Court allows CRST to sue Werner

CRST Van Expedited may proceed with its case against Werner Enterprises for hiring away CRST drivers that were bound by employment contracts, the U.S. Court of Appeals for the Ninth Circuit ruled recently.

The appeals court took no position, however, on whether CRST likely would succeed as a matter of law. Rather, a three-judge panel in March overturned a U.S. district court’s dismissal of CRST’s complaint, saying that the Cedar Rapids, Iowa-based carrier had adequately alleged a violation of the state’s Unfair Competition Law (UCL).

The case involves two drivers who had signed employment contracts with CRST Van Expedited under which they received about $3,600 in training benefits in exchange for a promise to remain at CRST for at least one year. About a month after the drivers signed the contracts, Werner contacted CRST for employment verification as required by federal regulation. CRST informed Werner by multiple letters that the drivers were bound by contract to continue working for CRST for the balance of the year, but Werner hired the drivers anyway.

The appeals court ruled that CRST had alleged all the elements required in a claim of intentional interference with contract – the existence of a valid contract, the defendant’s knowledge of that contract, the defendant’s intentional acts designed to induce a breach or disruption of the contractual relationship, an actual breach or disruption of the contractual relationship and resulting damage.

The principal issue for the appeals court was whether the contract provided for “at-will” employment of the drivers at the time they were induced to leave. If that had been the case, CRST would have had to allege an independently wrongful act by Werner. The appeals court ruled that CRST’s employment contract provides for employment of a specified term, during which the employer’s termination rights are limited. Therefore, the contract does not provide for at-will employment during the first year, the court said.

The appeals court decision sends the case back for litigation on the merits. CRST’s complaint against Werner is essentially the same as that CRST had lodged against J.B. Hunt. A federal court in Oklahoma City in February 2006 initially ruled in CRST’s favor, but the parties settled the dispute quietly last September.