Stonebridge Collection, Inc. v. Carmichael, No. 14-1601 (8th Cir. 2015)
Annotate this CaseStonebridge, an engraver of promotional pocket knives, sued its former distributor Cutting-Edge and its members; competitor knife engraver TaylorMade and its sole member and manager Taylor, a former Stonebridge employee; and Massey, a TaylorMade employee and former Stonebridge employee, arising from Massey’s copying Stonebridge’s computer files and using those files to solicit business from Stonebridge customers. Stonebridge brought claims under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961-1968; the Arkansas Deceptive Trade Practices Act (ADTPA), Ark. Code 4-88-101; and Arkansas common law. The district court partially found for Stonebridge on its fraud and conversion claims, dismissed the remaining eight claims, and denied the parties’ motions for attorney fees. The Eighth Circuit upheld: the finding that defendants converted the copies of certain files created by Stonebridge; an award of damages for unjust enrichment; a finding Stonebridge did not establish the existence of a business expectancy under Arkansas law; a finding Cutting-Edge fraudulently induced Stonebridge to send sample knives while intending to employ TaylorMade as its engraver on the orders placed as a result of seeing the samples; and dismissal of the RICO and ADTPA claims.
Court Description: Riley, Author, with Loken and Smith, Circuit Judges] Civil case - Fraud. Following Arkansas law, the district court did not err in determining defendants converted copies of certain customer files created by plaintiff; the district court did not clearly err in awarding damages based on defendants; unjust enrichment; since defendant Cutting Edge had unlimited access to the files plaintiff created for Cutting Edge's customers, the district court did not err in finding for Cutting Edge on plaintiff's claim that Cutting Edge had wrongfully converted the files; the district court did not err in finding plaintiff failed to establish the existence of a business expectancy under Arkansas law; the district court did not err in finding Cutting Edge fraudulently induced plaintiff to send sample knives while intending to use defendant TaylorMade as its engraver for any orders TaylorMade's customers made after seeing the samples; Arkansas's Deceptive Trade Practices Act does not apply to claims regarding business between a manufacturer and a distributor when consumers are not deceived or defrauded; plaintiff failed to prove its RICO claim; attorneys' fees award affirmed; remanded to permit the district court to correct a math error in the calculation of plaintiff's damages on the claim for unjust enrichment.
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