Cabela's Sues Local Start-up Companies

Cabela's LLC has lodged a complaint against two groups of former employees alleging unfair competition and misappropriation of confidential information, according to court records.

A case filed by Cabela's on Aug. 16, lists Ryan Wellman, Trent Santero, Mike Riddle, Jeremy Nesbitt and NexGen Outfitters, LLC as plaintiffs in the case.

A similar case, filed August 8, is against Matt and Molly Highby and Highby Outdoors.

Both cases were filed in Delaware courts because jurisdiction of the companies involved are in that state, and agreements involved specify Delaware law holds jurisdiction.

Cabela's alleges the defendants were longtime employees of Cabela's with access to many of its customer and vendor lists and much of its employee information, business plans and other proprietary and confidential information. The court document says each defendant received "grants of numerous shares of valuable Cabela's stock in exchange for their agreement not to compete unfairly against Cabela's or solicit its customers, vendors, or employees for at least 18 months following their respective departures from the company, and to protect its confidential information."

According to the complaint, "in late 2017, the predecessor-by-conversion of Cabela's LLC, Cabela's Incorporated, was acquired by Bass Pro Group, LLC ("Bass Pro")." The complaint says that at the acquisition price of $61.50 per share, the stock grants the individual defendants received in exchange for their agreements not to compete unfairly against Cabela's would have collectively been worth millions of dollars.

The defendants in the NexGen case responded in an Answer to Verified Complaint on Sept. 19, 2018, acknowledge Cabela's action against them, and that they were longtime employees of Cabela's, and received grants of Cabela's stock in exchange for signing the Proprietary Matters Agreement (PMA). The defendants deny, according to court records, all other allegations. They further "are without knowledge as to the veracity of the allegations contained in Paragraph 3 of the verified complaint and, therefore deny the same." Paragraph 3 defines the PMA and proceeds the former employees now associated with NexGen Outfitters received.

The verified complaint was filed in the Court of Chancery of the State of Delaware. Cabela's LLC and NexGen Outfitters, LLC, are both filed as Delaware limited liability companies.

Cabela's alleges that while the founders of NexGen Outfitters were still employed by Cabela's, "they were laying plans to launch a competing enterprise in direct violation of their contractural and legal obligations to Cabela's. The allegation says NexGen Outfitters, LLC was formed as a Delaware limited liability company on March 27, 2018, claiming the company was formed "mere weeks after the individual defendants terminated their employment with Cabela's.

The founders of NexGen Outfitters admit to founding the company, and the agreement with the City of Sidney for land in the industrial park including an agreement to create 12 new jobs and a payment of $640,000 in one year, but deny all other allegations. They also admit using Cabela's issued computers to prepare to seek alternate employment or start a business after they were terminated from Cabela's, but deny allegations of using the company computers to research web domain names, accessing sensitive vendor folders on the Cabela's network and "communicating with one another about the potential purchase of a third party's 'systems and warehouse.'"

The attorneys for the founders of NexGen Outfitters say in court documents that the plaintiffs complaint fails, in whole or in part, to state a complaint upon which relief may be granted. The attorneys further say the claims are barred "on the grounds that Plaintiff excused the Defendants from certain obligations alleged to be in the PMA's." The attorneys further state the Plaintiff cannot establish it is irreparably harmed by the actions of the former employees and NexGen Outfitters. The defendants further say the PMA's have been superseded by subsequent agreements signed by the defendants. The defendants' attorneys also say the agreements sought to be enforced violate the public policy of the State of Nebraska, and that the Court does not have personal jurisdiction of the individual defendants.

Highby Outdoors was formed shortly after the couple separated from the company. The case against the Highbys and Highby Outdoors contains similar claims as to use of Cabela's information and computers, as well as the 18-month non-competition clause.

In their answer to the complaint, Highby Outdoors states that Cabela's actions and inactions expressed intent to waive Noncompetition, Nonsolicitation of Vendors and other clauses in PMAs. The answer states that on a number of occasions, including in a direct conversation between Matt Highby and his supervisor, Cabela's senior management told him and other soon-to-be-ex employees that the noncompetition obligations of the PMA were no longer in force.

As a result, numerous other employees left Cabela's to work for competitors expressley named in the noncompetition clauses of the PMA.

Other portions of the Highby answer outline other examples of previous knowledge by senior management of the Highby's intent and told them they could move forward with their plan.

The Highbys also deny other allegations made by the complaint, saying Cabela's has no proof for those charges.

At stake in the suits are not only the eventual jobs proposed by the companies (25 by Highby Outdoors, 12 by NexGen), but also a great deal personally for the individuals forming the companies.

In each case, Cabela's is asking for reimbursement for the amounts the individuals gained under the Cabela's stock-grant program, as well as the amounts received from severance agreements. Cabela's is also asking for damages, at this time unspecified, to compensate for all forms of loss of actual damages, lost goodwill, and other costs.