United States District Court, N.D. Iowa, Western Division
ORDER ON MOTIONS FOR SUMMARY JUDGMENT
Leonard T. Strand, Chief Judge.
case is before me on a motion (Doc. No. 42) for summary
judgment filed by defendant Chad Funk and a motion (Doc. No.
44) for partial summary judgment filed by plaintiff FIMCO,
Inc. (FIMCO). Both motions are resisted and have been
fully-briefed. I find no need for oral argument.
filed this action in the Iowa District Court for Woodbury
County on July 14, 2016. FIMCO alleges that Funk, a former
employee, breached a non-compete agreement (Count I),
misappropriated trade secrets (Count II) and breached certain
fiduciary duties owed to FIMCO (Count III). Doc. No. 3 at
3-4. FIMCO seeks monetary damages and injunctive relief.
filed a notice (Doc. No. 2) of removal to this court on
August 17, 2016, and filed an answer (Doc. No. 5) on August
24, 2016. In his answer, Funk admits that he signed the
non-compete agreement, asserts that the court must apply
Nebraska law and contends that the agreement is unenforceable
under Nebraska law.
parties filed their motions for summary judgment on June 30,
2017. Doc. Nos. 42, 44. On July 21, 2017, both parties
resisted each other's motions. Doc. Nos. 48, 51. On
August 4, 2017, Funk filed a revised brief (Doc. No. 53) in
support of his motion. Each party then filed reply materials.
Doc. Nos. 55, 57.
otherwise noted, the parties do not dispute the following
The Parties' Relationship
a resident of Nebraska and has lived and worked in Nebraska
at all times relevant to this dispute. FIMCO is an Iowa
corporation with its principal place of business in South
Dakota. Doc. No. 3 at ¶ 4. FIMCO recruited Funk through
its employees based in South Dakota and Kansas, and
negotiations for Funk's employment took place
electronically between persons in Nebraska, Kansas and South
Dakota. Doc. No. 54 at 18; Doc. No. 51-3 at 48. At the outset
of his employment as a sales representative for FIMCO, and as
a condition of that employment, Funk signed a noncompetition
and confidentiality agreement (agreement) in Columbus,
Nebraska, on September 16, 2013. Doc. No. 51-3 at 47.
FIMCO's President and COO, Dave Wipson, later signed the
agreement at FIMCO's headquarters in South Dakota.
Id. Among other things, the agreement provided as
1.1 Employee acknowledges and recognizes the highly
competitive nature of the businesses of Company and its
affiliates and accordingly agrees as follows:
1.1.1 During employment and, for a period of one year
following the date Employee ceases to be employed by Company
(the “Restricted Period”), Employee will not,
whether on Employee's own behalf or on behalf of or in
conjunction with any person, firm, partnership, joint
venture, association, corporation or other business
organization, entity or enterprise whatsoever
(“Person”), directly or indirectly solicit or
assist in soliciting in competition with Company, the
business of any client or prospective client:
A. with whom Employee had personal contact or dealings on
behalf of Company;
B. with whom employees reporting to Employee have had
personal contact or dealings on behalf of Company; or
C. for whom Employee had direct responsibility.
1.1.2 During the Restricted Period, Employee will not
directly or indirectly:
A. engage in any business that competes with the business of
Company or its affiliates (including, without limitation,
businesses which Company or its affiliates have specific
plans to conduct in the future and as to which Employee is
aware of such planning) in any geographical area that is
within 100 miles of any geographical area where Company or
its affiliates manufactures, produces, sells, leases, rents,
licenses or otherwise provides its products or services (a
B. enter the employ of, or render any services to, any Person
(or any division or controlled or controlling affiliate of
any Person) who or which engages in a Competitive Business;
C. acquire a financial interest in, or otherwise become
actively involved with, any Competitive Business, directly or
indirectly, as an individual, partner, shareholder, officer,
director, principal, agent, trustee or consultant; or
D. interfere with, or attempt to interfere with, business
relationships (whether formed before, on or after the date of
this Agreement) between Company or any of its affiliates and
customers, clients, suppliers partners, members or investors
of Company or its affiliates.
1.1.3 Notwithstanding anything to the contrary in this
Agreement, Employee may, directly or indirectly own, solely
as an investment, securities of any Person engaged in the
business of Company or its affiliates which are publicly
traded on a national or regional stock exchange or on the
over-the-counter market if Employee (i) is not a controlling
person of, or a member of a group which controls, such person
and (ii) does not, directly or indirectly, own 5% or more of
any class of securities of such Person.
Doc. No. 44-3 at 3. The restricted geographic region
described in paragraph 1.1.2(A) includes South Dakota. Doc.
No. 51-3 at 3.
sold FIMCO's products in Iowa, Missouri and Nebraska.
Id. at 20. Funk testified that during his time at
FIMCO, he travelled to South Dakota “once a month,
maybe once every two months” and that his employment
never required travel or contact with employees in South
Dakota beyond those limited trips. Doc. No. 54 at 19.
However, Funk sold products to two South Dakota customers
(Doc. No. 51-3 at 48, 53), used a company cell phone that was
taxed in South Dakota (Id. at 48, 54-78) and
communicated with employees working in South Dakota
(Id. at 48, 50; Doc. No. 54 at 19). Funk resigned
from FIMCO on February 15, 2016, and began working as a sales
representative for Heartland Agriculture, LLC (Heartland), on
February 29, 2016. Id. at 16.
FIMCO and Heartland
is a national retailer and wholesaler of agricultural
equipment and parts used to hold and apply liquid fertilizer,
herbicide and pesticides to farmland. Doc. No. 44-3 at 83.
The equipment sold by FIMCO includes large tanks (for the
storage of chemicals), trailers (to transport the tanks) and
sprayers (to apply chemicals to farmland). Id. FIMCO
also sells pumps and nozzles for applying chemicals.
is based in Nebraska. Id. Heartland sells some
product lines that overlap with FIMCO's and sells in the
same geographic region as FIMCO. Doc. No. 43-4 at 57-58,
66-68; Doc. No. 54 at 19. Specifically, Heartland sells
tanks, trailers, sprayers and parts that are similar either
in design or purpose to those sold by FIMCO. Doc. No. 43-4 at
85. Heartland also sells self-propelled sprayers that FIMCO
does not sell; however, Heartland and FIMCO compete for some
of the same customers when it comes to sprayers. Id.
at 74, 79, 85. Additionally, Heartland sells flotation
equipment designed for self-propelled products which,
according to Funk, are not in competition with the flotation
equipment sold by FIMCO, as Heartland's flotation
equipment cannot be substituted for FIMCO's flotation
equipment. Doc. No. 42-6 at 15.
states that Heartland initially hired him as a sales
representative, but after Funk received a cease-and-desist
letter from FIMCO, Heartland designated Funk as a
“self-propelled sales rep” for what Funk and
Heartland considered to be the remainder of the noncompete
period agreement. Doc. No. 44-3 at 13-14. Funk sold Heartland
products to a customer in March 2016, after the customer had
unsuccessfully tried to purchase similar products from Funk
just before he left FIMCO's employment. Doc. No. 44-3 at
34-35. However, Funk did not receive a commission for this
sale. Id. at 43.
relevant facts are discussed below.
SUMMARY JUDGMENT STANDARDS
party may move for summary judgment regarding all or any part
of the claims asserted in a case. Fed.R.Civ.P. 56(a). Summary
judgment is appropriate when “the pleadings,
depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there
is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of
law.” Celotex Corp. v. Catrett, 477 U.S. 317,
material fact is one “that might affect the outcome of
the suit under the governing law.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Thus,
“the substantive law will identify which facts are
material.” Id. Facts that are
“critical” under the substantive law are
material, while facts that are “irrelevant or
unnecessary” are not. Id. “An issue of
material fact is genuine if it has a real basis in the
record, ” Hartnagel v. Norman, 953 F.2d 394,
395 (8th Cir. 1992) (citing Matsushita Elec. Indus. Co.
v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986)), or
“when ‘a reasonable jury could return a verdict
for the nonmoving party' on the question, ”
Woods v. DaimlerChrysler Corp., 409 F.3d 984, 990
(8th Cir. 2005) (quoting Anderson, 477 U.S. at 248).
Evidence that only provides “some metaphysical doubt as
to the material facts, ” Matsushita, 475 U.S.
at 586, or evidence that is “merely colorable” or
“not significantly probative, ”
Anderson, 477 U.S. at 249-50, does not make an issue
of material fact genuine. Put another way,
“‘[e]vidence, not contentions, avoids summary
judgment.'” Reasonover v. St. Louis Cnty.,
447 F.3d 569, 578 (8th Cir. 2006) (quoting Mayer v.
Nextel West Corp., 318 F.3d 803, 809 (8th Cir. 2003)).
The parties “may not merely point to unsupported
self-serving allegations.” Anda v. Wickes Furniture
Co., 517 F.3d 526, 531 (8th Cir. 2008).
such, a genuine issue of material fact requires
“sufficient evidence supporting the claimed factual
dispute” so as to “require a jury or judge to
resolve the parties' differing versions of the truth at
trial.” Anderson, 477 U.S. at 249 (quotations
omitted). The party moving for entry of summary judgment
bears “the initial responsibility 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, 953 F.2d at 395 (citing
Celotex, 477 U.S. at 323). Once the moving party has
met this burden, the nonmoving party must go beyond the
pleadings and by depositions, affidavits, or otherwise,
designate specific facts showing that there is a genuine
issue for trial. Mosley v. City of Northwoods, 415
F.3d 908, 910 (8th Cir. 2005). The nonmovant must show an
alleged issue of fact is genuine and material as it relates
to the substantive law. Id. If a party fails to make
a sufficient showing of an essential element of a claim or
defense with respect to which that party has the burden of
proof, then the opposing party is entitled to judgment as a
matter of law. Celotex, 477 U.S. at 322.
determine whether a genuine issue of material fact exists, I
must view the evidence in the light most favorable to the
nonmoving party. Matsushita, 475 U.S. at 587-88.
Further, I must give the nonmoving party the benefit of all
reasonable inferences that can be drawn from the facts.
Id. However, “because we view the facts in the
light most favorable to the nonmoving party, we do not weigh
the evidence or attempt to determine the credibility of the
witnesses.” Kammueller v. Loomis, Fargo &
Co., 383 F.3d 779, 784 (8th Cir. 2004) (citing Quick
v. Donaldson Co., 90 F.3d 1372, 1376-77 (8th Cir.
1996)). Instead, “the court's function is to
determine whether a dispute about a material fact is
genuine.” Quick, 90 F.3d at 1377.
cross motions for summary judgment, the “court must
rule on each party's motion on an individual and separate
basis, determining, for each side, whether a judgment may be
entered in accordance with the Rule 56 standard.” 10A
Charles Alan Wright, Arthur R. Miller & Mary Kay
Kane, Federal Practice and Procedure § 2720 (3d
ed. 1998). When the parties seek summary judgment on some of
the same issues, I may consider all the parties'
arguments as to each issue, keeping in mind the ...