Speck v. Agrex, Inc.

888 F. Supp. 2d 867, 2012 U.S. Dist. LEXIS 129210, 2012 WL 3764769
CourtDistrict Court, N.D. Ohio
DecidedAugust 30, 2012
DocketCase No. 3:11 CV 462
StatusPublished
Cited by4 cases

This text of 888 F. Supp. 2d 867 (Speck v. Agrex, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Speck v. Agrex, Inc., 888 F. Supp. 2d 867, 2012 U.S. Dist. LEXIS 129210, 2012 WL 3764769 (N.D. Ohio 2012).

Opinion

MEMORANDUM OPINION AND ORDER

JACK ZOUHARY, District Judge.

Introduction

This case centers on a hill of beans — a costly hill. Plaintiff Steven Speck was terminated from his job as Chief Operating Officer (“COO”) and President of Farmer Grain Dealers, Inc. (“FGDI”) after FGDI ended up on the wrong side of soybean contracts worth $150 million. Plaintiff alleges his termination violated Title VII and the Age Discrimination Employment Act (“ADEA”), as well as state discrimination law, public policy, and his compensation plan (Doc. 1 at 6-10). Defendant Agrex, Inc. (“Agrex”), who owns FGDI, denies the allegations and moves for summary judgment (Doc. 61). The matter has been fully briefed (Docs. 71 & 73).

Background

FGDI is a grain commodities trader serving both domestic and international markets. Plaintiff became president and Chief Executive Officer (“CEO”) of FGDI in 2000 and was responsible for its management, with some oversight by the Board of Directors (Docs. 54 at 8; 66 at ¶ 6). FGDI also employed Robert Obrock, COO, and Jean Bratton, Chief Financial Officer (“CFO”), both of whom reported directly to Plaintiff (Doc. 54 at 7). As of May 2007, FGDI’s management was organized as follows:

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Agrex Purchases FGDI

In June 2007, FGDI was purchased by Agrex, a full-service foods commodity trading company and a wholly-owned subsidiary of Mitsubishi Corporation (Doc. 66 at ¶ 2). Following this purchase, Hiroshi Fukuchi, a Japanese citizen, was appointed as CEO and Chairman of FGDI. Plaintiffs title was changed from CEO to COO, although he remained President. The former COO, Obrock, was made Executive Vice President. Plaintiff received the same compensation and performed the same duties as when he was CEO (Doc. 54 [870]*870at 8). The only real difference — Plaintiff now reported to Fukuchi instead of the Board (Doc. 54 at 8). Additionally, a Managing Committee was formed in order to give Agrex, the new majority owner, a more definitive role in FGDI’s operation. Both Fukuchi and Plaintiff were on the Managing Committee as well as several executives from Agrex and FGDI (Doc. 66-3 at 2).

FGDI’s new management was organized as follows:

In March 2008, Fukuchi sent a report to Agrex (Doc. 58 at 5) expressing concerns about Plaintiffs management capability, his knowledge of the grain business, and the potential for extremely large losses at FGDI (Doc. 64 at ¶ 4). Specifically, Fukuchi believed Plaintiff spent too much time on trades and not enough time managing, lacked strategic planning and analysis, failed to understand the goals of Agrex and its shareholders, and lacked basic knowledge of the grain futures market (Doc. 64-2 at 10-11). Fukuchi determined Plaintiff needed “significant growth and transformation;” contemplating Plaintiffs eventual termination (Doc. 64-2 at 10), and requested the assignment of a “Japanese trader” who would be more familiar with Mitsubishi’s “way of thinking and point of view” (Doc. 64-2 at 12).

The following month, April 2008, Fukuchi gave Plaintiff a performance evaluation highlighting several of the deficiencies noted in his earlier report. The evaluation highlighted Plaintiffs unsatisfactory performance in futures positions, reporting requirements, and debt management (Doc. 64-3 at 3-4). Later that month, Fukuchi reiterated his desire to have a Japanese employee dispatched to FGDI, stating in an e-mail to Yutaka Kyoya, Agrex’s General Manager for Grain (Doc. 64-4 at 9):

I am proposing that we should do away with the daily local business model that is dependent on one person, and requesting that you consider dispatching a trader who is a Japanese employee, so that we can move the company smoothly and swiftly in the appropriate direction.

Kyoya responded, copying Shinsuke Tokue, Agrex’s CEO, and noting concerns over Plaintiffs termination and reorganizing Plaintiffs role in FGDI (Doc. 64-4 at 10-11). Fukuchi replied “we want to be prepared to terminate him in case he does not perform the required work” (Doc. 64-4 at 12). Kyoya denied Fukuchi’s request and instead told Fukuchi “to have [Plaintiff] remain for another half year to a year or so and to deal with this one step at a time” (Doc. 65-1 at 5). Despite Fukuchi’s lack of confidence, Plaintiff remained in charge of managing FGDI’s trading in China (Doc. 54 at 30).

The Chinese Positions

In early October 2008, Plaintiff sent Fukuchi and the Managing Committee an update of FGDI’s performance, claiming FGDI continued to set “record earnings” with a positive assessment of FGDI’s market position, including China (Doc. 62-3 at [871]*8712). However, at some point during October, Plaintiff became aware of a multimillion dollar dispute between FGDI and a Chinese soybean buyer, Putian Hwakong Oil Mills Co., Ltd. (“Putian”) (Doc. 54 at 32), who apparently was threatening to walk away from some of the soybean contracts it had with FGDI unless FGDI was willing to offer deep discounts. By late October, William Gallo, FGDI’s Putian broker, was in full-panic-mode (Doc. 62-4):

[S]o far things do not look good---Putian i[n] my opinion is looking to shake down FGDI for money.... I think Putian has sustained] a loss with inventory he still has in his facilities and did not sell in the amount of 40 million dollars. COFCO [the import agent] has delayed payment on his loan ... for an additional two months. I do not see how he is going to execute the November cargo as no import agent will take him knowing the situation with COFCO. .... Mr. Peng [an official with Putian] has not showed up yet as a follow up to the meeting yesterday and it would not surprise[] me that he is so depressed and on pills as well as drinking. This is not a good situation and I am trying to keep my wits about me and act as professional as possible. There are two law firms here representing his interest who are not at all impressive. I have no idea where he got these guys. COFCO is the most reasonable and is trying to convince Putian to get this setteld [sic] amicably. Steve, we have a situation where [ ] Mr. Peng in my view is so over his head in debt that he is looking for any way to get money out of FGDI. I cannot see us settling [the contract] with out [sic] handing over a tremendous amount of money for reasons which make absolutely no sense. Additionally, he is using this stop loss issue as a way to hold us hostage on the November contract which I believe he can’t perform unless we agree to some riduculous [sic] settlement on [the contract].

Plaintiff failed to inform Fukuchi or the Managing Committee about Gallo’s gloom- and-doom report. Instead, in an e-mail dated mid-November 2008, Plaintiff reported “a good month booking strong monthly earnings____We are exposed to some of the same risk as others.... In all we are still having a good year and will continue our effort to navigate through the difficult waters” (Doc. 62-5 at 2). However, by November 21, 2008, Plaintiff had recommended FGDI sell their Putian contracts (Doc. 65-5 at 2).

Fukuchi heard about the Putian dispute from Gallo in late October, when Gallo handed him a copy of the panicked e-mail exchange with Plaintiff. Fukuchi then learned there were five contracts in dispute with Putian, totaling $150 million (Doc. 58 at 9). He immediately reported the dispute to Mitsubishi who, given the amount of money at stake, took control of the Putian contracts (Doc. 58 at 10).

Mitsubishi’s Investigation into the Putian Contracts

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888 F. Supp. 2d 867, 2012 U.S. Dist. LEXIS 129210, 2012 WL 3764769, Counsel Stack Legal Research, https://law.counselstack.com/opinion/speck-v-agrex-inc-ohnd-2012.