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Claim Preclusion – Fair Value and Corporate Misappropriation Claim

By: Derek Hawkins//December 10, 2019//

Claim Preclusion – Fair Value and Corporate Misappropriation Claim

By: Derek Hawkins//December 10, 2019//

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WI Court of Appeals – District III

Case Name: Jay Link, et al. v. John Link, et al.

Case No.: 2018AP1715

Officials: Stark, P.J., Hruz and Seidl, JJ.

Focus: Claim Preclusion – Fair Value and Corporate Misappropriation Claim

This appeal is the latest installment in a longstanding intrafamilial dispute between Jay Link; Jay’s brother, Troy Link; and their father, John (Jack) Link. The three Links owned various companies that produced and distributed meat products. In a prior lawsuit (hereinafter, the 2005 litigation), a jury found that Jack had breached his fiduciary duties to Jay, and Jay had breached his fiduciary duties to Link Snacks, Inc. (Link Snacks). The circuit court subsequently granted Link Snacks’ claim for specific performance of a Buy-Sell Agreement, which permitted Link Snacks to redeem Jay’s shares of the corporation at their fair market value. After the court entered judgment in the 2005 litigation, the parties stipulated to the dissolution of certain other jointly owned companies, including Link Snacks Global, Inc. (Link Global), in which Jay and Troy each held a 50% ownership interest.

Jay subsequently filed the instant lawsuit, asserting that Jack, Troy, and John Hermeier had each breached their fiduciary duties to him in various ways. As damages, Jay sought the difference between the fair value and the fair market value of his Link Snacks shares (hereinafter, the fair value claim). Jay later amended his complaint to assert additional claims against Jack, Troy, and Hermeier—both on his own behalf and on behalf of Link Global—alleging that they had acted to devalue Link Global’s most profitable subsidiary, Jack Link’s Canada Company (Link Canada), in order to decrease the value of Jay’s 50% share of Link Global (hereinafter, the corporate misappropriation claims).

Applying the doctrine of claim preclusion, the circuit court concluded Jay’s fair value claim was barred by the final judgment in the 2005 litigation. The court further concluded that Jay lacked standing to bring the corporate misappropriation claims on his own behalf, and that any derivative claim should have been brought on behalf of Link Canada, rather than Link Global. Jay now appeals, arguing the court erred by dismissing his fair value and corporate misappropriation claims. We agree with Jay that the court erred by dismissing his fair value claim because the exception to claim preclusion found in § 26(1)(c) of the Restatement (Second) of Judgments is applicable here, and Jay’s fair value claim is not barred by the applicable statute of limitations as argued by Jack, Troy, and Hermeier. We conclude, however, that the court properly dismissed Jay’s corporate misappropriation claims. We therefore affirm in part, reverse in part, and remand for further proceedings on Jay’s fair value claim.

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Derek A Hawkins is trademark corporate counsel for Harley-Davidson. Hawkins oversees the prosecution and maintenance of the Harley-Davidson’s international trademark portfolio in emerging markets.

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