Gableman

MADISON, Wis. (Legal Newsline) - The Wisconsin Supreme Court last week upheld $5 million in damages awarded to a man who claims he was "squeezed" out of his family's beef jerky business.

The Court, in its ruling Thursday, affirmed and reversed in part the decision of the state Court of Appeals and remanded the case.

The case is described by the Court as a "complex civil action" that initially involved 14 different parties in 18 separate but related claims and counterclaims.

The controversy, though, centers on a bitter interfamilial dispute among John "Jack" Link and his two sons, Jay and Troy Link.

In the mid-1980s, Jack began selling meat snacks in Minong, Wis. The business steadily expanded, and in 1995 Link Snacks Inc. -- which does business as Jack Link's Beef Jerky -- became entirely family-owned when Jay and Troy acquired shares of the company.

The popular line of meat snacks includes beef jerky, turkey jerky, beef sticks, meat and cheese packs, kippered beefsteaks, sausages and beefsteak nuggets.

In August 2005, after a number of conflicts between him and his father, Jay's employment ended.

A month later, his father and brother filed suit seeking specific performance of a buy-sell agreement that would require Jay to surrender his shares in Link Snacks. Jay filed counterclaims alleging that Jack and Troy had breached fiduciary duties owed to him as a minority shareholder by "squeezing" him out of the company in a scheme to buy his shares at a discounted price.

After two years of discovery, the Washburn County Circuit Court conducted a trial in three phases, which included a six-week jury trial.

The jury found that Jack and Troy breached fiduciary duties owed to Jay. The jury also found that Jay breached fiduciary duties owed to Link Snacks.

During the third phase of the trial -- after the jury's verdicts -- the circuit court granted specific enforcement of the buy-sell agreement and concluded that Jay, as a matter of law, had not been oppressed under state law.

Jay appealed three issues to the Court of Appeals.

First, he argued that the circuit court erred in its conclusion that he had not been oppressed by Jack and Troy. Second, he argued that the circuit court erred in limiting the evidence he could present regarding his theory of damages relating to his breach of fiduciary duty claims against Jack and Troy. Third, he argued that the circuit court erred in remitting the punitive damages awarded against Jack for breaching fiduciary duties owed to him.

Jack cross-appealed the jury's verdict awarding punitive damages to Jay. Link Snacks also moved to dismiss Jay's appeals related to his contention that the evidence at trial established oppression as a matter of law and his argument that the circuit court erred in limiting the evidence Jay could present regarding his theory of damages.

The appeals court granted Jack and the remaining respondents and cross-appellants partial dismissal of Jay's appeal. The court's order also reversed the circuit court order remitting a punitive damages award against Jack, reasoning that Jack's postverdict motion was not timely filed.

Three issues were presented to the state's high court.

First, Jack argues that the appeals court erred in reinstating the $5 million punitive damages award against him.

Second, Jay argues that the appeals court erred in concluding that he waived his right to appeal the judicial dissolution claim.

Third, Jay argues that the appeals court erred in concluding that he waived his right to appeal whether the circuit court erred in limiting the evidence he could present regarding his theory of damages relating to his breach of fiduciary duty claims against his father and brother.

The Court, in its 52-page decision, determined that the circuit court erred in remitting the award of punitive damages against Jack. Justice Michael J. Gableman wrote the Court's opinion.

"We would hold it is within the clerk of circuit court's discretion as an elected constitutional officer to accept and file pleadings received after the end of usual business hours, so long as that discretion is exercised reasonably and is within the guidelines provided by the Legislature," Gableman wrote for the Court.

The Court also found that the appeals court properly rejected Jay's oppression claim.

It did not address, however, whether Jay waived his right to bring his oppression claim under the benefit-estoppel doctrine because it concluded he does not have standing to appeal his oppression claim.

Statutory language, the Court said, "clearly states" that a party must be a shareholder to seek judicial dissolution of a corporation.

"Jay lost his status as a shareholder in Link Snacks when he surrendered his shares under the buy-sell agreement. Therefore, we affirm the court of appeals on this issue, but on different grounds," it wrote.

On the final issue, the Court said Jay did not, under the benefit-estoppel doctrine, waive his right to appeal the circuit court's decision to limit the evidence he could present.

"The contractual obligations set forth in the buy-sell agreement, which were enforced by the circuit court, would not be affected if Jay, on appeal, was successful in arguing that the circuit court erred in limiting the evidence Jay could present regarding his theory of damages relating to his breach of fiduciary duty claims against Jack and Troy," it wrote.

"Consequently, the benefit-estoppel doctrine is inapplicable to Jay's appeal of the circuit court's decision to limit the evidence Jay could present regarding his fiduciary duty damages theory relating to his breach of fiduciary duty claims against Jack and Troy."

The Court remanded to the case to the appeals court to decide whether the circuit court erred in limiting the evidence Jay could present regarding his theory of damages.

From Legal Newsline: Reach Jessica Karmasek by e-mail at jessica@legalnewsline.com.

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