The Cabela’s division of Bass Pro Shops is suing two Sidney, Nebraska, startup retail ventures run by former Cabela’s managers, alleging that they misappropriated company information and violated agreements not to compete after they were let go by Cabela’s last spring.
In a response, two of the managers, Matthew and Molly Highby, said in court papers that filing the lawsuit “reneges on (Cabela’s) professed ‘generosity’ to former employees by crushing their future livelihood, as well as the hopes of Sidney, Nebraska.”
In court responses, the two businesses, Highby Outdoors and NexGen Outfitters, denied Cabela’s allegations, saying that they didn’t misuse confidential information and that the noncompete agreements can’t be enforced in Nebraska and were negated by later agreements.
Cabela’s sued NexGen founders Ryan Wellman, Trent Santero, Mike Riddle and Jeremy Nesbitt in the Court of Chancery in Delaware, where the company is incorporated. The lawsuit against the Highbys, who are married, and Highby Outdoors is in U.S. District Court in Delaware.
The individuals couldn’t be reached immediately for comment, and their attorneys referred to documents filed in court. Matthew Highby’s father, Dennis Highby, was president of Cabela’s from 2003 through 2009 and served on its Board of Directors until Bass Pro acquired the company in late 2017.
In an email, Bass Pro said, “The issues in the litigation were vitally important to the lenders and investors for the acquisition of Cabela’s. These types of agreements were an essential consideration in order for Bass Pro Shops and its partners and lenders to justify the premium price paid to Cabela’s shareholders.
“As part of the acquisition, there are a number of individuals with similar agreements in place beyond those listed in the litigation and it is critical we take action to protect the interest of our team members, outfitters and co-investors.”
The lawsuits ask the courts to stop the former managers and companies from “unfairly” competing and from using what it said were trade secrets and confidential Cabela’s information for their businesses. The lawsuits ask the courts to assess damages to Cabela’s business and to require the managers to return severance payments and profits from stock they received from Cabela’s.
Cabela’s said the former managers signed “proprietary matters agreements” in exchange for stock options and awards, agreeing not to compete against Cabela’s for at least 18 months after leaving the company.
In response, NexGen and its founders said that Cabela’s had excluded them from some obligations under the agreements and that the agreements “violate the public policy of the State of Nebraska.” They denied using confidential Cabela’s information.
The Highbys said that they told Cabela’s managers well in advance of their planned retail venture and that their severance agreements superseded earlier agreements and did not prohibit them from starting a retail company.
NexGen said it had pledged to create new jobs with a payroll of at least $640,000 per year within a year as part of an agreement with the City of Sidney that allowed it to use property in an industrial part of town. The city also committed $500,000 to help with Highby Outdoors’ startup costs.
In a court filing, the Highbys said, “At its core, this case is about a large company belatedly deciding that a soon-to-be small business may become a threat in the future.”
Cabela’s employed more than 2,000 people at the time it was purchased by Bass Pro for $5 billion. Since then, many jobs or functions have shifted to Bass Pro’s headquarters in Springfield, Missouri, although Bass Pro has said it intends to keep at least 500 corporate jobs in Sidney.