaintiff
also
notes
that
some
of
the
Defendants
discussed Plaintiff’s marital issues amongst themselves and
repeated some of Susan’s allegedly false statements about
Plaintiff’s personal life and feelings about work.
There is
nothing
marriage
unusual
about
people
discussing
difficulties of a fellow family member.
the
In fact, it would be
unusual if they did not discuss and show concern for Susan’s
situation.
Furthermore, Plaintiff does not allege and has
28
failed to identify any evidence indicating that Defendants
knew that Susan’s statements, which some of the Defendants
repeated,
were
false.
Therefore,
there
is
no
evidence
indicating that they knew her statements constituted a breach
of duty.
Plaintiff
also
notes
that
Defendants
cooperated
to
purchase Plaintiff’s shares in the corporation once he was
terminated.
As
previously
noted,
once
Plaintiff
was
terminated, the Defendants had a right, under the terms of the
Buy-Sell Agreement, to purchase Plaintiff’s shares.
Their
exercise of that right was contemplated within the Agreements
and simply does not sufficiently support the inference that
they also conspired to terminate Plaintiff’s employment for
improper purposes.
Though Brosius indicated Plaintiff complied with the
terms of his leave of absence, Plaintiff also notes that some
of the Defendants thought Plaintiff did not comply with the
terms of his leave of absence.
Docket No. 31-1, 11-16.
However, there is neither any indication that their beliefs
were
insincere
or
somehow
affected
Brosius’
decision
to
terminate Plaintiff, nor that they were part of a concerted
effort to terminate Plaintiff for improper purposes.
29
On the
contrary, the fact that some Defendants thought Plaintiff was
terminated for legitimate reasons supports the inference that
there was no conspiracy.
Finally, in relation to LaJune Godbersen, Plaintiff notes
that
she
has
been
uncooperative
in
her
depositions
and
submitted an errata sheet in which each of her answers were
subsequently altered.
Docket No. 31-1, 13-14.
While this
evidence may raise questions related to LaJune’s reliability
or credibility as a witness, they are, in the opinion of this
Court,
insufficient
to
conspiracy against her.
sustain
a
cause
of
action
for
First, these events occurred in 2011
and simply are not sufficiently probative of whether she was
involved in a conspiracy to terminate Plaintiff for improper
reasons in 2009.
Second, other than noting that the changes
to the errata sheet were suspicious, Plaintiff fails to
indicate what the changes were attempting to hide or how they
relate to whether or not LaJune was engaged in a conspiracy to
terminate Plaintiff for improper purposes.
Finally, LaJune,
though the primary shareholder of Midwest Industries, is 84
years
old
and
does
not
actively
Corporations’ day-to-day operations.
participate
in
either
Plaintiff, other than
pure speculation, has failed to identify any evidence that
30
LaJune was involved, on any level, with Brosius’ decision to
terminate Plaintiff.
(F) Conclusion
Defendants LaJune Godbersen, Bruce Godbersen, Beverly
Corr, Ryan Godbersen, Jason Buns, Jon W. Devitt, and Linda
Harriman’s
normal
business
actions
and
typical
family
discussions are insufficient to give rise to the reasonable
inference that they conspired to terminate Plaintiff for
improper reasons.
Plaintiff’s intentional interference with
business relations claim against these Defendants relies on
the
hidden
premise
that
in
certain
personal
contexts,
individuals will digress to such a level of nastiness that it
is reasonable to infer that they have engaged in tortious
conduct.
While such digression certainly occurs in the
context of broken families, it does not always occur.
An
unsupported assumption grounded in the baser aspects of human
nature simply cannot be used to sustain a cause of action in
a court of law.
While there is evidence that Brosius acted
pursuant to pressure from the family, which family members
applied the pressure is unclear.
This Court simply cannot
subject all of the Defendants to the rigors of our legal
system
absent
evidence
that
31
they,
as
individuals,
were
sufficiently involved in the decision to terminate Plaintiff.
Plaintiff has failed to identify a single overt act of any of
the Defendants, other than Brosius and Susan, which reasonably
supports the inference that they intentionally and improperly
interfered with his prospective employment or conspired with
or aided Susan or Brosius to do so.
Therefore, Defendants’
motion for summary judgement of Plaintiff’s cause of action as
to Defendants LaJune Godbersen, Bruce Godbersen, Beverly Corr,
Ryan Godbersen, Jason Buns, Jon Devitt, and Linda Harriman for
intentional interference with prospective business relations
is hereby granted.
However, Defendant has presented evidence supporting the
reasonable inference that Susan was making false accusations
related to Plaintiff’s personal and professional life which
sufficiently influenced the decision to terminate Plaintiff;
and Brosius’ purported reason for terminating Plaintiff was a
pretext designed to obfuscate those improper considerations.
Therefore,
Defendants’
motion
for
summary
judgment
of
Plaintiff’s intentional interference claim in relation to
Defendants Brosius and Susan is hereby denied.
IV.
BREACH OF FIDUCIARY DUTIES
Plaintiff
contends
that
Defendants
32
LaJune
Godbersen,
Bruce Godbersen, Beverly L. Corr, Ryan Godbersen, Jason Buns,
Jon
Devitt,
Linda
Harriman,
Andrew
Brosius,
and
Susan
Godbersen, as shareholders and voting directors of Midwest
Industries and Byron Originals,13 violated their fiduciary
duties owed to Plaintiff as a minority shareholder.
No. 2-1, 11-12.
Docket
Specifically, Plaintiff claims Defendants
breached their fiduciary duties of fairness and care owed to
Plaintiff when they terminated him as an employee, purchased
his shares pursuant to the Buy-Sell Agreement, and did not reelect him as a director.14
A.
Id.
Plaintiff’s Termination
As previously noted, Plaintiff was fired by Defendant
Brosius who was acting under his authority as Plaintiff’s
superior, rather than a shareholder or director.
There is no
indication on record that any of the Defendants, acting in
their capacities as shareholders or directors, influenced
Brosius’ decision.
Simply stated, the decision to terminate
Plaintiff
officer
was
an
decision
subject
to
tort
and
13
Susan Godbersen, because she was not a director of
Midwest Industries or Byron Originals until she replaced
Plaintiff, is not subject to some of Plaintiff’s breach of
fiduciary duty claims.
14
Both parties concede that because Byron Originals and
Midwest Industries were incorporated in Delaware, Delaware law
is controlling.
33
employment law, not a decision made by the Board of Directors
or by vote of the Shareholders and not subject to corporate
law.
Therefore, director and shareholder Defendants’ motion
for summary judgment as to Plaintiff’s claim for breach of
fiduciary duty in relation to Plaintiff’s termination is
granted.
B.
Plaintiff’s Purchase of Shares Pursuant to the Buy-
Sell Agreements
As previously noted, the Buy-Sell Agreements were valid
Agreements Plaintiff voluntarily assented to.
Actions taken
in conformance with the terms of the Agreements cannot, in and
of themselves, constitute a tort.
However, Plaintiff implies
that because the purchase of his shares was not a sound
business decision, it constituted a breach of the fiduciary
duty of care and fairness.
Docket No. 31-2, 13.
Plaintiff
does not contend and fails to identify any evidence that the
purchase of his shares was in fact a poor business decision.
He merely notes that some of the Corporations’ directors
expressed doubt as to whether the purchase of his shares was
a good decision; however, after reviewing the directors’
relevant testimony, it is apparent to this Court that they
ultimately believed they were acting in the Corporations’ best
34
interests.
Delaware
law
recognizes
the
business
judgment
rule
whereby it is presumed that directors, in making business
decisions, “acted on an informed basis, in good faith and in
the honest belief that the action taken was in the best
interests of the company.”
916 (Del. Supr. 2000).
McMullin v. Beran, 765 A.2d 910,
In order to overcome the presumption
that directors’ actions were legitimate, a “plaintiff must
effectively provide evidence that the defendant[s] . . . in
reaching [their] challenged decision, breached” a fiduciary
duty.
Id.
at 17.
The fact that some of the Defendants
expressed moderate doubt as to the wisdom of purchasing
Plaintiff’s shares simply does not constitute evidence that
there was a breach of fiduciary duty.
If anything, it
constitutes evidence that the Defendants made their decision
after properly considering the potential drawbacks of their
decision.
When a plaintiff fails to provide sufficient
evidence of an actual breach of duty, “‘the business judgment
rule
attaches’
and
operates
to
protect
the
individual
director-defendants from personal liability . . . .”
Id.
(quoting Cede & Co. v. Technicolor, Inc., 634 A.2d 345, 361
(Del.
Supr.
1993).
Therefore,
35
director
and
shareholder
Defendants’ motion for summary judgment as to Plaintiff’s
breach of fiduciary duty claims for the purchase Plaintiff’s
shares is granted.
C.
Failure
to
Re-elect
Plaintiff
to
the
Board
of
Directors
As previously noted, under Delaware law, shareholders
have a right not to re-elect or remove a director for whatever
reason.
Del. Code § 141(k).
A shareholder’s decision not to
re-elect a previous director for personal reasons cannot
constitute, in and of itself, a breach of fiduciary duty.
In
order to establish a breach of fiduciary duty, a plaintiff
must produce additional evidence that the decision was not in
the corporation’s best interests.
introduces no such evidence.
In this case, Plaintiff
However, Plaintiff does contend
that a breach of fiduciary duty arose, not from the decision
to elect another in his place, but from the fact that he was
not given proper notice of the elections.
The by-laws of the Corporations provide that “‘Written or
printed notice stating the place, day, and hour of the meeting
. . . shall be delivered . . . personally or by mail . . . to
each shareholder.’”
31-2, 8).
Docket No. 31-1, 18 (citing Docket No.
Though Defendants did attempt to provide Plaintiff
36
notice, they concede that it was not in comportment with the
Corporate by-laws.
While, technically speaking, invalid notice destroys the
validity of director or member meetings and nullifies all
corporate actions taken therein.
Plaintiff does not pray for
this Court to deem the 2009 elections null and void.
Rather,
Plaintiff prays for compensatory damages based on breach of
fiduciary duty.
Nevins v. Bryan, 885 A.2d 233, 245 (Del. Ch.
2005) and Docket No. 2-1, 11-14.
ask
this
Court
to
nullify
the
Even if Plaintiff were to
2009
elections
and
all
subsequent corporate actions, Plaintiff’s victory would be
purely academic and have almost no practical consequence in
the long run because Defendants could simply hold a new
election after giving Plaintiff notice in conformity with the
Corporations’ By-laws; thus, ratifying the 2009 elections and
all subsequent Corporate actions.15
15
Id.
Invalid corporate actions are either void or voidable.
Nevins v. Bryan, 885 A.2d 233, 245 (Del. Ch. 2005). Void acts
are acts that were never in the corporations best interests,
such as “fraudulent gifts or waste of corporate assets.”
Michelson v. Duncan, 407 A.2d 211, 218 (Del. 1979). Void acts
cannot be subsequently ratified by valid shareholder approval.
Id. Voidable acts are acts “performed in the interest of the
corporation” but which were accomplished without following
corporate formalities or were otherwise beyond the scope of
managements’ authority.
Id.
Voidable acts may be
subsequently
ratified
by
valid
shareholder
approval.
Defendants claim that the board elections of March 2, 2009,
37
There
does
not
seem
to
be
any
case
law
indicating
directors are individually responsible for providing notice to
shareholders prior to shareholder meeting or that a failure to
provide notice constitutes a breach of fiduciary duty as to
each director of a corporation.
As discussed at the hearing
of April 4, 2012, corporate secretaries are responsible for
providing
proper
notice,
not
individual
directors.
Furthermore, though not technically in compliance with the
Corporations’ By-laws, Plaintiff was sent two e-mails, one to
his
business
account
and
one
to
his
personal
informing him of the elections of March 2, 2009.
account,
Plaintiff
was also aware that the Annual Shareholder Meeting took place
in late April or early March of each year.
At the previous
board meeting of December 15, 2008, Plaintiff and the other
directors set the annual shareholder meeting for March 2,
were subsequently ratified by the 2010 and 2011 elections;
however, by the time of the 2010 and 2011 elections,
Plaintiff’s shares were purchased by the board of directors
elected under a cloud of faulty notice on March 2, 2009, and
so Plaintiff was still not given proper notice of the 2010 and
2011 elections, and so they do not constitute valid
shareholder ratification. However, both parties concede that
the elections of March 2, 2009, were voidable, rather than
void, and so even if this Court were to conclude that all
corporate actions have been ultra vires since 2009, Defendants
could and, all signs indicate, would simply ratify the 2009
election by providing proper notice to the 2009 shareholders,
including Plaintiff, and holding a new election.
38
2009.
These facts indicate there was no concerted effort to
somehow prevent Plaintiff from exercising his rights as a
shareholder, especially considering any exercise of those
rights would have been futile.
This Court is persuaded that
a reasonable jury could not conclude that the directors’
failure
to
individually
give
Plaintiff
notice
in
strict
compliance with the Corporations By-laws constituted a breach
of fiduciary duty.
Furthermore, Plaintiff concedes that he was not paid as
a director and fails to allege what financial benefit he
received from being a director.
“Damages resulting from
breaches of fiduciary duty are to be liberally calculated, and
will be awarded as long as there is a basis for estimating
damages.”
Hampshire Group, Ltd. v. Kuttner, 2010 WL 2739995,
at 50 (Del. Ch. July 12, 2010).
However, a plaintiff still
has the burden to prove damages by a preponderance of the
evidence, and a court “may not set damages based on mere
‘speculation
or
conjecture’
adequately prove damages.”
where
a
plaintiff
fails
to
Beard Research, Inc. v. Kates, 8
A.3d 573 (Del. Ch. 2010) (quoting Medek v. Medek, 2009 WL
200535365, at 12 n. 78 (Del. Ch. July 1, 2009).
In this case,
Plaintiff fails to allege that he experienced any damages
39
related to the election of March 2, 2009, and the record does
not suggest any damages.
director
shareholder
Thus, summary judgment for the
Defendants
is
appropriate
as
to
Plaintiff’s breach of fiduciary duty claim for failure to reelect him in accordance with proper procedures.
V.
CIVIL CONSPIRACY
Plaintiff alleges that
[s]ome
or
all
of
the
defendants
participated in a conspiracy to interfere
with
[Plaintiff’s]
employment
and
prospective
employment
at
Midwest
Industries, to remove him from the boards
of directors without notice or due process,
and to otherwise strip him of all economic
benefits derived from his many years of
service to Midwest Industries and Byron
Originals, all for the purpose of causing
financial injury . . . .
Docket No. 2-1, 16.
As previously noted, under Iowa law,
a person becomes subject to liability for
harm caused by the tortious conduct of
another when that person:
(a) does a
tortious act in concert with the other or
pursuant to a common design with the other
(traditional conspiracy); or (b) knows that
the other’s conduct constitutes a breach of
duty and gives substantial assistance or
encouragement to the other in such conduct
(aiding and abetting).
Ezzone v. Riccardi, 525 N.W.2d 388, 398 (Iowa 1994) (citing
Restatement (Second) of Torts § 876).
40
A.
Plaintiff’s Termination
As
previously
discussed
in
Section
III(E)
of
this
Memorandum and Opinion Order, Plaintiff has only presented
evidence indicating that Defendants LaJune Godbersen, Bruce
Godbersen, Beverly Corr, Ryan Godbersen, Jason Buns, Jon
Devitt, and Linda Harriman discussed business and family
issues amongst themselves in an appropriate manner entirely
consistent with the actions of typical family members and coworkers.
Plaintiff
has
failed
to
present
any
evidence
indicating these Defendants were aware that some of the
information
they
were
sharing
was
false,
fraudulent,
or
otherwise malicious, or that they engaged in any overt act
indicative of a conspiracy between themselves and Susan or
Brosius
to
Therefore,
Plaintiff’s
terminate
as
Plaintiff
previously
claim
for
noted,
civil
for
an
improper
summary
conspiracy
purpose.
judgment
in
as
to
relation
to
Plaintiff’s termination as to these Defendants is granted.
However, a reasonable jury could conclude that Susan and
Brosius, as family members and business partners, acted in
concert to terminate Plaintiff for an improper purpose.
As
previously noted, Susan, though she was not actively involved
in Midwest Industries’ business, was present, along with
41
Brosius, at the meeting where Plaintiff was put on a leave of
absence.
Since it is apparent that Brosius and Susan were
communicating, and a reasonable jury could conclude that Susan
and Brosius both intentionally and improperly interfered with
Plaintiff’s
prospective
business
relations
with
Midwest
Industries, a reasonable jury could also conclude that they
did so together or in aid of each other’s independent schemes.
B.
The Board Elections and Purchase of Plaintiff’s
Shares
Under Iowa law, a “‘[c]ivil conspiracy is not in itself
actionable;
rather
it
furtherance
of
conspiracy
action.’”
the
is
the’”
injuries
[that]
give
caused
rise
to
“‘in
the
Wright v. Brooke Group, Ltd, 652 N.W.2d 159, 171
(Iowa 2002) (quoting Basic Chems., Inc. v. Benson, 251 N.W.2d
220, 233 (Iowa 1977).
In other words, a conspiracy consists
of an agreement to commit “an unlawful end or a lawful end by
unlawful means.”
Tubbs v. United Cent. Bank, 451 N.W.2d 177,
183-84 (Iowa 1990) (citation omitted).
Furthermore, “[t]he
principal element of a conspiracy is an agreement to or
understanding to effect a wrong against another.”
451 N.W.2d
at 184 (citations omitted).
As previously noted, Defendants neither did anything
42
inherently unlawful when they purchased Plaintiff’s shares
pursuant to the Buy-Sell Agreements, nor when they failed to
re-elect Plaintiff as a director; both actions were well
within
their
rights
as
directors
and
shareholders.
Furthermore, in purchasing Plaintiff’s shares, Defendants
followed the procedures validly provided for in the Buy-Sell
Agreements, and so their conduct does not constitute unlawful
means.
Finally, though the director elections of March 2,
2009, were, in the sense that Plaintiff was not given notice
in strict compliance with the Corporation’s by-laws, in some
degree done by unlawful means, the individual Defendants had
no duty to give Plaintiff notice, and there is no evidence on
record
indicating
that
they
came
to
an
agreement
or
understanding or otherwise aided each other in a scheme not to
give Plaintiff proper notice or even knew that Plaintiff had
not been given proper notice.
Therefore, Defendants’ motion
for summary judgment is hereby granted.
VI.
EMPLOYMENT
RETIREMENT
BENEFITS
INCOME
SECURITY
ACT
(ERISA)
Plaintiff claims that Defendants Midwest Industries and
Midwest Industries Supplemental Executive Retirement Plan (the
“Retirement Plan”) interfered with his retirement benefits in
43
violation of ERISA.
Docket No. 2-1, 15-17.
29 U.S.C. § 1140 provides that
[i]t shall be unlawful for any person to
discharge . . . a participant . . . of an
employee benefit plan . . . for the purpose
of interfering with the attainment of any
right to which such participant may become
entitled under the plan . . . .
As an initial matter, Congress has defined the term
“‘person’
as
corporation,
‘an
individual,
mutual
company,
partnership,
joint-stock
joint
venture,
company,
trust,
estate, unincorporated organization, association, or employee
organization.’”
Bontrager v. Central States, Southeast and
Southwest Areas Pension Fund, 2003 WL 22251407, at 6 (N.D.
Iowa 2003) (quoting 29 U.S.C. §1002(9)).
Congress simply did
not provide for a cause of action against retirement plans
themselves but only individuals and organizations who operate
or insure the plans.
Id. (citing Swanson v. U.A. Local 13
Pension Plan, 779 F. Supp. 690, 702 (W.D. N.Y. 1991).
Thus,
Defendants’ motion for summary judgment against the Retirement
Plan is granted; however, both parties concede that Midwest
Industries is a proper defendant under an ERISA claim.
An ERISA based retaliation or interference
claim can be established through direct
evidence, or in the absence of direct
evidence, through the McDonnell Douglas
three-part burden shifting framework common
44
to Title VII . . . cases.
Manning v. American Republic Ins. Co., 604 F.3d 1030, 1042 (8th
Cir. 2010) (citing McDonnell Douglas Corp. v. Green, 411 U.S.
792 (1973).
Both parties concede that there is no direct evidence and
McDonnell
Douglas’
burden
shifting
applies.
Under
the
McDonnell Douglas burden shifting framework, a plaintiff must
first establish a prima facie case, then “the burden shifts to
the employer to articulate a legitimate non-discriminatory
reason for its action.”
Id.
If the employer establishes a
legitimate non-discriminatory reason for its action, “the
burden [then] shifts back to the claimant to prove that the
proffered reason is pretextual.”
Id.
A prima facie case of ERISA interference with retirement
benefits consists of proof that: (1) claimant participated in
a statutorily protected plan; (2) employer took an adverse
employment action; and (3) there is a causal connection
between claimant’s participation in the plan and the adverse
employment action.
Id. at 1043.
Both parties concede that
claimant has established the first two elements, but Defendant
contends that Plaintiff has failed to show that there is a
causal connection between Plaintiff’s termination and his
participation in the Retirement Plan. Specifically, Defendant
45
contends that Plaintiff has failed to show that Defendant
“‘had a specific intent to interfere with [his] benefits.’”
Pendleton v. Quick Trip Corp., 567 F.3d 988, 992 (8th Cir.
2009) (quoting Register v. Honeywell Fed. Mfg. & Tech.,
L.L.C., 397 F.3d 1130, 1137 (8th Cir. 2005).
As previously
determined in Section III(B) of this Memorandum and Opinion
Order, a reasonable jury could conclude that Brosius, acting
as agent for Midwest Industries, terminated Plaintiff for
personal reasons in order to financially injure Plaintiff.
Thus, since Plaintiff’s retirement benefits were a large part
of Plaintiff’s financial future, a reasonable jury could also
conclude that Brosius, acting on behalf of Midwest Industries,
had
the
specific
intent
to
interfere
with
Plaintiff’s
benefits.
Defendant, as was also discussed in Section III(B) of
this Memorandum and Opinion Order, claims it fired Plaintiff
because he refused to return to Ida Grove, which, if true,
would
constitute
Plaintiff.
a
legitimate
reason
for
terminating
However, as previously determined, a reasonable
jury could conclude that Defendant’s purported reason for
46
terminating Plaintiff was a mere pretext.
Thus, Defendants’
motion for summary judgment is denied.
VII.
CONCLUSIONS
(1) Defendants’ motion for summary judgment as to Plaintiff’s
intentional interference with prospective business relations
claim against LaJune Godbersen, Bruce Godbersen, Beverly Corr,
Ryan Godbersen, Jason Buns, Jon Devitt, and Linda Harriman is
granted;
(2)
Defendants’
motion
as
to
Plaintiff’s
intentional
interference with prospective business relations claim against
Susan Godbersen and Andrew Brosius is denied;
(3)
Defendants’ motion as to Plaintiff’s breach of fiduciary
duty claims against all Defendants is granted.
(4)
Defendants’
motion
as
to
all
of
Plaintiff’s
civil
conspiracy claims against LaJune Godbersen, Bruce Godbersen,
Beverly Corr, Ryan Godbersen, Jason Buns, Jon Devitt, and
Linda Harriman is granted;
(5)
claim
Defendants’ motion as to Plaintiff’s civil conspiracy
against
Andrew
Brosius
and
Susan
Godbersen
for
exercising the corporate right to purchase Plaintiff’s shares
and failure to re-elect Plaintiff as a director is granted;
47
(6)
Defendants’ motion as to Plaintiff’s civil conspiracy
claim
against
intentionally
Andrew
Brosius
interfering
with
and
Susan
Godbersen
Plaintiff’s
for
prospective
business relations with Midwest Industries is denied;
(7)
Defendants’ motion as to Plaintiff’s ERISA claim against
the Retirement Plan is granted;
(8)
Defendants’ motion as to Plaintiff’s ERISA claim against
Midwest Industries is denied; and
(9) Defendants’ motion to continue the trial date “to allow
both parties the opportunity to engage in trial preparation
consistent with the Court’s decision on the pending Motion for
Summary Judgment” (Docket No. 47) will come before this Court
for hearing after the parties have had an opportunity to
review this Order.
The telephonic hearing will take place on
Friday, May 4, 2012, at 11:00 a.m., and the parties shall
promptly
supply
appropriate
contact
information
for
participation in this hearing, 712-233-3916.
IT IS SO ORDERED this 1st day of May, 2012.
__________________________________
Donald E. O’Brien, Senior Judge
United States District Court
Northern District of Iowa
48
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