Schaeffer Mfg. Co. v. Johnson

CourtDistrict Court, E.D. Missouri
DecidedJune 16, 2025
Docket4:24-cv-01656
StatusUnknown

This text of Schaeffer Mfg. Co. v. Johnson (Schaeffer Mfg. Co. v. Johnson) is published on Counsel Stack Legal Research, covering District Court, E.D. Missouri primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Schaeffer Mfg. Co. v. Johnson, (E.D. Mo. 2025).

Opinion

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MISSOURI EASTERN DIVISION SCHAEFFER MFG. CO., ) Plaintiff, V. Case No. 4:24CV1656 JAR JAMES D. JOHNSON, Johnson. MEMORANDUM AND ORDER This matter is before the Court on Defendant’s Motion to Dismiss [ECF No. 8]. Plaintiff filed its response in opposition, to which Defendant filed a reply. The Motion is fully briefed and ready for disposition. For the reasons set forth below, Defendant’s Motion will be denied. Background and Facts On November 1, 2024, Plaintiff Schaeffer Mfg. Co. (“Schaeffer”) filed this action in the Circuit Court of the City of St. Louis, Missouri against Defendant James D. Johnson, alleging breach of contract and breach of fiduciary duties (including duty of loyalty), or alternatively, unjust enrichment. Johnson subsequently removed this action to federal court pursuant to diversity jurisdiction under 28 U.S.C. § 1332. Johnson moves to dismiss Schaeffer’s complaint in its entirety pursuant to Federal Rule of Civil Procedure 12(b)(6). Schaeffer’s complaint [ECF No. 5], in pertinent part, alleges! the following: Schaeffer is a manufacturing company based in St. Louis, Missouri, specializing in the production and sale of industrial lubricants, industrial greases, industrial oils, chain lubes, and

Unless otherwise noted, all facts in this section are alleged in Schaeffer’s complaint and accepted as true 30k) of this motion only. McShane Constr. Co., LLC v. Gotham Ins. Co., 867 F.3d 923, 927 (8th

degreasers. In 1982, Schaeffer hired Johnson, a citizen of Wisconsin, as an employee sales representative. In 1989, Johnson and Schaeffer entered into an Employee Sales Agreement (the “Johnson Agreement’). Schaeffer promoted Johnson to a Division Manager position in approximately 1992, a position he held until late 2021. In August 2021, announced a plan to eliminate all of the Division Manager positions within the company. Schaffer then offered the Division Managers, including Johnson, the option to remain with Schaeffer as sales representatives. The terms of this transition were outlined in a Memorandum of Understanding (“MOU”), which was provided to each Division Manager. Johnson did not execute the MOU, but continued employment with Schaeffer and accepted all of the benefits of the MOU. In December 2021, Johnson transitioned back into a sales representative position. The MOU provided that Johnson would continue earning commissions on both his personal sales and on sales made by sales representatives in his former division (the “Override Commissions”), over a four-year period. During this four-year period, the Override Commissions were to be paid at 100% starting in 2022, and declining by 25% increments each year until the Override Commissions were entirely eliminated in 2025. Johnson has received and accepted all corresponding Override Commissions in accordance with the MOU to date. In December 2022, Johnson informed Schaeffer that he was terminating his employment relationship with Schaeffer, and that effective January 1, 2023, he would continue to sell Schaeffer product through an entity he had set up for that purpose, Payback Sales, LLC. Schaeffer agreed to allow Johnson to transition to an independent contractor role selling Schaeffer product through his entity while continuing to receive Override Commissions under the terms of the MOU.

Over a year later, Schaeffer began learning facts indicating that, while still employed at Schaeffer, Johnson had established a competing business, Extreme Crane Lube, and had been selling, and was continuing to sell, industrial lubricants in direct competition with Schaeffer’s product offerings in violation of Section 15 of the Johnson Agreement, which provides in part: [flor a period of two years following termination of your employment with the Company for any reason, you will not directly or indirectly engage in or associate yourself with a business that is in competition with the Company, or contribute your knowledge to any work or activity that involves a product, service or development that is competitive with or similar to a product, service or development of the Company .... ECF No. 5-2 at 3. Furthermore, Shaeffer alleges that Johnson’s conduct in setting up Extreme Crane Lube and Selling “Extreme”-branded products while still an employee of Schaeffer violated Section 14(b) of the Johnson Agreement, which provides that “[a]s an employee, you must represent the Company exclusively and you cannot represent other businesses.” /d. Schaeffer alleges that after Johnson transitioned from an employee to an independent contractor role at Schaeffer on January 1, 2023, he continued to engage in competition with Schaeffer through his Extreme Crane Lube business, as well as by selling other “Extreme”- branded lubricants, greases and cleaners that directly compete with Schaeffer products. On information and belief, Johnson sold ““Extreme”-branded product to Schaeffer customers while an employee, and he continues to do so. Moreover, on information and belief, Johnson solicited other Schaeffer sales representatives (including Luke Johnson) to sell these “Extreme”-branded competing products in violation of their own contractual obligations to Schaeffer and to get them to eventually end their

association with Schaeffer. Soliciting Schaeffer sales representatives also violated Section 15 of the Johnson Agreement, which stipulated that for the same two-year period following termination of his employment with Schaeffer, Johnson would “not solicit or induce sales representatives of the Company to terminate their association with the Company.” /d. As Johnson’s employee status terminated on December 31, 2022, Johnson remained barred from competing with Schaeffer and soliciting its sales representatives until January 1, 2025. Thus, Johnson’s actions until that date constituted violations under the terms of the Johnson Agreement. Schaeffer’s complaint alleges the following three counts: Breach of Contract (Count I); Breach of Fiduciary Duties Including Duty of Loyalty (Count II); and, alternatively, Unjust Enrichment (Count III). Johnson moves to dismiss Schaeffer’s complaint in its entirety for failure to state any claims upon which relief can be granted. Legal Standard Federal Rule of Civil Procedure 8(a) requires that a pleading contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Ifa pleading fails to state a claim upon which relief can be granted, an opposing party may move to dismiss it. See Fed. R. Civ. P. 12(b)(6). This court “accept[s] as true the complaint's factual allegations and grant[s] all reasonable inferences to the non-moving party.” Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 591 (8th Cir. 2009) (internal citation omitted). To survive a motion to dismiss, a complaint must contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

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Bluebook (online)
Schaeffer Mfg. Co. v. Johnson, Counsel Stack Legal Research, https://law.counselstack.com/opinion/schaeffer-mfg-co-v-johnson-moed-2025.