Arkansas Business Litigation Lawyer & Attorney : Allen Law Firm : Serving Little Rock, Fort Smith, North Little Rock

The District Court of Minnesota dismissed a declaratory action under an exception to the first-filed rule in ABC Teacher's Outlet, Inc. v. School Specialty, Inc., 2007 WL 2028903 (D. Minn. 7/17/07).

This case actually began on March 25, 2002 when School Specialty sent a cease and desist letter to ABC Teacher's Outlet (ABC) accusing it of trademark infringement. ABC responded, but School Specialty never replied. Several years later, on November 14, 2006, and January 5, 2007, School Specialty sent additional letters threatening to file a lawsuit.

ABC filed a declaratory action in Minnesota on January 11, 2007, and served School Specialty on February 21. School Specialty filed suit in Wisconsin on February 6 and served ABC on February 21. The court dismissed this case as an exception to the first-filed rule because (1) the claim was for declaratory relief and (2) ABC knew of School Specialty's intent to sue.

The court surprisingly gave no weight to the fact that School Specialty waited 5 years before actually filing the lawsuit. ABC should win on a laches defense whether Wisconsin or Minnesota ultimately hears the case.

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The Eighth Circuit affirmed a grant of judgment as a matter of law in SL Montevideo Technology, Inc. v. Eaton Aerospace, LLC, 2007 WL 2002543 (8th Cir. 2007).

SL Montevideo brought suit against Eaton Aerospace for trade secret misappropriation and breach of a nondisclosure agreement regarding an airplane motor. SL Montevideo could not establish the information was a trade secret, so it relied on the contract claim on appeal. The Eighth Circuit affirmed, noting that SL Montevideo somehow chose to structure the nondisclosure agreement as having a trade secret requirement:

To be sure, agreements such as the Proprietary Information Agreement (PIA) may protect broader categories of information than trade secrets. But the PIA's exclusions limited its protection to information having the same characteristics of secrecy and novelty as trade secret.

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The District Court of Minnesota granted a temporary restraining order in Wells Fargo Investments, LLC v. Bengtson, 2007 WL 2007997 (D. Minn. 7/9/07).

Wells Fargo hired Bengtson in their wealth management department. Part of the employment contract contained a non-solicitation and a nondisclosure agreement. Bengtson left Wells Fargo to join Merrill Lynch. He immediately began soliciting Wells Fargo clients and disclosing information to Merrill Lynch. Wells Fargo brought suit for breach of contract and trade secret misappropriation.

The court had no trouble granting the TRO, but its take on Bengtson's defense is interesting. Bengtson argued that Wells Fargo should be barred by the doctrine of unclean hands because they encouraged him to bring over client lists when they hired him from Piper Jaffray. The court rejected this argument, holding that Wells Fargo must have been guilty of unconscionable conduct in their employment contract with Bengtson for unclean hands to apply.

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It is never a good sign when the court's opinion begins "This troubled matter comes before the Court . . . " but that is what happened in Master Craft Tool Co., LLC v. Stanley Works, 2007 WL 2008685 (D. Minn. 7/6/07).

Master Craft filed suit against Stanley Works on behalf of other plaintiffs. Prior to the lawsuit, the other plaintiffs assigned to Master Craft their right to file suit against Stanley. The lawsuit was filed in 2004. The other plaintiffs terminated the contract in July 2005, but Master Craft dismissed the claims with prejudice in October 2005. The other plaintiffs wanted to revoke the dismissal and proceed with the litigation.

The court refused, noting that standing must be determined at the beginning of the lawsuit. Steger v. Franco, 228 F.3d 889, 892 (8th Cir. 2000). Thus, the other plaintiffs lost their standing when the lawsuit was filed. The later termination of their agreement with Master Craft had no effect on standing.

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Fackrell v. Marshall is an interesting Eighth Circuit decision arising out of a garden-variety car wreck case. The Eighth Circuit affirmed the District Court's rulings on two exceptions to the "coming and going" rule of vicarious liability.

The wreck happened at a Kansas City gas station where Marshall, an software consultant, had just topped off his rental car with gas. He was on his way to the Kansas City airport, "where he was to drop off his rental car, participate in a work-related conference call an hour before his flight, and then fly to his home in South Carolina." Marshell was an independent contractor for the co-defendant, Lombardi Software, and had been working at Sprint's corporate headquarters in Overland Park, Kansas during the week and flying home on the weekends.

The plaintiff asserted vicarious liability against Lombardi as Marshell's employer, who countered that Marshell was an independent contractor. The District Court granted summary judgment on the basis that even if Marshell was an employee, he was acting outside the scope of his employment at the time of the accident. The Eighth Circuit affirmed on the basis of the so-called "coming and going" doctrine. The coming and going doctrine, under Missouri law, holds that "getting to the place of work is ordinarily a personal problem of the employee," so employers generally are not liable for accidents that occur on the way to and from work. The Court held that the "special errand" exception did not apply.

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"Where an agreement entitles the parties to select interested arbitrators, "evident partiality" cannot serve as a basis for vacating an award under §10(a)(2) absent a showing of prejudice." The  Eighth Circuit affirmed Winfrey, et al., v. Simmons Food, Inc., on this basis.

The underlying dispute was a between a group of poultry growers and a poultry company governed by an arbitration clause that "provided among other things, that 'each party shall appoint one arbitrator' and that these arbitrators 'shall jointly appoint a third arbitrator.'" 

Both sides named their arbitrators, the growers naming J. Dudley Butler and the company Frank Hamlin. The company moved to have Butler struck because as biased because he had previously represented poultry growers and testified on their behalf before Congress. The District Court denied this motion, and the company withdrew Hamlin and nominated the preeminent Fayetteville attorney John Everett. Butler and Everett then named Mr. Hamlin as the "neutral" arbitrator.

The Eighth Circuit, affirming the panel's decision in favor of the growers, held that, unless the arbitration clause specifically provides for neutral arbitrators, an arbitrator's inclination toward one party or the other is not a basis for reversal "unless the objecting party proves that the arbitrator's partiality prejudicially affected the award"--which was not proved in this case.

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"Because the district court did not properly analyze the City's standing to sue the United States, we remand the case for such consideration." The Eighth Circuit thus remanded City of Clarkson Valley v. Mineta, et al., to decide whether Clarkson Valley, Missouri, has standing to sue the federal government over a road-widening project.

The underlying dispute concerns the environmental impact of a road-widening project. The City, suing under the Administrative Procedure Act and 28 USC 1131, claims that the FHA failed to comply with the National Environmental Policy Act when it OK'd the widening of the road.

The FHA asserted the City's lack of standing in a motion to dismiss, and later in a motion for summary judgment. The District Court denied the motion to dismiss standing argument as premature and the second on the basis that the FHA's brief  "[did] not contain any citations to the record in support of its argument that Clarkson Valley lacks standing."

The Eighth Circuit reversed, holding that under Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992), standing is an element of the plaintiff's cause of action and thus should have been decided on the basis of the pleadings, in the case of the motion to dismiss, or on the record, in the case of the motion for summary judgment. The Court also instructed the District Court to conduct a zone-of-interests standing analysis, as well.

Notes after the jump.

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British multinational Codian filed a patent infringement lawsuit in the Western District of Arkansas. Codian Ltd. v. Polycom, Inc., No. 07-4063 (filed 7/6/07)(See Complaint here). Codian owns two patents for videoconferencing technology (here and here). The complaint alleges that Polycom is selling products that infringe these patents.

Both companies are large multinationals with headquarters outside Arkansas. However, the sales complained of were made to the University of Arkansas and the "Government of the State of Arkansas."

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The Northern District of Iowa imposed Rule 11 sanctions in Ideal Instruments, Inc. v. Rivard Instruments, Inc., 2007 WL 1953147 (N.D. Iowa 7/3/07). The denial of Rivard's motion for preliminary injunction was previously posted 4/12/07.

Ideal moved for Rule 11 sanctions, and, in a thorough opinion, the court reluctantly imposed sanctions. Rivard based its motion for preliminary injunction on the expert testimony of Dr. Hoff. Ideal conducted several depositions of Dr. Hoff, and it became obvious that Dr. Hoff's test results were incredible. The court found that any reasonable inquiry would have revealed the inaccuracies in his tests.

Ideal also relied on a metallurgical expert whose testimony was provided to supplement Dr. Hoff's testimony. The court was troubled by this testimony but did not find it so utterly lacking any merit as that of Dr. Hoff. Therefore, the court awarded sanctions in the amount of: (1) all Ideal's reasonable fees and costs through February 2, 2007; and (2) half Ideal's reasonable fees and costs after February 2, 2007.

The sanctions were awarded against Ideal, its primary counsel and its local counsel. The court expressed its regret in the ruling: "The court cannot adequately express its disappointment that it has been necessary to impose sanctions upon any party or attorney appearing before it."

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The District Court of South Dakota quashed a subpoena in Pinnacle Pizza Company, Inc. v. Little Caesar Enterprises, Inc., 2007 WL 1960585 (D.S.D. 7/3/07).

Pinnacle Pizza is a franchisee of Little Caesar's Pizza. Pinnacle claimed it invented the slogan "Hot n' Ready" and that Little Caesar's wrongfully used their slogan. James Fischer, Pinnacle's president, revealed in his deposition that he hired an attorney to perform a trademark search. When asked the results of the search, Fischer replied, the attorney opined that "Hot n' Ready was too generic to receive trademark protection. Pinnacle's counsel never objected to this line of questioning.  

Little Caesar's issued a subpoena to depose the attorney. The court agreed with Pinnacle that Fischer had made an inadvertent disclosure of a statement protected by attorney-client privilege. The court adopted the five factors from Hydraflow, Inc. v. Enidine Inc., 145 F.R.D. 626 (W.D.N.Y. 1993) and held that Pinnacle did not waive the privilege through the inadvertent disclosure.

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The details are here. The most important notes:

• you don't submit an electronic copy of the addendum, and
• during the pilot program, the e-brief is submitted in addition to -- not instead of -- the traditional paper brief. Submitting the e-brief has no effect your brief's due date!

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The District Court of Minnesota granted summary judgment in Questar Data Systems, Inc. v. Service Management Group, Inc., 2007 WL 1847259 (D. Minn. 6/25/07).

Questar Data and SMG are competitors in the customer satisfaction research and consulting business. This case began in a separate lawsuit in Missouri. Brian Wunder left SMG to join Questar, and he sued SMG for severance payments. SMG counterclaimed against Wunder for breach of employment agreement and trade secret misappropriation.

As part of the Missouri suit, SMG issued a subpoena to Questar that sought confidential information. Questar resisted, but a Minnesota court compelled compliance. After Questar complied with the subpoena, SMG voluntarily dismissed its counterclaims against Wunder.

Questar brought this suit claiming abuse of process, interference with contract, and unfair competition in issuing the subpoena. However, Questar could not show any evidence that SMG acted in bad faith in issuing the subpoena. The court granted summary judgment to SMG.

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The Arkansas Supreme Court agreed Thursday to decide the following question, which has fascinating legal and philosophical implications:

Does a child, who was created as an embryo through in vitro fertilization during his parent's marriage, but implanted into his mother's womb after the death of his father, inherit from the father under Arkansas intestacy law as a surviving child?

The case is Amy Finley on behalf of herself and W.F., a minor child, v. Michael J. Astrue, Commissioner, Social Security Administration, No. 07-627.

A clue that the answer may be "yes," is provided by Arkansas Code Annotated 28-9-209(C), which provides:

Any child conceived following artificial insemination of a married woman with the consent of her husband shall be treated as their child for all purposes of intestate succession. Consent of the husband is presumed unless the contrary is shown by clear and convincing evidence.

Last December, the Arkansas Worker's Compensation Commission found that W.F. was entitled to receive benefits under the worker's compensation statute as a dependent child of the father. The Commission cited Section 209(C), as well as decisions such as Gillett-Netting v. Barnhart, 371 F.3d 593 (2004).

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The District Court of Minnesota granted a partial preliminary injunction in H.B. Fuller Co. v. Mooney, 2007 WL 1827240 (D. Minn. 6/22/07).

H.B. Fuller is an adhesive manufacturer that operates in 34 countries. Mooney, a strategic manager, signed a noncompete agreement. However, he took a job at Coim USA, one of H.B Fuller's competitors. Mooney took with him customer files and copied thousands of computer files. Fuller filed suit for breach of the noncompete agreement and trade secret misappropriation.

The court partially granted the preliminary injunction. Mooney is enjoined from disclosing information about Fuller's customers or strategies, but he is permitted to continue his employment at Coim USA. Moreover, the court based the injunction on the noncompete agreement claim; the court found that H.B. Fuller failed to show a likelihood of success on the trade secret claim. The preliminary injunction only has an initial term of 3 months and still commanded a $40,000 bond.

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