JAMES P. O'HARA, United States Magistrate Judge.
This is an unfair competition case. It arises out of a dealer agreement that granted plaintiff, Utility Trailer Sales of Kansas City, Inc. ("Utility Trailer"), a license to sell trailers manufactured by defendant MAC Trailer Manufacturing, Inc. ("MAC"). Utility Trailer brought claims against MAC for breach of contract, tortious interference with a prospective business expectancy or relationship, and violation of the Kansas Dealers and Manufacturers Licensing Act ("KDMLA"), K.S.A. § 8-2401 et seq. Utility Trailer also brought claims against a second defendant, Summit Truck Equipment, LLC ("Summit"), for tortious interference with an existing contract and tortious interference with a prospective business expectancy or relationship.
Following seven days of trial, the jury returned a verdict in favor of Utility Trailer on the claims of tortious interference with a prospective business expectancy or relationship against both MAC and Summit. The jury awarded Utility Trailer $87,500 in actual damages against MAC and $37,500 in actual damages against Summit (doc. 247). The jury rejected Utility Trailer's remaining claims and also found that no punitive damages should be awarded. Judgment has been entered accordingly (doc. 249).
The case is now before the court on the renewed motion of MAC and Summit (together, "defendants") for judgment as a matter of law, pursuant to Fed. R. Civ. P. 50(b), on Utility Trailer's claims of tortious interference with a prospective business
Utility Trailer is a Kansas corporation with its principal place of business in Kansas City, Kansas. It sells specialized trailers and related equipment for use with highway tractor-trailer rigs; it also provides maintenance and service on such trailers and equipment. Utility is a wholly-owned subsidiary of Kansas City Peterbilt, Inc., which sells and services the tractor side of such tractor-trailer rigs, mainly as a dealer under the Peterbilt brand.
MAC is an Ohio corporation with its principal place of business in Ohio. MAC manufactures and sells trailers and related equipment. It sells it products directly and also through dealers such as Utility Trailer.
Summit is a Colorado company and is wholly-owned by Transwest, Inc. Summit operates under a fictitious name registered with the state of Missouri, Transwest Trailers, LLC. Transwest Trailers, LLC, is a Colorado company that is also wholly-owned by Transwest, Inc. Summit has a business location in the Kansas City metropolitan area from which it markets and sells trailers and related equipment.
On or about November 15, 2000, Utility Trailer and MAC entered into a dealer agreement (the "Dealer Agreement"), granting Utility Trailer a non-exclusive license and right to sell trailers and other products manufactured by MAC.
On April 14, 2008, MAC sent Utility Trailer a letter stating that it "reviewed the Kansas marketplace, its market potential incorporating the full MAC Trailer product line and have regretfully come to the conclusion that we as MAC Trailer must pursue different avenues in a more aggressive manner."
Summit began marketing and selling trailers and related equipment in the Kansas City metropolitan area in late 2007. It began selling MAC trailers in 2008 when MAC authorized Transwest Trailers, LLC, as a MAC dealer.
Utility Trailer filed this lawsuit against MAC and Summit on December 19, 2008, in state court. The lawsuit was timely removed to federal court on January 16, 2009.
On October 30, 2009, MAC sent a second termination letter to Utility Trailer. This letter specifically referenced the termination provision in the Dealer Agreement and stated that, "[e]ffective 30 days from the date of this letter, Utility will no longer be treated as a MAC dealership."
A post-trial motion for judgment as a matter of law pursuant to Fed. R. Civ. P. 50(b) is appropriate only if the evidence, viewed in a light most favorable to the nonmoving party, "points but one way and is susceptible to no reasonable inferences supporting the party opposing the motion."
In considering a motion for a new trial, the court may grant a new trial on all or some of the issues "after a jury trial, for any reason for which a new trial has heretofore been granted in an action at law in federal court."
As noted above, the jury returned a verdict and awarded damages in favor of Utility Trailer on its separate claims against MAC and Summit for tortious interference with a prospective business expectancy or relationship. "Tortious interference with a prospective business advantage or relationship seeks to protect future or potential contractual relations and is predicated on malicious conduct by a defendant."
1. The existence of a business relationship or expectancy with the probability of future economic benefit to Utility Trailer;
2. Knowledge of the relationship or expectancy by the defendant;
3. That, except for the defendant's conduct, Utility Trailer was reasonably certain to have continued the relationship or realized the expectancy;
4. Intentional conduct by the defendant;
5. The absence of justification on the part of the defendant;
6. The absence of privilege on the part of the defendant as a competitor of Utility Trailer;
7. The defendant's actions were "malicious," which in this particular context means acting with actual evil-mindedness or specific intent to injure; and
8. Damages were suffered by Utility Trailer as a result of the defendant's conduct.
To establish that defendants acted with malice, Utility Trailer was required to present evidence from which a reasonable juror could conclude that defendants acted with "actual evil-mindedness or specific intent to injure."
According to Utility Trailer, evidence presented at trial demonstrated MAC's "premeditated intention to do harm to Utility Trailer"
Whether Utility Trailer established that MAC acted with evil-mindedness or specific intent to injure is a close call. The court can certainly envision a reasonable juror determining that this element of tortious interference was not satisfied. However, it is not for the court to weigh the evidence nor substitute its judgment for that of the jury. As noted above, the entry of judgment as a matter of law is appropriate only if the evidence points "but one way"— against the jury verdict. In the court's view, sufficient evidence was presented at trial from which the jury could have found the existence of malice on MAC's part.
First, the evidence demonstrated that MAC spoke with Transwest Trailers, LLC, about establishing a MAC dealership in the Kansas City metropolitan area (Utility Trailer's dealership area) in early 2008 while the Dealer Agreement between MAC and Utility Trailer was still in effect. Mike Conny, the president and owner of MAC, testified that Steven Hallas, MAC's director of sales for the western region, approached Transwest Trailers, LLC, in February 2008 about becoming a MAC dealer. Mr. Hallas confirmed this in his testimony. In an email dated March 18, 2008, Mr. Hallas wrote Ryan Eidsness of Transwest Trailers, LLC/Summit
Second, the evidence demonstrated that MAC helped to establish Summit's presence as a MAC dealer in the Kansas City market. Ron Rowland, a former salesperson for Summit and Transwest Trailers, LLC, testified that when he was selling trailers for Summit in the Kansas City area, MAC provided him with sales leads. Documentary evidence further indicated a MAC salesperson came to Kansas City in July 2008 to meet with Mr. R. Eidsness,
Third, Utility Trailer presented evidence that in 2009, one of its customers, Tom Peace, requested that Utility Trailer perform certain warranty work on a MAC trailer he had purchased from Utility Trailer. MAC told Utility Trailer that the requested work was not under warranty, so Utility Trailer was unable to do the work. Subsequently, though, Summit representatives and Mr. Conny personally visited with Mr. Peace,
Thus, after reviewing the record in the light most favorable to Utility Trailer, the court holds that "all the evidence does not clearly indicate that [MAC's] behavior was not malicious, as would be required to support [MAC's] motion for judgment as a matter of law."
Again, a close call exists as to whether the evidence supported the jury's finding that Summit acted with actual evil-mindedness or specific intent to injure Utility Trailer. As with MAC, however, the court cannot say that the evidence could not be construed to support a finding of malice on the part of Summit. The following evidence supports the jury's verdict.
First, the jury could reasonably infer that Summit knew that MAC had a dealer agreement with Utility Trailer which provided that Utility Trailer would be the only authorized MAC dealer in the Kansas City metropolitan area. Mr. Hallas testified that he informed Mr. R. Eidsness that because MAC had an existing dealer in Missouri, he was unsure whether Transwest Trailers, LLC, would be able to have a dealership in Kansas City, Missouri.
In reviewing the evidence as a whole as presented to the jury during trial in a light most favorable to Utility Trailer, and indulging Utility Trailer all reasonable inferences that can be drawn from the trial record, the court finds that Utility Trailer has met its evidentiary burden, although just barely so, to prove it is more probably true than not true that Summit acted with an intent to injure Utility Trailer. The malice element of Utility Trailer's tortious interference with prospective contracts claim was satisfied.
Defendants next assert that they are entitled to judgment as a matter of law on Utility Trailer's tortious interference with prospective business expectancy or relationship claims because Utility Trailer failed to produce sufficient evidence that defendants' actions were not protected under the previously mentioned competitor privilege. Specifically, defendants contend that Utility Trailer failed to offer substantial evidence that defendants employed wrongful means when competing with Utility Trailer. As explained in detail below, establishing "wrongful means" is a more difficult hurdle than establishing "malice." Thus, although the court has held Utility Trailer presented sufficient evidence to support the malice element of its tortious interference with prospective business expectancy or relationship claims, that holding does not decide the issue of whether Utility Trailer presented sufficient evidence to support the "absence of privilege" element of those claims.
"Kansas recognizes that `not all interference in present or future contractual relations is tortious. A person may be
(a) the relation concerns a matter involved in the competition between the actor and the plaintiff;
(b) the actor does not employ wrongful means;
(c) its action does not create or continue an unlawful restraint of trade; and
(d) its purpose is at least in part to advance its interest in competing with the plaintiff.
Defendants assert that they were competitors of Utility Trailer, as Utility Trailer's owners, Leon Geis and Christopher Geis, conceded at trial.
As an initial matter, the court must address whether the competitor privilege was properly at issue in this case. Utility Trailer argues that defendants did not assert the competitor privilege as an affirmative defense in the final pretrial order (doc. 81) and should therefore not be permitted to rely upon it post-trial. The court finds no merit in Utility Trailer's position. Defendants did assert as a defense in the pretrial order that each one's conduct was "legally justified."
Turning now to the merits of defendants' competitor privilege argument, the court notes that Utility Trailer attempted at trial to prove the absence of privilege by focusing on subsection b of the four-factor test—whether defendants employed wrongful means. The Tenth Circuit has interpreted the wrongful means element to require "independently actionable conduct."
The issue before the court, then, is whether the record, when viewed in the light most favorable to Utility Trailer, contains evidence upon which the jury could have properly determined that defendants' actions amounted to independently actionable conduct. Utility Trailer asserts that defendants' conduct was wrongful because defendants willfully violated the exclusive-dealership-area provision of the Dealer Agreement between MAC and Utility Trailer. According to Utility Trailer:
Utility Trailer asserts that defendants used deceit and false pretense to establish the Kansas City Summit dealership. Utility Trailer further asserts that defendants' statements to Mr. Peace "regarding warranty work were not the giving of `truthful information' but rather were attempts to interfere wrongfully with Utility Trailer's prospective business relationships."
Because Utility Trailer failed to present evidence from which a reasonable jury could conclude that all elements of its tortious interference with a prospective business advantage or relationship claims were satisfied, defendants' renewed motion for judgment as a matter of law on these claims is granted. Judgment will be entered accordingly.
Given the court's finding that defendants are entitled to the entry of judgment in their favor based on the lack of evidence to support the absence of a competitor privilege, the court technically need not reach defendants' remaining arguments for the entry of judgment. However, for the sake of completeness (and as a matter of caution should the above holding be reversed on appeal), the court will briefly address defendants' arguments regarding (1) whether MAC is entitled to judgment as a matter of law because the evidence did not establish that MAC committed a tort and damages separate from those alleged in Utility Trailer's breach of contract claim, and (2) the propriety of the jury's award of damages for lost profits. The court finds no merit in either of these arguments.
First, defendants rely on Pizza Management, Inc. v. Pizza Hut, Inc.,
The facts in this case are different. Utility Trailer's tortious interference with a prospective business advantage or relationship claim against MAC alleged conduct that went further than conduct alleged to show MAC's breach of contract. For example, the breach of contract claim was premised on allegations that MAC authorized or licensed Summit to sell MAC products in Utility Trailer's exclusive dealership area.
Second, defendants argue that the evidence presented at trial does not support the jury's award of damages for lost profits sustained by Utility Trailer because the Dealer Agreement was terminable at will upon thirty-days notice, making any expectation by Utility Trailer of lost profits beyond thirty days (i.e., November 29, 2009) not reasonable. The court finds no support for this argument. Defendants made a similar argument at trial—that damages should be limited by the thirty-day notice provision—but that argument was clearly rejected by the jury in their damages award. Utility Trailer presented the expert testimony of Jay R. Hill, who opined on Utility Trailer's likely lost profits as a result of defendants' actions. Utility Trailer also presented testimony from two potential customers that sought to purchase MAC trailers from Utility Trailer after November 29, 2009. The court finds that the evidence supports the jury's finding that Utility Trailer suffered damages after the thirty-day notice period in the Dealer Agreement, that these damages were reasonably contemplated by Utility Trailer, and that the damage awards were reasonable. MAC's request for judgment as a matter of law on this ground is denied.
As noted above, the jury rejected Utility Trailer's claims against MAC for breach of contract and violation of the KDMLA. The jury also rejected Utility Trailer's claim against Summit for tortious interference with an existing contract. In its post-trial motion, Utility Trailer asserts it is entitled to judgment as a matter of law on the KDMLA claim based on the facts contained within the four corners of the Dealer Agreement. Utility Trailer also argues a new trial is warranted on its claims of breach of contract against MAC
Utility Trailer asserts that the KDMLA governed its relationship with MAC. The KDMLA requires vehicle dealers
At trial, the court instructed the jury on the definition of a franchise agreement, as set forth in § 8-2401(w) of the KDMLA.
As an initial matter, even assuming for the sake of discussion that the KDMLA provides a private right of action,
Section 8-2414 specifically provides that a vehicle dealer may file a complaint with the Kansas Director of Motor Vehicles challenging the termination of a franchise agreement.
Utility Trailer ignored the administrative remedies specifically set forth in § 8-2414, failed to file a complaint with the Director, and instead asserted its KDMLA claim for the first time in this lawsuit.
Utility Trailer next argues that it is entitled to a new trial on its claims of breach of contract against MAC and tortious interference with contract against Summit. The sole basis of Utility Trailer's argument is defendants' failure to produce during discovery the letter from MAC that Summit submitted with its application for a Missouri motor vehicle dealer license. The (undisclosed) letter Summit submitted is dated July 15, 2008, and is addressed to Ryan Eidsness of Transwest Trailers, LLC, and Summit Truck Equipment, LLC.
Instead of the letter that Summit submitted with its license application, defendants produced during discovery a letter that is similar in all respects except that it does not reference Summit—it is addressed to Ryan Eidsness solely of Transwest Trailers, LLC, and only grants a license and right to sell MAC products to Transwest Trailers, LLC.
Utility Trailer argues it was prejudiced by defendants' disclosure of the wrong letter, because defendants took the position during trial that the submitted letter, because it was unsigned, did not constitute an agreement between MAC and Summit authorizing Summit as a MAC dealer. Utility Trailer notes that the jury presented two questions to the court asking what weight to give unsigned letters; one of the questions specifically referenced Exhibit 300, the letter submitted by Summit to the state of Missouri.
The misconduct of counsel or a party in failing to produce a requested document prior to trial justifies a new trial if that misconduct prejudiced the adverse party.
The court agrees with Utility Trailer that the "Summit" version of the subject document should have been produced by defendants. But Utility Trailer has not established prejudice from the non-disclosure. First, as conceded by Utility Trailer's counsel, he had obtained a copy of the letter submitted by Summit with its application directly from the Missouri Department of Revenue weeks before trial began. Thus, Utility Trailer had sufficient time to file a motion seeking to reopen the deposition of Mr. Bortz or seeking to limit the use of the document pursuant to Fed. R. Civ. P. 37(c)(1). However, Utility Trailer failed to raise the issue of the nondisclosure prior to trial.
Second, Utility Trailer certainly could have sought to call Mr. Bortz as an inperson witness at trial and attempted to establish that the letter had been approved or authorized by him on behalf of MAC. Utility Trailer chose not to do so. Similarly, Utility Trailer could have questioned Mr. Conny, the president of MAC, about the letter when it called him during its case-in-chief. Again, Utility Trailer did not do so. In short, despite Utility Trailer's knowledge weeks before trial of the document submitted with Summit's application (and the non-disclosure of such document by defendants), Utility Trailer made no timely attempt to explore the circumstances surrounding the subject letter either before or during trial. There is simply no evidence that Utility Trailer was prejudiced by the nondisclosure.
To the extent Utility Trailer is arguing that it is entitled to a new trial because the court declined to instruct the jury, in response to their questions, "that signed and unsigned letters should be afforded equal weight,"
Utility Trailer's request for a new trial on its claims of breach of contract and tortious interference with contract is denied.
In consideration of the foregoing,
1. Defendants' renewed motion for judgment as a matter of law (doc. 250) is granted. Judgment shall be entered in favor of MAC and Summit on Utility Trailer's tortious interference with a prospective business expectancy or relationship claims.
2. Utility Trailer's motion for judgment as a matter of law and/or new trial (doc. 252) is denied.
IT IS SO ORDERED.
