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Canning Logistics Services, LLC v. Baxter Bailey & Associates, Inc.

United States District Court, D. Nebraska

May 16, 2017

BAXTER BAILEY & ASSOCIATES, INC., a Mississippi Corporation; JT REESOR, and PAUL FOWLER, Defendants.


          Laurie Smith Camp Chief United States District Judge

         This matter is before the Court on the Motion for Temporary Restraining Order and Preliminary Injunction, ECF No. 15, filed by Plaintiff Canning Logistics Services, LLC (“Canning”). The Court ruled on the request for temporary restraining order on May 2, 2017. See ECF No. 26. This order addresses the request for preliminary injunctive relief. For the reasons stated below, the motion will be granted in part and denied in part.


         Canning provided freight-hauling transportation logistics for customers as both a carrier and a freight broker.[2] In September of 2014, Canning entered into a written contract (“Broker-Carrier Agreement”) with Cyclone Carriers, LTD, (“Cyclone”) to complete a series of freight-hauling jobs. After working with Canning for approximately two years, Cyclone demanded payments it alleged Canning owed based on oral agreements with Cyclone. Canning denied the existence of these oral agreements and claimed all money owed under the Broker-Carrier Agreement was paid. On October 26, 2016, Cyclone sued Canning in the District Court of Pottawattamie County, Iowa. On February 28, 2017, the Pottawattamie County District Court determined that the alleged oral agreements between Canning and Cyclone were within the scope of the Broker-Carrier Agreement and governed by its terms, including an arbitration provision. Accordingly, that court stayed the proceeding, pending arbitration.

         In early January of 2017, Canning became aware that Defendant Baxter Bailey & Associates, LLC, (“BBA”) along with its President, JT Reesor, and its employee Paul Fowler, (“Defendants”) were attempting to collect debts allegedly owed by Canning to Cyclone, which Cyclone allegedly assigned to BBA. Beginning on January 25, 2017, Fowler sent a series of emails to Canning Director of Operations Tim Lukowski, [3] and copied several major customers of Canning, accusing Canning of dishonesty and of sending checks without sufficient funds. The email also threatened Lukowski with “criminal charges.” Fowler sent similar emails on February 21 and 22, 2017, again copying various Canning customers, demanding payment from Lukowski and accusing Lukowski of personal and professional dishonesty. On February 24, 2017, and March 2, 2017, BBA sent letters to two major Canning customers, stating that the customers were liable for the debt owed to Cyclone due to Canning's nonpayment. On March 29, 2017, a Canning customer informed Canning that it was suspending payments to Canning pending an investigation into allegations that Canning engaged in double-brokering and failed to pay its carriers.

         Canning filed suit against Defendants in the District Court of Douglas County, Nebraska, on March 16, 2017, alleging tortious interference with business relationships and defamation. ECF No. 1-2. Defendants removed the action to this Court on April 4, 2017. ECF No. 1. On April 25, 2017, Canning moved for a temporary restraining order (“TRO”) and preliminary injunction. ECF No. 15. Canning asked this Court to enjoin Defendants from (1) attempting to collect from Canning or third-parties any debts allegedly owed to Cyclone by Canning; (2) making any representations regarding the credit rating or reputation of Canning or regarding the status of the litigation and arbitration pending between Cyclone and Canning; (3) making any statements disparaging Lukowski; or (4) making any representations to any third party, threatening Canning with litigation.

         The Court held a hearing on May 1, 2017, on the request for temporary restraining order. All parties were represented by counsel, who requested that a hearing on the motion for preliminary injunction be scheduled for a later date. On May 2, 2017, the Court entered an order, ECF No. 26, granting the request for temporary restraining order, in part. The Court temporarily restrained Defendants from attempting to collect any debt allegedly owed by Canning to Cyclone and from contacting current Canning customers to attempt to collect any debt allegedly owed by Canning to Cyclone.

         The Court held a hearing on the request for preliminary injunction on May 11, 2017. All parties were represented by counsel.


         Courts in the Eighth Circuit apply the factors set forth in Dataphase Sys., Inc. v. CL Sys., Inc., 640 F.2d 109, 114 (8th Cir. 1981) (en banc), when determining whether to issue a preliminary injunction. Those factors are: “(1) the threat of irreparable harm to the movant; (2) the state of balance between this harm and the injury that granting the injunction will inflict on other parties litigant; (3) the probability that movant will succeed on the merits; and (4) the public interest.” Id. “No single factor is determinative.” WWP, Inc. v. Wounded Warriors, Inc., 566 F.Supp.2d 970, 974 (D. Neb. 2008). “A preliminary injunction is an extraordinary remedy and the burden of establishing the propriety of an injunction is on the movant.” Roudachevski v. All-Am. Care Centers, Inc., 648 F.3d 701, 705 (8th Cir. 2011) (citing Watkins, Inc. v. Lewis, 346 F.3d 841, 844 (8th Cir. 2003)).


         As with the TRO, the Court has reviewed the Dataphase factors and applied them to the facts of this case, based on the evidence currently before the Court.

         Canning argues that it is likely to prevail on its claim based on tortious interference with business relationships. Under Nebraska law, Canning must establish, (1) the existence of a valid business relationship or expectancy, (2) knowledge by Defendants of the relationship or expectancy, (3) an unjustified intentional act of interference by Defendants, (4) proof that the interference caused the harm alleged, and (5) damage to Canning. See Forest Prod. Indus., Inc. v. ConAgra Foods, Inc., 460 F.3d 1000, 1002 (8th Cir. 2006) (citing Macke v. Pierce, 661 N.W.2d 313, 317 (Neb. 2003)).

         Canning argues that BBA contacted several of Canning's customers attempting to collect directly from the customers for the debts allegedly owed by Canning to Cyclone and assigned to BBA. As a result, Canning alleges, several customers have either terminated or suspended their business relationship with Canning. Canning also alleges that other potential customers have declined to retain Canning, likely because of BBA's efforts to publicize its dispute with Canning. Defendants argue that Canning cannot establish that Defendants' actions caused the harm alleged by Canning, because the ...

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