Nebraska-based Wright Printing Company, its owner Mark Wright, and CEO Mardra Sikora collectively owe a subsidiary of promo/print supplier Ennis, Inc. (asi/52493) the vast majority of nearly $6 million following a Nebraska federal court judge’s Sept. 19 ruling.

Crabar/GBF, Inc., an Ennis subsidiary that produces business forms, sued Wright, Sikora and the company they helm on allegations that included theft of trade secrets and illegal interference with customer relationships.

In April 2023, a jury found in favor of Crabar/GBF, awarding the firm a total judgement of $5 million. However, the defendants didn’t think the ruling should stand, calling it a “wrongful decision.” Attorneys for the company, Wright, and Sikora subsequently filed to have the jury verdict reversed and a new trial granted.

This month, Federal Judge John M. Gerrard of the U.S. District Court for the District of Nebraska upheld the verdict – for the most part – and denied the request for a new trial.

“The evidence supports the jury’s finding that the defendants, clearly and convincingly, acted willfully and maliciously when they took information sold to Crabar to compete against it,” Gerrard wrote in a 39-page ruling. “The jury’s verdict in this case is not speculative. It was based on expert testimony and on figures provided to the jury.”

‘Deceitful and Unlawful, and Even Malicious’

Gerrard did reverse the jury’s award of $1 million in contract damages against Mark Wright because, according to Ennis, Crabar/GBF had not made a claim for those damages. Still, the judge observed “the jury determined that the manner in which Wright Printing reentered the folder business was deceitful and unlawful, and even malicious.”

Despite the contract damages award against Wright being vacated, the business owner, Sikora and Wright Printing Company owe nearly $6 million to Crabar/GBF. That includes $4 million in Gerrard’s amended judgement and more than $1.85 million the judge said was due in attorney fees.

The vast majority of the $4 million judgement is owed by Wright ($1.75 million), Sikora ($1.25 million) and Wright Printing Company ($1 million). Two individuals identified as Wright Printing employees owe a combined $10,350 for their roles in the misdoings as part of the judgement, court filings indicated.

Ennis said those same employees are also on the hook for $2,500 of the total $1.85 million in attorney fees owed; the rest is levied against Wright and Sikora.

“The court has considered that Wright and Sikora are primarily responsible for both the inception of this lawsuit and many of the hours spent preparing this case for trial,” Gerrard commented.

“In all the business acquisitions Ennis has made over the years, we have never had a situation where a seller has turned around and launched a competing business with the trade secrets sold to Ennis.” Keith Walters, Ennis, Inc.

The Particulars of the Case

According to Ennis, Crabar/GBF purchased Wright Printing Company’s Folder Express and Progress Publications folder business for $15 million in 2013.

However, alleged underhanded activities ensued – namely, that Wright Printing Company, Wright and Sikora used confidential customer lists, customer sales data and specifications regarding what was Crabar’s Folder Express (asi/54896) and Progress Publications custom line to launch competing folder brands Pocket Folders Fast and Bandfolder Press, according to Ennis.

Ultimately, Wright Printing Company duplicated all of the Folder Express and Progress Publications top-selling products, Ennis asserted. They then launched a direct-marketing campaign targeted at the top customers of Folder Express and Progress Publications that Mark Wright and Mardra Sikora culled from the confidential customer data that Wright Printing Company had sold to Crabar with a covenant never to use in the future, according to the allegations.

Regarding the activity, Gerrard observed: “According to the jury, collecting $15 million for a sale of a company, and then restarting that company with the information sold as part of that sale, violates a deep-held philosophy of justice: no take-backsies.”

Ennis, Inc., a Midlothian, TX-headquartered publicly traded company, routinely makes acquisitions as part of its growth efforts. Nothing like what occurred with Wright Printing had happened in the past, said Ennis CEO Keth Walters.

“In all the business acquisitions Ennis has made over the years, we have never had a situation where a seller has turned around and launched a competing business with the trade secrets sold to Ennis,” Walters stated. “Had Mark Wright and Mardra Sikora just honored the contract and accepted that they no longer could use the property that we bought for $15 million, everyone concerned would have been better off.”