Retiree, Inc. v. Anspach et al

Filing 91

MEMORANDUM AND ORDER granting 57 Motion for Contempt. The Court grants judgment to Retiree on its claim for a permanent injunction. The Preliminary Injunction set forth in this Court's July 23, 2013 Memorandum and Order (Doc. 51) shall be per manent. The Court will further grant judgment to Retiree on its claim for liquidated damages in the amount of $500,000. IT IS FURTHER ORDERED BY THE COURT that Retiree shall submit evidence of its reasonable attorneys' fees on or before July 21, 2014; Defendants shall respond on or before August 4, 2014. See order for further details. Signed by District Judge Julie A. Robinson on 7/2/14. (hw)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

RETIREE, INC.,
Plaintiff,
vs.
DANA ANSPACH, and
SENSIBLE MONEY, LLC,
Defendants.

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Case No. 12-2079-JAR

MEMORANDUM AND ORDER
This matter comes before the Court on Plaintiff Retiree, Inc.’s (“Retiree”) Complaint
against Defendants Dana Anspach (“Anspach”) and Sensible Money, LLC, seeking to
permanently enjoin Defendants from violating the parties’ confidentiality and non-compete
agreement (the “Agreement”) and to enforce the liquidated damages provision contained in the
Agreement. Specifically, in Count I Retiree seeks a permanent injunction barring Defendants
from the continued use of the Sensible Money website in its current form and from all marketing
and promotional efforts, including the dissemination of written materials, which incorporate the
alleged proprietary and confidential information Anspach obtained from Retiree, plus attorneys’
fees and costs. Under Count II, Retiree alleges breach of contract and seeks damages pursuant to
the Agreement’s liquidated damages clause, which authorizes Retiree to recover $250,000 for
each breach of the Agreement. The Court previously held an evidentiary hearing on Retiree’s
Motion for Preliminary Injunction, and entered a Memorandum and Order granting the Motion
for Preliminary Injunction (Doc. 51). The Court subsequently held a bench trial to determine
whether a permanent injunction and liquidated damages should be awarded. Retiree has also

filed a Motion for Contempt (Doc. 57), moving the Court to hold Anspach in contempt for
violation of the Court’s preliminary injunction.
I.

Findings of Fact
The Court’s Memorandum and Order (Doc. 51) sets forth the facts underlying this action

and the Court will not restate them, but rather will incorporate them and only set forth additional
evidence presented at trial.
This action arises from the confidentiality and non-compete Agreement1 between Retiree
and Anspach, which they entered into during the period in which they unsuccessfully negotiated
an employment agreement for Anspach to join Retiree and merge her financial planning business
with Retiree’s financial planning business. During the approximate five months in which the
parties negotiated the merger, Anspach had access to confidential information about the
methodology and practices of Retiree’s comprehensive and integrated financial planning
process, and had some exposure to Retiree’s proprietary financial planning software. Retiree’s
principal, William Meyer, and Anspach had numerous discussions about the commonalities of
their financial planning practice; they both focused on individuals at or nearing retirement. They
also had numerous discussions about the differences in their financial planning practice; while
Anspach focused on more common and traditional retirement planning strategies, Meyer focused
more on “decumulation” strategy. In contrast to the financial industry’s focus on accumulation,
Retiree has researched, formulated and implemented a unique business plan oriented on the
maximization and longevity of retirement assets with a particular focus on Social Security and
tax minimization. Without focusing on investment returns, Retiree focuses on the tax-sensitive
1
The Agreement, executed by Retiree as “Owner” and Anspach as “Recipient,” has an effective date of
April 7, 2010, and is set out in this Court’s Memorandum and Order granting a preliminary injunction. (Doc. 51).

2

drawdown of a client’s assets to increase the availability of these assets over a protracted
retirement period.
The financial planning industry has niches and specialities; Meyer and Anspach both
focused on retirees. Both Meyer and Anspach are accomplished in their field; both are authors,
as well as speakers in demand at various seminars and conferences in the financial planning
field. However, Retiree occupies a unique position in the retirement industry; it is the first and
most accomplished firm operating in the decumulation area with a focus on the coordination of
Social Security claiming strategies, asset location, asset allocation, withdrawal sequencing and
tax minimization. Each of the five coordinates represents a complex specialization, and the
coordination of them makes it exponentially more complicated.
Meyer focused far more on asset location and social security claiming strategies than
Anspach did. In fact, Meyer worked closely with Dr. William Reichenstein, CFA, PhD, who is
a leading authority on after-tax and before-tax asset allocation and tax-efficient withdrawal
strategies and Social Security claiming strategies.2 Meyer considered the effect of various
strategies on the taxation of Social Security benefits and thus taxation of all income, avoiding
what he referred to as the “tax torpedo” caused when a retiree realized so much income that the
taxation of his or her Social Security benefits leaped from 0% to 50% or 85%. Meyer testified
that there are over 500,000 permutations in the ways that someone can take Social Security.
Retiree has a patent pending on an algorithm to maximize Social Security benefits and to
coordinate it with how someone withdraws in a tax-efficient way.3 Retiree also has a patent

2

See Ex. 72.

3

See Ex. 96.

3

pending regarding its use of its QuickStart Model on the web; and Retiree was awarded a patent
dealing with the utilization of longevity hedging.
Nonetheless, Meyer and Anspach were interested in merging their practices for
professional as well as personal reasons. Professionally, they recognized that Anspach, a
certified financial planner (“CFP”) and Retirement Management Analyst (“RMA”),4 had a
healthy financial planning practice in the Phoenix, Arizona area, and national recognition as the
top financial planning blogger with her “MoneyOver55” column on the www.About.com
website, which contributed to a growing client base in her financial planning practice. Meyer
and Retiree’s success, on the other hand, was not in numbers of clients, but in the proprietary
software he developed that allowed for a leading-edge approach to financial planning that
integrated essentially all of the well-recognized components of retiree financial planning, and
allowed a client to see, in real-time, how changing variables would affect their financial picture.
Retiree’s product, as well as the processes and methodologies that underlay the product, gave it
an edge over others in the field. While institutional investment houses and others had developed
a panoply of financial planning tools and products, none integrated all of the material elements
into one product and none were able to produce financial planning information in the agile and
visually comprehensive and digestible way that Retiree’s software could. Meyer and Retiree’s
business plan involved selling enterprise and user licenses for the software to institutions, as well
as financial planners in the industry.
But this case is not about Anspach violating the confidentiality and non-disclosure
contract by appropriating Retiree’s software. To be sure, Anspach had prolonged access to, and
4
RMA is a professional certification for financial planners specializing in issues related to retirement by the
Retirement Income Industry Association (“RIIA”).

4

in fact worked with the Excel Quickstart Model of the software, in advising clients during the
months that she and Retiree worked together as they anticipated an imminent merger. But the
Quickstart Model did not contain most of the algorithms, formulas and details that were in
Retiree’s “Big Model.” The Big Model was the product of five years of Meyer’s development of
processes and methodologies in collaboration with mathematicians and engineers who wrote
algorithms and formulas and five years of software development by developers Meyers
contracted with to produce the software.
Rather, this case is about Anspach violating the confidentiality and non-disclosure
agreement by appropriating the processes and methodology that underlay Retiree’s software and
practices. While Anspach did not have full access to the Big Model, she had significant
exposure to it, including participating in a five hour sales presentation Retiree made to American
Funds, as it attempted to sell an enterprise license for American Funds’ use of the software.
During this five hour presentation, Anspach witnessed the Big Model in operation and was privy
to detailed explanations that Retiree gave to American Funds regarding the details of the Big
Model and the underlying processes. Retiree closely guarded this information; it entered into a
confidentiality and non-disclosure agreement with American Funds and other potential clientele,
as well as confidentiality and non-disclosure agreements with others who worked on the product,
including the software developers. Retiree also limited exposure to the Big Model. Meyer
testified that after five years of development, only six people have seen the Big Model.
Over the course of a four day Preliminary Injunction hearing in November, 2012 and
January 2013, and a four day trial on the Complaint in November 2013, the Court heard much
about Retiree’s business, Anspach’s business, the financial planning industry, and software

5

products produced and utilized by others in the financial planning industry. Much of Anspach’s
defense centered on the fact that there are common elements of financial planning with respect to
retirees or those nearing retirement, and that Retiree’s processes and methodologies were not
unique, nor protectible as proprietary, confidential information. But, the strongest evidence that
Retiree’s processes and methodologies (not to mention its software) were in fact unique, novel
and protectible, came from the pen and the voice of Anspach herself. In numerous emails,
Anspach spoke of the novel, unique and cutting edge methodologies and processes of Retiree.5
More notably, after the attempted merger failed, and after Anspach began developing or
enhancing her own financial planning methodologies and tools (including a series of
spreadsheets) that Retiree claims violated the confidentiality and non-disclosure agreement,
Anspach began calling these notably similar methodologies and processes her own. Anspach
also began claiming that these methodologies and processes that she claimed were her own were
novel, unique and cutting-edge in the industry.
This trial centered around whether the post-merger methodologies, processes and tools
Anspach claimed to develop on her own were in fact the product of her exposure to, and
knowledge of certain confidential information of Retiree. There was abundant circumstantial
evidence leading this Court to the conclusion that Anspach did violate the agreement with
Retiree by using confidential information. First, when comparing the detail of Anspach’s
spreadsheets and the financial planning components that she considered and attempted to

5

See, e.g., Ex. 118 (On June 9, 2011, Anspach sent an email to her colleagues with the subject line
“Announcement and Looking to Hire - Please forward along.” The email announces her merger with Retiree and
states: “The interest they have generated has been due to their proprietary methodology for a retirement income
drawdown process that coordinates tax planning, investment planning and Social Security benefit decisions in a way
that extends the life of a retiree’s savings an additional 4 to 7 years over traditional drawdown plans.”).

6

integrate with one another before the attempted merger and after, the evidence is compelling.
In February 2011, when Anspach first corresponded with Meyer, Anspach was using a
spreadsheet entitled “What’s Your Number?”6 It had two tabs and calculated the gap between
spending needs projected over a period of time and the sources of funds available to finance
those spending needs. The function of the spreadsheet was to determine any gap between
spending needs and available resources. The spreadsheet utilized an imputed tax rate, did not
accomplish tax efficient drawdown of assets, and did not reference detailed Social Security
taxes. Anspach’s notes on the spreadsheet stated:
“Envision simple tax calculation, that uses fixed income from line
above, tax tables in next tab, and a few user input variables like
filing status (married, single), and avg annual itemized deductions
or standard deduction. It then calculates ideal amount of income
needed from assets that would come from tax-deferred vs. after tax
buckets.”
The spreadsheet also lacks asset allocation. Anspach’s note on the spreadsheet stated that “[t]his
section would have some type of algorithm that would prefill into ideal allocation.” The
spreadsheet also lacked asset location. Anspach’s notes on the spreadsheet provided a broad
directive: “Any gap is being pulled from the bond bucket below.” The spreadsheet’s lack of
accurate federal tax and Social Security tax calculations prevented it from incorporating
withdrawal sequencing. Without asset allocation and detailed federal and Social Security taxes,
there can be no tax efficient drawdown.
This “What’s Your Number?” spreadsheet clearly had gaps— as evidenced by Anspach’s
notes on the spreadsheet—that she needed help to fill in. By February 2011, Kim Morton and

6

Ex. 11.

7

Anspach had worked together for six years in the retirement income industry. Anspach had been
exposed to RIIA materials since 2009, she obtained the RMA designation in 2010. Thus, she
was in a position to know what was going on in the retirement income industry. At that time,
Anspach was using ExecPlan, which could run a projection based on one set of assumptions and
generate an analysis.7 The user would then have to input different assumptions and run another
analysis and compare the two. Unlike Retiree’s side-by-side easy visualization, which Retiree
considers to be a business and marketing attribute, Anspach’s did not simultaneously show sideby-side comparisons nor generate a visualization that made it easy for clients to understand their
options.
During Anspach’s affiliation with Retiree, Meyer explained to Anspach that there is no
magic algorithm, but rather spreadsheets are patched together with detailed tax calculations and
the engine of the Excel Model is the control tab, which is combined with a base and an
optimized tab. The user inputs data into the spreadsheet and has the ability to modify the input.
The input is then fed into a base projections spreadsheet and an optimized projections
spreadsheet. The base and optimized spreadsheets are projections over a retiree’s projected
longevity or the coordination of a number of variables to determine how long a retiree’s assets
will last. The control tab feeds information into the arms of the engine and then the arms feed
back into the control tab the results of the projections. The results of those projections allow the
control tab to generate a visual side-by-side comparison. This allows the user to vary input to
adjust the base and optimized outcomes. This was all shown to Anspach during her affiliation
with Retiree.

7

See Exs. 270, 271 (ExecPlan printouts).

8

Anspach decided not to join Retiree in July 2011. On August 21, 2011, Anspach showed
Meyer a more-evolved spreadsheet that she claimed to have created.8 This new spreadsheet
coordinated Social Security taxes with a withdrawal strategy through projections contained in
base and optimal tabs, and employed a side-by-side comparison. Now Anspach has a control
tab, which she calls the “interface tab.”
Anspach’s spreadsheet was even more detailed at the launch of her Sensible Money
website in January 2012. The final version of Anspach’s spreadsheet was referred to as
“Spreadsheet 2.0.” In correspondence from Anspach in June 2013, she discussed Spreadsheet
2.0 and claimed that it has “key differentiators” and that it does something no other tool does.9
Anspach demonstrated Spreadsheet 2.0 at the trial. Defendants claim Spreadsheet 2.0
was cobbled together and not fully integrated. Some tabs could be deleted without effect and the
Free Report was unconnected to everything else in the spreadsheet. Defendants point to the
differences between Retiree’s and Anspach’s spreadsheets: Retiree’s pdf printout is over 1,000
pages while Anspach’s is 300 (and only 230 if abandoned tabs are not counted); Retiree’s has
fifty-nine tabs while Anspach’s has twenty-four, only seven of which she actually uses; Retiree’s
has five to ten screens for inputting information while Anspach’s has one; Retiree’s calculates
risk potential while Anspach’s does not; Retiree’s social security claiming strategies interact in
its model while Anspach uses another social security calculator then puts the optimal strategy
into her spreadsheet. Anspach also argues that she has used publicly available information to
create her spreadsheets. However, she was exposed to Retiree’s methodology of integrating

8

Ex. 12.

9

Exs. 714 and 715.

9

various information into the Big Model.
Another strong piece of circumstantial evidence is the timeline or evolution of the
development of Anspach’s spreadsheets. Although it took Retiree over five years, using
nationally recognized experts to develop a similar Excel model and business plan, in just six
months (July 2011 to January 2012), Anspach commenced a new business without a detailed
plan, launched a website, created a new marketing strategy; and her spreadsheets evolved from
considering and evaluating two tabs in a non-integrated fashion, to considering and evaluating
multiple components in a somewhat integrated fashion through the use of her interface tab,
resulting in “key differentiators.” The Court finds that Anspach’s exposure to and use of
Retiree’s confidential information has enabled her to accelerate the development and commercial
exploitation of the Sensible Money spreadsheet. Indeed, Anspach, in a series of emails with
counsel and others, sought to investigate whether her spreadsheets could be protectible
proprietary information as novel, unique and cutting-edge in the field.
Ironically, Anspach’s defense included claims that her spreadsheet contained errors and
was not as complete or detailed as Retiree’s. To be sure, Anspach’s spreadsheets were not as
complete, detailed or integrated as Retiree’s. But that is precisely the point of this action. In a
relatively short period of time, Anspach rapidly evolved her spreadsheets to a state that was
inferior to Retiree’s, yet was indicative of the fact that the spreadsheets were based on a new
base of knowledge she had acquired from Retiree and was using in violation of the Agreement.
Anspach lacked access to certain algorithms and formulas. She lacked full access to the Big
Model. Yet, in an abbreviated time, with her working knowledge and noted acumen in the
financial planning field, she had managed to replicate parts of Retiree’s spreadsheet, in substance

10

and in similar form and format. This evidence leads the Court to a conclusion that Anspach did
use certain confidential information in violation of the Agreement.
Anspach was given ample opportunity to review the Agreement prior to signing it.10 She
requested two revisions to the document—to exclude Ms. Morton and another associate from the
operation of the Agreement and to ensure that she could continue to service her existing clients
in the event she did not remain with Retiree.11 She did not object to the liquidated damages
clause or to the confidentiality provisions, and emailed that she was pleased to sign the
document.12
Defendants place stock in the fact that Meyer did not attempt to enforce the Agreement
when Anspach showed him the August 2011 spreadsheet and in December 2011 he vouched for
her integrity. However, Meyer and Anspach had a personal relationship that continued after the
end of their business relationship. Their personal communications ended, however, on
December 24, 2011.
II.

Conclusions of Law
There is no question that the parties entered into the Agreement, or that the Agreement

provides for a permanent injunction and contains a liquidated damages clause. The Court has
also found that Anspach breached the Agreement. Therefore, the only issue left for the Court to
determine is whether the Agreement is enforceable under Kansas law.13

10

Ex. 226.

11

Id.

12

Id.

13

The Agreement provides that it shall be construed according to the laws of the State of Kansas. Ex. 1 at

¶12.

11

A. Restraint of Trade
Defendants argue that the confidentiality, non-disclosure and non-compete provisions are
contrary to public policy because they constitute a restraint of trade. The confidentiality and
non-disclosure provisions prohibited Anspach from disclosing or using Retiree’s Confidential
Information other than for the purposes of her business with Retiree. The non-compete provision
in the Agreement provides that “[f]or a period of five (5) years from the effective date of this
Agreement, Recipient will not divert or attempt to divert from Owner any business Owner has
enjoyed or solicited from its customers.”14 The effective date of the Agreement is April 7,
2010.15 Thus, the non-compete clause will expire on April 7, 2015.
“In Kansas, it is well recognized that a restrictive covenant in an employment contract
will only be applied to the extent it is reasonably necessary under the facts and circumstances of
the particular case.”16 Reasonableness determinations are made on the particular facts and
circumstances of each case, evaluating these factors: “(1) Does the covenant protect a legitimate
business interest of the employer? (2) Does the covenant create an undue burden on the
employee? (3) Is the covenant injurious to the public welfare? (4) Are the time and territorial
limitation contained in the covenant reasonable?”17
Defendants argue that the Agreement is too general as to the type of information being
protected, and cite Puritan-Bennett Corp., for the proposition that “[h]iring agreements which

14

Ex. 1 at ¶6.

15

Ex. 1 at ¶13.

16

Puritan-Bennett Corp. v. Richter, 679 P.2d 206, 210 (Kan. 1984) (citations omitted).

17

Weber v. Tillman, 913 P.2d 84, 90 (Kan. 1996).

12

restrict communication of ideas in general, rather than purely trade secrets, have been held
unreasonable.”18 However, the Court has emphasized that although some ingredients in
Retiree’s processes are in the public domain, it is Retiree’s product, as well as the processes and
methodologies that underlay the product, that were novel and unique, integrating all of the
components into a leading-edge approach that allowed the client to see, in real-time, how
changing variables affected their financial picture. Retiree’s Big Model and software are the
result of five years of development by experts in the field, Retiree has been awarded patents and
has patents pending. Clearly, there was nothing “general” about Retiree’s leading-edge
approach, and the covenants protect a legitimate business interest of Retiree.
Defendants also argue that a confidentiality agreement, whose sole purpose is to avoid
competition, rather than protect confidential information, is unreasonable and unenforceable,
citing Weber v. Tillman.19 However, the evidence shows that the purpose of the Agreement was
to protect and guard Retiree’s confidential information—which it went to great effort to
accomplish—not solely to avoid ordinary competition. There is a public interest in upholding
enforceable contracts.20 Moreover, the public interest is served where unfair competition is
restrained.21 Kansas courts have held that preventing trade secret disclosure in addition to
18

Puritan-Bennett, 679 P.2d at 210. Defendants also cite Evolution, Inc. v. Suntrust Bank, 342 F. Supp. 2d
943, 962 (D. Kan. 2004) for the proposition that reverse engineering is not evidence of an improper use of
confidential information. However, the issue in Evolution was whether or not the defendants used “improper means
to acquire knowledge” within the meaning of the Trade Secrets Act. The case is clearly distinguishable from this
case, where Anspach gained her knowledge directly from Retiree and the parties entered into a nondisclosure and
noncompete agreement.
19

913 P.2d 84, 89 (Kan. 1996).

20

Fireworks Spectacular, Inc. v. Premier Pyrotechnics, Inc., 86 F. Supp. 2d 1102, 1109 (D. Kan. 2000);
Hearton, Inc. v. Shackelford, 898 F. Supp. 1491, 1502 (D. Kan. 1995).
21
Shackelford, 898 F. Supp. at 1502; Am. Fid. Assurance Corp. v. Leonard, 81 F. Supp. 2d 1115, 1121 (D.
Kan. 2000).

13

preventing use of the expertise learned to benefit a competitor, are both reasonable purposes.22
Furthermore, Retiree and Anspach were not competitors prior to their affiliation in February
2011. Anspach had a successful business prior to her affiliation with Retiree, and Retiree has
acknowledged that Anspach is free to resume her prior financial planning practice in the Phoenix
area. The Court finds that the Agreement’s confidentiality, nondisclosure and noncompete
covenants are valid and enforceable and the restraint is reasonable under the circumstances and
not adverse to the public welfare.
B. Liquidated Damages
Defendants argue that the liquidated damages clause constitutes is a penalty that is
unenforceable as a matter of law. The Agreement provides that:
Liquidated Damages: Because the damages the Owner will suffer
as a result of a violation of the covenants contained in paragraphs
above are difficult, if not impossible, to calculate, the Recipient
shall be obligated to pay to the Owner liquidated damages of
$250,000 for each violation of covenants in this agreement. Since
a violation of the covenants may not only result in a loss
attributable to a specific transaction but also to the goodwill and
enterprise value of the Owner, the amount of liquidated damages
represents a reasonable estimate of the Owner’s damages. In the
event of a breach or threatened breach by Recipient of any of the
provisions of this Agreement, Recipient agrees to the amount of
liquidated damages payable for each violation of the referenced
covenants above and represents that the amount of liquidated
damages payable for each violation are a fair, reasonable, and
negotiated approximation of the damages that would be sustained
by the Owner which are otherwise difficult to establish.23
Prior to execution of the Agreement, Retiree made Anspach aware of the liquidated damages
clause and explained its significance. Anspach was given ample opportunity to review and
22

Puritan-Bennett, 679 P.2d at 212.

23

Ex. 1 at ¶8.

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discuss the Agreement. Anspach did not object to the liquidated damages clause, although she
objected to other provisions in the Agreement and successfully negotiated revisions to resolve
those objections.
The policy under Kansas law “‘is to permit mentally competent parties to arrange their
own contracts and fashion their own remedies.’”24 Thus, parties may agree on liquidated
damages “if the set amount is determined to reasonable and the amount of damages is difficult to
ascertain.”25
The Court finds that the use of a liquidated damages clause is particularly appropriate in
this case because the damages suffered by Retiree are difficult, if not impossible, to calculate.
Retiree claims that Defendants’ use of Retiree’s proprietary information is harming Retiree in an
irreparable and incalculable manner by diminishing the novelty of Retiree’s business model, by
competing with Retiree in the decumulation segment of the retirement market, and by shifting
recognition from Retiree to Anspach in professional, academic, advisor, and institutional circles.
Retiree asserts that it cannot calculate the loss to its revenues, income, and goodwill resulting
from Anspach’s misappropriation. Given the magnitude of the universe of potential consumers,
Retiree cannot possibly determine the number or identity of individuals diverted by Anspach’s
efforts. As Anspach has been marketing on the internet, her market is nationwide, if not
international. Similarly, given the magnitude of the immense universe of potential advisors,
Retiree cannot know the number of advisors that may have lost interest in Retiree’s business
offer as a result of Anspach’s promotion of her spreadsheet. Lastly, Retiree cannot know which

24

United Tunneling Enterpr., Inc. v. Havens Constr. Co., Inc., 35 F. Supp. 2d 789, 794 (D. Kan. 1998)
(citations omitted).
25

Id. (citation omitted).

15

enterprises had harbored an interest in Retiree but either lost or diminished their interest. While
Retiree could, perhaps, determine from one or more interested companies the loss of its going
concern value, Retiree can only speculate about the loss in the value of its goodwill attributable
to financial institutions’ altered perspective on Retiree.
The Court must also determine whether the set amount of liquidated damages is
reasonable. To determine whether a liquidated damages provision is an unenforceable penalty,
“the court must consider the whole contract, the situation of the parties, and the circumstances
surrounding execution of the contract.”26 The provision will be enforced if the amount “is
reasonable in view of the value of the subject matter of the contract and of the probable or
presumptive loss if a party breaches the contract,” and “actual damages resulting from the breach
wold not be easily or readily determinable.”27 To recover liquidated damages, the amount must
have some reasonable relationship to the actual injury caused by the breach.28
Defendants argue that the liquidated damages clause is a penalty because there was no
attempt to calculate the amount of actual damages that might be sustained in the event of a
breach. Defendants cite Wichita Clinic, P.A. v. Louis, for the proposition that if the amount of
damages is the same for minor or major breaches or total or partial breaches, it is evident the
parties did not attempt to calculate actual damages.29 Defendants claim that the Agreement
provides for $250,000 for each violation regardless of whether the breach is for minor or major

26

Wichita Clinic, P.A. v. Louis, D.O., 185 P.3d 946, 956 (Kan. Ct. App. 2008).

27

Id. (citations omitted).

28

Id. at 958.

29

185 P.3d 946 (2008).

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breaches or total or partial breaches.
Retiree alleges that there are two clear and significant breaches warranting liquidated
damages. One is Defendants’ use of Retiree’s confidential information to build their spreadsheet
and utilize it to develop their business. Second, is Defendants’ disclosure of Retiree’s
confidential information to Retiree’s competitors, including software providers Finance Logix
and Social Security Timing. Meyer then testified as to the reasonableness of the $250,000 figure
in light of these two significant breaches.
Meyer testified that he had been negotiating with Finance Logix earlier in 2013 to license
Retiree’s IP and software, but the transaction never came to fruition. Anspach presented her
spreadsheet in her blog, her publications and to influential people through RIIA. Anspach writes
that Spreadsheet 2.0 is different from current planning projection modes, because of various
technical aspects, including the ability to “[a]ccurately incorporate the taxation of Social
Security and illustrate what percent of Social Security is subject to income taxes each year.
(Finance Logix will be rolling out with this feature shortly – thanks to me.)”30
Retiree was also negotiating with a regional broker dealer based in Philadelphia who
wanted to use Retiree’s Social Security software and training for its advisors. The deal did not
come to fruition and the company licensed with Finance Logix instead. Meyer testified that
deals involving an enterprise license—the purchase of Retiree’s software for use with the
company’s advisors—have significant monetary value, giving as an example an enterprise
license that Retiree issued in 2012 for $270,000. Meyer also testified as to deals involving
advisor licenses—where each individual advisor would purchase a license for approximately

30

Ex. 715 at p. 2.

17

$1000 per year— have significant monetary value and can be millions of dollars depending on
the size of the organization. Meyer also testified as to opportunities for potential investors in
Retiree, that were dependent on the novel and unique nature of its Big Model and software. The
potential damages from these lost opportunities were significant and the damage to Retiree’s
goodwill is impossible to determine.
The Court finds that applying the liquidated damages clause to these two significant
breaches is reasonable and the liquidated damages amount has a reasonable relationship to the
actual injury caused by the breach. The Agreement provides that:
In the event that any of the provisions of this Agreement shall be
held to be invalid or unenforceable in whole or in part, those
provisions to the extent enforceable and all other provisions shall
nevertheless continue to be valid and enforceable as though the
invalid or unenforceable parts had not been included in this
Agreement. In the event that any provision relating to the time
period or scope of restriction shall be declared by a court of
competent jurisdiction to exceed the maximum time period or
scope such court deems reasonable and enforceable, then the time
period or scope of restriction deemed reasonable and enforceable
by the court shall become and shall thereafter be the maximum
time period.31
Thus, the scope of the liquidated damages clause can be limited to these two significant
breaches, as asserted by Retiree, and the unenforceability of the liquidated damages clause to
minor or partial breaches will not invalidate the remaining scope of the provision.
Defendants also argue that $250,000 is unreasonable because a different number was
negotiated in the proposed employment agreement. However, the Agreement was to be
superseded upon execution of the employment agreement,32 pursuant to which Anspach would
31

Ex. 1 at ¶10.

32

Ex. 226.

18

have obtained ownership in Retiree. It is easy to see how Retiree would have viewed its
exposure during the negotiation phase to be a higher risk as compared to its risk after Anspach
joined the company and obtained an interest in Retiree.
The Court finds that the liquidated damages clause is enforceable as set forth herein.
“The party challenging the provision bears the burden to prove the provision is an unenforceable
penalty.”33 Defendants have failed to meet their burden. The amount of liquidated damages
bears a reasonable relationship to the actual injury caused by the breach and the breach would
produce damages uncertain in amount and difficult to prove.
C. Permanent Injunction
The Agreement provides that:
In the event of a breach or threatened breach by Recipient of any
of the provisions of this Agreement, Recipient agrees that
Owner—in addition to and not in limitation of any other rights,
remedies, or damages available to Owner at law or in equity—shall
be entitled to a permanent injunction in order to prevent or restrain
any such breach by Recipient or by Recipient’s partners, agents,
representatives, servants, Recipients, and/or any and all persons
directly or indirectly acting for or with Recipient.34
Defendants cite Weber v. Tillman,35 for the proposition that a liquidated damages
provision in a contract precludes injunctive relief. However, the contract in Weber prohibited
the defendant from competing with plaintiff, or “[a]lternatively, [defendant could] elect to
practice medicine in the aforementioned area upon payment of an amount equal to six months

33

Wichita Clinic, P.A. v. Louis, D.O., 185 P.3d 946, 956 (Kan. Ct. App. 2008) (citation omitted).

34

Ex. 1 at ¶7.

35

913 P.2d 84, 88 (Kan 1996).

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salary and bonus.”36 Clearly, the contract in that case provided that the remedies were
alternatives. In this case, the Agreement expressly provides that the permanent injunction
remedy is “in addition to and not in limitation of any other rights, remedies, or damages
available to Owner at law or in equity.”37
The Court found in its Memorandum and Order granting a preliminary injunction that
Retiree is suffering a harm that cannot be cured by monetary damages. In finding that Retiree
has shown irreparable harm, this Court relied on its previous decision holding that: “Certainly, if
the disclosure allows a competitor to cut corners in the research and development process . . .,
the competitor will attain a competing product . . . much sooner, and it is this harm . . . that is
irreparable.”38 In addition to the harm from the acceleration of Defendants’ development of its
spreadsheet and business model, Retiree is also suffering harm due to the diminution of its
innovative position in the decumulations segment of the retirement industry. The Court adopts
its reasoning set forth in its Memorandum and Order granting a preliminary injunction and finds
that the evidence at trial further supports Retiree’s entitlement to a permanent injunction.
D. Contempt
Retiree also seeks to hold Anspach in contempt for violating the Court’s preliminary
injunction order, which ordered Defendants to discontinue use of their current Excel spreadsheet
and remove all material on their website that was created using the spreadsheet, in particular

36

Id. at 87.

37

Ex. 1 at ¶7.

38

Universal Engraving, Inc. v. Duarte, 519 F. Supp. 2d 1140, 1150 (D. Kan. 2007) (quoting Interbake
Foods, LLC v. Tomasiello, 461 F. Supp. 2d 943, 975 (N.D. Iowa 2006) (explaining that the disclosure of trade
secrets may cause irreparable harm)).

20

their case studies page and The Free Report.39 Defendants were further enjoined from utilizing
the developed Excel model in presentations, speaking engagements, books, and articles, and
from using Social Security claiming strategies that they were exposed to while working with
Retiree.40
Civil contempt may be used to compensate for injuries from noncompliance with a court
order.41 Wilfulness is not an element of civil contempt.42 However, substantial compliance with
a court’s order is a defense to civil contempt.43 Generally, the court has broad discretion to use
its contempt powers to ensure adherence to its orders.44 Retiree, as the movant, has the burden to
show that Anspach disobeyed the terms of the injunction.45 If Retiree makes such a showing, the
burden shifts to Anspach to show either that she did indeed comply with the order of the Court,
or circumstances rendered it impossible for her to do so.46
Retiree claims that Anspach utilized the developed Excel model in her book, Control
Your Retirement Destiny,47 and that Anspach continues to promote and sell the book, which was

39

Doc. 51 at 13.

40

Id.

41

Reliance Ins. Co. v. Mast Constr. Co., 159 F.3d 1311, 1318 (10th Cir.1998).

42

See Universal Motor Oils Co. v. Amoco Oil Co., 743 F. Supp. 1484, 1487 (D. Kan. 1990) (good faith not
defense to civil contempt, although it may affect extent of penalty); see also McComb v. Jacksonville Paper Co., 336
U.S. 187, 191 (1949) (because purpose of civil contempt is remedial, failure to comply need not be intentional).
43

Universal Motor Oils Co., 743 F. Supp. at 1487 (if violating party has taken “all reasonable steps” to
comply with order, technical or inadvertent violations will not support finding of civil contempt).
44

See Rodriguez v. IBP, Inc., 243 F.3d 1221, 1231 (10th Cir. 2001).

45

See United States v. Ford, 514 F.3d 1047, 1051 (10th Cir. 2008) (citing Reliance, 159 F.3d at 1315).

46

Id. at 1051.

47

Ex. 687.

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published between the preliminary injunction hearing and the date the Court issued its order
granting a preliminary injunction. Retiree’s suggestions in support of its motion sets forth the
specific pages of the book that it alleges are in violation of the Court’s order.48 Retiree also
alleges that Anspach’s About.com site is viewed by 200,000 people a month and references the
book.
Meyer testified as to the use of the Excel model in Anspach’s book. Meyer conducted a
detailed demonstration, comparing the model to pages in the book. He used a current
Spreadsheet from Anspach, focusing on the interface tab.49 The numbers or values in the
interface tab were exactly the same as those used in the “Steve & Carol” case study in the book.
The case study starts in Chapter Two and concludes in Chapter Five, including representations in
schedules and graphs.50 Retiree met its burden of showing that Anspach violated the Court’s
preliminary injunction order.
The burden therefore shifts to Anspach to show either that she did indeed comply with
the order of the Court, or circumstances rendered it impossible for her to do so. Anspach’s
testimony lacked a denial of her use of the enjoined Excel model. Instead, she focused on errors
in the book and the fact that she made her publisher aware of this Court’s preliminary injunction
order—issues irrelevant to whether or not she violated the Court’s order. Anspach has failed to
meet her burden of showing compliance with the preliminary injunction or circumstances
rendering it impossible to comply.

48

Doc. 66 at 3–7.

49

Ex. 331 (admitted only for purposes of the Motion for Contempt).

50

See, e.g., Ex. 687 at pp. 20, 156–64.

22

The Court finds that Anspach’s continued promotion, publication and sale of the book
violates the Court’s preliminary, and now permanent, injunction. Although the book was
published prior to the Court entering its preliminary injunction, Retiree notified Anspach of the
alleged violation after the Court entered its order. Anspach shall cease any further production,
promotion or sales of the book in its current form utilizing the developed Excel model, as well as
any reference to the book in her marketing materials, blogs, websites or otherwise. Retiree will
be awarded its reasonable fees and expenses in pursuing the Motion for Contempt, as part of its
fees and expenses set forth below.
D. Costs and Attorneys’ Fees
Retiree claims entitlement to fees and costs pursuant to the Agreement which provides
that “[t]he losing party agrees to pay to the prevailing party all costs, including attorneys’ fees,
incurred in enforcing this agreement.”51 Kansas law enforces these types of contract terms.52
The burden is on the party requesting the fees to show their reasonableness.53 Reasonableness is
determined by applying the factors set forth in KRPC 1.5(a): (1) the time and labor required, the
novelty and difficulty of the questions involved, and the skill requisite to perform the legal
services properly; (2) the likelihood, if apparent to the client, that the acceptance of the particular
employment will preclude other employment by the lawyer; (3) the fee customarily charged in
the locality for similar legal services; (4) the amount involved and the results obtained; (5) the

51

Ex. 1 at ¶9.

52

See Boston Hannah Int’l, LLC v. Am. Acad. of Family Physicians, Case No. 10-2510-CM, 2012 WL
137870, at *9 (D. Kan. Jan. 18, 2012) (citing Farmers Cas. Co. v. Green, 390 F.2d 188, 192 (10th Cir.1968)).
53
Westar Energy, Inc. v. Lake, 552 F.3d 1215, 1229 (10th Cir. 2009); Westar Energy v. Wittig, 235 P.3d
515, 532 (Kan. Ct. App. 2010).

23

time limitations imposed by the client or the circumstances; (6) the nature and length of the
professional relationship with the client; (7) the experience, reputation, and ability of the lawyer
or lawyers performing the services, and (8) whether the fee is fixed or contingent.54 A trial
judge, based upon experience and knowledge of the legal profession, is deemed an expert on
attorney’s fees and may draw on that expertise in rendering an award in a particular case.55 The
determination of the reasonable value of attorney’s fees lies within the sound discretion of the
trial court.56
In ruling on the reasonableness of the time and labor expended in the litigation of this
case, the Court must begin by determining the amount of hours reasonably expended on the
litigation. The burden is on the applicant to prove that the hours billed are reasonable “by
submitting meticulous, contemporaneous time records that reveal, for each lawyer for whom fees
are sought, all hours for which compensation is requested and how those hours were allotted to
specific tasks.”57 However, Retiree has not submitted evidence in the form of detailed,
contemporaneous time records that the Court is required to review to determine if Retiree has
established its reasonable attorneys’ fees. Accordingly, Retiree shall submit sufficient evidence
to establish its reasonable attorneys’ fees by July 7, 2014; Defendants may file a reply by
July 21, 2014.

54

See Johnson v. Westhoff Sand Co., 135 P.3d 1127, 1135–36 (Kan. 2006).

55

Thoroughbred Assocs., LLC v. Kansas City Royalty Co., LLC, 248 P.3d 758, 774 (Kan. Ct. App. 2011),
aff’d in part and rev’d in part 308 P.3d 1238 (Kan. 2013).
56

See City of Wichita v. BG Prods., Inc., 845 P.2d 649, 653 (Kan. 1993).

57
Case v. Unified Sch. Dist. No. 233, 157 F.3d 1243, 1250 (10th Cir.1998); Kan. Penn Gaming, LLC v. HV
Properties of Kan., LLC, 790 F. Supp. 2d 1307, 1316 (D. Kan. 2011).

24

IT IS THEREFORE ORDERED BY THE COURT that the Court grants judgment to
Retiree on its claim for a permanent injunction. The Preliminary Injunction set forth in this
Court’s July 23, 2013 Memorandum and Order (Doc. 51) shall be permanent.
IT IS FURTHER ORDERED BY THE COURT that the Court will further grant
judgment to Retiree on its claim for liquidated damages in the amount of $500,000.
IT IS FURTHER ORDERED BY THE COURT that Retiree’s Motion for Contempt
(Doc. 57) is GRANTED.
IT IS FURTHER ORDERED BY THE COURT that Retiree shall submit evidence of
its reasonable attorneys’ fees on or before July 21, 2014; Defendants shall respond on or before
August 4, 2014.
IT IS SO ORDERED.
Dated: July 2, 2014

S/ Julie A. Robinson
JULIE A. ROBINSON
UNITED STATES DISTRICT JUDGE

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