Opinion
8:19-CV-14
2020-04-21
FARM CREDIT SERVICES OF AMERICA, FLCA, Plaintiff, v. Kathy MENS, Defendant.
Christopher R. Hedican, David P. Kennison, Baird, Holm Law Firm, Omaha, NE, for Plaintiff. Kathryn A. Dittrick, Rhianna A. Kittrell, Fraser, Stryker Law Firm, Omaha, NE, for Defendant.
Christopher R. Hedican, David P. Kennison, Baird, Holm Law Firm, Omaha, NE, for Plaintiff.
Kathryn A. Dittrick, Rhianna A. Kittrell, Fraser, Stryker Law Firm, Omaha, NE, for Defendant.
MEMORANDUM AND ORDER
Brian C. Buescher, United States District Judge
I. INTRODUCTION
This case arises out of an employment relationship and covenant not to compete between Farm Credit Services of America, FLCA ("Farm Credit") and its former employee, Kathy Mens. See Filing 1. Farm Credit, a crop insurance broker, employed Mens to sell crop insurance policies. Filing 1 at 2. After Mens no longer worked for Farm Credit, Farm Credit filed this action seeking damages for Mens's alleged breach of the covenant not to compete and enforcement of the same via both preliminary and permanent injunctions. Filing 1 at 7-8. Mens counterclaimed alleging Farm Credit terminated her because of her age and sex. Filing 39 at 8-10. This matter now comes before the Court on (1) Mens's Motion for Partial Summary Judgment (Filing 46) seeking dismissal of Farm Credit's Complaint, (2) Farm Credit's Motion for an Order of Civil Contempt (Filing 41), and (3) Mens's Motion to Stay (Filing 54) any contempt decision pending resolution of her summary judgment motion.
In summary, Mens argues the covenant not to compete is unenforceable because it is overbroad and also that Farm Credit cannot show any damages resulting from any breach of the covenant not to compete. Farm Credit responds that the covenant not to compete is enforceable, and Mens's breach thereof has caused it damages or that the causation of damages is at least disputed. Also, Farm Credit requests the Court find Mens in contempt for violation of the Court's preliminary injunction orders.
The Court finds that the covenant not to compete is valid and enforceable. The Court also finds that there is a dispute of material fact as to causation of damages except as related to a select few customers. Thus, the Court denies in part and grants in part Mens's Motion for Partial Summary Judgment. Based on the valid covenant not to compete and Mens's actions, the Court also finds Mens in contempt of the Court's prior order, but because of the circumstances, declines to award any damages or to impose sanctions.
The Court synthesizes the following factual background from the evidence submitted for all three pending motions. This includes undisputed facts pertaining to summary judgment matters and uncontested facts pertaining to matters of contempt.
A. Mens's Insurance Sales History
Mens sells crop insurance in Iowa and obtained her license to do so in 1988. Filing 49-2 at 3. She then began selling crop and personal insurance for Midwest Insurance Corporation ("Midwest"), formally known as Agri Business Insurance Consultants, as an insurance sales agent. Filing 49-2 at 4. At one point, Mens ran Midwest's crop insurance department. Filing 49-2 at 7. During her time at Midwest, Mens developed business relationships with many customers through her personal contacts and community connections. Filing 49-2 at 5; Filing 66-1 at 2-4. Mens worked for Midwest for twenty-four years until 2012. Filing 49-2 at 4.
During her insurance career, Mens learned that the federal government regulates crop insurance and effectively sets crop insurance prices. Filing 49-2 at 13. The government sets prices for the majority of crops in February prior to the upcoming season. Filing 49-2 at 13. Insurance policies must be purchased by March 15 and the majority of insurance policies are sold between February 1 and March 15 each year. Filing 49-2 at 13.
Because the federal government sets crop prices for insurance purposes, crop insurance agencies cannot compete on prices for some types of insurance, making customer relationships and service of utmost importance. Filing 49-2 at 11, 29.
B. Farm Credit Employs Mens
In 2012, Mens left Midwest and began working for Farm Credit as a crop insurance agent. Filing 49-2 at 4. Farm Credit is a federal Farm Credit System affiliate that provides credit and financial services, including various forms of crop insurance, to farmers and ranchers. Filing 1 at 2. After Mens began working for Farm Credit, approximately fifty customers, with whom she had developed relationships prior to and while working at Midwest, transferred their business to Farm Credit. Filing 49-2 at 16, 23, 26. Those customers included Bud Robey ("Robey"), Melissa Eshelman, Jared Eshelman, Audrey Eshelman, and Clay Ag Enterprises, all of whom chose to transfer their business to Farm Credit due to their longstanding relationship with Mens. Filing 49-2 at 30, 34, 37-38. At least several of these customers had no prior relationship with Farm Credit. Filing 49-3 at 2; Filing 49-4 at 1. Farm Credit did not directly compensate Mens for the customers that followed her to Farm Credit. Filing 57 at 3. Mens also worked with customers who did not follow her from Midwest; including the fifty customers that left Midwest to follow Mens, Mens serviced approximately 110 customers. Filing 49-2 at 23-24.
The Court will collectively refer to Melissa Eshelman, Jared Eshelman, Audrey Eshelman, and Clay Ag Enterprises as the "Eshelmans." The parties do not dispute that Melissa Eshelman "is the decision maker" for the collective Eshelmans. Filing 49-3 at 2. However, Melissa Eshelman's status as a decision maker does not change the fact that each individual member of the Eshelmans held a separate crop insurance policy.
In 2015 Mens had the opportunity to participate in Farm Credit's incentive bonus program if she signed an Assignment, Nonsolicitation, and Nondisclosure Agreement (the "Agreement"). Filing 49-2 at 22; Filing 1-1 at 1. Mens understood she had to sign the Agreement if she wanted the bonuses, and she signed the Agreement. Filing 49-2 at 21-22; Filing 1-1 at 3. The relevant provisions of the Agreement state as follows:
For a period of two (2) years following the termination (voluntary or involuntary, for any reason or no reason) of [Mens's] employment with [Farm Credit], [Mens] shall not, seek or accept employment with, and will not call on or solicit the business of, or sell to, or service (directly or indirectly, on [Mens's] own behalf or in association with or on behalf of any other individual or entity), any of the customers of [Farm Credit] with whom [Mens] actually did business and had personal contact while employed by [Farm Credit], except to the extent such activities are unrelated to and not competitive with the business, products or services that [Mens] offered or provided on behalf of [Farm Credit] and cannot adversely affect the relationship or volume of business that [Farm Credit] [has] with such customers.
Filing 1-1 at 1-2.
Because she signed the Agreement, Mens was eligible for and received roughly $25,000 in bonuses in 2015, 2016, and 2017 totaling approximately $75,000. Filing 49-2 at 22. In addition to paying Mens and providing bonuses, Farm Credit paid for Mens to do the following: attend annual training with the companies that underwrote the insurance she sold, attend industry trade shows, obtain continuing education and ethics credits for her licensure, and cultivate customer relationships. Filing 49-2 at 17-18. Related to cultivating customers, Farm Credit gave Mens a credit card and paid for her to purchase meals for her customers, paid for her hotel rooms while she traveled to meet customers, and even paid for a company car and gas to meet with customers. Filing 49-2 at 18-19. Farm Credit also provided Mens with "schwag," including t-shirts, koozies, and other promotional materials to give to customers. Filing 49-2 at 19. Lastly, some of the customers Mens worked with attended Farm Credit's annual "Growing On" meeting that boasted a lineup of speakers who provided crop insurance updates, other farming information, and training for customers. Filing 49-2 at 19-20.
In May of 2018, Farm Credit terminated all of its retail division employees, including Mens, as part of a company-wide restructuring initiative designed to "improve Farm Credit's business model." Filing 49-2 at 52; Filing 57-4 at 2. Several of Mens's customers, specifically Robey and the Eshelmans, were upset or angry upon learning that Mens was no longer working for Farm Credit. Filing 49-2 at 5; Filing 49-3 at 2; Filing 49-4 at 2. Robey and the Eshelmans had no intent to stay with Farm Credit once Mens stopped being an employee, and they planned to purchase crop insurance from Mens "regardless of the entity at which she [was] employed." Filing 49-3 at 2-3; Filing 49-4 at 2. Once Mens no longer worked for Farm Credit, forty of the customer accounts she had worked with left Farm Credit. Filing 49-5 at 2.
C. Farmers Business Network Employs Mens
Approximately six months after leaving Farm Credit, Mens began working for Farmers Business Network ("FBN") as a crop insurance agent in November of 2018. Filing 21-1 at 1. FBN competes with Farm Credit by selling the same or similar products within the same geographic area. Filing 49-2 at 28-29. Upon learning that Mens was again working as a crop insurance agent, Robey and the Eshelmans contacted Mens and insisted she serve as their crop insurance agent based on their longstanding relationships with her. Filing 49-2 at 30, 34; Filing 49-3 at 2-3; Filing 49-4 at 2. Mens then executed an insurance contract with Robey on November 30, 2018. Filing 49-2 at 32. Mens executed insurance contracts with the Eshelmans sometime in January of 2019. Filing 49-2 at 37. Mens further maintains that she did not solicit any of the customers she worked with at Farm Credit upon leaving Farm Credit. Filing 49-2 at 29, 34-35.
D. Procedural History
On January 11, 2019, Farm Credit filed a Verified Complaint for Preliminary and Permanent Injunction and Damages and Demand for Jury Trial (the "Complaint") seeking damages from Mens's alleged breach of the Agreement and enforcement of the same via both preliminary and permanent injunctions. Filing 1. "That same day Farm Credit filed a Motion for Temporary Restraining Oder [sic]" and preliminary injunction. Filing 4. On January 18, the Court held a hearing on the motion with counsel for both parties present. Filing 16 at 1. After the hearing, the Court issued a preliminary injunction granting Farm Credit's motion. Filing 16 at 11-13. In the preliminary injunction, the Court analyzed the Agreement and determined it was valid after finding (1) it was not injurious to the public, (2) Farm Credit showed a legitimate business interest in protecting its goodwill, and (3) the Agreement was not unduly harsh upon consideration of all relevant factors. Filing 16 at 6-8. As a result, the Court stated as follows:
The Honorable Laurie Smith Camp, United States District Judge for the District of Nebraska, presiding.
Pending resolution of this matter, Mens and those acting in active concert or participation with her:
a. shall not call on or solicit the business of, or sell to, or service (directly or indirectly), on Mens's own behalf or in association with or on behalf of any other individual or entity, including without limitation her employer FBN Insurance LLC (FBN), any of the customers of Farm Credit with whom Mens actually did business and had personal contact while employed by Farm Credit, except to the extent such activities are unrelated to and not competitive with the business, products, or services that Mens
offered or provided on behalf of Farm Credit and cannot adversely affect Farm Credit's relationship or volume of business with such customers; and
b. shall not call on or solicit the business of, or sell to, or service (directly or indirectly), on Mens's own behalf or in association with or on behalf of any other individual or entity, including without limitation her employer FBN, the persons or entities listed on the attached Exhibit A, except to the extent such activities are unrelated to and not competitive with the business, products or services that Mens offered or provided on behalf of Farm Credit and cannot adversely affect Farm Credit's relationship or volume of business with such customers. Such restrictions include refraining from issuing crop insurance quotes or working in the AIP systems on their policies or databases.
Filing 16 at 11-12.
Exhibit A was an affidavit containing a list of the 110 customers Mens actually did business and had personal contact with while she worked for Farm Credit, including the Eshelmans and Robey. See Filing 17. However, the Court allowed Mens to submit additional briefing on the matter, despite entering an enforceable injunction and requiring a $1,000 bond. Filing 16 at 12-13.
The roughly fifty customers that followed Mens to Farm Credit are included in that list. Filing 17; Filing 49-2 at 26.
On February 8, 2019, Mens filed a brief opposing the preliminary injunction. Filing 20. In it, she argued, inter alia, the Agreement was unenforceable because Farm Credit has no legitimate interest in the customers she developed prior to working for Farm Credit. Filing 20 at 6-7. And, she argued the Agreement unfairly prohibited ordinary competition. Filing 20 at 6-7. As a result, she requested that the Court find the Agreement unenforceable in its entirety and dissolve the preliminary injunction. Filing 20 at 10-11. The Court then issued a Memorandum and Order on March 1, 2019, rejecting Mens's arguments and affirming its prior preliminary injunction. Filing 26. Specifically, the Court determined the Agreement was not overbroad, even though it prevented Mens from working with customers who followed her to Farm Credit, because the Nebraska Supreme Court approved similar noncompete language in Aon Consulting, Inc. v. Midlands Financial Benefits, Inc. , 275 Neb. 642, 654, 748 N.W.2d 626, 638 (2008), and also because Farm Credit "provided substantial resources to cultivating goodwill" with its customers, including the customers that followed Mens to Farm Credit. Filing 26 at 3-4.
On October 2, 2019, Mens filed an Amended Answer to Verified Complaint and Counterclaims alleging Farm Credit discriminated against her on the bases of age and sex. Filing 39 at 8-10. Nearly a month prior on September 12, Farm Credit had deposed Mens. Filing 49-2 at 1. During her deposition, Mens recalled that she had executed insurance policy contracts with the Eshelmans and Robey on behalf of FBN prior to the Court's January 18 preliminary injunction. Filing 49-2 at 30, 32, 34, 37. While she initially rejected business from any customers included in the preliminary injunction and did not solicit any such customers after the preliminary injunction was entered, Mens admitted that she continued to service the five Robey and Eshelman accounts throughout 2019 even after the preliminary injunction was entered and then affirmed. Filing 49-2 at 35-38. As a part of servicing those five accounts, Mens drafted required reports including acreage reports. Filing 49-2 at 35-38. Mens also planned to work with these customers to help them submit any insurance claims they might have at year-end in 2019 and also intended to remain their agent of record in 2020. Filing 49-2 at 33, 36-39. Further, Mens admitted she was aware of and had read the preliminary injunction but thought it only prohibited solicitation. Filing 49-2 at 29. Subsequently, on October 17, 2019, Mens sent letters to Melissa Eshelman and Robey stating that Mens was prohibited from servicing their accounts in 2020. Filing 44-2 at 1.
Farm Credit then filed a Motion for an Order of Civil Contempt (Filing 41) and argued Mens violated the preliminary injunction by servicing the Robey and Eshelman accounts despite having time to request an exception from the Court or transfer their policies prior to the March 15 crop insurance deadline. Filing 42. Mens subsequently filed a Motion for Partial Summary Judgment and also a Motion to Stay any contempt ruling pending resolution of her summary judgment motion. Filing 46; Filing 54. This matter is now before the Court on all three motions, and the Court addresses each as discussed below.
III. STANDARD OF REVIEW
"Summary judgment is appropriate when the evidence, viewed in the light most favorable to the nonmoving party, presents no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Garrison v. ConAgra Foods Packaged Foods, LLC , 833 F.3d 881, 884 (8th Cir. 2016) (citing Fed. R. Civ. P. 56(c) ). "[S]ummary judgment is not disfavored and is designed for every action." Briscoe v. Cty. of St. Louis, Missouri , 690 F.3d 1004, 1011 n.2 (8th Cir. 2012) (internal quotation marks omitted) (quoting Torgerson v. City of Rochester , 643 F.3d 1031, 1043 (8th Cir. 2011) (en banc)). In reviewing a motion for summary judgment, the Court will view "the record in the light most favorable to the nonmoving party ... drawing all reasonable inferences in that party's favor." Whitney v. Guys, Inc. , 826 F.3d 1074, 1076 (8th Cir. 2016) (citing Hitt v. Harsco Corp. , 356 F.3d 920, 923–24 (8th Cir. 2004) ). Where the nonmoving party will bear the burden of proof at trial on a dispositive issue, " Rule 56(e) permits a proper summary judgment motion to be opposed by any of the kinds of evidentiary materials listed in Rule 56(c), except the mere pleadings themselves." Se. Missouri Hosp. v. C.R. Bard, Inc. , 642 F.3d 608, 618 (8th Cir. 2011) (quoting Celotex Corp. v. Catrett , 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ). The moving party need not produce evidence showing "an absence of a genuine issue of material fact." Johnson v. Wheeling Mach. Prod. , 779 F.3d 514, 517 (8th Cir. 2015) (quoting Celotex , 477 U.S. at 325, 106 S.Ct. 2548 ). Instead, "the burden on the moving party may be discharged by ‘showing’ ... that there is an absence of evidence to support the nonmoving party's case." St. Jude Med., Inc. v. Lifecare Int'l, Inc. , 250 F.3d 587, 596 (8th Cir. 2001) (quoting Celotex , 477 U.S. at 325, 106 S.Ct. 2548 ).
In response to the moving party's showing, the nonmoving party's burden is to produce "specific facts sufficient to raise a genuine issue for trial." Haggenmiller v. ABM Parking Servs., Inc. , 837 F.3d 879, 884 (8th Cir. 2016) (quoting Gibson v. Am. Greetings Corp. , 670 F.3d 844, 853 (8th Cir. 2012) ). The nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts, and must come forward with specific facts showing that there is a genuine issue for trial." Wagner v. Gallup, Inc. , 788 F.3d 877, 882 (8th Cir. 2015) (quoting Torgerson , 643 F.3d at 1042 ). "[T]here must be more than ‘the mere existence of some alleged factual dispute’ " between the parties in order to overcome summary judgment. Dick v. Dickinson State Univ. , 826 F.3d 1054, 1061 (8th Cir. 2016) (quoting Vacca v. Viacom Broad. of Mo., Inc. , 875 F.2d 1337, 1339 (8th Cir. 1989) ).
IV. DISCUSSION
Before the Court are three separate motions. First is Mens's Motion for Partial Summary Judgment. Filing 46. Mens's argument is twofold. She argues the Agreement is invalid because Farm Credit has no protectable interest in customers that followed Mens from Midwest to Farm Credit to FBN, and she also argues there is no evidence that her alleged breach of the Agreement caused Farm Credit any harm. See generally Filing 47. However, the Court finds the Agreement is valid and that there is a dispute of material fact as to causation and damages for all customers except Robey and the Eshelmans.
The second motion before the Court is Farm Credit's Motion for an Order of Civil Contempt. Filing 41. Farm Credit argues Mens violated the Court's preliminary injunction by servicing several customers after the Court enjoined her from doing so. Filing 42. As remedies, Farm Credit requests damages, attorney fees, and an extension of the Agreement's noncompete restrictions. Filing 42. Mens argues she did not fully understand the preliminary injunction, thought this case would settle, and had no choice but to violate the preliminary injunction for the good of her customers. Filing 53. Mens also argues the preliminary injunction is based on the allegedly invalid Agreement, and therefore filed the third motion pending before this Court, a Motion to Stay, requesting this Court delay ruling on Farm Credit's contempt motion until the Court issues an order on summary judgment. See Filing 53; Filing 54. Because Mens's summary judgment arguments necessarily impact the Court's contempt analysis, below the Court addresses summary judgment before proceeding to the issue of contempt. Ultimately, the Court finds Mens in contempt of the preliminary injunction.
Because the Court addresses summary judgment and contempt in this order, Mens's Motion to Stay is denied as moot.
A. Mens's Motion for Partial Summary Judgment
As noted above, Mens argues the Agreement is invalid and unenforceable because (1) Farm Credit has no protectable interest in the customers Mens serviced prior to working for Farm Credit, and (2) Farm Credit cannot show that any alleged breach of the Agreement caused it any damages. Filing 47. The Court addresses both arguments below and concludes the Agreement is valid and enforceable and that there is a dispute of material fact as to causation and damages for all customers in question except for Robey and the Eshelmans.
1. Validity and Enforceability of the Agreement
"In determining whether a covenant not to compete is valid, a court considers whether the restriction is (1) reasonable in the sense that it is not injurious to the public, (2) not greater than is reasonably necessary to protect the employer in some legitimate interest, and (3) not unduly harsh and oppressive on the employee." Aon Consulting, Inc. , 275 Neb. at 653, 748 N.W.2d at 638 (citing Mertz v. Pharmacists Mut. Ins. Co. , 261 Neb. 704, 625 N.W.2d 197 (2001) ). Mens does not argue that the Agreement injures the public or is unduly harsh, therefore the Court turns its attention to the contested prong: whether Farm Credit has a legitimate interest in the approximately fifty customers that followed Mens to Farm Credit and whether the Agreement's restrictions are greater than reasonably necessary to protect any legitimate interest.
As discussed by the Court in the preliminary injunction and incorporated here after this Court has reviewed the record, nothing indicates the Agreement is injurious to the public and the factors relating to undue harshness favor Farm Credit. See Filing 16 at 6-7 (citing C & L Indus., Inc. v. Kiviranta , 13 Neb. App. 604, 615, 698 N.W.2d 240, 250 (2005) and considering the factors laid out therein). Though several of Mens's clients clearly wish to continue working with Mens, the restriction is only for two years and, as Mens noted, there are numerous other insurance providers available. See Filing 49-2 at 10 ("[T]here's way over 100 [crop insurance agencies in Iowa.]").
As an initial matter, the Court notes, as it did previously in its preliminary injunction, that the Nebraska Supreme Court has approved of restrictive language nearly identical to that contained in the Agreement. In Aon Consulting, Inc. , the nonsolicitation agreement in question provided that for two years following separation from the employer, a former employee could not:
solicit, sell to, divert, serve, accept or receive insurance agency, brokerage or consulting business ... from any customer or active prospect of [employer] which you personally, alone or in combination with others, handled, serviced or solicited at any time during the two (2) year period immediately preceeding [sic] termination of your employment.
275 Neb. at 645, 748 N.W.2d at 633.
The Aon court found the language was not overly broad or unenforceable because it did not prevent ordinary competition but rather focused on the "legitimate purpose of protecting [the employer]’s goodwill with its customers." Id. at 653, 748 N.W.2d at 638. Accordingly, this Court again finds nothing inherently wrong or overbroad about the requirements of the Agreement because the Agreement accords with Nebraska case law and only prohibits Mens from working with customers with whom she actually worked and had personal contact while employed by Farm Credit.
Further, Farm Credit persuasively points out that the use of more tailored, narrow noncompete language would impose a costly administrative burden on both the employer and employee by requiring them to prospectively identify which customers are part of the goodwill of each party and what circumstances change that calculation. See Filing 57 at 23. This Court will not nullify language approved by the Nebraska Supreme Court.
Mens, however, argues that the Agreement is still overly broad and greater than necessary as applied because Farm Credit has no goodwill or protectable interest in the fifty customers that followed Mens to Farm Credit. Filing 47 at 10-12. As a result, Mens argues the agreement is entirely invalid because Nebraska does not allow courts to revise restrictive covenants to allow for enforceability. Filing 47 at 12-13. After examining the relevant case law in light of the facts of this case, the Court disagrees and finds Farm Credit has a protectable interest in the fifty customers at issue.
The Court notes that the parties did not cite to and the Court did not find any Nebraska cases directly dealing with the issue of an employee with prior customer relationships.
The reasonableness of any particular restrictive covenant "must be assessed upon the facts of a particular case" and "determined on all the circumstances." Am. Sec. Servs., Inc. v. Vodra , 222 Neb. 480, 489, 385 N.W.2d 73, 79 (1986). "[A]n employer has a legitimate business interest in protection against a former employee's competition by improper and unfair means, but is not entitled to protection against ordinary competition from a former employee." Id. at 486, 385 N.W.2d at 78 (citing Boisen v. Petersen Flying Serv., Inc. , 222 Neb. 239, 383 N.W.2d 29 (1986) ). "[A] key for distinguishing ‘unfair competition’ from ‘ordinary competition’ is an employee's appropriation of ‘good will’ properly belonging to the employer." Id. at 487, 385 N.W.2d at 78. Customers are an important aspect of good will because "customer contact is one of the most important assets, sometimes the stock, of a business." Id. at 488, 385 N.W.2d at 79.
The Court went on to note that "under traditional agency concepts, any new business or improvement in customer relations attributable to [an employee] during [her] employment is for the sole benefit of the principal." Id. at 488, 385 N.W.2d 73, 79 (citing Harlan M. Blake, Employee Agreements Not to Compete , 73 Harv. L. Rev. 625, 654 (1960) ). The court further cited 6A A. Corbin, Corbin on Contracts § 1394 at 98 (1962) for the following proposition:
Salesmen and solicitors are generally hired and paid a salary in order that they may help to build up custom, getting acquainted with customers and acquiring their good will. A promise to forbear to solicit such customers and to deprive the employer of the advantage of that good will is reasonable.
American Sec. Services, Inc. , 222 Neb. at 488, 385 N.W.2d at 79.
Applying this reasoning, Mens worked with the fifty customers in question prior to working for Farm Credit. Filing 49-2 at 16, 23, 26. However, she was hired and paid to help build up Farm Credit's custom. After she was hired by Farm Credit, those fifty customers that followed her to Farm Credit were new business for Farm Credit and an improvement in Farm Credit's customer relations. Under agency concepts, her work of transferring her customer base to Farm Credit was for the sole benefit of her principal, Farm Credit. Thus, Farm Credit had and has a protectable interest in the transferred customers.
In Emerson Electric Co. v. Rogers , 418 F.3d 841, 845 (8th Cir. 2005), the Eighth Circuit applied Missouri case law to address the same argument Mens raises and concluded that an employer can have a legitimate interest in the enhancement of an employee's preexisting customer relationships. Employee Rogers argued employer Emerson Electric had no "cognizable interest in customers he had before he started to work with Emerson." Id. The court disagreed, stating that "Emerson ha[d] a legitimate business interest in restraining Rogers from violating the terms of their agreement by unfairly using the relationships he developed or strengthened while working for it. " Id. (emphasis supplied).
Similarly, in Naegele v. Biomedical Systems Corp. , 272 S.W.3d 385, 388–89 (Mo. Ct. App. 2008), the employee, Naegele, argued her employer, Biomedical, had no protectable interest in preexisting customers she "initially developed a relationship with when she worked at [prior employer] because ... Biomedical did not assist in developing these contacts." The court determined that "customer relationships pursued and developed at the employer's expense" that "add value to the employer's business" are a protectable part of the employer's good will "regardless of whether the customer contact originated with the employer or the employee." Id. (citing Emerson Elec. Co. , 418 F.3d at 844–45 ). The Naegele court stated the following:
As Naegele's employer, Biomedical had the right to require Naegele to develop strong relationships with any and all customers that she could. The evidence in the record showed that Biomedical invested considerable money, time, and effort to allow Naegele to develop, maintain, foster and preserve Biomedical's relationships with its customers, including the customers Naegele originally met during her [prior] employment. Biomedical had a legitimate business interest in restraining Naegele from pursuing those customers with whom she developed or strengthened a relationship while working for Biomedical, regardless of whether those customer contacts originated with Naegele while she was working at [her prior place of employment].
Id. at 389.
Relying on Naegele in another case arising out of Missouri, the Eighth Circuit more recently agreed that an employer had a protectable interest in an employee's customer contacts when the employee had a prior relationship with the customers. See Mayer Hoffman McCann, P.C. v. Barton , 614 F.3d 893, 907 (8th Cir. 2010).
Mens argues she has greater relationships with her clients than the employees in Mayer Hoffman. Filing 66 at 11. Mens also points to Ag Spectrum Co. v. Elder , 865 F.3d 1088 (8th Cir. 2017) in support of her argument. Filing 47 at 10. In Ag Spectrum Co. , defendant Elder worked for Ag Spectrum and "connected his customers to Ag Spectrum—not the other way around." Id. at 1093. The Eighth Circuit, generally applying Iowa case law, held that "in this situation, the noncompete provision allows Ag Spectrum not to protect a proprietary customer base, but rather to capture customers that [the employee] provided." Id. In reaching this conclusion, the court quoted Reddy v. Community Health Foundation of Man , 171 W. Va. 368, 298 S.E.2d 906 (1982) for the proposition that "the more the relationship between employer and employee looks like an agent-principal or independent contractor relationship, the more the customer list becomes an asset properly belonging to the employee." Id. The court found Elder was not an Ag Spectrum employee but rather an independent contractor because he only worked with his own customer base except for two Ag Spectrum customers, had to supply all materials needed for his work, used and maintained his own equipment, was an independent contractor for tax purposes, had no authority to contract on Ag Spectrum's behalf, and did not receive employee benefits. Id. at 1089-90, 1093.
Ag Spectrum Co. is distinguishable from the present case. Mens is Farm Credit's employee, not an independent contractor. See Filing 1-1 at 1-2 (referring to Mens as an "employee" and discussing her employment). Mens also worked with a significant number of Farm Credit customers or customers that she solicited and serviced for the first time while working for Farm Credit. Filing 49-2 at 23-24. Mens also received significant support from Farm Credit throughout her employment, as thoroughly discussed below. Accordingly, Mens was Farm Credit's employee, and the Court finds Ag Spectrum far less persuasive as a result.
This Court is persuaded by the reasoning in the Emerson Electric Co. , Naegele , and Mayer Hoffman McCann, P.C. cases. The Court acknowledges Mens had and has longstanding, prior personal relationships with some, if not all, of the roughly fifty customers in question. See, e.g. Filing 49-2 at 5. But the Court does not find the depth of these relationships dispositive. Farm Credit, as Mens's employer, should receive the benefit of these customer relationships because it is her "principal" and hired her to develop its customer base and good will, presumably through those relationships. See American Sec. Servs., Inc. , 222 Neb. at 488, 385 N.W.2d at 79. The record is clear that Mens continued to service, maintain, and develop her relationships with the customers in question throughout her time at Farm Credit. Filing 49-2 at 30, 34, 37-38.
Farm Credit also expended "money, time, and effort to allow [Mens] to develop, maintain, foster and preserve [Farm Credit]’s relationships with its customers, including the customers [Mens] originally met during her [prior] employment" with Midwest. Naegele , 272 S.W.3d at 389. For example, Farm Credit paid for Mens to attend annual training with the companies that underwrote the insurance she sold, attend industry trade shows, obtain continuing education and ethics credits for her licensure, and cultivate customer relationships. Filing 49-2 at 17-18. Specifically, Farm Credit gave Mens a credit card and paid for Mens to purchase meals for her customers, rent hotel rooms while travelling to meet customers, and even paid for a company car and gas to meet with customers. Filing 49-2 at 18-19. Farm Credit also provided Mens with "schwag," including t-shirts, koozies, and other promotional materials to give to customers. Filing 49-2 at 19. Lastly, at least some of the customers Mens worked with attended Farm Credit's annual "Growing On" meeting that boasted a lineup of speakers who provided crop insurance updates, information, and training for customers. Filing 49-2 at 19-20. Accordingly, "[Farm Credit] has a legitimate business interest in restraining [Mens] from violating the terms of [the Agreement] by unfairly using the relationships [s]he developed or strengthened while working for it. " Emerson Elec. Co. , 418 F.3d at 845 (emphasis supplied).
Applying the traditional agency concepts espoused by the Nebraska Supreme Court in American Security Services, Inc. and the persuasive reasoning of the Emerson Electric Co. , Naegele , and Mayer Hoffman McCann, P.C. courts, the Court finds Farm Credit has a legitimate, protectable interest in the fifty customers that followed Mens to Farm Credit. The Court also finds the Agreement's language and restrictions, mirroring those approved of by the Nebraska Supreme Court in Aon Consulting, Inc., 275 Neb. at 653, 748 N.W.2d at 638, are not greater than is reasonably necessary to protect Farm Credit's interest. In summation, the Agreement is valid and enforceable.
The Court notes that discovery in this matter is ongoing, and the facts relating to damages are likely incomplete. See Filing 70 at 2 (setting the written discovery deadline for August 21, 2020, and the deposition deadline for October 30, 2020). However, the Court proceeds on the facts currently before it.
To prove a breach of contract under Nebraska law, a plaintiff must prove the following: (1) the parties entered into a contract; (2) the terms of the contract; (3) the defendant breached the contract in one or more of the ways alleged by the plaintiff; (4) the breach of contract was the proximate cause of some damage to the plaintiff; and (5) the nature and extent of the damage. Walkinshaw v. Saint Elizabeth Reg'l Med. Ctr. , 428 F.Supp.3d 171, 184 (D. Neb. 2019) (citations omitted). Mens argues Farm Credit's act of terminating her, not her alleged breach of the Agreement, was the cause of any damages Farm Credit sustained. Filing 47 at 13. The Court finds there is a genuine dispute of material fact as to causation of damages except as to Robey and the Eshelmans.
As the Court will discuss in section IV.B., Mens clearly and admittedly violated the Agreement.
The Court finds it helpful at the outset of this discussion to parse Farm Credit's single cause of action. While Farm Credit only listed one cause of action in its Complaint, Farm Credit seeks two different remedies. First, Farm Credit seeks enforcement of the Agreement by requesting a preliminary and permanent injunction. Filing 1 at 6-8. Second, Farm Credit seeks damages stemming from Mens's alleged breach of the Agreement. Filing 1 at 6-8. Because the Court has already found the Agreement valid and finds Mens has violated the Agreement as discussed below in section IV.B., Mens's claim for enforcement of the Agreement remains regardless of the Court's determination regarding damages.
Turning to Mens's damages argument, the Court agrees with her with regard to the Eshelmans and Robey. There is no dispute of fact that these customers with their five accounts were "upset" and "angry" that Mens was no longer with Farm Credit and would have left Farm Credit regardless of whether Mens serviced their accounts at FBN. Filing 49-2 at 5; Filing 49-3 at 2-3; Filing 49-4 at 2. Mens's breach of the Agreement did not cause them to leave Farm Credit; rather Mens's separation from Farm Credit caused them to leave.
Farm Credit disagrees that causation is stringently required and instead looks to other jurisdictions for its arguments that (1) causation is satisfied when there is a reasonable basis to infer causation and (2) customer explanations for moving their business are irrelevant. Filing 57 at 23-27. First, Farm Credit points the Court to several cases in which jury or bench trials were held and the finders of fact determined causation was present. See Prairie Eye Ctr., Ltd. v. Butler , 329 Ill. App. 3d 293, 297, 263 Ill.Dec. 654, 768 N.E.2d 414, 418 (2002) (bench trial); Tower Oil & Tech. Co. v. Buckley , 99 Ill. App. 3d 637, 639, 54 Ill.Dec. 843, 425 N.E.2d 1060, 1063 (1981) (jury trial); Solentus, Inc. v. Lam , No. CL-2016-3462, 2017 WL 9833483, at *1 (Va. Cir. Ct. May 4, 2017), judgment entered, (Va. Cir. Ct. 2017) (jury trial). These cases are all distinguishable.
In Prairie Eye Center, Ltd. , the court affirmed a finding of causation based on testimony regarding the former employer's patient retention rate because "there [was] no way of knowing precisely how many patients [former employer] would have retained." 329 Ill. App. 3d at 302-03, 263 Ill.Dec. 654, 768 N.E.2d at 422-23. Here, the record is clear that Farm Credit would not have retained the Robey or Eshelman accounts. See Filing 49-2 at 5; Filing 49-3 at 2-3; Filing 49-4 at 2.
In Tower Oil & Technology Co. , the court affirmed the trial court's denial of the employer's motion for a directed verdict based on a lack of causation. 99 Ill. App. 3d at 646, 54 Ill.Dec. 843, 425 N.E.2d at 1068. Because "[a] directed verdict should be entered only in those cases in which all the evidence, when viewed most favorabl[ly] to the opponent, so overwhelmingly favors the movant that no contrary verdict based on that evidence could ever stand," the Tower Oil & Technology Co. court found that evidence showing the customers in question were "stable" with the former employer for years before following the employee to competitor where the employee sold to them was sufficient evidence of causation to deny the directed verdict. Id. The court then affirmed the jury verdict because a "plaintiff is only required to present evidence which will establish, with a fair degree of probability, a basis for the assessment of damages." Id. at 647, 54 Ill.Dec. 843, 425 N.E.2d 1060.
Similarly in Solentus, Inc. , the court found that there was sufficient evidence to support a jury verdict when a plaintiff shows "that the breaching defendant billed for the work or related work, that the plaintiff would have billed, and how much they would have billed." 2017 WL 9833483, at *6 (emphasis removed). The court then noted that there need not have been any "guarantee" that the plaintiff would have been given the work. Id. Unlike Tower Oil & Technology Co. and Solentus, Inc. , here there is evidence that Robey and the Eshelmans would not return to Farm Credit after it terminated Mens. Filing 49-2 at 5; Filing 49-3 at 2-3; Filing 49-4 at 2. No facts dispute this, thus is no guarantee or even a likelihood that Farm Credit would have received and billed for Robey's business and the Eshelmans’ business.
Second, Farm Credit argues the Robey and Eshelman affidavits are "irrelevant" to the causation analysis. Filing 57 at 25 (citing Lumenate Techs., LP v. Baker , No. 1:14-CV-125, 2015 WL 9460225, at *9 (S.D. Ohio Dec. 28, 2015) and Shred-It USA, Inc. v. Mobile Data Shred, Inc. , 238 F. Supp. 2d 604, 608 (S.D.N.Y. 2002), aff'd, 92 F. App'x 812 (2d Cir. 2004) ). In Shred-It USA, Inc. , the court found that the trier of fact had a factual basis for finding causation even "without direct testimony from the former customers." 238 F. Supp. 2d at 608. Relying on this concept, the court in Lumenate Techologies, LP held that customers’ declarations stating their reason for taking their business to a competitor were "irrelevant to the causation analysis." 2015 WL 9460225, at *9 n.34. This Court disagrees. The evidence before this Court undisputedly shows that Robey and the Eshelmans would have taken their business away from Farm Credit regardless of any breach of the Agreement by Mens. Filing 49-2 at 5; Filing 49-3 at 2-3; Filing 49-4 at 2. The Court declines to disregard this relevant evidence of causation. Thus, summary judgment is proper as to Robey and Eshelmans because there is no evidence Mens's breach of the Agreement caused damages.
However, as discussed later in this order, this does not mean that Mens was justified in breaching the Agreement by continuing to service their accounts.
However, thirty-five other customers that Mens worked with while at Farm Credit left Farm Credit once Mens no longer worked there. Filing 49-5 at 2. Mens argues there is nothing showing any breach of the Agreement by her caused Farm Credit to lose those customers and the commissions related to them. Filing 47 at 13-14. Yet, when asked during her deposition if any customers complained or expressed frustrations with Farm Credit, Mens responded, "No." Filing 49-2 at 40. Thus, it appears the thirty-five customers in question may have been satisfied with Farm Credit, at least while Mens serviced their accounts. Making all inferences in favor of the nonmoving party, the Court finds there is a dispute of material fact as to what caused those thirty-five customers to leave Farm Credit.
In summary, the Court finds that the Agreement is valid and enforceable and therefore denies Mens's Motion for Partial Summary Judgment on that ground. The Court also finds that there is a dispute of material fact as to causation of damages except as related to Robey and the Eshelmans. Accordingly, the Court grants summary judgment as to allegations involving Robey and the Eshelmans because of the lack of disputed evidence regarding damages and denies summary judgment as to the remaining customers. B. Contempt
Farm Credit requests that the Court enter an order finding Mens in contempt of its preliminary injunction and granting damages, attorney's fees, and a ten-month extension of the Agreement's noncompete terms. Filing 41. Farm Credit argues Mens violated the preliminary injunction by servicing customers in violation of the Court's preliminary injunction. See Filing 42. The Court agrees that Mens violated the preliminary injunction. However, the Court will not sanction Mens as discussed below.
1. Violation of the Court's Order
While this Court does not flippantly entertain a contempt order, "[o]ne of the overarching goals of a court's contempt power is to ensure that litigants do not anoint themselves with the power to adjudge the validity of orders to which they are subject." Chicago Truck Drivers v. Bhd. Labor Leasing , 207 F.3d 500, 504 (8th Cir. 2000). "A party commits contempt when [she] violates a definite and specific order of the court requiring [her] to perform or refrain from performing a particular act or acts with knowledge of the court's order." In re Reed , 888 F.3d 930, 936 (8th Cir.), cert. denied sub nom. Briggs v. Rendlen , ––– U.S. ––––, 139 S. Ct. 461, 202 L. Ed. 2d 349 (2018). "The party moving for contempt sanctions bears the burden of proving facts warranting a civil contempt order by clear and convincing evidence." Chicago Truck Drivers , 207 F.3d at 504 (citing Indep. Fed'n of Flight Attendants v. Cooper , 134 F.3d 917 (8th Cir. 1998) ). If the moving party does so, the burden shifts to the nonmoving party to show an inability to comply. Id.
On January 18, 2019, this Court granted Farm Credit's "Motion for Temporary Restraining Oder [sic] and Preliminary Injunction" (Filing 4) and issued the preliminary injunction. Filing 16. In the preliminary injunction, the Court analyzed the Agreement and determined it was valid after finding (1) it was not injurious to the public, (2) Farm Credit showed a legitimate business interest in protecting its goodwill, and (3) the Agreement was not unduly harsh upon consideration of all relevant factors. Filing 16 at 6-8. As a result, the Court entered a preliminary injunction stating as follows:
Pending resolution of this matter, Mens and those acting in active concert or participation with her :
a. shall not call on or solicit the business of, or sell to, or service (directly or indirectly), on Mens's own behalf or in association with or on behalf of any other individual or entity, including without limitation her employer FBN Insurance LLC (FBN), any of the customers of Farm Credit with whom Mens actually did business and had personal contact while employed by Farm Credit , except to the extent such activities are unrelated to and not competitive with the business, products, or services that Mens offered or provided on behalf of Farm Credit and cannot adversely affect Farm Credit's relationship or volume of business with such customers; and
b. shall not call on or solicit the business of, or sell to, or service (directly or indirectly), on Mens's own behalf or in association with or on behalf of any other individual or entity, including without limitation her employer FBN, the persons or entities listed on the attached Exhibit A , except to the extent such activities are unrelated to and not competitive with the business, products or services that Mens offered or provided on behalf of Farm Credit and cannot adversely affect Farm Credit's relationship or volume of business with such customers. Such restrictions include refraining
from issuing crop insurance quotes or working in the AIP systems on their policies or databases.
Filing 16 at 11-12 (emphasis supplied).
Exhibit A was an affidavit containing a list of the 110 customers Mens actually did business and had personal contact with while she worked for Farm Credit, including the Eshelmans and Robey. See Filing 17.
Despite entering an enforceable preliminary injunction and requiring a $1,000 bond, the Court allowed Mens to submit additional briefing on the matter. Filing 16 at 12-13. On February 8, 2019, Mens filed a brief opposing the preliminary injunction on the basis that it was unenforceable and prohibited fair competition. Filing 20 at 6-7. The Court rejected Mens's arguments and issued a Memorandum and Order on March 1, 2019, affirming its prior preliminary injunction. Filing 26.
Prior to the Court issuing the preliminary injunction, Mens executed an insurance contract with Robey on November 30, 2018, and separate insurance contracts on each of the five Eshelman accounts sometime in January of 2019. Filing 49-2 at 32, 37. While executing these new insurance contracts likely violated the Agreement, executing these contracts did not violate any Court order because the Court had yet to enter the January 18 preliminary injunction. However, the Court's January 18 preliminary injunction was clear: Mens was and is prohibited from servicing the crop insurance needs of Robey and the Eshelmans. Filing 16 at 11-12. When Farm Credit deposed Mens in September of 2019, roughly eight months after the Court entered the preliminary injunction, Mens admitted that she continued to service the five Robey and Eshelman accounts throughout 2019. Filing 49-2 at 35-38. Specifically, Mens drafted federally mandated acreage reports. Filing 49-2 at 35-38. Mens also planned to work with these customers to help them submit any insurance claims they might have at year-end in 2019 and also intended to remain their agent of record in 2020. Filing 49-2 at 33, 36-39. Further, Mens admitted she was aware of and had read the preliminary injunction but thought it only prohibited solicitation. Filing 49-2 at 29. On October 17, 2019, after her deposition and discussions of sanctions with Farm Credit, Mens sent letters to Melissa Eshelman and Robey stating that she was prohibited from servicing their accounts in 2020. Filing 44-2 at 1.
In her briefing in opposition to Farm Credit's Motion for Contempt, Mens cites an exhibit from her deposition to support her contention that the Eshelmans executed contracts on January 4, 2019. See Filing 53 at 4 (citing "Doc. No. 49, Ex. 1-A, Def. Dep., Ex. 5"). However, the cited exhibit is not in the record. Thus, the Court presumes the date Mens started servicing Jared Eshelman's account coincides with the time she started servicing all of the Eshelmans’ accounts. See Filing 49-2 at 37. Farm Credit does not contest Mens's assertion of January 4, 2019 being the date of contract for the Eshelmans.
Good faith or subjective misunderstanding is not a defense to contempt when "there is no fair ground of doubt as to whether the [preliminary injunction] barred [Mens's conduct]." See Taggart v. Lorenzen , ––– U.S. ––––, 139 S. Ct. 1795, 1799, 204 L. Ed. 2d 129 (2019).
In light of Mens's admissions, Farm Credit has borne its burden of showing the Court clear and convincing evidence that Mens violated the preliminary injunction by continuing to service the Robey and Eshelman accounts after the Court entered the preliminary injunction. Chicago Truck Drivers , 207 F.3d at 504 (citing Indep. Fed'n of Flight Attendants , 134 F.3d 917 ). Thus, the burden shifts to Mens to show an inability to comply. Id. Mens may show an inability to comply by establishing all three of the following: "(1) that [she was] unable to comply, explaining why categorically and in detail; (2) that [her] inability to comply was not self-induced; and (3) that [she] made in good faith all reasonable efforts to comply." Id. at 506 (internal citations omitted).
Mens admits as much in her brief. See Filing 53 at 4.
Turning to the first requirement, Mens argues that she was unable to comply with the preliminary injunction because, after March 15, 2019, she could not terminate the insurance agreements with Robey and the Eshelmans because March 15 is the federal deadline for obtaining insurance. Filing 53 at 5-6. She had to submit acreage reports for the accounts before July 15 as required by federal law and presumably the insurance contracts. Filing 49-2 at 7. Thus, Mens faced the choice of violating the preliminary injunction by filing the acreage reports or violating federal law and her insurance contracts. Accordingly, Mens has persuaded the Court that she was unable to comply with the preliminary injunction given the circumstances and federal law.
Turning to the second requirement, however, Mens has failed to show that she was not the cause of her inability to comply with the preliminary injunction. In working with these customers, Mens violated the Agreement even before the Court entered the preliminary injunction, and Mens was aware it was wrong to do so as evidenced by her refusal to service her other former customers. Filing 49-2 at 34, 48. Thus, Mens induced her inability to comply with the preliminary injunction by violating the Agreement, and she has not met her burden of legally demonstrating her inability to comply with the preliminary injunction.
Though it need not, the Court addresses the third requirement, good faith, in the interest of thoroughness. The Court finds Mens did not make a good-faith effort to comply with the preliminary injunction because she made no attempts to alert the Court to her impossible position. Faced with the choice to fail the requirements of federal law or violate the preliminary injunction, Mens never raised the issue before this Court. She could have addressed the issue in her briefing after the January 18 preliminary injunction was entered. She also could have brought the issue before the Court on motion at any time. She did not. Thus, Mens did not make a good faith effort to comply with the preliminary injunction, and she has again failed to demonstrate her inability to comply with the preliminary injunction. Accordingly, Mens has not shown her inability to comply by establishing "(1) that [she] were unable to comply, explaining why categorically and in detail; (2) that [her] inability to comply was not self-induced; and (3) that [she] made in good faith all reasonable efforts to comply." Chicago Truck Drivers , 207 F.3d at 504.
2. Remedies
Because the evidence clearly and convincingly shows that Mens violated the preliminary injunction, the Court now addresses remedial measures. Farm Credit requests damages, attorney's fees, and a ten-month extension of the Agreement's noncompete terms. Filing 41. The Court declines to grant any of Farm Credit's requested relief.
"Civil contempt may be employed either to coerce the defendant into compliance with a court order or to compensate the complainant for losses sustained, or both." Chicago Truck Drivers , 207 F.3d at 505 (citing United States v. United Mine Workers of Am. , 330 U.S. 258, 303–04, 67 S. Ct. 677, 91 L. Ed. 884 (1947) ). Courts may use incarceration or a fine to coerce compliance, and a court may impose a fine to compensate the complainant. Id. Compensatory damages "must of course be based on evidence of complainant's actual loss." United Mine Workers of America , 330 U.S. at 304, 67 S.Ct. 677. "[A] party's good faith, even where it does not bar civil contempt, may help to determine an appropriate sanction." Taggart , 139 S. Ct. at 1802, 204 L. Ed. 2d 129. A court need not issue sanctions even if it finds a party in contempt. See Warnock v. Archer , 443 F.3d 954, 956 (8th Cir. 2006) (rejecting the prosecuting party's request for monetary sanctions when the district court did not impose such sanctions); In re Tetracycline Cases , 927 F.2d 411, 413 (8th Cir. 1991) (considering a district court contempt order that lacked compensatory sanctions); Sec. & Exch. Comm'n v. Naftalin , 460 F.2d 471, 475 (8th Cir. 1972) (same).
Here, the Court declines to award Farm Credit damages for Mens's contempt because, as previously discussed, Farm Credit would not have profited from business from the Robey and Eshelman accounts after Mens left, regardless of Mens's breach of the Agreement and preliminary injunction. There is no "evidence of complainant's actual loss" in regard to Robey and the Eshelmans. United Mine Workers of Am. , 330 U.S. at 304, 67 S. Ct. 677.
Further, the Court declines to exercise its equitable power to extend the Agreement beyond two years. Mens has already informed Robey and the Eshelmans that she cannot service their accounts in 2020, seemingly purging herself of contempt to the extent she can, under federal crop insurance requirements, after already violating the preliminary injunction. Filing 44-2 at 1. While Mens still violated the preliminary injunction, the Court finds an extension of the Agreement extreme and unnecessary to coerce future compliance with the preliminary injunction.
The Court also denies Farm Credit's request for compensatory relief in the form of attorney's fees and costs associated with prosecuting Men's contempt. Mens had to submit acreage reports for the accounts before July 15 as required by federal law and presumably the insurance contracts. Filing 49-2 at 7. Mens violated the preliminary injunction to comply with federal crop insurance requirements and protect innocent parties, Robey and the Eshelmans, from being uninsured or sanctioned for failure to file required reports. Further, Mens only had two weeks, from the date the Court rejected her arguments in opposition to the preliminary injunction on March 1 until the federal crop insurance deadline of March 15, to inform Robey and the Eshelmans of her inability to work with them and help them find a new crop insurer. Given these circumstances, the Court awards no attorney's fees or costs. However, the Court will not be so lenient should further evidence come before the Court showing Mens violated the preliminary injunction.
V. CONCLUSION
For the foregoing reasons, Defendant's Motion for Partial Summary Judgment (Filing 46) is granted on the basis of causation and damages only as to customers Robey and the Eshelmans but denied as to all other customers in question because causation is a disputed issue of material fact. Farm Credit's Motion for an Order of Civil Contempt (Filing 41) is granted, but the Court declines to impose sanctions or require compensatory damages. Finally, Mens's Motion to Stay (Filing 54) is denied as moot.
IT IS ORDERED:
1. Defendant's Motion for Partial Summary Judgment (Filing 46) is granted in part as to customers Robey and the Eshelmans;
2. Defendant's Motion for Partial Summary Judgment (Filing 46) is denied as to all other customers;
3. Plaintiff's Motion for an Order of Civil Contempt (Filing 41) is granted only in that the Court finds Defendant in contempt of the Court's January 18, 2019, preliminary injunction;
4. Defendant's Motion to Stay (Filing 54) is denied as moot; and
5. The Court's Injunctive Order (Filing 16) remains in full effect pending resolution of this matter, including as to the customers enumerated in the preliminary injunction and expressly discussed in this Memorandum and Order.