author: BRIGHT, Circuit Judge. SHEPHERD, MURPHY, Circuit Judge,

text:
    QWEST COMMUNICATIONS CORPORATION, a Delaware corporation, Third Party Plaintiff-Appellant v. FREE CONFERENCING CORPORATION, a Nevada corporation, Third Party Defendant-Appellee.
    No. 15-2406
    United States Court of Appeals, Eighth Circuit.
    Submitted: June 16, 2016
    Filed: September 15, 2016
    Rehearing and Rehearing En Banc Denied October 31, 2016

      Counsel who presented argument on behalf of the appellant was Charles W. Steese, of Denver, CO. The following attorneys) appeared on the appellant brief; Thomas Blumeyer Weaver, of Saint Louis, MO, Sandra L. Potter, of Denver, CO.
    Counsel who presented argument on behalf of the appellee was Stephen Wald, of Boston, MA. The following attorney(s) appeared on the appellee brief; Scott R. Swier, of Avon, SD.
    Before MURPHY, BRIGHT, and SHEPHERD, Circuit Judges.

       Judge Murphy would grant the petition for rehearing en banc. Judge Gruender did not participate in the consideration or decision of this matter.

   BRIGHT, Circuit Judge.

Following a bench trial, the district court found third-party plaintiff-appellant Qwest Communications Corporation (Qwest) failed to prove its claims for intentional interference with a business relationship, unfair competition, and unjust enrichment against third-party defendant-appellee Free Conferencing Corporation (FC). Qwest appeals. We affirm the district court on the claims for intentional interference with a business relationship and unfair competition. We reverse and remand on the claim for unjust enrichment,

I. BACKGROUND

Qwest is a long-distance telephone service provider, referred to as an interex-change carrier (IXC). Sancom, Inc. (San-com), the original named plaintiff, is a local telephone service provider, referred to as a local exchange carrier (LEC), for the Mitchell, South Dakota, area.

When IXCs like Qwest transmit calls from one local area to a different’ local area, they pay fees to the LEC in each local area in order to compensate the LEC for delivering, or “terminating,” the call locally on the LEC’s infrastructure. These fees are typically paid on a per-minute basis, so the longer the call the more the IXC must pay the LEC.

Federal laws and regulations govern the contractual relationship between the IXC and the LEC. The Communications Act of 1934 requires the LEC to file with the Federal Communications Commission (FCC) its proposed charges for the IXC, and the FCC must approve this fee, called a tariff. 47 U.S.C. § 203(a). Unless specified in this tariff, the LEC may not otherwise charge the IXC a fee for terminating calls to local customers under its tariff rate. Id. at § 203(c). LECs may, however, receive some compensation from IXCs for calls they deliver to non-customers. Qwest Commc’ns Corp. v. Farmers & Merchants Mutual Telephone Co., 24 F.C.C. Rcd. 14801, 14812 n.96 (2009) (hereinafter Farmers II).

The terms of Sancom’s tariff authorized it to charge IXCs, including Qwest, more than three. cents per minute for calls it delivered to an “end user,” which the tariff defined as an individual or other entity “which subscribe[d] to the services” San-com offered. (Appellant’s Appendix pp. 532, 535, Sancom Tariff § 2.6 (defining an “end user” as “any customer of an interstate or foreign telecommunications service that is not a carrier” and a “customer” as an individual, company, or other entity “which subscribes to the services offered under this tariff’)). Therefore, if Sancom did not deliver a call to -an individual-or entity which subscribed to its services, ■ it could not charge IXCs under the terms of the tariff for terminating the call.

In 2004, FC, a company that provides conference calling services to its customers free of charge, hired Darin Rohead, operating as PowerHouse Communications, to find LECs that would be interested in contracting with FC to host its conference call bridges. Rohead identified Sancom and drafted a contract that the parties' later signed.

Under the terms of the contract, San-com agreed to host FC’s conference call bridges on its premises in Mitchell, South Dakota. FC guaranteed its conference call bridges would increase call traffic to San-com’s service area by a minimum number of minutes per month. In return, Sancom agreed to pay FC a “marketing fee” of 2.5 cents for each minute of call traffic that terminated at FC’s conference call bridges.

Although unwritten in the contract, FC knew Sancom would charge the IXCs under its tariff for each minute of call traffic it terminated at FC’s conference call bridges. The contract was therefore designed to take advantage of the tariff system: FC would increase the volume of call traffic- IXCs delivered to Sancom’s service area; Sancom would bill IXCs under its tariff for the increased traffic; and Sancom would pay FC a per-minute “marketing fee,” effectively splitting the revenues from the increased traffic. While FC knew this contract would take advantage of the tariff system, the district court found FC President David Erickson credible when he testified that he did not know the arrangement was unlawful, he did not intend to premise his business model on an unlawful source of revenue, and he would have taken any steps necessary to comply with the law.

FC’s call bridges heavily increased call traffic to Sancom’s service area. From March to April 2005, Sancom terminated roughly 3.7 million minutes of FC traffic. By the end of 2007, that number jumped to roughly 50 million minutes of FC traffic per month. In 2007 and the first half of 2008, FC traffic accounted for 98%. of San-com’s overall traffic. During this time period, Sancom terminated roughly 686 million minutes of FC traffic and only 14 million minutes of traffic for all other customers. The FC traffic never interfered with San-com’s service to the other customers.

Today, it is well-settled that an LEC cannot bill an IXC under its tariff for calls “terminated” at a conference call bridge when the conference calling company does not pay a fee for the LEC’s services. But when FC and Sancom first entered into their contract, this issue had not been litigated. The FCC first considered this issue in 2007. Qwest Commc’ns Corp. v. Farmers & Merchants Mutual Telephone Co., 22 F.C.C. Rcd. 17973 (2007) (hereinafter Farmers I). In Farmers I, the FCC held that a conference call company could qualify as an “end user” under the terms of an LEC’s tariff as long as it paid the LEC a subscription fee for its services, even if the LEC, in turn, paid the conference call company a marketing fee that exceeded the subscription fee. Id. at 17987-88. Therefore, even if the conference call company received a net payment from the LEC, it could still qualify as an “end user,” and the LEC could charge the IXC under its tariff for traffic that terminated at the conference call bridge. Id at 17988.

Following Farmers I, Qwest filed a motion to reconsider with the FCC, asking it to revisit its holding in light of newly discovered evidence that the conference call companies were not actually paying a subscription fee to the LECs. See Farmers II, 24 F.C.C. Rcd. at 14801. The FCC granted Qwest’s motion, and in November 2009 it held that an LEC could not charge an IXC under its tariff for calls delivered to a conference call bridge when the conference call company did not pay a fee to subscribe to the LEC’s services. Id. at 14812-13. The FCC, however, indicated in a footnote that the LEC was not “precluded from receiving any compensation at all for the services” it provided to the IXC. Id. at 14812 n.96.

II. PROCEDURAL BACKGROUND

Prior to Farmers I, Qwest stopped paying Sancom access charges, and on October 9, 2007, Sancom sued Qwest to recover the charges, advancing a handful of different legal theories. Qwest filed counterclaims against Sancom and also claims as a third-party plaintiff against FC for unfair competition, tortious interference with contract, civil conspiracy, and unjust enrichment.

After the FCC decided Farmers II, the district court referred three issues to the FCC: (1) whether Sancom violated its tariff by charging Qwest for calls that terminated at FC’s call bridges; (2) whether Sancom was entitled to some compensation from Qwest for these calls even if it could not bill Qwest under its tariff; and (3) if so, what rate Sancom could charge Qwest for those calls. The FCC found FC was not an “end user” because it did not subscribe to Sancom’s services, and therefore Sancom could not bill Qwest ünder its tariff for calls that terminated at FC’s bridge. The FCC reserved ruling on the remaining two issues. Qwest subsequently settled with Sancom on all claims for an undisclosed amount.

In May 2014, Qwest and FC proceeded to trial before the district court. Following the bench trial, the district court issued an order and entered judgment in favor of FC on all claims. Qwest filed a motion to vacate judgment, which the district court denied on June 5, 2015. Qwest timely appealed.

III. DISCUSSION

Qwest appeals the district court’s judgment on its claims of intentional interference with a business relationship, unfair competition (via FC’s inducement of regulatory violations), and unjust enrichment. “In reviewing a judgment after a bench trial, we review the district court’s factual findings and credibility determinations for clear error, and its legal conclusions de novo.” Affordable Cmtys. of Mo. v. Fed. Nat’l Mortgage Ass’n, 815 F.3d 1130, 1133 (8th Cir. 2016) (citing Fed. R.. Civ, P. 52(a)(6)). “We will overturn a finding of fact only if it is not supported by substantial evidence, it is based on an erroneous view- of the law, or we are left with a definite and firm conviction that an error has been made.” Id.

A. Intentional Interference with a Business Relationship

Qwest argues the district court erred when it entered judgment in favor of FC on its claim for intentional interference with a business relationship. Under South Dakota law, the plaintiff must prove five elements for a claim of intentional interference with a business relationship: “(1) [T]he existence of a valid business relationship or expectancy; (2) knowledge by the interferer of the relationship or expectancy; (3) an intentional and unjustified act of interference on the part of the interferer; (4) proof that the interference caused the harm sustained; and, (5) damages to the party whose relationship or expectancy was disrupted.” Selle v. Tozser, 786 N.W.2d 748, 753 (S.D. 2010) (alteration in original). The parties dispute only the third element: whether FC committed "an intentional and improper act of interference. ’

To determine when interference is improper, South Dakota courts weigh a handful of non-exhaustive factors, referred to as the Gruhlke factors: “(a) [T]he nature of the actor’s conduct, (b) the actor’s motive, (c) the interests. of the other with which the actor’s conduct interferes, (d) the interests sought to be advanced by the actor, (e) the social interests in protecting the freedom of action of the actor and the contractual interests of the other, (f) the proximity or remoteness of the actor’s conduct to the interference, and (g) the relations- between the parties.” Gruhlke v. Sioux Empire Fed. Credit Union, 756 N.W.2d 399, 408 (S.D. 2008). Motivation of personal gain generally is not enough to satisfy the improper interference requirement. Id. at 408 n.13.

The district court considered the Gruhlke factors and found Qwest did not meet its burden to prove FC’s interference was improper. It highlighted that FC President David Erickson credibly testified that he did not intend to cause San-eom' to breach its tariff; FC’s motivation to maximize its own profits was not improper; and FC’s interests were not inconsistent with the societal interests in the tariff regulatory system. Qwest Commc’ns Corp. v. Free Conferencing Corp., No. Civ. 07-4147, 2014 WL 5782543, at *10 (D.S.D. Nov. 6, 2014).

Qwest argues the district court erred when it found FC’s interference was not improper, because the FCC’s finding, on referral from the district court, that FC’s business model was “intentionally designed to take advantage” of Sancom’s tariff mandates a finding of impropriety. While this FCC finding relates to only some of the Gruhlke factors, Qwest argues that under South Dakota law and the Restatement (Second) of Torts, which South Dakota follows, it is unnecessary to weigh any other factors where case law has developed a “more or less crystalized rule,” (App. Br. p. 44 (“The court erred because no further analysis was necessary once the district court found FC’s business was premised on interjecting itself into Sancom’s tariff billing of Qwest, and thereby inducing a contract breach.”) (citing Restatement (Second) of Torts § 767 cmt. j (1979))). The “more or less crystalized rule” that FC violated, Qwest argues, is that a business model premised on inducing a party to breach its contract is tortious interference per se.

We have found no such per se rule under South Dakota law, let alone a rule so ingrained in South Dakota case law that it can be characterized as “more or less crystalized.” Rather, the South Dakota Supreme Court is clear: even when the defendant induces the third party to breach its contract, the court must examine whether the inducement is wrongful. See Lien v. Nw. Eng’g Co., 73 S.D. 84, 39 N.W.2d 483, 486 (1949) (“When one has knowledge of the contract rights of another, his wrongful, inducement of a breach thereof is a willful destruction of the property of another and cannot be justified on the theory, that it enhances and advances the business interests of the wrongdoer.”) (emphasis added). This inquiry turns on the particular facts of each case. Gruhlke, 756 N.W.2d at 408.

Under these circumstances, we agree with the district court that FC did not act with an improper purpose when it contracted with Sancom, because FC was simply attempting to take advantage of the uncertain regulatory scheme at the time. When FC entered into its contract with Sancom in 2005, it was unsettled whether its business model complied with the tariff system. FC had a legitimate argument that it could be considered an “end user,” and thus Sancom could bill Qwest under its tariff-for calls delivered to FC’s call bridges, because FC “paid” for Sancom’s services through a netting agreement: Sancom charged FC for subscribing to its services; FC charged Sancom for technical support and marketing; and the net result was that Sancom owed FC money. It was not until the FCC’s Farmers II decision in 2009 — after this lawsuit began — that it appeared that FC’s business model violated Sancom’s tariff. Significantly, the district court found credible Erickson’s testimony that he did not know FC’s business model violated the tariff and that he intended to comply with the tariff system.

FC’s business model was not based on inducing Sancom to breach its tariff. Instead, it was based on its reasonable, credible belief that it was taking advantage of the tariff system within the terms of the law. Under these circumstances, FC was not acting with an improper purpose, because it reasonably believed it was complying with the law as it existed at the time it contracted with Sancom. See Briesemeister v. Lehner, 295 Wis.2d 429, 720 N.W.2d 531, 543-44 (Ct. App. 2006) (noting defendant did not act with improper motive when it relied on advice of attorney, even if the attorney’s advice was incorrect), cited with approval in Selle, 786 N.W.2d at 753. FC’s innocent motive distinguishes this case from other cases where the South Dakota Supreme .Court found the interferes acted with an improper purpose. See, e.g., St. Onge Livestock Co., Ltd. v. Curtis, 650 N.W.2d 537, 542 (S.D. 2002) (finding issue of material fact on impropriety of interference where party disregarded express advice of counsel about legality of employment contract and recruited competitor’s manager).

Judge Murphy argues that the district court committed clear error when it held that- FC did not act with; improper purpose, based largely on the district court’s finding that Erickson was credible when he testified that he did not know FC’s business model violated - Sancom’s tariff and that he intended to comply with the law. First, Judge Murphy argues this credibility finding was internally inconsistent with the district court’s finding that FC’s business model was “specifically designed” to take advantage of the tariff. Second, Judge Murphy argues Erickson’s intent was irrelevant, because FC had actual knowledge it was interfering with San-com’s contract with Qwest.

This argument rests on the flawed premise that FC knew it was acting unlawfully. The FCC’s finding that FC designed its business model to take advantage of the tariff system does not compel the conclusion that FC knew it was acting unlawfully. There is nothing unlawful about a company acting to take advantage of a favorable regulatory scheme,. which FC believed it was doing. While Sancom’s billings to Qwest were later deemed “unlawful,” this conclusion was not apparent to FC at the time it contracted with San-com.. FC thought its.contract with Sancom fit withio Sancomis tariff. In hindsight, FC was wrong. But. at the time, it did not know it was wrong.

This difference is important, because tortious interference with a business relationship is an intentional tort, and therefore a defendant must knowingly interfere with the contract to be liable. Restatement (Second) of Torts § 766 cmt. j. (1979) (noting that element of intent may be satisfied where actor “knows that the interference is certain or substantially certain to occur as a result of his action”). Indeed, in each case Judge Murphy cites the defendant knew its actions would interfere with the plaintiffs business relationship at the time it engaged in the interference. See Lien, 39 N.W.2d at 489 (finding defendant had sufficient intent to interfere with a business relationship where it mined a third party’s land even though it had knowledge of plaintiffs contractual rights to the rock on the land); ANR W. Coal Dev. Co. v. Basin Elec. Power Co-op., 276 F.3d 957, 972-73 (8th Cir. 2002) (finding actor acted with sufficient intent for claim of tortious interference where it had knowledge that its accounting advice would undercut the defendant’s, contractual right to receive royalties). By contrast, FC did not know that its business model would cause San-com to breach its contract. It simply believed it was taking advantage of the regulatory system. Therefore, FC did not act with an improper motive.

We affirm the district court’s judgment that Qwest failed to prove FC acted with an improper purpose.

B. Unfair Competition

Qwest next argues the district court erred when it predicted South Dakota would not recognize FC committed a tort of unfair competition when it induced Sancom to breach its tariff. When a state’s highest court has not spoken on an issue, a federal court must predict what the state court would do if it were called upon to decide the issue. See Nw. Mut. Life Ins. Co. v. Weiher, 809 F.3d 394, 397 (8th Cir. 2015).

Under South Dakota law, the tort of unfair competition itself does not have specific elements, but rather it describes a general category of torts which courts recognize to protect commercial interests. Setliff v. Akins, 616 N.W.2d 878, 887-88 (S.D. 2000). Therefore, to prove the defendant committed the tort of unfair competition, the plaintiff must identify an underlying tortious act the defendant committed. Id.

To identify an underlying tortious act that FC committed, Qwest points to the Restatement (Third) of Unfair Competition, which provides a remedy in tort for harm that results from the “acts or practices of the actor determined to be actionable as an unfair method of competition, taking into account the nature of the conduct and its likely effect on both the person seeking relief and the public.” Restatement (Third) of Unfair Competition § 1(a)(3) (1995). Qwest argues FC’s business model was based on tortiously inducing regulatory violations, which falls under this section of the Restatement as an act or practice that South Dakota would determine to be actionable as an unfair method of competition.

We disagree with Qwest that South Dakota would recognize a new tort under these circumstances, because an essential component for a claim of unfair competition under South Dakota law is lacking: direct competition. South Dakota recognizes the tort of unfair competition when one company gains an upper hand on its competitor due to an unfair practice. In Raven Industries, Inc. v. Lee, for example, the South Dakota Supreme Court found the defendant committed the tort of unfair competition when it gained a “thirteen-year head start in manufacturing” after it took its competitor’s trade secret. 783 N.W.2d 844, 851 (S.D. 2010). Likewise, in Setliff, the court found a triable issue on whether an employee committed the tort of unfair competition when he breached his duty of loyalty and began competing against his former employer. 616 N.W.2d at 887-88. And cases from other jurisdictions on which Qwest relies also involve unfair competition between direct competitors. See ID Sec. Sys. Canada, Inc. v. Checkpoint Sys., Inc., 249 F.Supp.2d 622, 688-89 (E.D. Pa. 2003) (finding unfair competition where competitor tortiously interfered with contract and gained advantage over direct competitor); N.M. Oncology & Hematology Consultants, Ltd. v. Presbyterian Healthcare Servs., 54 F.Supp.3d 1189, 1233-37 (D.N.M. 2014) (denying defendant’s motion to dismiss- claim of unfair competition where hospital used unfair means to drive competitor out of market).

In this case, FC was not a direct competitor of Qwest and it did not use any unfair methods to gain an advantage over Qwest. We therefore predict the South Dakota Supreme Court would not recognize a tort of unfair competition under these circumstances, and we find the district court properly rejected this new tort.

C. Unjust Enrichment

Finally, Qwest argues the district court erred when it found FC was not unjustly enriched. Unjust enrichment is an equitable remedy, Dowling Family P’ship v. Midland Farms, 865 N.W.2d 854, 860 (S.D. 2015), and we review a district court’s decision to deny an equitable remedy for abuse of discretion. Olivares v. Brentwood Indus., 822 F.3d 426, 429 (8th Cir. 2016). A district court abuses its discretion if it fails to consider a relevant factor that should have been given significant weight, if it considers an improper or irrelevant factor, or if it “commits a clear error of judgment in the course of weighing proper factors.” Aaron v. Target Corp., 357 F.3d 768, 774 (8th Cir. 2004).

To establish a claim for unjust enrichment, the plaintiff must prove (1) it conferred a benefit upon another; (2) the other accepted or acquiesced in that benefit; and (3) it would be inequitable to allow the other to retain that benefit without paying. Dowling Family P’ship, 865 N.W.2d at 862. “[T]he fact that a benefit is retained, enjoyed, and profitably exploited by the recipient, all without compensation, does not necessarily mean that the recipient has been unjustly enriched.” Restatement (Third) of Restitution and Unjust Enrichment § 2 cmt. b (2011) (cited with approval in Johnson v. Larson, 779 N.W.2d 412, 416 (S.D. 2010)). Rather, the beneficiary must obtain the benefit “in a manner that the law regards as unjustified.” Id. “[T]he relevant inquiry is whether the circumstances are such that equitably the beneficiary should restore to the benefactor- the benefit or its value.” Hofeldt v. Mehling, 658 N.W.2d 783, 788 (S.D. 2003).

The district court found Qwest did not prove it was entitled to an equitable remedy for unjust enrichment because it would not be inequitable to allow FC to retain the benefit it received. Qwest Commc’ns Corp., 2014 WL 5782543, at *17. The district court noted that FC did not gain any benefit illegally or inequitably — it merely “took advantage of a loophole until the loophole closed.” Id. The district court also noted that FC provided legitimate services in exchange for its payments from Sancom. Id. Finally, the district court found it would not be equitable to allow Qwest to recover money from FC when it already recovered money in its settlement with Sancom. Id.

At this stage, this ruling must be vacated. Here the district court relied on two irrelevant factors. First, the district court incorrectly found FC’s conduct was “neither illegal nor inequitable” because it was simply taking advantage of a loophole until the loophole closed. Id. The phrase “loophole” implies that the Sancom-FC contract was legal prior to the FCC’s decision in Farmers II. But that is not the case. In Farmers II, the FCC held that LECs violated the Communications Act by billing IXCs for calls that terminated at conference call bridges when the conference calling company did not subscribe to the LEC’s services. Farmers II, 24 F.C.C. Red. at 14813. This decision was not merely prospective (that LECs could no longer bill IXCs for this traffic) but retrospective as well (that LECs never could have billed IXCs for this-traffic). Since these billing practices were never legal, no loophole ever existed.

As such, FC was not exploiting a loophole, but rather taking advantage of legal uncertainty. In other words, while FC did not intend to cause Sancom to breach its tariff, it did, in part, cause San-com to breach its tariff. This distinction is crucial, because unjust enrichment is appropriate where the beneficiary gains a benefit inequitably, even if the beneficiary does not intend to deprive the benefactor of the benefit. See Johnson, 779 N.W.2d at 417-18 (finding unjust enrichment appropriate even where defendant was not a wrongdoer and had “no intent to deprive” the plaintiff of his benefit). Thus, the fact that FC did not know it was inducing a tariff violation is not a defense to Qwest’s claim for unjust enrichment. And even though FC was not itself acting illegally, its conduct might be characterized as inequitable because it retained a benefit based on Sancom’s tariff violation, which it partly caused. By finding FC did not act illegally or inequitably because it took advantage of a “loophole,” the district court may have relied on an improper factor for its denial of relief.

Second, the district court improperly considered Sancom’s settlement payments to Qwest when it found FC was not unjustly enriched. South Dakota measures damages for unjust enrichment based on the amount the beneficiary received unjustly, not the amount the benefactor lost. See Johnson, 779 N.W.2d at 418 (“Unjust enrichment ... allows an award of restitution for the value of the benefit unjustly received, rather than the value of the services provided.”). Since Sancom’s payments to Qwest have no effect on the amount by which FC was enriched, this factor is legally irrelevant to Qwest’s claim for unjust enrichment. Rather, the focus should have been the amount of money FC inequitably received, not the amount of money Qwest has already recovered from Sancom. By denying Qwest’s claim for unjust enrichment due, in part, to the amount of damages Sancom already paid Qwest, the district court may have given undue weight to another legally irrelevant factor.

Thus, we reverse and remand to the district court for reconsideration of whether FC was unjustly enriched. We leave the merits of Qwest’s claim for unjust enrichment to the district court based on the full record.

IV. CONCLUSION

For the foregoing reasons, we conclude the district court properly entered its rulings in favor of FC on Qwest’s claims for intentional interference with a business relationship and unfair competition. However, the district court failed to consider all important factors undergirding the unjust enrichment claim. We therefore vacate the district court’s order on the claim for unjust enrichment and remand to the district court for reconsideration of whether FC was unjustly enriched.

It is so ordered.

SHEPHERD,

concurring in part and dissenting in part.

I concur in the court’s decision to affirm the district court in denying Qwest’s claims for intentional interference with a business relationship and unfair competition. However, I would also affirm the district court’s denial of Qwest’s unjust enrichment claim.

“ ‘In reviewing a judgment after a bench trial, this court reviews the court’s factual findings for clear error and its legal conclusions de novo.’” Tussey v. ABB, Inc., 746 F.3d 327, 333 (8th Cir. 2014) (quoting Outdoor Cent. Inc. v. GreatLodge.com, Inc., 688 F.3d 938, 941 (8th Cir. 2012)). The majority, finds that the district court erred in denying Qwest’s unjust enrichment claim against FC because FC’s conduct was neither illegal or inequitable. The court finds that the Sancom-FC contract was never legal, because the FCC decision in Farmers II was retrospective as well as prospective, i.e. that LEC’s could never bill IXCs for bridged conference calls. This misses the point. It is undisputed that two separate and distinct contractual relationships existed under the facts of this case. First, Qwest had a contractual relationship with Sancom governed by federal laws and regulations. Charges by Sancom to Qwest are set forth in a tariff which Sancom filed with the FCC and the South Dakota Public Utilities Commission, Money was paid by Qwest to Sancom based upon minutes of use attributable to qualifying “end users” under the tariffs. Second, Sancom and FC entered into a contract under whieh San-com agreed to provide FC with a location for a conference call bridge and FC agreed to provide a minimum number of minutes to the bridge in exchange for a marketing fee. Money was paid by Sancom to FC as a per minute marketing fee for call traffic to FC’s conference call bridge.

FC was not a party to a contract between Sancom and Qwest and did' not participate in the billing relationship between those entities. Nor was FC a party to the FCC proceedings. In Farmers II the FCC, based upon newly presented evidence, ruled that conference call customers were not end users or customers under the LEC’s tariff and that IXCs such as Qwest were not liable for termination charges with respect to that traffic. However, the FCC exercised no jurisdiction over FC and the written decision does not criticize the motives of FC in entering into the contract with Sancom much less invalidate the contract or opine that it is unenforceable. In this action, the district court found that “FC had no obligations under any tariff because it is not a carrier,” “FC was under no legal obligation to ensure that Sancom complied with its tariff,” and, “significantly, that FC was not the actor who violated Sancom’s tariffs, and therefore FC did not engage in conduct that was actionable under a federal or state statute.” Indeed, the majority accurately concludes: “There is nothing unlawful about a company acting to take advantage of a favorable regulatory scheme — (Supra p. 897.)

Not a party to an illegal agreement and having no legal obligation to ensure that Sancom complied with its tariff, FC can not be said to have received a benefit “ ‘from the plaintiff which would be inequitable to retain without paying for its value’” an essential element of an unjust enrichment action. Apache Corp. v. MDU Res. Grp, Inc., 603 N.W.2d 891, 895 (N.D. 1999) (quoting Zuger v. North Dakota Ins. Guar. Ass’n, 494 N.W.2d 135, 138 (N.D. 1992)). The district court’s findings are amply supported by the record and are consistent with the contracts between the parties and the order of the FCC. The decision of the district court to decline this equitable remedy was not an abuse of discretion. Entergy Arkansas, Inc. v. Nebraska 358 F.3d 528, 554 (8th Cir. 2004) (“We review a decision not to impose a particular equitable remedy for an abuse of discretion.”).

I would affirm the district court’s judgment in favor of FC on Qwest’s unjust enrichment claim.

MURPHY, Circuit Judge,

dissenting.

Free Conferencing and Sancom created a scheme by which Free Conferencing generated telephone traffic on Qwest’s network, and Sancom then billed Qwest under its FCC approved tariff, and Free Conferencing received part of Sancom’s proceeds. On referral the FCC found that Sancom was not entitled to bill Qwest because the Free Conferencing/Sancom arrangement violated federal, law. The district court found that Free Conferencing’s contract with Sancom was “intentionally designed” to take advantage of Qwest’s FCC tariff. The majority nonetheless concludes that Free Conferencing is not liable to Qwest for interfering with the tariff because of its own “innoeent motive.” That conclusion is contrary to South Dakota law, and its premise conflicts with the facts as found by the FCC. Because Qwest is entitled to recover from Free Conferencing on its claims for tortious interference and unjust enrichment, I respectfully dissent.

I.

In South Dakota, the elements of tor-tious interference with a business relationship are:

1. The existence of a valid business relationship or expectancy;
2. knowledge by the interferer of the relationship or expectancy;
3. an intentional and unjustified act of interference on the part of the interferer;
4. proof that the interference caused the harm sustained; and,'
5. damages to the party whose relationship or expectancy was disrupted.

Selle v. Tozser, 786 N.W.2d 748, 753 (S.D. 2010). Based on the record here the district court found that the tariff “controlled the relationship” between Sancom and Qwest, that Free Conferencing had knowledge of that relationship, and that it had knowledge of Sancom’s obligations under the tariff. The question is whether Free Conferencing committed an “intentional and unjustified act of interference” with that relationship.

The findings and conclusions made by the FCC in this case should be given significant weight. See United States v. Great N. Ry. Co., 337 F.2d 243, 248 (8th Cir. 1964); MCI Telecomms. Corp. v. Teleconcepts, Inc., 71 F.3d 1086, 1103 (3d Cir. 1995); see also Access Telecomms. v. Sw. Bell Tel. Co., 137 F.3d 605, 608 (8th Cir. 1998) (courts apply the doctrine of primary jurisdiction “to obtain the benefit of an agency’s expertise and experience”). The FCC found that Sancom “was not entitled to charge Qwest ... under the Tariff’ for Free Conferencing traffic and concluded that its charges to Qwest were unlawful. In re Qwest Commc’ns Co. v. Sancom, Inc. (Sancom), 28 F.C.C.R. 1982, 1994 (2013). The district court found that Free Conferencing’s agent Darin Rohead drafted a contract which depended on Sancom violating its tariff obligations with Qwest and making illegal billings to Qwest. This interfered with Qwest’s rights under the tariff.

Free Conferencing’s actions were intentional. The FCC found that the contract between Free Conferencing and Sancom, which Rohead drafted, appeared to be “purposefully structured” to avoid the tariff, Sancom, 28 F.C.C.R. at 1993, and the district court found that the contract was “intentionally” and “specifically designed to take advantage of the tariff relationship.”

Free Conferencing also had no justification for inducing violations of federal law. Free Conferencing knew about the tariff and knew that the consequence of its contract was that Sancom would bill Qwest in a way that violated that tariff. The district court specifically found that Free Conferencing “knew that [its] profit would come at the expense of’ Qwest because the latter was “bound to pay a high tariff rate” to Sancom and Free Conferencing’s business was “intentionally designed to take advantage of that arrangement.” These facts are sufficient to make out a claim for unjustified interference under South Dakota law. “When one has knowledge of the contract rights of another, his wrongful inducement of a breach thereof is a willful destruction of the property.” Lien v. Nw. Eng’g Co., 73 S.D. 84, 39 N.W.2d 483, 486 (1949).

The majority concludes that Free Conferencing “did not act with an improper purpose,” relying heavily on the testimony of its president, David Erickson claiming that he had intended to act lawfully. Although we give significant deference to a trial court’s credibility determinations, we may find clear error when a witness story is “so internally inconsistent or implausible on its face that a reasonable factfinder would not credit it,” or when a court’s finding is internally inconsistent with its other findings. Wilson v. Lambert, 789 F.2d 656, 658 (8th Cir. 1986) (quoting Anderson v. City of Bessemer City, 470 U.S. 564, 575, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985)). The district court’s finding that Free Conferencing did not intend to violate the law was flawed for both reasons.

Erickson’s testimony directly conflicts with the FCC’s finding that the contract was purposefully structured to avoid the tariff relationship. See Sancom, 28 F.C.C.R. at 1993. The FCC examined the contract and found that it “bear[s] no indications that [it] pertain[s] in any way to the services offered under the Tariff’ and that it contains provisions which are different from and “inconsistent with” the tariff. The district court found that Free Conferencing “knew about the tariff, its rates, and the obligations of the parties bound by the tariffs.” It strains credulity to believe that Free Conferencing intended to act lawfully when it entered into a contract under which it profited from Sancom’s unlawful billings to Qwest. Moreover, Erickson’s testimony, that he “did not have any motivation to operate his business outside the tariffs” and took steps to comply with the tariff, conflicts with the district court’s own finding that the contract was “specifically designed” to take advantage of the tariff. The district court’s finding that Free Conferencing had- no improper motivation is clearly erroneous because it is internally inconsistent with the court’s other findings and contradicts the FCC’s factual findings.

Regardless, Erickson’s subjective view about the propriety of his company’s actions is hot relevant to the legal-analysis in this case. Under the Restatement approach to tortious interference which South Dakota follows, “even if an actor has a legitimate motive or purpose for its actions, if- the actor has knowledge of the consequences-of its acts, then it may be hable for tortious interference with contract.” ANR W. Coal Dev. Co. v. Basin Elec. Power Co-op., 276 F.3d 957, 972 (8th Cir. 2002) (analyzing North Dakota law and section 766 of the Restatement (Second) of Torts); see Gruhlke v. Sioux Empire Fed. Credit Union, Inc., 756 N.W.2d 399, 406 (S.D. 2008) (noting that South Dakota follows section 766). In South Dakota, when the defendant “has knowledge of the' contract rights of another, his wrongful inducement of a breach thereof is a willful destruction of the property of another and cannot be justified on the theory that it enhances and advances the business interests of the wrongdoer.” Lien, 39 N.W.2d at 486 (quoting Sorenson v. Chevrolet Motor Co., 171 Minn. 260, 214 N.W. 754, 756 (1927)). The majority cites no South Dakota case for the proposition that an “innocent motive” provides a defense to a claim of tortious interference if the defendant had actual knowledge that it was interfering with a contract. See id. (defendant liable “even though he promoted his legitimate interests”). Because Free Conferencing had “the requisite knowledge of the inevitable effect” of its own contract with Sancom, it is liable to Qwest. ANR W. Coal Dev. Co., 276 F.3d at 972.

Free Conferencing and Sancom were not “simply attempting to take advantage of the uncertain regulatory scheme at the time” as the majority claims. Rather, their contract involved deliberate avoidance of federal law. Free Conferencing knew about the obligations of the tariff when it created a scheme by which Sancom would pay it for generating calls which Sancom would charge to Qwest even though the calls were not covered by the tariff. The FCC- found that “under the agreement, Sancom would pay Free Conferencing a per-minute fee when [Qwest] paid San-com’s related switched access bills.” Sancom, 28 F.C.C.R. at 1984. In other words, if Sancom had not breached its tariff and billed Qwest, Free: Conferencing would not have gotten paid. This factual record shows that, contrary to the majority’s conclusion, the Free Conferencing business model was in fact “based on inducing San-com to breach its tariff.”’

The contract Free Conferencing drafted was premised on a business model that was unlawful at the time. The majority’s “legal uncertainty” rationale is belied by its own analysis of the applicable law at the time the contract was drafted. The majority correctly states that the FCC’s Farmers II decision was “not merely prospective .., but retrospective as well,” and that under the law as determined by Farmers II “[Sancom] never could have billed [Qwest] for this traffic” because San-com’s billing practices “were never legal.” Creating a business model which violates federal law is not “taking advantage of legal uncertainty” if the government has not yet filed an enforcement action against a novel scheme. It is simply unlawful.

II.

I agree that the district court abused its discretion by granting judgment to Free Conferencing on Qwest’s unjust enrichment claim. The basis for Free Conferencing’s profits under its' contract with Sancom was Qwest’s tariff payments to Sancom, Free Conferencing was aware of those payments because the district court found it had drafted the contract, knew about the tariff, and that the contract was designed to take advantage of the tariff. For Free Conferencing to retain its share of Qwest’s tariff payments would not be equitable because that money was obtained as part of a wilful, unlawful business practice.

The district court relied on the fact that Free Conferencing provided a service to its own customers, and that some of its customers were also Qwest customers. Whether or not Free Conferencing provided its own customers teleconferencing services is irrelevant, because it was providing those services so that it and Sancom could make money from Qwest. The fact that some Free Conferencing customers used Qwest’s long distance services is also irrelevant, because Sancom was not entitled to bill Qwest for any of the calls going to Free Conferencing. Qwest never received any benefit from Free Conferencing’s actions (which in fact cost it millions of dollars). Qwest is entitled to damages on its unjust enrichment claim.

III.

Because Qwest’s claims for tortious interference and unjust enrichment can provide it with adequate remedies, the district court correctly concluded that the South Dakota Supreme Court would not likely recognize the new tort of inducing regulatory violations under the circumstances of this case. See Garrett v. BankWest, Inc., 459 N.W.2d 833, 842-43 (S.D. 1990), The majority suggests South Dakota courts would never recognize this tort theory, but its conclusion is based on the erroneous premise that Free Conferencing “did not use any unfair methods to gain an advantage over Qwest.” On this record it, is clear that Free Conferencing’s purposeful abuse of the tariff system was unfair to Qwest.

IV.

Qwest is entitled to recover on its claims for tortious interference and unjust enrichment. I therefore respectfully dissent and would reverse and remand for a calculation of Qwest’s damages on these claims.

      . The district court also entered judgment in favor of FC on Qwest's claim for civil conspiracy, which Qwest does not appeal.

      . While Qwest was a patty to Farmers I and Fanners II, these cases are unrelated to the current case.

      . We apply South Dakota law to Qwest's claims in tort and in equity, as both parties agree. See Platte Valley Bank v. Tetra Fin. Grp., LLC, 682 F.3d 1078, 1082 (8th Cir. 2012).

      . We leave to the district court to decide whether Sancom's payments to Qwest may diminish Qwest’s recovery under any other legal theory.

      . Judge Shepherd argues FC cannot be said to have gained a benefit inequitably without paying for its value, and therefore it is not liable to Qwest under a theory of unjust enrichment. That matter goes to the merits, which we leave to the district court.


source: Caselaw Access Project

author: PER CURIAM. KELLY, Circuit Judge,

license: Public Domain

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Rashad A. WEARING, Defendant-Appellant.
    No. 15-2730
    United States Court of Appeals, Eighth Circuit.
    Submitted: April 11, 2016
    Filed: September 15, 2016

      Counsel who represented the appellant was Charles Daniel Hancock of Little Rock, AR.
    Counsel who represented the appellee was Chris Givens, AUSA, of Little Rock, AR.
    Before GRUENDER and KELLY, Circuit Judges, and ERICKSEN, District Judge.

      . The Honorable Joan N. Ericksen, United States District Judge for the District of Minnesota, sitting by designation.

   PER CURIAM.

Rashad Wearing, a federal prisoner at the Federal Correctional Institution in Forrest City, Arkansas (FCI-Forrest City), was indicted on one charge of being an inmate in possession of a prohibited object, in violation of 18 U.S.C. §§ 1791(a)(2) and (d)(1)(B). After his motions to dismiss were denied, Wearing conditionally pleaded guilty, reserving his right to appeal the denials. The district court sentenced him to six months’ imprisonment to run consecutively to the term of imprisonment he was already sery-ing. Having jurisdiction under 28 U.S.C. § 1291, we affirm.

I.

On April 24, 2013, while incarcerated at FCI-Forrest City, Wearing was found in possession of a five-inch plastic object with a handle wrapped in tape .and a sharpened, pointed tip (shank). Wearing told prison officials he obtained the shank to protect himself against other inmates. He was placed in administrative segregation that same day. Wearing was indicted on a charge of possession of a prohibited object while an inmate of a prison on April 2, 2014. He filed two motions to dismiss the indictment: one based on an alleged violation of his speedy trial rights and one based on alleged deficiencies in the indictment.

The district court held a pretrial eviden-tiary hearing on the two motions on March 15, 2015. At the hearing, Special Investigative Services Agent Sutton and Investigative Specialist Flint testified. Both testified that an inmate is placed in administrative segregation at FCI-Forrest City if the inmate does something that jeopardizes the security of the institution in order to protect the safety of prison employees and other inmates. Agent Sutton testified that any time an inmate is found with contraband, he is placed in administrative segregation.

Agent Flint testified that after an inmate is placed in administrative segregation, the inmate has a unit disciplinary committee hearing, usually within five days of the incident. Another hearing is held before a disciplinary hearing officer (DHO) to determine what sanctions to impose. Agent Flint further testified that he also refers cases involving contraband. to the United States Attorney’s Office for the Eastern District of Arkansas for a determination of whether the inmate should be criminally prosecuted. He referred Wearing’s case on May 8, 2013, and the United States Attorney’s Office accepted the referral that same day.

On March 20, 2015, the court issued an order denying the motion to dismiss the indictment based on the sufficiency of the indictment, concluding the indictment was sufficient to provide notice to the grand jury of what charge it was considering and to Wearing of what charge he faced. On April 21, 2015, the court denied the motion to dismiss based on speedy trial grounds. The district court ruled that placement in administrative segregation was not an arrest for purposes of the Speedy Trial Act and, utilizing the four-factor balancing test from Barker v. Wingo, 407 U.S. 514, 530, 92 S.Ct. 2182, 33 L.Ed.2d 101 (1972), that any delay had not violated Wearing’s constitutional right to a speedy trial.

II.

On appeal, Wearing renews his speedy trial arguments. Wearing first alleges the government violated his right to a speedy trial under the Speedy Trial Act, 18 U.S.C. §§3161-3174. Wearing contends the district court erred by not dismissing the indictment because the government failed to indict him within thirty days of his “arrest” — that is, when he was placed in administrative segregation' on April 24, 2013 for possessing a shank.Nee 18 U.S.C. § 3161(b) (“[A]ny information or indictment charging an individual with the commission of an offense shall be filed within thirty days from the date on which such individual was arrested or served with a summons in connection with such charges.”). Section 3162(a) of the Speedy Trial Act provides that “[i]f, in the case of any individual against whom a complaint is filed charging such individual with an offense, no indictment or information is filed within the time limit required by section 3161(b) ,.. such charge against that individual contained in such complaint shall be dismissed or otherwise dropped.”

In reviewing a district court’s denial of a motion to dismiss an indictment based on the Speedy Trial Act, we review the district court’s factual findings for clear error and its legal conclusions de novo. United States v. Herbst, 666 F.3d 504, 509 (8th Cir. 2012). “The [Speedy Trial Act] does not define ‘arrest’....” United States v. Piggie, 316 F.3d 789, 795 (8th Cir. 2003). However, we have previously construed the term “arrest” in § 3161(b) “as an arrest where the person is charged with an offense.” United States v. Jones, 676 F.2d 327, 331 (8th Cir. 1982); see also United States v. Peterson, 698 F.2d 921, 923 (8th Cir. 1982) (concluding “that the thirty-day arrest-to-indictment time limit does not commence until there is a pending criminal charge”). This is because § 3162(a)(1) does not provide a sanction “for delay in indictment unless a complaint has been filed.” Jones, 676 F.2d at 329; see also United States v. Abernathy, 688 F.2d 576, 578 n.2 (8th Cir. 1982) (noting that post-Jones, Abernathy’s detention would not be considered an “arrest” for purposes of triggering the thirty-day limitation of § 3161(b) because, although he was given his Miranda warnings and was not free tó leave, no complaint was issued). Because Wearing was not charged by complaint or otherwise, his placement in administrative segregation on April 24, 2013 was not an arrest for purposes of § 3161(b).

Wearing next asserts that the thirteen-month gap between when he was placed in administrative segregation on April 24, 2013 and his first trial setting date, May 27, 2014, violated his right to a speedy trial under the Sixth Amendment, and the indictment should therefore have been dismissed under Federal Rule of Criminal Procedure 48(b). The Sixth Amendment provides, “In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial...,” Relatedly, Rule 48(b)(3) provides that “[t]he court may dismiss an indictment, information, or complaint if unnecessary delay occurs in ... bringing a defendant to trial.” Like our review under the Speedy Trial Act, “[w]e review the district court’s findings of fact on whether a defendant’s [Sixth Amendment] right to a speedy trial was violated for clear error but review its legal conclusions de novo.” United States v. Aldaco, 477 F.3d 1008, 1016 (8th. Cir. 2007). Furthermore, we may affirm on any basis supported by the record. See United States v. Abadia, 949 F.2d 956, 958 n.12 (8th Cir. 1991) (“[W]e may affirm a judgment on any ground supported by the record even if not relied upon by the district court_”) (quotations omitted), cert. denied, 503 U.S. 949, 112 S.Ct. 1510, 117 L.Ed.2d 648 (1992). We review a district court’s denial of a motion to dismiss the indictment under Rule 48(b) for an abuse of discretion. United States v. Kitzman, 520 F.2d 1400, 1402 (8th Cir. 1975).

“[T]he Sixth Amendment right to a speedy trial attaches at the time of arrest or indictment, whichever comes first, and continues until the trial commences.” United States v. Sprouts, 282 F.3d 1037, 1042 (8th Cir. 2002). Wearing asserts his Sixth Amendment speedy trial rights attached when he was placed in administrative segregation. We disagree.

While we have not. previously addressed this issue, we conclude that administrative segregation — which prisons use for a variety of safety and disciplinary purposes — is not an arrest under the Sixth Amendment. The two are different, as administrative segregation is “in no way related to or dependent on prosecution by the federal government” and is instead “a method of disciplining dr investigating inmates who break prison regulations, of protecting certain inmates from members of the general population, and of providing a general cooling-down period for inmates involved in events that could disrupt the general population.” United States v. Duke, 527 F.2d 386, 390 (5th Cir. 1976). Here, Wearing was placed in administrative segregation on April 24, 2013 — the same day he was found in possession of a five-inch shank — for safety and disciplinary purposes^ Prison -officials referred Wearing’s case- to the U.S. Attorney’s Office fourteen days later, on May 8, 2013.

Furthermore, other circuits have uniformly concluded that being held in administrative segregation pending criminal charges is not an arrest for purposes of the Sixth Amendment. See United States v. Mills, 641 F.2d 785, 787 (9th Cir. 1981) (quoting United States v. Clardy, 540 F.2d 439, 441 (9th Cir. 1976)); accord United States v. Daniels, 698 F.2d 221, 223 n.1 (4th Cir. 1983); United States v. Blevins, 593 F.2d 646, 647 (5th Cir. 1979) (per curiam); United States v. Bambulas, 571 F.2d 525, 527 (10th Cir. 1978). These opinions-.are persuasive, and we follow their reasoning.

Because we conclude that Wearing was not arrested when placed into administrative segregation, his Sixth Amendment speedy trial rights had not yet attached and were therefore not violated. As a result, we likewise conclude the district court did- not abuse its discretion in refusing to dismiss Wearing’s indictment under Rule 48(b)(3). See United States v. Carlson, 697 F.2d 231, 235-36 (8th Cir. 1983) (holding that Sixth Amendment protection is activated only when a criminal prosecution has begun and, absent a Sixth Amendment violation, the court’s refusal to dismiss indictment under Rule 48(b) not an abuse of discretion).

Wearing also contends the district court erred in denying his motion to dismiss based on the insufficiency of the indictment. Specifically, Wearing contends the indictment was fatally deficient because it failed to allege an essential element of 18 U.S.C. § 1791(d)(4) — that the offense occurred in a federal prison — as required under Federal Rule of Criminal Procedure 7(c). The indictment in this case charged: “On or about April 24, 2013, in the Eastern District of Arkansas, ... [Wearing], being an inmate of a prison, did possess a prohibited object ... to wit: a five-inch plastic object with a handle wrapped with tape and a sharpened, pointed tip, in violation of Title 18, U.S.C. § 1791(a)(2) and (d)(1)(B).”

We review the sufficiency of an indictment de novo. United States v. Hance, 501 F.3d 900, 906 (8th Cir. 2007). The test for determining the sufficiency of an indictment is “whether it contains the elements of the offense intended to be charged,” lets the defendant know “what he must be prepared to meet,” and if “any other proceedings are taken against him for a similar offense ... the record shows with accuracy to what extent he may plead a former acquittal or conviction.” United States v. Debrow, 346 U.S. 374, 376, 74 S.Ct. 113, 98 L.Ed. 92 (1953). An indictment is ordinarily sufficient if it “tracks the statutory language.” United States v. Tebeau, 713 F.3d 955, 962 (8th Cir. 2013) (quoting United States v. Sewell, 513 F.3d 820, 821 (8th Cir. 2008)).

Section 1791(d)(4) defines “prison” as a “[f]ederal correctional, detention, or penal facility or any prison, institution, or facility in which persons are held in custody by direction of or pursuant to a contract or agreement with the Attorney General.” The district court denied the motion to dismiss the indictment for insufficiency because it found that the indictment was adequate to inform Wearing of the charge against him. As the district court noted, “The premise of the whole thing is that Mr. Wearing is in the Federal Bureau of Prisons facility at Forrest City. I just don’t see any defect there, and to the extent there is any defect, it’s at the margin and not dispositive.” We agree. The indictment provides notice of the date the offense occurred, notifies Wearing that the offense occurred in a prison, and specified the prohibited object Wearing was accused of possessing. “[I]n view of these limitations we cannot say that [Wearing] could have failed to realize exactly what conduct the trial concerned.” United States v. Huggans, 650 F.3d 1210, 1218 (8th Cir. 2011).

For the reasons set forth above, we affirm the district court’s denial of Wearing’s motions to dismiss.

KELLY, Circuit Judge,

concurring.

I concur in the court’s opinion with one exception: As to the Sixth Amendment claim, I concur in the result only. The district court did not reach the issue of whether, for purposes of the Sixth Amendment right to a speedy trial, Wearing was arrested when he was placed in administrative segregation, and the parties did not fully brief this issue on appeal. Instead, the district court assumed an arrest, weighed the appropriate factors under Barker v. Wingo, 407 U.S. 514, 530, 92 S.Ct. 2182, 33 L.Ed.2d 101 (1972), and concluded Wearing’s right to a speedy trial was not violated.' On this issue, I would affirm on the grounds relied on by the district court. I would leave for another day, in a case in which the issue is fully presented for our review, the question of whether being placed . in administrative segregation may under any circumstances qualify for an arrest for purposes of an accused’s right to a speedy trial pursuant to the Sixth Amendment.

      . The Honorable D. P. Marshall, Jr., United States District Judge for the Eastern District of Arkansas.

      . We note that other circuits that have addressed the issue of whether being placed in administrative segregation constitutes an arrest for purposes of § 3161(b) have concluded that it is not. See, e.g., United States v. Harris, 12 F.3d 735, 736 (7th Cir. 1994); United States v. Jackson, 781 F.2d 1114, 1115 (5th Cir. 1986) (per curiam).

      .Wearing's speedy trial rights did not attach until he was indicted, and Wearing does not assert the time between when he was indicted, April 2, 2014, and the date his trial first was set, May 27, 2014, violated the Sixth Amendment or Rule 48(b)(3).

      . Rule 7(c) requires an indictment to “be a plain, concise, and definite written statement of the essential facts constituting the offense charged.”

      . Wearing also seems to argue the district court abused its discretion in not dismissing the indictment because the government did not present the fact that the offense occurred in a federal prison to the grand jury. To the extent Wearing is raising this issue, it is not sufficiently developed in his opening brief, so we deem it waived. See Meyers v. Starke, 420 F.3d 738, 742-43 (8th Cir. 2005) ("To be reviewable, an issue must be presented in the brief with some specificity. Failure to do so can result in waiver.”).


author: SHEPHERD, Circuit Judge.

text:
    BAYER CROPSCIENCE, LLC; Bayer CropScience, Inc.; Bayer AG; Bayer CropScience, NV; Bayer Aventis Cropscience USA Holding, Now known as Starlink Logistics, Inc.; Bayer Corporation; Bayer CropScience Holding, SA; Bayer CropScience, SA; Eagle Lake Rice Dryer; Genetically Modified Rice Common Benefit Qualified Settlement Fund; Golf Rice Milling; Looper Reed & McGraw; Stoneville Pedigreed Seed Company; Texana Rice; Texana Rice Mill; Bayer CropScience, Inc.; Bayer CropScience Holding, Inc.; Bayer CropScience, AG, Plaintiffs v. STEARNS BANK NATIONAL ASSOCIATION, Defendant-Appellant Amegy Bank National Association, Defendant-Appellee
    No. 15-1967
    United States Court of Appeals, Eighth Circuit.
    Submitted: March 15, 2016
    Filed: September 20, 2016

      Counsel who presented argument on behalf of the appellant was Michael A. Campbell, of Saint Louis, MO. The following attorney also appeared on the appellant brief; Memario M. Carswell, of Saint Louis, MO.
    Counsel who presented argument on behalf of the appellee was David M. O’Dens, of Dallas, TX. The following attorneys also appeared on the appellee brief; Jason M. Brown, of Dallas, TX, and W. Jeffrey Mus-kopf, of Saint Louis, MO.
    Before WOLLMAN, BENTON, and SHEPHERD, Circuit Judges.
   SHEPHERD, Circuit Judge.

Bayer CropSeien'ce (“Bayer”) brought this interpleader action to determine its obligations with regards to a settlement reached with Texana Rice Mill and Texana Rice, Inc. (collectively, “Texana”). That settlement came about as a result of lawsuits that arose when Bayer introduced genetically modified rice into the United States commercial long-grain rice-supply. The parties in this appeal, Stearns Bank National Association (“Stearns Bank”) and Amegy Bank National Association (“Ame-gy Bank”) are both bank creditors of debt- or Texana. Texana settled its commercial tort claim against Bayer, and after disbursement of certain amounts, $933,697.90 remains. Stearns Bank and Amegy Bank claim priority oyer those funds. The district court found for Amegy Bank, and we reverse that decision and remand this matter to the district court for further consideration.

I.

In November 2006, Texana sued Bayer in Texas state court for several claims related to the contamination of the United States rice supply by Bayer’s genetically modified rice. Among the damages claimed, Texana alleged the contaminated rice damaged its property “including any uncontaminated rice it purchased, and its plant, equipment, and improvements.” The state court action was eventually removed to federal court and made part of an ongoing multi-district litigation..- Texana and Bayer reached a settlement for $2,137,500, and Bayer made payment into the . custody of the Clerk of Court for the United States District Court for the Eastern District of Missouri. After two uncontested disbursements, $933,697.90 remains.

Texana owes separate debts to Stearns Bank and Amegy Bank which total an amount in excess of the remaining settlement proceeds. Each bank argues that it has a superior priority interest in the proceeds. A timeline of events is helpful in understanding the parties’ arguments.

September 13, 2002 — -Stearns Bank made a $2.65 million loan to Texana. This loan was secured, in part, by a Commercial Security Agreement covering:

All Fixtures
All Chattel Paper, Equipment and General Intangibles (EXCLUDING INVENTORY AND ACCOUNTS RECEIVABLE)
[including] all the following, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever located:
(A) All accessions, attachments, accessories, tools, parts, supplies, replacements of and additions to any of the collateral described herein, whether added now or later.
(B) All products and produce of any of the property described in this Collateral section.
(C) All accounts, general intangibles, instruments, rents, monies, payments, and all other rights, arising out of a sale, lease, or other disposition of any of the property described in this Collateral section.
(D) All proceeds (including insurance proceeds) from the sale, destruction, loss, or other disposition of any of the property described in’ this Collateral section, and sums- due from-a third party who has damaged or destroyed the Collateral or from that party’s insurer, whether due to judgment, settlement or other process.
(E) All records and data relating to any of the property described in this Collateral section, whether in the form of a writing, photograph, microfilm, microfiche, or electronic media, together with all of Grantor’s right, title and interest in and to all computer software required to utilize, create, maintain, and process any such records or data on electronic media.

Stearns Bank perfected its'security interest by filing a Uniform Commercial Code (UCC) Financing Statement with the Texas Secretary of State.

February 1, 2006 — Amegy Bank loaned Texana $2 million. Texana defaulted on the Amegy Bank loan in 2006.

November 8, 2006 — Texana brought its state court action against Bayer for the contamination of Texana’s inventory and property by the genetically modified rice.

June 8, 2007 — Texana executed a written Forbearance Agreement with Amegy Bank. Pursuant to this agreement, Amegy Bank agreed to forbear on certain of its contractual and legal rights, and Texana in return gave Amegy Bank a security interest in its Bayer suit, a commercial tort claim. Specifically, Texana conveyed to Amegy Bank:

All sums of money now due or to become due to [Texana] from any of the Defendants in the [Bayer] Lawsuits or any other third party in connection with the Claims and/or any other claim relating to the Contamination Issues ... [a]ll sums of money paid by, or on behalf of, any of the Defendants in the [Bayer] Lawsuits or any other third party to [Texana] in connection with the Claims ... [and] [a]ll other rights of [Texana] ... under any settlement agreement entered into by [Texana] in connection with their assertion of any of the Claims and/or any other claim relating to the Contamination Issues ....

June 13, 2007 — Amegy Bank perfected its security interest in the commercial tort claim by filing a UCC Financing Statement of public record.

January 21, 2010 — Final Summary Judgment was entered against Texana for Texana’s default on the Stearns Bank loan.

June 1, 2010 — Stearns Bank foreclosed on its Deed of Trust and security agreement. It later purchased all of the existing collateral sold at the foreclosure sale. As of January 20, 2014, $3,809,708.09 remained on the unpaid judgment against Texana.

September 8, 2012 — Bayer and Texana reached a settlement agreement.

October 5, 2012 — Stearns Bank applied for Writs of Garnishment in Texas state court and served the Writs on Bayer.

November 22, 2013 — Bayer filed this in-terpleader action in the United States District Court for the Eastern District of Missouri to allow any entities claiming an interest in the settlement proceeds to assert their claims.

In this interpleader action, Stearns Bank and Amegy Bank filed motions for summary judgment. Stearns Bank argued its security interest had priority because it filed a UCC financing statement covering Texana’s general intangibles before Amegy Bank filed its UCC statement covering the Bayer suit. It also argued it was entitled to the Settlement payment as proceeds from its original collateral, which includes fixtures and equipment that was damaged by Bayer’s negligence. Amegy Bank claimed in its summary judgment motion that Stearns Bank’s interest in general intangibles could not cover the settlement in a subsequent commercial tort claim and that Stearns Bank’s interest was discharged in the foreclosure. The district court granted Amegy Bank’s motion and denied Stearns Bank’s motion, entering judgment for Am-egy Bank, but the district court has stayed enforcement of its orders pending this appeal.

II.

We review a district court’s decision on cross-motions for summary judgment de novo. See J.E. Jones Constr. Co. v. Chubb & Sons, Inc., 486 F.3d 337, 340 (8th Cir. 2007). “Summary judgment is appropriate when, viewing the facts in the light most favorable to the non-movant, there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law.” Id. “We also apply a de novo standard of review to the questions of law raised by the parties, including the interpretation and application of the UCC.” Kunkel v. Sprague Nat’l Bank, 128 F.3d 636, 641 (8th Cir. 1997) (citing Affeldt v. Westbrooke Condo. Ass’n (In re Affeldt), 60 F.3d 1292, 1294 (8th Cir. 1995)).

A

We begin our analysis where the district court concluded. The district court determined when Stearns Bank foreclosed on the collateral after Texana’s default and then purchased the existing collateral at auction that Stearns Bank’s security interest was discharged. We conclude this was error. The district court relied on an incorrect interpretation of Texas Business & Commerce Code Annotated (hereinafter “Texas UCC”) § 9.617 to reach this decision. Texas UCC § 9.617(a) states “[a] secured party’s disposition of collateral after default: (1) transfers to a transferee for value all of the debtor’s rights in the collateral; (2) discharges the security interest under which the disposition is made; and (3) discharges any subordinate security interest or other subordinate lien.” Id. The district court read this language broadly to preclude Stearns Bank from seeking proceeds of its original collateral. However, Stearns Bank, as a secured creditor, had the cumulative right to foreclose on its collateral as well as to enforce its security agreement as to the proceeds of its collateral. See Texas UCC § 9.601(c) (“The rights under Subsections (a) and (b) are cumulative and may be exercised simultaneously.”). This holding is further supported by the language of the security agreement, which clearly states that collateral includes “sums due from a third party who has damaged or destroyed the Collateral or from that party’s insurer.” A Tennessee bankruptcy court rejected a similar argument in In re Ferry Road Properties, LLC, 11-52170, 2012 WL 3888201 (Bankr. E.D. Tenn. Sept. 7, 2012). The bankruptcy court held that a foreclosure purchase of real estate did not preclude the creditor from asserting a lien interest in the debt- or’s property damage lawsuit. Id. at *5. Accordingly, Stearns Bank’s foreclosure did not discharge an otherwise valid security interest in the proceeds of the collateral nor did it preclude Stearns Bank from pursuing its rights to such proceeds. We reverse the district court on this point.

B. •

Stearns Bank argues that once the Bayer commercial tort claim was settled and reduced to a contractual obligation to pay, it became a “payment intangible” under the UCC and Texas'law. See Texas UCC § 9.109 cmt. 15 (“[Ojnce a claim arising in tort has been settled and reduced to a contractual obligation to pay, the right to payment becomes a payment intangible- and ceases to be a claim arising in tort.”). A payment intangible is a subset of a general intangible, “under which the account debtor’s principal obligation is a monetary obligation.” See id. § 9.102(a)(62). Because Stearns Bank’s original security agreement with Texana included general intangibles, it argues that it has a superior claim to Amegy Bank. The district court explained in the order on Stearns Bank’s Motion for Reconsideration, that Stearns Bank’s security interest in the settlement proceeds from the Bayer Suit did not attach until the suit settled in 2012. Thus, the court concluded that Ame-gy Bank, who had secured an interest in the Bayer commercial tort claim, had the superior claim to the settlement proceeds.

We conclude that Stearns Bank has no interest in the proceeds of the Bayer Suit as a general intangible due to the rule in Texas UCC § 9.108. Under Texas’s revised UCC Article 9, creditors may take a security interest in commercial tort claims as original collateral. See id. § 9.109(d)(12). A commercial tort claim is defined, in relevant part, as “a claim arising in tort with respect to which ... the claimant is an organization.” See id. § 9.102(a)(13). Neither party disputes that the Bayer suit constituted a commercial tort claim. Whereas most debtor property can be secured by referencing its “type,” such as “general intangibles” or “fixtures,” see id. § 9.108(a) (stating “a description of personal or real property is sufficient, whether or not it is specific, if it reasonably identifies what is described”), the UCC imposes heightened identification requirements to encumber commercial tort claims, see id. § 9.108(e) and cmt. 5 (“Subsection (e) requires that a description by defined ‘type’ of collateral alone of a commercial tort claim ... is not sufficient”). The UCC imposes this heightened description requirement “in order to prevent debtors from inadvertently encumbering” commercial tort claims. See id. § 9.108 cmt. 5. Further, the UCC states “that when an effective security agreement covering a commercial tort claim is entered into the claim already will exist” as of the time of the effective date of the security agreement. See ⅛ see also id. § 9.204 cmt. 4 (“In order for a security interest in a tort claim to attach, the claim must be in existence when the security agreement is authenticated”).

Accordingly, we hold that the drafters of the UCC, in implementing the heightened identification requirements of commercial tort claims including the requirement that the commercial tort claim to be in existence at the time it is encumbered, intended for the proceeds of a commercial tort claim to be excluded from an after-acquired general intangible clause. See 4 James J. White, Robert S. Summers, & Robert A. Hillman, Uniform Commercial Code § 31:5 (6th ed. 2015) (questioning “if we recognize a proceeds claim arising from a security agreement that was signed before the tort claim came into existence to be effective as to funds later paid to settle the tort, have we not voided the rule in 9-108(e)(1)?”).

C.

This does not, however, end the analysis in this case. Stearns Bank also argues it should still have priority as to the portion of the Settlement Payment that is proceeds of its original collateral. See Texas UCC § 9.102 cmt. 5(g) (“A security interest in a tort claim also may exist under this Article if- the claim is proceeds of other collateral.”). As did the district court, we agree with this argument.

Proceeds include “to the extent of the value of collateral, claims arising out of the loss, nonconformity, or interference with the use of, defects or infringement of lights in, or damage to, the collateral.” See id. § 9.102(a)(65)(D) (emphasis added). Stearns Bank claims that its interest attached to the right of recovery for damage to its original collateral in October 2006.

Amegy Bank urges this court to follow the holding of In re Zych, wherein a bankruptcy court held that “the heightened identification requirement applicable to commercial tort claims survives disposition of the claim and extends to proceeds of a commercial tort claim.” 379 B.R. 857, 861 (Bankr. D. Minn. 2007). The Zych court ultimately held that the creditor could not claim a security interest in the proceeds of the debtor’s commercial tort claim because the security agreement did not identify the commercial tort claim by detailed type and because the commercial tort claim arose after the effective date of the security agreement. Id. at 864. To the extent that Zych applies generally to proceeds of a commercial tort claim, we agree. However, a superior interest in proceeds of original collateral is not displaced simply because damage to that collateral gives rise to a subsequent commercial tort claim.

When Bayer damaged Texana’s equipment in 2006, Steams Bank’s interest attached to the right of recovery for damages to the equipment. This holding is in line with In re Wiersma wherein the court held that the settlement of a claim arising from damage to the dairy cows that served as collateral constituted “proceeds” within the meaning of UCC § 9-315(a)(2) (“[A] security interest attaches to any identifiable proceeds of collateral”). See In re Wiersma, 324 B.R. 92, 108 (9th Cir. BAP 2005), aff'd in part, rev’d in part, 483 F.3d 933 (9th Cir. 2007). A similar result was reached in BMW Financial Services, NA, LLC v. Rio Grande Valley Motors, Inc., No. M-11-292, 2012 WL 4623198 (S.D. Tex. Oct. 1, 2012). There, the district court held that “[ujnlike the definition of general intangibles, the definition of proceeds does not exclude commercial tort claims” and “a security interest does not cease to attach to collateral merely because the collateral is converted into proceeds.” See id. at *10 (citing Paskow v. Calvert Fire Ins. Co., 579 F.2d 949, 954 (5th Cir. 1978)); see also Helms v. Certified Packaging Corp., 551 F.3d 675, 678 (7th Cir. 2008) (“If a suit .against someone who steals or damages collateral eventuates in an award measured by the diminution in the value of the collateral caused by the defendant’s wrongdoing, so that the award restores the original value of the collateral, the award, like. an insurance payment for damaged collateral, constitutes ‘proceeds’ of the collateral and is therefore covered by the lender’s security interest.”).

Further, this is the correct result under a plain reading of the UCC. The Texas law adopting the UCC explicitly states in comment 5(g) to Texas UCC § 9.102 that “[a] security interest in a tort claim also may exist under the Article if the claim -is proceeds of other collateral.” “Proceeds” is defined under the statute as “(A) whatever is acquired from the sale ... or other disposition of collateral; (B) whatever is collected on, or distributed on account of, collateral; (C) rights arising out of collateral; (D) to the extent of the value of collateral, claims arising out of the loss, nonconformity, or interference with the use of, ... or infringement of rights in, or damage to the collateral _” Texas UCC § 9.102(a)(65). Moreover, “[a] security interest in proceeds is a perfected security interest if the interest in the original collateral was perfected.” Texas UCC § 9.315(c). Accordingly, Stearns Bank held a security interest in the proceeds of the Bayer suit as a right of recovery with respect to damage to its original collateral.

Finally, the result is mandated by the language of Stearns .Bank’s security agreement with Texana. That agreement provided that the collateral consisted of “sums due from a third party who has damaged or destroyed the Collateral or from that party’s insurer.” To the extent- that the Settlement Payment from Bayer to Texa-na included payment for damages to Stearns Bank’s original collateral, those sums are covered by the original security agreement.

III.

In conclusion, we hold that the district court erred in determining that Stearns Bank’s foreclosure extinguished its rights to pursue the proceeds of its- original collateral. While Stearns. Bank does not have an interest in the Settlement Payment as an after-acquired general intangible because that payment arose as proceeds of a commercial tort claim, it does have an interest in the Settlement Payment to the extent the payment is for damage to the original collateral. It remains to the district court to détermine, on remand, what part of the sum held in the registry of the court constitutes proceeds of Stearns Bank’s original collateral and what' part does not constitute such proceeds. Accordingly, we reverse the judgment of the district court and remand this' matter for further proceedings not inconsistent with this opinion.

      . As the parties concede, 'Texas law applies to this action.