Judge Enters Final Judgment against MRI
by Josh Long - September 4, 2013
OGDEN, Utah—A state judge last month entered a final judgment against Mineral Resources International Inc. (MRI) for nearly $1 million in a lawsuit the family-owned business filed against former managers.
MRI not only failed to convince the jury that its claims were meritorious, the defendants were found to have proven all four of their counterclaims against the company, which is owned by co-founder Gaye Anderson and other members of her family.
The final judgment included $850,000 in damages against MRI. The nutritional supplements manufacturer also was ordered to pay $148,687.50 in attorney's fees that the defendants incurred.
Donald Dalton, a Salt Lake City lawyer representing the defendants, said the most important aspect of the final judgment is an order that certain inventory and mining rights have returned to his client, Schenk Family Ltd. Partnership to the detriment of NorthShore Ltd. Partnership .
NorthShore, which is the Andersons' mineral harvesting operation on the Great Salt Lake, has characterized such a decision as "unconscionable," according to a legal filing from the defense.
The inventory and mining rights are said to be worth hundreds of thousands of dollars, the filing disclosed.
NorthShore harvests mineral brine from the Great Salt Lake. Its mining rights are subject to a 2002 commercial property lease through which NorthShore's ponds are located, Dalton said. In the 50-year agreement, Schenk Family leased 116 acres of property to NorthShore.
The ponds, Dalton asserted, are the "exclusive source of MRI's concentrated mineral brine." According to MRI's website, it takes more than 100 gallons of water from the Great Salt Lake to make one gallon of its mineral concentrate.
Dalton views the order as granting water rights to Schenk Family, he wrote last month in a letter to Kent Jones, a state engineer with the Utah Division of Water Rights.
"We think the [water] rights are valuable" because the State of Utah is not granting them anymore, Dalton told INSIDER.
In the jury trial, MRI sought to prove that two former managers (David Schenk and the late Mitch Shaw) breached non-compete agreements, stole trade secrets and interfered with contractual relations. Instead, the jury found in favor of the defendants, awarding them $850,000 in damages based on findings that MRI had breached a supply agreement, committed defamation, engaged in unfair competition and intentionally interfered with contractual or economic relations.
The final judgment also included $28,687.50 in attorney's fees awarded to Schenk Family (a defendant and third-party plaintiff) against NorthShore.
Dalton said he asked the jury for just $1 in damages for the breach of contract counterclaim.
"We never got into this thing to make any money," he said in a phone interview. "We got sued. We filed a counterclaim. We wanted them to leave us alone."
Dalton said MRI has filed post-trial motions including a so-called JNOV (judgment notwithstanding the verdict). (INSIDER could not immediately obtain copies of the filings from MRI). If the judge, Noel Hyde of the Second Judicial District Court, denies those motions, MRI is expected to appeal the decision where it is likely to be heard by the Utah Court of Appeals. While the Utah Supreme Court has discretion to turn down a request to review the case, the Utah Court of Appeals must do so provided the proper procedures are followed.
"We believe that the jury ruling, if allowed to stand, is a travesty of justice and a tragedy for the Anderson family and a loss for the natural products industry and consumers," MRI said earlier this year in a statement. "We cannot allow this ruling to stand uncontested."
Meanwhile, Dalton said he is prepared to take action to enforce the judgment. Often, funds are seized from a bank account in order to collect on a monetary judgment. But How Schenk Family would go about enforcing its mining rights on the Great Salt Lake is a more intriguing question, particularly if NorthShore refused to cede the ground.
"To get the inventory and mining rights, I'm going to have to take them, and the person who is going to have to do this is the … county sheriff pursuant to a writ of execution that has just been entered," said Dalton, who has been involved in a number of lawsuits against MRI. "This is where the rubber hits the road. A guy with a gun and a guy with a badge who says, 'hand it over.'"
Representatives of MRI did not immediately respond to requests for comment.
MRI had sought damages against the defendants in excess of $700,000. Its lawsuit had alleged breach of contract, breach of the covenant of good faith and fair dealing, misappropriation of trade secrets/unjust enrichment, violation of the federal Lanham Act and Utah Unfair Competition Act/Unfair Practices Act, intentional interference with economic relations and breach of fiduciary duties. The complaint also sought relief under Utah's Citizen Participation in Government Act.
The case (Case No. 070900119 CN) is Mineral Resources International Inc. vs. Salt Lake Minerals LLC, Minerals-4-Health LLC, Schenk Family Ltd. Partnership, David Schenk, Mitch Shaw, Leroy Schenk, Farley Quist and Country Lane Sales Inc.