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Koch Foods, Inc. v. Pate Dawson Co.

United States District Court, S.D. Mississippi, Northern Division

May 3, 2018

KOCH FOODS, INC. PLAINTIFF
v.
PATE DAWSON CO., et al. DEFENDANTS

          ORDER AND OPINION

          DAVID BRAMLETTE, UNITED STATES DISTRICT JUDGE

         Before the Court is a Motion for Judgment as a Matter of Law urged by the Defendants, Malcolm Sullivan, Micah Sullivan, and Mike Pate, Jr, at the close of Plaintiff Koch Foods, Inc.'s casein-chief.

         For the reasons that follow, in addition to those stated in Court on the record on May 2, 2018, the Court GRANTS the Defendants' Motion, as to all of the Defendants, on Koch's claims for (1) breach of a free-standing fiduciary duty, (2) civil conspiracy, (3) violations of North Carolina's Unfair and Deceptive Trade Practices Act, and (4) punitive damages.[1] The Court reserves ruling on the Defendants' Motion as to Koch's remaining claim for constructive fraud based on a breach of fiduciary duty.

         Background

         Koch Foods, an unsecured creditor of a now-defunct foodservice distributor that was known as the Pate Dawson Company, sued four of the company's former officers and directors - Malcolm Sullivan, Micah Sullivan, and Mike Pate, Jr. - for breach of fiduciary duty, constructive fraud, civil conspiracy, and violations of North Carolina's Unfair and Deceptive Trade Practices Act, N.C. Gen. Stat. § 75-1.1.

         Trial of this action began on April 30, 2018. In its casein-chief, Koch called (1) Lance Buckert, Koch's chief financial officer, (2) Malcolm Sullivan, (3) Micah Sullivan, and (4) H. Kenneth LeFoldt, Koch's solvency expert. Koch also offered into evidence the deposition testimony of David Stansfield, the former president of the Pate Dawson Company, and Huron Consulting Group's Jamie Lisac and Hugh Sawyer. Koch rested at about 10:30 A.M. on May 2, 2018.

         After Koch finished its case-in-chief, all of the Defendants moved for judgment as a matter of law on all of Koch's claims.

         I

         The Court is empowered, after fully hearing a party on an issue during a jury trial, to grant a motion for judgment as a matter of law against that party if the Court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on the issue. Fed.R.Civ.P. 50(a).

         There is no legally sufficient evidence upon which a jury could find for a party “where the facts and inferences point so strongly and overwhelmingly in favor of the moving party that reasonable jurors could not arrive at a contrary verdict.” Herster v. Bd. Of Supervisors of Louisiana Stat Univ., 887 F.3d 177, 184 (5th Cir. 2018).

         The United States Supreme Court has for nearly a century required that a plaintiff offer more than a mere scintilla of evidence to present an issue to a jury. See Gunning v. Cooley, 281 U.S. 90, 93-94 (1930) (“[I]n every case, before the evidence is left to the jury, there is a preliminary question for the judge, not whether there is literally no evidence, but whether there is any upon which a jury can properly proceed to find a verdict for the party producing it.”).

         In evaluating the Defendants' Rule 50(a) Motion, the Court draws all reasonable inferences in favor of Koch, and refrains from determining witness credibility and from weighing the evidence. Reeves v. Sanderson Plumbing Prod., Inc., 530 U.S. 133, 150 (2000) (Ginsburg, J.).

         II

         A

         Koch alleges each of the Defendants violated North Carolina's Unfair and Deceptive Trade Practices Act, N.C. Gen. Stat. § 75-1.1 (“UDTPA”). To recover under the UDTPA, Koch must prove (1) a Defendant committed an unfair or deceptive act or practice, (2) in or affecting commerce, and (3) Koch was injured as a result. N.C. Gen. Stat. § 75-1.1.

         The question whether an act is unfair or deceptive under the UDTPA is an issue of law for the Court. Dalton v. Camp, 548 S.E.2d 704, 711 ( N.C. 2001). And the Court's analysis must consider the “impact the practice has on the marketplace.” Shepard v. Bonita Vista Properties, L.P., 664 S.E.2d 388, 395 ( N.C. Ct. App. 2008). A party violates the UDTPA if its conduct amounts to “an inequitable assertion ...


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