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Minnesota Supreme Court denies review of Cirrus co-founder's appeal

The Minnesota Supreme Court has declined to hear an appeal filed by Alan Klapmeier in a lawsuit against Cirrus Aviation, the Duluth-based company he co-founded and led for 25 years.

In a decision released Wednesday, the Supreme Court denied Klapmeier’s petition for further review of a state Court of Appeals decision. An appeals court panel earlier this year overturned a 2014 jury verdict awarding Klapmeier $10 million in lost profits and out-of-pocket expenses.

According to court documents, the suit stemmed from allegations that Cirrus violated a “non-disparagement” clause in a June 2011 settlement agreement reached after Klapmeier left the company.

“We are pleased with the ruling in Cirrus Aircraft’s favor at the Minnesota Court of Appeals, dismissing the case against Cirrus and the decision by the Minnesota Supreme Court not to further review the case,” said Curtis Landherr, general counsel for Cirrus. “More importantly, we are glad to have this matter behind us and look forward to the many exciting things happening in our business.”

Attempts to reach Alan Klapmeier for comment on Wednesday were unsuccessful.

Klapmeier and his brother, Dale Klapmeier, moved to Duluth from Wisconsin and founded Cirrus, choosing Duluth for the company's home base and primary manufacturing plant. Alan Klapmeier served as chairman from its inception in 1984 to 2009 as Cirrus became the leader in manufacturing new, single-engine general aviation planes.

Klapmeier was replaced as CEO in 2009; initially he retained his role as chairman of Cirrus' board of directors but several months later he relinquished that role, too. In 2010 he became chairman and CEO of a new firm called Kestrel Aircraft Co. Kestrel joined with New Mexico-based Eclipse Aerospace to form ONE Aviation Corp. earlier this year; Klapmeier is CEO of the new firm.

Klapmeier’s lawsuit, first filed in State District Court in Hennepin County, claimed that in July 2011 — a month after Klapmeier reached the settlement agreement with Cirrus — the company’s then-CEO Brent Wouters gave an interview to an aviation industry group that addressed Klapmeier’s departure.

According to court filings, Wouters told the interviewer that Cirrus had moved away from its founding stage and that during rapid growth from 2002-07 it took “a different kind of leadership, someone who understands how to deal with economic downturns and turnarounds in those kinds of circumstances as well as the growth mindset to grow the business internationally … and be ready to capitalize on new capital and take the product set to a much broader level.”

When asked if there was a place for Alan Klapmeier in Cirrus’ future, Wouters allegedly said, “We’re well beyond those days where I think his skills set (is) appropriate.”

The large EAA AirVenture airshow in Oshkosh, Wis., took place a few weeks later.

“Kestrel was an exhibitor at Oshkosh and (Klapmeier) hoped to meet with potential investors at the event to raise private equity for Kestrel,” according to an appeals court filing recounting the case. “(Klapmeier) was unsuccessful in raising private-equity funds and believed that it was caused by the interview.”

At a jury trial in March 2014, Klapmeier and his attorneys presented evidence they said showed that Wouters’ comments had impeded Kestrel’s efforts to obtain private financing, and calculations for how much Kestrel and Klapmeier had allegedly been harmed financially. An expert witness for Klapmeier said damages may have exceeded $40 million.

The jury awarded Klapmeier $10 million, and Cirrus appealed.

The three-judge appeals panel found in Cirrus’ favor in a 2-1 decision, taking issue in particular with the financial projections and calculations for Kestrel that had been presented at trial.

“We conclude that (Klapmeier’s) calculation of damages is too speculative to permit

recovery because it failed to demonstrate the amount of damages to a reasonable degree

of certainty,” the court wrote in its ruling overturning the $10 million the jury had awarded to Klapmeier.

In appealing the case to the state Supreme Court, Klapmeier’s attorneys wrote that the appeals court majority “tossed aside a $10 million verdict because it disagreed with the jury and the trial judge as to the weight and meaning of the evidence. … The court of appeals’ majority disregarded both the sanctity of the jury’s determination of contested evidence and the district court’s discretionary admission of expert testimony that was heavily tested through cross examination and conflicting experts. …

“The majority’s opinion … invites a flood of improper challenges to jury verdicts. The law should not be so dramatically altered.”

The Supreme Court denied the petition for further review without comment.

Andrew Krueger and Candace Renalls of the News Tribune contributed to this report.

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