JAMES D. WHITTEMORE, United States District Judge.
Carlwood brought three claims against Wesco in state court: tortious interference with a business relationship (Count I); violation of the Florida Deceptive and Unfair Trade Practices Act (Count II); and fraud (Count III). (Dkt. 2). The case was removed to federal court based on diversity jurisdiction, and the parties stipulated to the dismissal of Count II. (Dkts. 1, 74). Wesco moves for summary judgment on the remaining counts, arguing they are preempted by the Florida Uniform Trade Secrets Act (FUTSA) and alternatively, the undisputed evidence cannot establish a prima facie case on either count. (Dkt. 77).
Carlwood Safety, Inc. is a supplier of safety, industrial, and janitorial supplies and tools. (Dkt. 2 ¶ 7). Carlwood supplied products to Progress Energy, Inc. and its predecessor entities since at least 1989, which constituted the majority of Carlwood's business. (Dkt. 87-1, Larry Wilson Dep. at pp. 14-16). As a preferred vendor for Progress Energy, Carlwood was party to a series of blanket purchase orders through which Progress Energy ordered products as necessary. (Dkt. 2 ¶ 8; Dkt. 87-3, Jerome Boies Dep. at pp. 104-05; Dkt. 87-2 at 2). One such blanket purchase order was in effect from September 2010 to September 2013. (Dkt. 87-3, Boies Dep. at p. 105).
In 2011, Duke Energy Corporation announced its planned acquisition of Progress
(Dkt. 2-1).
Also in 2012, Duke sent an open bid to "everybody that was already a supplier and could be a supplier" to determine which entity would be responsible for integrating and managing Duke's company-wide supply chain as its supply "integrator." (Dkt. 77-1, Scott Dowell Dep. at pp. 21, 38). Wesco Distribution, Inc. bid on and won the contract. (Id. at 37-38). As a result, Wesco became Duke's supply integrator and sold products to Duke as a distributor. (Id. at 50).
After Wesco became Duke's supply integrator, Duke approved the suppliers from whom WESCO was authorized to purchase products. (Dkt. 77-1, Patrick Penuel Dep. at pp. 30-31). Wesco could purchase items from suppliers if Duke authorized the supplier and issued a blanket purchase order identifying the acceptable scope and price of supplies. (Dkt. 77-1, Dowell Dep. at pp. 59-60, 88).
During the negotiations between Duke and Wesco, Duke advised Wesco that it wanted to maintain relationships with several diversity suppliers, including Carlwood, with which it had "been in the public eye" the past year "at events or with some sort of recognition." (Id. at 47). Wesco's Scott Dowell recommended that Duke and Wesco "put in the contract, that commitment.... Let's say as part of this diversity commitment, it will be these four suppliers, and we will identify ... how much revenue you want us to carve off ..." (Id. at 47-48). Duke rejected this proposal, however, as Duke's representative "didn't want to call [the suppliers] out in the contract." (Id. at 48).
In June 2013, Carlwood was informed by Estex, one of its supply sources, that Wesco had instructed it not to quote items for Carlwood. (Dkt. 87-5 at 2). In response to Carlwood's inquiry into this, Dowell told Wilson he was unaware of the matter, asked for details, and said he would look into it. (Id. at 3). The next month, Wesco informed Carlwood that items it had supplied to Progress Energy's power generation sites would be "pulled from [Carlwood's] blanket purchase order," including items that Duke instructed Wesco to remove. (Dkt. 87-6). In response to Carlwood confronting Wesco about this decision, a Wesco representative said, "Then I lied to [Boies] and Larry [Wilson] in that meeting." (Id. at 2).
In February 2014, Wesco sent Carlwood a request for quotation (RFQ) for items identified by Duke and Wesco for Carlwood to supply. (Dkt. 87-3, Boies Dep. at p. 137). Duke had to approve the item and its manufacturer, and the pricing and profit margins had to reach the level dictated by Duke as conveyed to Carlwood by Wesco. (Id. at pp. 138-39; Dkt. 77-1, Penuel Dep. at 79). Boies explained: "[Wesco] told us specifically the number. Basically, they could have filled out the RFQ for us, because they were telling us `Here's what the price has to be.' And so we filled it out exactly how they said, yes." (Dkt. 87-3, Boies Dep. at p. 139). Prior to this, Carlwood had never responded to an RFQ that required it to release its cost, profitability, and vendor information, and was not "concerned about the confidentiality [it] assumed was going to transpire and take place based on the agreement [it] had made." (Dkt. 87-1, Wilson Dep. at p. 67). Significantly, the RFQ expressly provided that inclusion of the quantities of certain items were not guarantees of future business. (Dkt. 87-3 at 20).
Penuel testified that when Carlwood asked whether Wesco would order supplies based on the RFQ, Wesco "would tell them
In April 2014, Wesco provided Duke hard hat liners that were not ordered through Carlwood. (Dkt. 87-7).
In September 2014, Duke's managing director of its supply chain strategy team told Carlwood that Duke is "unable to make a specific volume commitment[ ] due to the variability of demand for [Carlwood's] products. These projections should serve only for planning purposes and not be considered promised or committed revenues." (Dkt. 90-1 at 4). Duke's spending on products supplied by Carlwood declined each year from 2012 to 2015. See (Dkt. 87-2 at 3).
In November 2014, Penuel told his team by email:
(Dkt. 87-11).
Duke ultimately informed Wesco that it would not "be part of this process anymore, so it's up to Wesco to do whatever
Summary judgment is appropriate where "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "A genuine factual dispute exists only if a reasonable fact-finder `could find by a preponderance of the evidence that the [non-movant] is entitled to a verdict.'" Kernel Records Oy v. Mosley, 694 F.3d 1294, 1300 (11th Cir. 2012) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). A fact is material if it may affect the outcome of the suit under the governing law. Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir. 1997).
The moving party bears the initial burden of showing, by reference to materials on file, that there are no genuine disputes of material fact. Hickson Corp. v. N. Crossarm Co., Inc., 357 F.3d 1256, 1260 (11th Cir. 2004) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). If the movant adequately supports its motion, the burden shifts to the nonmoving party to show specific facts that raise a genuine issue for trial. Dietz v. Smithkline Beecham Corp., 598 F.3d 812, 815 (11th Cir. 2010). The evidence presented must be viewed in the light most favorable to the nonmoving party. Ross v. Jefferson Cty. Dep't of Health, 701 F.3d 655, 658 (11th Cir. 2012). "Although all justifiable inferences are to be drawn in favor of the nonmoving party," Baldwin Cty. v. Purcell Corp., 971 F.2d 1558, 1563-64 (11th Cir. 1992), "inferences based upon speculation are not reasonable," Marshall v. City of Cape Coral, 797 F.2d 1555, 1559 (11th Cir. 1986).
In summary, Carlwood's claims are not preempted by FUTSA. However, the evidence does not establish a prima facie claim of tortious interference with a business relationship or fraud. Accordingly, based on the undisputed material facts, and there being no genuine dispute of material fact, summary judgment in Wesco's favor is appropriate as a matter of law on both claims.
Wesco's contention that FUTSA preempts Carlwood's claims is without merit. FUTSA "displace[s] conflicting tort, restitutory, and other law of [Florida] providing civil remedies for misappropriation of a trade secret." Fla. Stat. § 688.008(1). The statute does not affect "other civil remedies that are not based on misappropriation of a trade secret." Fla. Stat. § 688.008(2)(b). "[T]he issue becomes whether allegations of trade secret misappropriation alone comprise the underlying wrong; if so, the cause of action is barred by § 688.008." Allegiance Healthcare Corp. v. Coleman, 232 F.Supp.2d 1329, 1335-36 (S.D. Fla. 2002) (citations omitted).
Wesco argues that because Carlwood "cannot prevail on the tortious interference with business relationship and fraud claims without proving misappropriation of trade secrets, those claims are preempted as matter of law and must be dismissed." (Dkt. 77 at 13). Carlwood maintains that it did not bring a trade secrets misappropriation claim, that the misappropriated information does not constitute a trade secret, and that, unlike here, the plaintiffs in the cases Wesco relies on brought claims under various Uniform Trade Secrets Acts. (Dkt. 87 at 4-5).
In its Reply, Wesco contends that misappropriated information need not constitute
Rather, Wesco's contention that preemption is appropriate even if the misappropriated information falls short of a trade secret is contrary to the express language of the statute, which does not affect "other civil remedies that are not based on misappropriation of a trade secret." Fla. Stat. § 688.008(2)(b). Accordingly, because Carlwood's claims are not based on the misappropriation of a trade secret, they are not preempted by FUTSA.
Although not preempted, Carlwood's tortious interference with a business relationship claim is not supported by the evidence, and there is no genuine dispute of material fact to preclude summary judgment.
Under Florida law, the elements of a claim of tortious interference with a business relationship are: "(1) the existence of a business relationship, not necessarily evidenced by an enforceable contract, under which the plaintiff has legal rights; (2) the defendant's knowledge of the relationship; (3) an intentional and unjustified interference with the relationship by the defendant; and (4) damage to the plaintiff as a result of that interference." Palm Beach Cty. Health Care Dist. v. Prof'l Med. Educ., Inc., 13 So.3d 1090, 1094 (Fla. 4th DCA 2009) (citation omitted).
Wesco contends that summary judgment is appropriate because there was no business relationship between Carlwood and Duke under which Carlwood had legal rights or evidence of intentional and unjustified interference by Wesco with such a relationship. Carlwood counters that the blanket purchase order and Duke's assurances of continued business provided it with legal rights, and that Wesco intentionally and unjustifiably interfered with its relationship with Duke by not purchasing supplies on Duke's behalf from Carlwood. Based on the undisputed evidence, Carlwood's contentions are not supported and therefore without merit.
"A business relationship need not be evidenced by a contract, but it generally requires an understanding between the parties that would have been completed had the defendant not interfered." Int'l Sales & Serv., Inc. v. Austral Insulated Prod., Inc., 262 F.3d 1152, 1154 (11th Cir. 2001) (internal quotation marks, citations, and brackets omitted); see also Ethan Allen, Inc. v. Georgetown Manor, Inc., 647 So.2d 812, 815 (Fla. 1994) ("As a general rule, an action for tortious interference with a business relationship requires a business relationship evidenced by an actual and identifiable understanding or agreement which in all probability would have been completed if the defendant had not interfered."). Such a relationship might exist,
Carlwood has not shown a business relationship with Duke under which it had legal rights, that is, an agreement giving rise to legal rights or understanding between Duke and Carlwood that would have been completed if Wesco had not interfered. First, Carlwood has not produced a written agreement with Duke.
Second, although Duke may have assured Carlwood that they would continue to do some business together, there was no understanding as to the extent of that future business. Carlwood's expectations in that regard would have been speculative, at best, and did not give rise to legal rights. St. Johns River Water Mgmt. Dist. v. Fernberg Geological Servs., Inc., 784 So.2d 500, 505 (Fla. 5th DCA 2001) ("The speculative hope of future business is not sufficient to sustain the tort of interference with a business relationship."); see also Realauction.com, LLC v. Grant St. Grp., Inc., 82 So.3d 1056, 1060 (Fla. 4th DCA 2011) (same).
Moreover, any interference with Carlwood and Duke's business relationship by Wesco was not unjustified because Wesco was not a stranger to that relationship. Under Florida law,
Palm Beach Cty. Health Care Dist., 13 So. 3d at 1094 (internal citations and quotation marks omitted). Actions taken to safeguard or protect one's financial interests, so long as improper means are not employed, are also privileged. See Johnson Enters. of Jacksonville, Inc. v. FPL Group, Inc., 162 F.3d 1290, 1321 (11th Cir. 1998).
To illustrate, in Genet Co. v. Annheuser-Busch, Inc., 498 So.2d 683 (Fla. 3d DCA 1986), the court rejected a tortious interference claim against Annheuser-Busch, Inc., based on its failure to approve the sale of a wholesalership to Genet. Under an equity agreement between Annheuser-Busch and the seller, Annheuser-Busch reserved the right to approve transfer of the wholesalership. 498 So. 2d at 684. The court reasoned that because Annheuser-Busch "had the contractual right ... to approve or disapprove any proposed transfer," it was not a "disinterested third party to plaintiffs' agreement." Id.
This reasoning has been applied in other contexts. For example, in Romika-USA, Inc. v. HSBC Bank USA, N.A., 514 F.Supp.2d 1334 (S.D. Fla. 2007), summary judgment was granted in favor of a defendant that had engaged an entity to issue a
Consistent with this reasoning, Wesco, as Duke's supply integrator, had a financial interest in the Carlwood and Duke relationship. And it had a supervisory interest in and control over how the relationship was conducted.
The undisputed record evidence therefore demonstrates that Wesco was not a stranger to the Carlwood — Duke relationship and that any interference was justified. Accordingly, summary judgment against Carlwood on its tortious interference with a business relationship claim is appropriate.
Although Carlwood's fraud claim is not preempted, it is unsupported by the evidence. In its response to the summary judgment motion, Carlwood does not expressly refute Wesco's argument that the fraud claim is unsupported, since "[t]here is no proof of an intentionally false statement on Wesco's part" or that Wesco "misrepresented any material fact or had knowledge of a misrepresentation of a material fact." (Dkt. 77 at 17, 19; Dkt. 87).
Indeed, to succeed on its fraud claim, Carlwood must show: "(1) a false statement concerning a specific material fact; (2) the maker's knowledge that the representation is false; (3) an intention that the representation induces another's reliance; and (4) consequent injury by the other party acting in reliance on the representation." See Wadlington v. Cont'l Med. Servs., Inc., 907 So.2d 631, 632 (Fla. 4th DCA 2005) (citations omitted). In short, there is no indication in the record that Wesco made a false statement concerning a specific material fact, which it knew was false, or that Carlwood suffered a resulting injury.
First, Carlwood does not identify a false statement or misrepresentation of a material fact on which it relied. Nor does it identify evidence indicating that Wesco was aware that any material statement was false. Indeed, it has not refuted Wesco's evidence that the RFQ was sent in good faith for Carlwood to meet Duke's pricing and margin requirements. Although Carlwood speculates that the RFQ was sent to obtain its proprietary information, "[g]uesses or speculation which raise merely a conjecture or possibility are not sufficient to create even an inference of fact for consideration on summary judgment." Atakora v. Franklin, 601 F. App'x 764, 766 (11th Cir. 2015).
Second, as for the element of injury, Boies testified that Carlwood's response to the RFQ was constrained by Wesco's price and markup limitations, which were imposed by Duke. In his words, "[Wesco] told us specifically the number. Basically, they could have filled out the RFQ for us, because they were telling us `Here's what the price has to be.' And so we filled it out exactly how they said, yes." (Dkt. 87-3, Boies Dep. at p. 139). Carlwood's response to the RFQ was more an indication of its willingness to provide supplies at the specified price, rather than a disclosure of confidential pricing information.
Moreover, Carlwood fails to produce evidence to support its allegation that Wesco used the information to undercut its prices and sell to Duke. Even if Wesco decided to supply products to Duke directly, rather than order through Carlwood, it does not necessarily follow that Wesco used any information it obtained from Carlwood to accomplish this. Indeed, it is undisputed that Wesco had an agreement with Duke that included pricing and markup information
Accordingly, Carlwood has not shown any knowing misrepresentation or resulting injury. Considering the record evidence and the absence of a genuine dispute of material fact, summary judgment is due to be granted against Carlwood on the merits of its fraud claim.
Accordingly, Defendant Wesco Distribution, Inc.'s motion for summary judgment is
(Dkt. 77-1, Dowell Dep. at p. 50). In other words, Wesco was "managing suppliers that Duke has selected" and "pulling [them] into this integrated supply chain." (Id. at 52).
Without Wesco's knowledge, someone at Duke removed the blanket purchase order on file for Carlwood. (Dkt. 77-1, Dowell Dep. at p. 77). The information was "converted" to the "new Wesco price in the Duke system." (Id.). Wesco followed up on the matter with Duke, but "never got an answer." (Id. at 78).
To the extent this presents a factual dispute, the dispute is not material since, even assuming that Wesco instructed its employees not to purchase products from Carlwood and the deletion of the blanket purchase order did not present an obstacle to purchasing from Carlwood, the record evidence does not support a tortious interference of business relationship or fraud claim.
Based on Penuel's communications with his team in April 2014, Duke's supply chain team had Wesco "on the hook for $450K spend in T&D with Carlwood." (Dkt. 87-7 at 2). Yet as a Duke representative explained to Carlwood in September 2014, Duke was "unable to make a specific volume commitment[ ] due to the variability of demand for [Carlwood's] products," and its "projections should serve only for planning purposes and not be considered promised or committed revenues." (Dkt. 90-1 at 4). Moreover, as discussed, Dowell's statements at the April 2013 meeting were too vague and indefinite to create an oral agreement between Wesco and Carlwood, much less Carlwood and Duke. See Bergman, 826 So. 2d at 503 (Fla. 4th DCA 2002).
Additionally, the privilege does not apply if the defendant used "improper methods" to interfere. See KMS Restaurant Corp. v. Wendy's Intern., Inc., 361 F.3d 1321, 1326-27 (11th Cir. 2004). This includes "physical violence, misrepresentations, intimidation, conspiratorial conduct, illegal conduct, and threats of illegal conduct." See Ice Portal, Inc. v. VFM Leonardo, Inc., No. 09-60230-CIV, 2010 WL 2351463, at *7 (S.D. Fla. June 11, 2010); Florida Standard Jury Instructions in Civil Cases § 408.6 (2018).
Carlwood has not demonstrated that Wesco's sole basis for the claimed interference was malice or that improper methods were used. It further cites no authority finding malice or improper methods in circumstances like those presented here. See, e.g., Int'l Sales & Serv., Inc., 262 F.3d at 1160 (applying competition privilege, which requires that no improper means are employed, to defendant's promise to plaintiff that it would not sell directly to its customers in exchange for their identity, which was subsequently broken).
And in his declaration, Robert Stevens, a senior project manager for Duke, avers that "WESCO did not act against Duke Energy's interest in its dealings with Carlwood Safety, and Wesco acted in Duke Energy's best interest in its dealings with Carlwood Safety." (Dkt. 90-1 ¶ 10). Although this declaration was seemingly prepared in response to Carlwood's opposition, Carlwood did not move to strike or otherwise object to the document. In any event, summary judgment is appropriate without consideration of this declaration.
Finally, Carlwood incorrectly contends that Wesco did not plead that its interference was justified and constituted lawful competition. See (Dkt. 3 at 7-8). Even if Wesco did not plead the defense, Carlwood fails to cite authority refusing to consider a privilege to interfere because it was not pleaded. (Dkt. 87 at 15).
Because any interference was not unjustified, however, it is unnecessary to resolve this dispute. It is moreover unnecessary to determine whether, as Wesco suggests, the statements from Carlwood's suppliers are inadmissible hearsay, insufficient to preclude summary judgment. (Dkt. 90 at 4); see Jones v. UPS Ground Freight, 683 F.3d 1283, 1293-94 (11th Cir. 2012).
PVC Windoors, Inc. v. Babbitbay Beach Const., N.V., 598 F.3d 802, 809 n.12 (11th Cir. 2010) (citations omitted). And "there must be a false assertion in regard to some existing matter by which a party is induced." Sun Life Assurance Co. of Canada v. Imperial Premium Fin., LLC, 904 F.3d 1197, 1223 (11th Cir. 2018) (emphasis omitted) (rejecting argument that fraud claim is permitted to proceed alongside a breach of contract claim "where the plaintiff alleged that the defendant never intended, from the outset, to comply with the contractual provisions at issue").
It is undisputed that Wesco did not make any pre-contractual representations to Carlwood "expressly affirming that it would comply with the specific contractual provision that it ultimately breached." Id. Rather, there never was a contract between Carlwood and Wesco. Finally, there is no evidence to substantiate Carlwood's speculation that, at the time of the meeting, Wesco had a secret intent not to partner with Carlwood. (Dkt. 85 at 20-22); see Awodiya v. Ross Univ. Sch. of Med., 391 F.Supp.3d 1098, 1108 (S.D. Fla. 2019) (finding assertion of defendant's secret intent not to comply with law insufficient to withstand summary judgment); Prieto v. Smook, Inc., 97 So.3d 916, 918 (Fla. 4th DCA 2012) (lack of performance insufficient).
