United States District Court, D. South Dakota, Southern Division
ORDER DENYING DEFENDANT'S MOTION FOR PARTIAL
E. SCHREIER, UNITED STATES DISTRICT JUDGE
Beef Products, Inc., filed a complaint alleging that
defendant, Michael Hesse, improperly solicited Beef
Products' employees for employment with Hesse and
Hesse's business, Automatic Equipment Manufacturing Co.
Docket 64. Beef Products' amended complaint alleges four
causes of action: breach of contract, breach of duty of
loyalty, fraud in the inducement of contract, and declaratory
judgment. Id. ¶¶ 31-58. Hesse filed
counterclaims alleging a breach of contract claim and a
breach of implied covenant of good faith and fair dealing
claim. Docket 70 at 18-20. Hesse also requested a declaratory
judgment that the non-solicitation provision of the contract
was per se unenforceable. Id. at 17-18. Hesse moves
for partial summary judgment. Docket 106. Beef Products
opposes the motion. Docket 137. For the following reasons,
the court denies Hesse's motion for partial summary
facts, viewed in the light most favorable to the non-moving
party, are as follows:
began his employment at Beef Products on June 1, 1998. Docket
135 ¶ 7. During his time at Beef Products, Hesse served
as Head of Sales and oversaw a fourteen-person sales group
for over a decade. Docket 70 at 3; Docket 137 at 2. In June
of 2016, Hesse informed Beef Products that he intended to
leave Beef Products and run his family's company,
Automatic. Id. at 3.
sells roller mills, hammer mills, rotary mills, towing
products, and braking products. Id. at 4. Beef
Products does not sell any of those products. Id.
Beef Products produces and sells “lean finely textured
beef.” Docket 135 ¶ 1. Beef Products'
customers include ground beef processors, supermarkets, and
restaurants. Id. ¶ 3. Beef Products alleges
that the limited amount of discovery received “suggests
that Automatic was targeting the beef industry as a customer
for its roller mills.” Docket 137 at 5. Beef Products
and Automatic compete over the allocation of resources and
spending by customers in the beef industry. Id.
August 3, 2016, Hesse and Beef Products entered into an
agreement called the “Transitional Employment, On-Call
Services Agreement and General Release” (Transition
Agreement). Id.; Docket 64-1. The Transition
Agreement stated that Hesse's full-time, regular
employment at Beef Products would terminate on November 23,
2016 (Termination Date). Docket 64-1 at 1. For thirty-six
months after the Transition Agreement's effective date,
Hesse agreed to continue on-call employment with Beef
Products. Id. at 2-3. The Transition Agreement also
contained a non-solicitation provision that applied to
customers, vendors, suppliers, and employees. Id. at
3-4. The non-solicitation provision stated:
Employee agrees that during the On-Call Period and for a
period of one (1) year following the conclusion of the
On-Call Period (the “Restrictive Period”),
Employee will not, directly or indirectly, on Employee's
own behalf or by aiding any other individual or entity . . .
Solicit for employment any Company employee with whom
Employee had personal contact during the twelve (12) month
period immediately prior to the Termination Date.
Id. The Restrictive Period is from August 11, 2016
to August 11, 2020. Docket 137 at 6. The Transition Agreement
did not contain any geographical limitations. Id.
November 23, 2016, Hesse began to provide full-time services
to Automatic and serve as the Chairman of Automatic.
Id. at 11. Beef Products also used Hesse's
services from November 23, 2016, to September 22, 2017 in
line with the terms of the Transition Agreement. Docket 70 at
Products alleges that Hesse improperly solicited several
employees of Beef Products' sales group to work at
Automatic. Docket 64 ¶ 34. These employees include Chuck
Szitas, Cameron Jacobs, Bryce Snyder, Britton Wall, and Alec
Hannah (collectively, “Subject Individuals”).
Id. ¶¶ 20-21. The Subject Individuals were
at-will employees at Beef Products. Docket 137 at 12, 14, 16,
18, 19. Additionally, Szitas, Jacobs, Snyder, and Wall never
signed non-compete or non-solicitation agreements with Beef
Products. Id. at 20-30. Between December of 2016 and
August of 2017, the Subject Individuals ended their
employment at Beef Products and started employment at
Automatic. Docket 70 at 5.
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). The moving party can meet its burden by
presenting evidence that there is no dispute of material fact
or that the nonmoving party has not presented evidence to
support an element of its case on which it bears the ultimate
burden of proof. Celotex Corp. v. Catrett, 477 U.S.
317, 322-23 (1986). The moving party must inform the court of
the basis for its motion and also identify the portions of
the record that show there is no genuine issue in dispute.
Hartnagel v. Norman, 953 F.2d 394, 395 (8th Cir.
1992) (citation omitted).
avoid summary judgment, “[t]he nonmoving party may not
‘rest on mere allegations or denials, but must
demonstrate on the record the existence of specific facts
which create a genuine issue for trial.' ”
Mosley v. City of Northwoods, 415 F.3d 908, 910 (8th
Cir. 2005) (quoting Krenik v. Cty. of Le Sueur, 47
F.3d 953, 957 (8th Cir. 1995)). Summary judgment is precluded
if there is a genuine dispute of fact that could affect the
outcome of the case. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). When considering a
summary judgment motion, the court views the facts and the
inferences drawn from such facts “ ‘in the light
most favorable to ...