Seaboard Corp., Grindrod Settle Lengthy Business Suit
A long-running corporate lawsuit involving an alleged employee conspiracy that spanned continents settled this summer in Kansas City.
Seaboard Corp., an agri-business and transportation company that's based out of Merriam, Kan., filed suit against South Africa's largest and oldest shipping company, Grindrod Ltd., four years ago, claiming fraud and other counts.
Also a defendant in the suit is Kevin Neilson, a former Seaboard executive who left the company in the midst of a profitable joint venture with Grindrod and then allegedly convinced three other key players in the negotiations to resign to take positions with the African company.
Seabord's attorney, Patrick Stueve, of Stueve Siegel Hanson, who previously told the Daily Record he expected the case to go to trial, didn't return a phone call from a reporter.
Neilson's attorney, Richard Modin, said he'd signed a confidentiality agreement and couldn't discuss settlement details.
But the stakes were high, as Seaboard alleged it would've lost $70 million if it hadn't turned over business to Grindrod that was making $600 million a year.
The three Seaboard employees necessary to the operation reportedly traveled to Kansas City in May 2005 and within three days had announced their resignations and "demanded" that Seaboard move the business over to Grindrod so that the African company could maintain the existing contracts. The sale was allegedly below fair market value.
"Having no real choice and recognizing the need to mitigate its potential losses, Seaboard was forced during the three days of discussions held in Kansas City to transfer its highly profitable business to Grindrod with little or no remunerations for the goodwill and good name of the business rather than face the risks and losses made a near certainty by defendants' scheme," the original petition stated.
Jurors would have considered at least six counts against Grindrod and Neilson if the case had gone to trial, which was set for October.
Seaboard sued for compensatory and punitive damages, alleging fraud, negligent misrepresentations, misappropriation of corporate opportunity, breach of confidentiality agreements, civil conspiracy and tortuous interference with contract.
Jackson County Circuit Judge Sandra Midkiff dismissed the case with prejudice late last month.
The case made its rounds in appellate and federal courts before the recent settlement, however.
The case was removed to the U.S. District Court for the Western District of Missouri shortly after the original filing with the defendants arguing for arbitration in New York. It was remanded to circuit court in August 2006.
Grindrod then asked Midkiff to stay the case based on a motion to compel arbitration. Grindrod filed the motion in New York based on a forum selection clause in an asset purchase agreement, but Midkiff denied the motion.
The defendants then in January 2008 argued before the Missouri Court of Appeals Western District that there were two applicable arbitration agreements that required it to be settled out of court. Neilson claimed a clause in his employment letter required claims against him be arbitrated. However, he never signed the letter, so the appellate panel ruled there was no enforceable arbitration.
By Alyson E. Raletz