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Keywords

contractlawsuittortdefendantattorneyappealtrialaffidavitsummary judgmentpiracy
contractaffidavitmotionsummary judgment

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Cooper Tire & Rubber Co. v. Farese, 423 F.3d 446, 23 IER Cases 1751

Facts

Cathy Barnett, a former employee of Cooper Tire, signed a separation agreement containing a non-disparagement clause after being accused of embezzlement. Despite this agreement, she executed an affidavit with the help of her attorney, John Booth Farese, making disparaging statements about Cooper Tire. This affidavit was leaked, causing significant financial losses to Cooper Tire. The company subsequently filed a lawsuit against Farese and others for tortious interference and civil conspiracy, leading to the summary judgment that was later appealed.

In exchange for its not filing criminal charges, Cooper Tire required Barnett to execute the separation agreement, which, inter alia, contained the following non-disparagement clause: I agree (a) not to make any public statement or statements to the media or, directly or indirectly, provide information of any kind, whether written or non-written, to, or otherwise collaborate in any way in the taking of any action with, any third party concerning [Cooper Tire], without first receiving the written approval of [Cooper Tire]; and (b) not to take action or make any statements which could cause [Cooper Tire] any embarrassment or humiliation or otherwise reflect negatively on [Cooper Tire] or cause [Cooper Tire] to be held in disrepute.

Issue

The main legal issues were whether the separation agreement was enforceable, whether the non-disparagement clause was void for illegality or unconscionability, and whether the defendants' actions constituted tortious interference and civil conspiracy.

Cooper Tire contends the district court: (1) abused its discretion in denying the Rule 56(f) motion; (2) made improper factual findings on summary judgment regarding material fact issues; and (3) erred in concluding the separation agreement's non-disparagement clause was void for illegality and unconscionability under Mississippi law.

Rule

The court applied Mississippi law regarding the enforceability of contracts, particularly focusing on the ambiguity of contract terms, the legality of non-disparagement clauses, and the standards for tortious interference with contract and business relations.

The Mississippi Supreme Court has held: 'where a contract is ambiguous and uncertain, questions of fact are presented which are to be resolved by the trier of facts, [therefore,] the granting of summary judgment is inappropriate'.

Analysis

The court determined that the district court erred in its findings regarding the effective date of the separation agreement and the legality of the non-disparagement clause. It emphasized that ambiguities in contracts should be resolved by a trier of fact and that the mere possibility of illegal use of a contract clause does not render it void. The court also noted that the district court's inference against Cooper Tire was unsupported by the record.

The district court erred, however, in ruling that Cooper Tire backdated the separation agreement in order to cover Barnett's affidavit. The court stated: 'it is not a stretch to infer that Cooper Tire more likely than not drafted the second version of the [separation] [a]greement in direct response to somehow discovering the existence of the Barnett affidavit'.

Conclusion

The Court of Appeals vacated the summary judgment and remanded the case for further proceedings, indicating that the issues of fact regarding the separation agreement and the defendants' motives needed to be resolved at trial.

Accordingly, Farese and Kaster contend that, even if the district court's ruling on this point is reversed, summary judgment is still appropriate because contractual ambiguities should be resolved against the drafter (Cooper Tire).

Who won?

The prevailing party on appeal was Cooper Tire, as the court found that the district court had made errors in its summary judgment ruling.

The court held: (1) the separation agreement was ambiguous as to the effective date; (2) this ambiguity was caused by Cooper Tire's 'draft[ing] the [final] version of the [separation] [a]greement in direct response to somehow discovering the existence of the Barnett affidavit'; (3) under Mississippi law, non-disparagement agreements are void per se for illegality.

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