In Samsung Electronics America v. Chung, Samsung Electronics America, Inc. (“Samsung”) filed suit against All Pro Distributing, Inc. (“All Pro”) and certain former employees alleging claims for breach of fiduciary duty and aiding and abetting breach of fiduciary duty related to an alleged scheme involving the distribution of service parts for Samsung devices. No. 3:15-CV-4108-D, 2017 U.S. Dist. LEXIS 21700 (N.D. Tex. February 16, 2017). All Pro moved under Federal Rule of Civil Procedure 12(b)(6) to dismiss Samsung’s complaint for failure to state a claim.

The court first addressed the breach of fiduciary duty claim. Samsung asserted an informal fiduciary relationship existed because the two companies had a long standing business relationship of trust and confidence that went beyond any specific contracts. The court noted that an informal fiduciary relationship “may arise from a variety of relationships where the parties are ‘under a duty to act for or give advice for the benefit of another upon matters within the scope of their relation.’” Id. (citing ARA Auto. Grp. v. Cent. Garage, Inc., 124 F.3d 720, 723 (5th Cir. 1997)). “The existence of a fiduciary relationship, outside of formal relationships that automatically give rise to fiduciary duties, is usually a fact intensive inquiry.” Id. “Under Texas law, ‘a fiduciary duty will not be lightly created’ since ‘it imposes extraordinary duties’ and requires the fiduciary to ‘put the interests of the beneficiary ahead of its own if the need arises.’” Id. Samsung cited ARA for the proposition that early Texas cases recognized an informal fiduciary duty existed where parties “were looking to profit from a shared risk, e.g., an oil and gas well, or the sale of a particular property and not where the parties’ positions, harmonized for purposes of self-interest, were yet naturally antagonistic.” Id. The court, however, stated that ARA also noted that “[n]o Texas [or federal] case cited by [plaintiff] or uncovered in our research has affirmed a fiduciary obligation in the context of a . . . manufacturer-distributor relationship, or other transactional setting involving experienced managers . . . . We decline to be the first.” Id. The court was similarly unaware of any authority that would support Samsung’s claim and concluded that Samsung had failed to plead a plausible claim for breach of fiduciary duties.

The court then moved to the aiding and abetting breach of fiduciary duty claim. The court held: “It is settled as the law of this State that where a third party knowingly participates in the breach of duty of a fiduciary, such third party becomes a joint tortfeasor with the fiduciary and is liable as such.” Id. (citing Kinzbach Tool Co. v. Corbett-Wallace Corp., 160 S.W.2d 509, 514 (Tex. 1942)). “For Samsung to state a claim for aiding and abetting breach of fiduciary duties, it must plead facts that enable the court to draw the reasonable inference that there was “(1) the existence of a fiduciary relationship; (2) that the third party knew of the fiduciary relationship; and (3) that the third party was aware that it was participating in the breach of that fiduciary relationship.” Id. (citing Meadows v. Hartford Life Ins. Co., 492 F.3d 634, 639 (5th Cir. 2007)).  Samsung alleged (1) that the employee defendants owed them fiduciary duties; (2) that All Pro knew the employees owed Samsung fiduciary duties; and (3) that All Pro knowingly participated in the employees’ breach by paying bribes to obtain discounted or free parts for Samsung devices. The court held that Samsung went beyond mere recital of the standard and alleged facts that, if true, enabled the court to draw the reasonable inference that All Pro is liable for the misconduct alleged. The court denied All Pro’s motion to dismiss this claim.

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Photo of David Fowler Johnson David Fowler Johnson

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David maintains an active trial and appellate practice and has consistently worked on financial institution litigation matters throughout his career. David is the primary author of the The Fiduciary Litigator blog, which reports on legal cases and issues impacting the fiduciary…

[email protected]

David maintains an active trial and appellate practice and has consistently worked on financial institution litigation matters throughout his career. David is the primary author of the The Fiduciary Litigator blog, which reports on legal cases and issues impacting the fiduciary field in Texas. Read More

David’s financial institution experience includes (but is not limited to): breach of contract, foreclosure litigation, lender liability, receivership and injunction remedies upon default, non-recourse and other real estate lending, class action, RICO actions, usury, various tort causes of action, breach of fiduciary duty claims, and preference and other related claims raised by receivers.

David also has experience in estate and trust disputes including will contests, mental competency issues, undue influence, trust modification/clarification, breach of fiduciary duty and related claims, and accountings. David’s recent trial experience includes:

  • Representing a bank in federal class action suit where trust beneficiaries challenged whether the bank was the authorized trustee of over 220 trusts;
  • Representing a bank in state court regarding claims that it mismanaged oil and gas assets;
  • Representing a bank who filed suit in probate court to modify three trusts to remove a charitable beneficiary that had substantially changed operations;
  • Represented an individual executor of an estate against claims raised by a beneficiary for breach of fiduciary duty and an accounting; and
  • Represented an individual trustee against claims raised by a beneficiary for breach of fiduciary duty, mental competence of the settlor, and undue influence.

David is one of twenty attorneys in the state (of the 84,000 licensed) that has the triple Board Certification in Civil Trial Law, Civil Appellate and Personal Injury Trial Law by the Texas Board of Legal Specialization.

Additionally, David is a member of the Civil Trial Law Commission of the Texas Board of Legal Specialization. This commission writes and grades the exam for new applicants for civil trial law certification.

David maintains an active appellate practice, which includes:

  • Appeals from final judgments after pre-trial orders such as summary judgments or after jury trials;
  • Interlocutory appeals dealing with temporary injunctions, arbitration, special appearances, sealing the record, and receiverships;
  • Original proceedings such as seeking and defending against mandamus relief; and
  • Seeking emergency relief staying trial court’s orders pending appeal or mandamus.

For example, David was the lead appellate lawyer in the Texas Supreme Court in In re Weekley Homes, LP, 295 S.W.3d 309 (Tex. 2009). The Court issued a ground-breaking opinion in favor of David’s client regarding the standards that a trial court should follow in ordering the production of computers in discovery.

David previously taught Appellate Advocacy at Texas Wesleyan University School of Law located in Fort Worth. David is licensed and has practiced in the U.S. Supreme Court; the Fifth, Seventh, and Eleventh Federal Circuits; the Federal District Courts for the Northern, Eastern, and Western Districts of Texas; the Texas Supreme Court and various Texas intermediate appellate courts. David also served as an adjunct professor at Baylor University Law School, where he taught products liability and portions of health law. He has authored many legal articles and spoken at numerous legal education courses on both trial and appellate issues. His articles have been cited as authority by the Texas Supreme Court (twice) and the Texas Courts of Appeals located in Waco, Texarkana, Beaumont, Tyler and Houston (Fourteenth District), and a federal district court in Pennsylvania. David’s articles also have been cited by McDonald and Carlson in their Texas Civil Practice treatise, William v. Dorsaneo in the Texas Litigation Guide, and various authors in the Baylor Law ReviewSt. Mary’s Law JournalSouth Texas Law Review and Tennessee Law Review.

Representative Experience

  • Civil Litigation and Appellate Law