Court Holds That The Cost To Create A Distributor List Was Sufficient Evidence of Damages for A Breach of Fiduciary Duty Claim

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In In re Amerisciences, a bankruptcy trustee sued a bankrupt company’s former officers for breach of fiduciary duty regarding the theft of trade secrets. No. 18-20394, 2019 U.S. App. LEXIS 20635 (5th Cir. July 11, 2019). The jury found for the trustee, and the officers appealed. The court of appeals addressed whether there was sufficient evidence of damages to support the breach of fiduciary duty claim:

Appellants’ last argument for judgment as a matter of law is that there was insufficient evidence to show damages for breach of fiduciary duty and unjust enrichment. Under Texas law, a corporate officer’s or director’s breach of fiduciary duty may result in liability for “any loss” the corporation may suffer as a result, including consequential damages. Appellants argue Tow never tied evidence of Organo’s profit to AmeriSciences’s distributors breaching their contract with AmeriSciences. But evidence showing Buggs pitched AmeriSciences’s distributors on Organo and that some of AmeriSciences’s distributors joined Organo shows that Buggs and Organo’s tortious interference contributed to their profits. Further, a defendant is obligated to restore benefits to the plaintiff when a defendant is unjustly enriched via fraud. Tow presented legally sufficient evidence for a reasonable jury to conclude as it did through Weingust’s testimony regarding AmeriSciences’s development costs to recruit and retain distributors and how much a reasonably prudent investor would have paid for the list.

Id. The court affirmed the judgment for the trustee.

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