Foodcomm International v. Barry

328 F.3d 300 (7th Cir. 2003)

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Nature of the Case

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Facts

P is an importer of Australian beef. Ds were senior sales representatives at P and oversaw its dealings with Empire Beef, one of P's largest customers. Empire approached P with a business proposal to redistribute market fluctuation risk between the companies. Negotiations broke down and Leacy (D), who had been present at the meeting, asked his boss to leave it to him (Leacy (D)) to 'smooth things over' with Empire. Leacy (D) learned that the relationship between P and Empire was finished. Leacy (D) never informed P of this discovery. P's business with Empire dropped roughly 75 percent. Ds decided to 'seek alternative employment together,' and contacted Empire to inquire whether it would be interested in their services. Empire requested a written business plan. Ds used their P computers and PDAs to prepare a business ] plan for a new company (Outback Imports) that would import beef for Empire. Ds never said a word to P about their plans with Empire and Outback. Leacy (D) continued to lie to P saying that he was 'smoothing things over' with Empire. Outback was incorporated in July 2002. Ds did not resign from P until late August 2002. In September 2002, Outback began operating as a division of Empire with Ds, now Empire employees, at its helm. P sued Ds seeking a preliminary injunction enjoining Ds' continued employment with Empire and Outback. The court had found that Ds had breached their fiduciary duties to P when they approached Empire with a business plan and formed a company to compete against P. The district court enjoined them from directly or indirectly providing services of any kind to or for Empire or Outback or any of their affiliates and agencies. Ds appealed. Ds contend that since they were not titled as 'officers' of P, they do not owe fiduciary duties to P.