Judgment hits former salesman who helped start competing company


Capital Press

An onion salesman owes his former employer about $680,000 in damages for defecting to a farmer-owned marketing company in Central Washington, according a federal appellate court.

The salesman, William Brownfield, violated his duty of loyalty to Keystone Fruit Marketing, a Pennsylvania-based international produce company, by interfering in an exclusive agreement between the firm and one of its clients, according to the 9th U.S. Circuit Court of Appeals.

The order upholds a previous decision by a federal judge, who based the amount of damages on Brownfield's salary of about $145,700 and lost profits of about $537,400 incurred by Keystone due to his defection.

As a sales manager at Keystone's office in Walla Walla, Wash., Brownfield established a marketing agreement between the firm and an onion farming company, Grigg and Sons of Quincy, Wash.

As part of the arrangement, Keystone secured a "lucrative deal" for Grigg and Sons to supply onions to a major fast-food chain, according to court records.

"The Griggs' exclusive Redwing red onion had special attributes that were desirable in the food service industry, including being consistent in its size and color, having a single center and storing well for up to six months," according to court documents. "At the time, there was no other onion farmer growing this type of red onion."

However, the relationship between the salesman and the marketing firm was tense, with Brownfield repeatedly complaining about his salary and Keystone executives raising questions about alcohol consumption at the office, according to court documents.

The situation deteriorated at two meetings with local farmers in October 2004, during which senior Keystone executives discussed "alcohol use and alleged abusive behavior" by Brownfield and another employee, according to court documents.

Keystone later claimed that after these meetings, Brownfield began planning to launch a competing onion marketing company with Grigg and Sons. The salesman and the farm company denied these allegations.

In July 2005, Grigg and Sons canceled the marketing agreement with Keystone.

In a letter, the farm company announced the launch of its own marketing operation, claiming an alliance between Keystone and a competing firm had resulted in lost onion sales, according to court records.

Brownfield was fired a few days later and soon joined Grigg and Sons' new firm, Sweet Clover Produce, according to court documents. Keystone filed a legal complaint against him the next month in the U.S. District Court for Eastern Washington.

In May 2008, the judge in that case rejected Brownfield's arguments that he did not assist Grigg and Sons in establishing the new marketing company.

Chief U.S. District Judge Robert Whaley said he did not believe Grigg and Sons had developed the new company without Brownfield's assistance, or that the farm company expected to run the operation without him.

"It is incredible to believe that the Griggs were planning on directly competing with the same man they hold in such high esteem," Whaley said in the ruling. "It is also incredible to believe that the Griggs would plant 2,500 acres of onion without first knowing who and how they would sell these onions."

Whaley's decision also hinged on an e-mail sent to Brownfield's wife, Janet, from Gail Grigg, a member of the Grigg family. The e-mail was sent shortly before the farm's marketing agreement with Keystone was terminated, court records said.

According to court records, a copy of the termination letter was attached to the e-mail, which included the statement, "Here we go, plug your nose and jump in!!!"

Whaley said the statement was significant because it showed Brownfield had previously discussed Grigg and Sons' plans and expected to join their new venture.

Brownfield challenged the decision in the federal appellate court, but his appeal was unanimously rejected by a three-judge panel on Thursday, Nov. 5.

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