Conspiracy Lawsuit Will Proceed at Trial Court

By Charles Emerick

A lawsuit against South Africa's largest and oldest shipping company was given a green light to proceed in a Jackson County court by an appellate panel last week.

Grindrod Limited lost its argument at the Missouri Court of Appeals' Western District to have the case arbitrated in New York. It is accused of taking part in a scheme that forced Shawnee-based Seaboard Corp. to sell a part of its business that generated $600 million a year in revenue to Grindrod.

Seaboard attorney Patrick Stueve of Stueve Siegel Hanson called it a "very important decision" and expects to try the case before a jury next year.

According to Seaboard's petition, Kevin Neilson, a former employee and now a defendant in the case, became involved in "secret negotiations" with Grindrod in early 2005. The two allegedly implemented a conspiracy to raid Seaboard of key employees that forced it to sell a portion of its business to Grindrod for a price below fair market value.

It began when Neilson resigned from Seaboard in April 2005. The company then contacted other employees and promoted several of them to become directors.

However, Neilson and Grindrod had allegedly recruited the employees to assist in the conspiracy.

In May 2005, the employees who were to be promoted arrived in Kansas City to meet with Seaboard management. They announced then they were leaving and joining Grindrod.

Seaboard claimed it had "no real choice" and sold part of its business to Grindrod in order to avoid the risk of losing more than $70 million.

Seaboard filed its suit three months later.

Grindrod asked Jackson County Circuit Judge Sandra Midkiff to stay the case based on a motion to compel arbitration filing it made in New York. Grindrod filed the motion in New York based on a forum selection clause in an asset purchase agreement.

Midkiff denied the motion.

The defendants argued before the 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 laid out that claims against him be arbitrated. However, he never signed the letter so the appellate panel ruled there was no enforceable arbitration.

Additionally, Grindrod argued that Seaboard's claims fall under an arbitration clause in an asset purchase agreement. That argument was also rejected by the Western District, which held that the claims in the petition did not fall within the scope of the agreement.

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