United States District Court, N.D. Alabama, Western Division
MEMORANDUM OF OPINION
Scott Coogler, United States District Judge.
John and Kimberly Staples (collectively
“Plaintiffs”), bring this action against
Defendants, H. Walker Enterprises, LLC (“HWE”),
Renaissance Man Food Services, LLC (“RMFS”), and
Simmons Food, Inc. (“Simmons”) (collectively
“Defendants”). Presently before the Court are
cross motions for summary judgment filed by all parties.
Specifically, Plaintiffs have each filed a motion for summary
judgment asking the Court to grant summary judgment on
liability for all claims asserted in their Second Amended
Complaint. (See Docs. 69 & 71.) Defendants have
filed motions for summary judgment seeking dismissal of all
of Plaintiffs' claims against them. (See Docs.
72 & 76.) Additionally, Defendant RMFS moves for summary
judgment in its favor on two of the three counterclaims it
has filed against Plaintiffs. (See Doc. 76.)
Defendants HWE and RMFS also ask that this Court strike an
affidavit submitted as part of Plaintiffs' evidentiary
submissions. (Doc. 106.) Finally, the parties have filed a
Joint Status Report requesting that the Court schedule an
oral argument to consider these pending motions. (Doc. 103.)
motions have been fully briefed and are ripe for
decision. For the reasons that follow, Plaintiff
John Staples's (“Mr. Staples's”) motion
(doc. 69) is due to be DENIED, and Plaintiff Kimberly
Staples's (“Mrs. Staples's”) motion (doc.
71) is also due to be DENIED. Defendant Simmons's motion
(doc. 72) is due to be GRANTED in PART and DENIED in PART,
and Defendants HWE and RMFS's motion (doc. 76) is also
due to be GRANTED in PART and DENIED in PART. Defendants HWE
and RMFS's motion to strike (doc. 106) is due to be
DENIED. The parties' request for oral argument (doc. 103)
is due to be DENIED.
case involves claims surrounding the termination of John
Staples (“Mr. Staples”) as well as
Defendants' alleged interference with the relationship
between his wife, Kimberly Staples (“Mrs.
Staples”), and her employer DSM Sales and Marketing,
LLC (“DSM3”). In 2009, Mr. Staples began his
employment with Defendant Simmons, a food services industry
business. During Mr. Staples's employment, Simmons
provided him with written employment rules related to job
performance, progressive discipline, and fair treatment.
However, the parties dispute whether Simmons ever made any
representations to Mr. Staples that his employment would only
be terminated for cause. Although Simmons was Mr.
Staples's direct employer, his job duties included
serving as the general manager of Defendant RMFS, an entity
that buys chicken from Simmons. RMFS would refund Simmons for
Mr. Staples's compensation. Defendant HWE, which is owned
by Herschel Walker (“Walker”), is the sole owner
of RMFS. Under a profit-sharing agreement between HWE and
Simmons, Simmons receives 35% of the profits generated by
RMFS. Additionally, Simmons provides the back-office
accounting functions for RMFS.
a company owned by Mrs. Staples and Julie Blanchard
(“Blanchard”), who is also employed by HWE. DSM3
had a brokerage agreement with RMFS to broker the sale of
RMFS's product. Mr. Staples signed the brokerage
agreement on behalf of RMFS, and Mrs. Staples signed the
agreement on behalf of DSM3. As part of its performance of
administrative functions for RMFS, Simmons would send DSM3
commission checks representing the amount of commissions RMFS
owed DSM3 under the brokerage agreement. These checks would
be mailed to Mrs. Staples who would then deposit them in a
DSM3 bank account. In addition to her ownership interest in
DSM3, Mrs. Staples received an $85, 000 annual salary from
the company. DSM3 paid Mr. Staples $40, 000 per year to work
as a consultant for it.
December 27, 2017, Mr. Staples lost his position as general
manager of RMFS. The next day, on December 28, 2017, Mr.
Staples's employment with Simmons was terminated. Around
the same time period, on December 30, 2017, RMFS terminated
its brokerage agreement with DSM3. Additionally, in either
December 2017 or January 2018, Simmons withheld commission
payments RMFS owed DSM3. Plaintiffs contend that these
actions were taken in a concerted effort to sever their
relationships with HWE, RMFS, Simmons, and DSM3. As evidence
of this, Plaintiffs point to a memo sent to Walker on
December 21, 2017. In the memo, Ronald Eisenman
(“Eisenman”), an attorney who represented Walker
and prepared the paperwork necessary to form DSM3, detailed
two proposals concerning Plaintiffs' future with these
business entities. According to the memo, the proposals were
discussed during a meeting held between Simmons's
President and Walker on December 12, 2017.
Proposal A, which contemplated Plaintiffs going along with
the proposal, Mr. Staples would agree to terminate his
employment as general manager of RMFS, and his role as paid
consultant to DSM3 would end. He would then sign a one-year
consultant agreement with RMFS. Mrs. Staples would resign
from her position with DSM3 and sign over her ownership
interest in the company to Blanchard. Under Proposal B, which
contemplated Plaintiffs refusing to cooperate with Proposal
A, Simmons would terminate Mr. Staples's employment and
RMFS would end its brokerage agreement with DSM3. Plaintiffs
did not accept Proposal A, which they argue led to the
actions taken by Simmons and RMFS in late December 2017. Mr.
Staples testified that he believes that Defendants took these
actions against him and his wife because he raised ethical
concerns as to whether Simmons should be paying an invoice on
behalf of RMFS for waffle packaging that Mr. Staples asserts
was being sold through HWE rather than RMFS.
contends that it was Mr. Staples who acted unethically during
his tenure as RMFS's general manager. RMFS asserts that
while it employed Mr. Staples he: (1) sent an email to a
competitor which contained confidential information
concerning RMFS's sales and volume revenue; (2) caused
RMFS to enter into a broker arrangement with Diversified
Sales & Marketing, an entity that Mrs. Staples had a 60%
ownership interest in; (3) paid unauthorized commissions on
behalf of RMFS to DSM3; (4) asked a prospective broker for
RMFS to hire Mrs. Staples and his daughter as a quid pro quo
for RMFS's business; and (5) approved reimbursement of
his personal expenses by RMFS.
point, Walker contacted Kristin Caffey
(“Caffey”), a professional within the food
services industry, to complain about Mr. Staples. Mr. Staples
contends that at the time this conversation took place Sysco
Corporation (“Sysco”) employed Caffey. HWE and
RMFS assert that Caffey was employed by Radian, another food
services industry business. According to Caffey, Walker made
disparaging remarks about Mr. Staples and told her that Mr.
Staples had “stolen money from him or his
business.” (See Doc. 70-8 at 4.) Caffey then
began to hear from others in the food services industry who
reported receiving similar calls from Walker about Mr.
parties agree that Mr. Staples's employment relationship
with Simmons arose in Arkansas. Around May 2015, Mrs. Staples
moved from Arkansas to Alabama. Mr. Staples followed Mrs.
Staples to Alabama in either August or September of 2015 and
worked remotely for Simmons until his termination. Thus, at
the time of the events giving rise to this lawsuit,
Plaintiffs were full-time residents of Alabama.
judgment is appropriate “if the movant shows that there
is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a). A dispute is genuine if “the record taken as a
whole could lead a rational trier of fact to find for the
nonmoving party.” Hickson Corp. v. N. Crossarm Co.,
Inc., 357 F.3d 1256, 1260 (11th Cir. 2004). A genuine
dispute as to a material fact exists “if the nonmoving
party has produced evidence such that a reasonable factfinder
could return a verdict in its favor.” Greenberg v.
BellSouth Telecomms., Inc., 498 F.3d 1258, 1263 (11th
Cir. 2007) (quoting Waddell v. Valley Forge Dental
Assocs., 276 F.3d 1275, 1279 (11th Cir. 2001)). The
trial judge should not weigh the evidence, but determine
whether there are any genuine issues of fact that should be
resolved at trial. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 249 (1986).
considering a motion for summary judgment, trial courts must
give deference to the non-moving party by “view[ing]
the materials presented and all factual inferences in the
light most favorable to the nonmoving party.”
Animal Legal Def. Fund, 789 F.3d at 1213-14 (citing
Adickes, 398 U.S. at 157. However,
“unsubstantiated assertions alone are not enough to
withstand a motion for summary judgment.” Rollins
v. TechSouth, Inc., 833 F.2d 1525, 1529 (11th Cir.
1987). Conclusory allegations and “mere scintilla of
evidence in support of the nonmoving party will not suffice
to overcome a motion for summary judgment.” Melton
v. Abston, 841 F.3d 1207, 1219 (11th Cir. 2016) (per
curiam) (quoting Young v. City of Palm Bay, Fla.,
358 F.3d 859, 860 (11th Cir. 2004)). In making a motion for
summary judgment, “the moving party has the burden of
either negating an essential element of the nonmoving
party's case or showing that there is no evidence to
prove a fact necessary to the nonmoving party's
case.” McGee v. Sentinel Offender Servs., LLC,
719 F.3d 1236, 1242 (11th Cir. 2013). Although the trial
courts must use caution when granting motions for summary
judgment, “[s]ummary judgment procedure is properly
regarded not as a disfavored procedural shortcut, but rather
as an integral part of the Federal Rules as a whole.”
Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986).
This standard does not change when a court is presented with
cross-motions for summary judgment. See Griffis v. Delta
Family-Care Disability, 723 F.2d 822, 824 (11th Cir.
parties' summary judgment motions involve several
discrete issues. Central to the parties' dispute is
whether Alabama or Arkansas law applies to several of the
claims asserted. The Court will first address which
state's substantive law applies. After disposing of this
choice of law issue, the Court will then address the claims
brought by Plaintiffs in their Second Amended Complaint. The
Court will finally address whether RMFS is entitled to
summary judgment on its counterclaims.
Choice of Law
parties dispute whether Arkansas or Alabama law governs Mr.
Staples's claims for wrongful termination and tortious
interference with his employment relationship with
Simmons. A federal court sitting in diversity must
apply the choice of law rules of the state in which it sits.
U.S. Fid. & Guar. Co. v. Liberty Surplus Ins.
Corp., 550 F.3d 1031, 1033 (11th Cir. 2008) (citing
Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487,
496 (1941)). “Alabama law follows the traditional
conflict-of-law principles of lex loci contractus
and lex loci delicti.” Precision Gear Co.
v. Cont'l Motors, Inc., 135 So.3d 953, 956 (Ala.
2013) (quoting Lifestar Response of Ala., Inc. v. Admiral
Ins. Co., 17 So.3d 200, 213 (Ala. 2009)). Under these
principles, a contract is governed by the law of the place
where the contract is made, and tort claims are governed
according to the law of the state where the injury occurred.
See Id. Accordingly, to determine which state's
substantive law applies, the Court must first determine
whether these claims sound in contract or in tort.
of whether a tort claim arose from a business relationship,
it is still treated as a tort claim for the purposes of
Alabama's conflict-of-law precedent. See Batey &
Sanders, Inc. v. Dodd, 755 So.2d 581, 583 (Ala. Civ.
App. 1999). Thus, Mr. Staples's claim for tortious
interference with his business relationship with Simmons
sounds in tort and is governed by the law of the state where
Mr. Staples's alleged injury occurred.
Staples argues that Arkansas law governs this claim because
his employment relationship with Simmons was based in
Arkansas. However, under lex loci delicti, “it
is not the site of the alleged tortious act that is relevant,
but the site of the injury, or the site of the event that
created the right to sue.” Glass v. S. Wrecker
Sales, 990 F.Supp. 1344, 1347 (M.D. Ala. 1998).
Where a plaintiff's damages are primarily financial in
nature “the ‘injury' for choice of law
purposes occurs in the jurisdiction where those economic
damages are felt.” See Doug's Coin &
Jewelry, Inc. v. Am.'s Value Channel, Inc., No.
2:12-cv-1095-MHH, 2015 WL 3632228, at *8 (N.D. Ala. June 10,
2015) (citing Fitts v. Minn. Mining & Mfg. Co.,
581 So.2d 819, 820 (Ala. 1991)). Consistent with this
principle, federal courts applying lex loci delicti
to tortious interference claims have repeatedly concluded
that those claims are governed by the law of the state in
which the plaintiff suffered an economic impact. See,
e.g., Chambers v. Cooney, No. 07-0373-WS-B,
2007 WL 2493682, at *11 (S.D. Ala. Aug. 29, 2007);
Bradbury Co. v. Teissier-duCros, 387 F.Supp.2d 1167,
1173 (D. Kan. 2005).
the tortious interference with business relationship claim at
issue is based on Mr. Staples's assertion that HWE and
RMFS took actions that caused Simmons to terminate his
employment. The damage that Mr. Staples alleges to have
suffered from this interference is loss of income. Because
this injury is financial in nature, the Court concludes that
the law of the place where Mr. Staples suffered the economic
impact of HWE and RMFS's alleged actions should be
applied to this claim. It is undisputed that at the time of
his termination and the alleged interference with his
employment Mr. Staples resided in Alabama. Therefore, Mr.
Staples's financial injury from his loss of employment
was necessarily felt in Alabama rather than Arkansas. Thus,
Alabama law governs this claim.
Staples's wrongful termination claims are brought under
three different theories of liability: (1) breach of express
contract; (2) breach of the implied covenant of good faith
and fair dealing; and (3) termination in violation of public
policy. (See Doc. 70 at 24-30.) Mr. Staples's
claims for breach of the implied covenant of good faith and
fair dealing and termination in violation of public policy
are essentially claims for retaliatory discharge. This is
evidenced by the cases Mr. Staples cites to support these
claims. See, e.g., Smith v. Am. Greetings
Corp., 804 S.W.2d 683, 684- 85 (Ark. 1991) (noting that
under Arkansas law there is an implied covenant of good faith
and fair dealing which includes a prohibition on discharges
“which contravene[ ] public policy”);
Scholtes v. Signal Delivery Serv., Inc., 548 F.Supp.
487, 494 (W.D. Ark. 1982). Similar to retaliatory discharge
claims, which in Alabama are recognized when an employer
terminates an employee for seeking to recover workers'
compensation benefits, see Ala. Code §
25-5-11.1, the principles discussed in these cases apply to
situations where an employee is fired for refusing to commit
a wrong, for exercising a statutory right, or for otherwise
seeking to “further the public good.” See
Smith, 804 S.W.2d at 684-85.
Alabama choice of law principles, “a claim alleging
retaliatory discharge sounds in tort, not in contract.”
Batey, 755 So.2d at 583. Thus, these claims are also
governed by the law of the place of Mr. Staples's injury.
Simmons asserts that, as with Mr. Staples's interference
with business relationship claim, Alabama law should control
Mr. Staples's wrongful termination claims because it is
where he felt the economic impact of his termination. The
Court disagrees. The Alabama Supreme Court has cautioned
against utilizing a broad test where the place of financial
harm is always determinative as to where a plaintiff's
alleged injury occurred. See Ex parte U.S. Bank Nat'l
Ass'n, 148 So.3d 1060, 1071-72 (Ala. 2014). Instead,
the court has reiterated that under lex loci delicti
“the place of injury is in the state where the
‘fact which created the right to sue'
occurs.” See Id. at 1070 (quoting Ala.
Great S. R.R. v. Carroll, 11 So. 803, 806 (Ala. 1892)).
Thus, to determine whether it should apply the law of the
place of financial harm a court must first look to the nature
of the particular claim at issue. See Id.
(distinguishing malicious prosecution and bad faith insurance
claims from tortious interference and fraud claims where
federal courts sitting in Alabama have looked to the law of
the state of plaintiffs' financial injuries).
these principles, the Court concludes that the law of the
place of termination should control Mr. Staples's
wrongful discharge claims. Unlike with tortious interference
and fraud claims, retaliatory discharge claims do not require
plaintiffs to prove, as an element of those claims, financial
injury. See Ala. Power Co. v. Aldridge, 854 So.2d
554, 563 (Ala. 2002) (noting that pursuant to Ala. Code
§ 25-5-11.1 a prima facie case of retaliatory
discharge requires a showing of: “(1) an employment
relationship, (2) an on-the-job injury, (3) knowledge on the
part of the employer of the on-the-job injury, and (4)
subsequent termination of employment based solely upon the
employee's on-the-job injury and the filing of a
workers' compensation claim”). As such, although
the place where a plaintiff suffered financial injury from an
alleged retaliatory discharge and the location of the
plaintiff's termination are typically the same, Alabama
courts have mainly focused on where the plaintiff was
terminated when conducting a choice of law analysis on these
types of claims. See, e.g., Batey, 755 So.2d at 583
(“It is undisputed that [plaintiff's] employment
was terminated in Georgia. Because the wrong complained of
occurred in Georgia, the law of Georgia applies.”).
Here, the record reflects that Simmons terminated Mr. Staples
in Arkansas. Thus, the Court will apply Arkansas law to his
retaliatory discharge claims. Any contract that existed between
Simmons and Mr. Staples was made in Arkansas. Accordingly,
Arkansas law governs Mr. Staples's claims for breach of
express contract as well.
Count One: Interference with Business Relationship of Mr.
Staples and Simmons
Count One, Mr. Staples alleges that HWE and RMFS tortiously
interfered with his employment relationship with Simmons by
seeking to have Simmons terminate his employment. Under
Alabama law, the elements of a claim for wrongful
interference with a business relationship are: “(1) the
existence of a [protectable] business relationship; (2) of
which the defendant knew; (3) to which the defendant was a
stranger; (4) with which the defendant intentionally
interfered; and (5) damage.” White Sands Grp., LLC,
v. PRS II, LLC, 32 So.3d 5, 14 (Ala. 2009). A defendant
is a participant in rather than a stranger to a business
relationship if “(1) [it] is an essential entity to the
purported business relations; (2) the allegedly injured
relations are inextricably a part of or depend upon [its]
contractual or business relations; (3) [it] would benefit
economically from the alleged injured relations; or (4) both
[it] and the plaintiff are parties to a comprehensive
interwoven set of contracts or relations.” Waddell
& Reed, Inc. v. United Inv'rs Life Ins. Co., 875
So.2d 1143, 1156 (Ala. 2003) (quoting Britt/Paulk Ins.
Agency, Inc. v. Vandroff Ins. Agency, Inc., 952 F.Supp.
1575, 1584 (N.D.Ga. 1996)).
HWE and RMFS were participants in Mr. Staples's
employment relationship with Simmons. Although Simmons was
Mr. Staples's direct employer, Mr. Staples performed work
for RMFS through Simmons. Indeed, it is undisputed that Mr.
Staples's job duties for Simmons included serving as
RMFS's general manager. Additionally, as part of the
business relationship between Simmons and RMFS, RMFS would
reimburse Simmons for the compensation it paid Mr. Staples.
Therefore, Mr. Staples's employment relationship with
Simmons was “inextricably a part of or depend[ed]
upon” Simmons's relationship with RMFS.
Id. As it is undisputed that HWE is the sole owner
of RMFS, RMFS only existed because of HWE. Thus, without HWE,
there would be no RMFS for Mr. Staples to manage. The fact
that HWE and Simmons have a profit-sharing agreement where
they split the profits generated by RMFS further demonstrates
that these entities were interdependent and that HWE was not
a stranger to Mr. Staples's employment relationship with
Simmons. Mr. Staples acknowledges that HWE and RMFS were
parties to what he refers to as “the Joint Venture
[that he] managed.” (See Doc. 87 at 15.) Based
on these facts, it is apparent that Mr. Staples, Simmons,
HWE, and RMFS were all “parties to a comprehensive
interwoven set of . . . [business relations]” connected
to Mr. Staples's employment. See Waddell, 875
So.2d at 1156.
put, HWE, RMFS, and Simmons were all working together to
generate profits from RMFS's sales. Simmons employed Mr.
Staples to help generate profits for these three business
entities. Accordingly, HWE and RMFS were not strangers to Mr.
Staples's employment relationship with Simmons. Thus,
with respect to Count One, Mr. Staples's motion for
summary judgment is due to be denied, and HWE and RMFS's
motion for summary judgment as to this Count is due to be
Count Two: Interference with Business Relationship of Mr.
Staples and DSM3
Count Two, Mr. Staples alleges that RMFS and HWE wrongfully
interfered with his consulting agreement with
DSM3. As with Count One, this claim fails
because HWE and RMFS were participants in Mr. Staples's
relationship with DSM3. Mr. Staples argues that HWE and RMFS
were strangers to his relationship with DSM3 because neither
entity was a party to his consulting agreement with DSM3.
However, the test for whether or not a defendant was a
stranger to a business relationship is not this narrow.
Instead, a defendant is a participant in a business
relationship if the defendant “has any beneficial or
economic interest in, or control over, that
relationship.” Tom's Foods, Inc. v. Carn,
896 So.2d 443, 454 (Ala. 2004) (citation omitted).
the brokerage agreement between RMFS and DSM3 provided that
DSM3 was to broker the sale of RMFS's products. Because
DSM3 was RMFS's broker, RMFS had an economic interest in
DSM3's success. This included the success of its
relationship with its consultants, such as Mr. Staples. As
HWE is entitled to the majority of profits generated by RMFS,
it too had an economic interest in Mr. Staples's success
as a DSM3 consultant. Moreover, DSM3, Mr. Staples, HWE, and
RMFS were all parties to a “comprehensive set of
interwoven contracts.” See Waddell, 875 So.2d
at 1156. As RMFS and HWE note, under the brokerage agreement,
DSM3 received commissions from RMFS in exchange for selling
RMFS's products. These commissions produced income for
DSM3, which allowed it to pay Mr. Staples's consulting
fee. Thus, Mr. Staples's ability to receive his $40, 000
consultant fee was directly tied to RMFS's, and by
extension HWE's, relationship with DSM3. Accordingly, HWE
and RMFS were not strangers to Mr. Staples's consulting
arrangement with DSM3. Therefore, with respect to Count Two,
Mr. Staples's motion for summary judgment is due to be
denied, and HWE and RMFS's motion for summary judgment as
to this Count is due to be granted.
Count Three: Civil Conspiracy - Interference with Business