Int'l Sales & Service v. Austral Insulated Products

• Decision Date: 30 July 2001
• Docket Number: No. 99-12939,99-12939
• Citation: 262 F.3d 1152
• Parties: (11th Cir. 2001) INTERNATIONAL SALES & SERVICE, INCORPORATED, a Florida corporation, Plaintiff-Appellant, v. AUSTRAL INSULATED PRODUCTS, INCORPORATED, a Georgia corporation, Defendant-Appellee
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1152

262 F.3d 1152 (11th Cir. 2001)

INTERNATIONAL SALES & SERVICE, INCORPORATED, a Florida corporation, Plaintiff-Appellant, v. AUSTRAL INSULATED PRODUCTS, INCORPORATED, a Georgia corporation, Defendant-Appellee.

No. 99-12939

UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

July 30, 2001

Appeal from the United States District Court for the Southern District of Florida.

Before EDMONDSON, WILSON and MAGILL^*, Circuit Judges.

MAGILL, Circuit Judge:

International Sales & Service, Inc. ("ISS") sued Austral Insulated Products, Inc. ("Austral") for tortious interference with an advantageous business relationship. After the jury returned a verdict for ISS, the district court entered judgment as a matter of law for Austral. We affirm.

I.

ISS was a distributor of, and manufacturer's representative for, various products, principally aviation wire. In 1990, ISS began providing aviation wire to Shannon Aircraft Motorworks, later renamed Shannon Ireland and Shannon Canada (together, "Shannon"). Construing the facts in the light most favorable to the non-moving party, ISS was the sole distributor of aviation wire to Shannon from 1990 through 1995. From 1992 to 1995, Shannon ordered wire from ISS 111 times, an average of about one order every nine business days.

To fill orders from Shannon, ISS obtained wire from Austral, a manufacturer of insulated wire. ISS did not have a written distributorship agreement with Austral. ISS used a freight forwarder to prevent Austral from discovering the identity of ISS's clients and selling directly to them. Austral dealt with its customers on a "quote by quote" basis, without any formalized relationships. Under this system, customers called Austral and received a quote for the purchase price of wire. Between 1989 and 1993, Austral's clients included a major distributor, several smaller distributors such as ISS, and end-users.

In 1993, Austral changed course and entered into exclusive distributorship agreements with distributors in Canada and the United States. As part of its new relationship with its American distributor, Electrical Insulation Suppliers ("EIS"), Austral agreed to end its relationships with other independent distributors in the United States and to instruct its direct customers that orders within the continental United States would have to be placed with EIS. In 1995, Austral stated that it would no longer sell wire to ISS unless ISS disclosed the identity of its customers. ISS initially refused, but agreed when Austral promised not to use the information to sell directly to ISS's clients. After obtaining ISS's client information, Austral contacted Shannon directly. Austral then stopped selling wire to ISS, leaving ISS unable to fill subsequent orders from Shannon. ISS and its sole employee and shareholder, German Bravo, went bankrupt.

On January 14, 1998, ISS sued Austral in Florida state court for tortious interference with an advantageous business relationship. After Austral removed the case to federal district court based on diversity jurisdiction, a jury heard the action from August 10-12, 1999, and returned a verdict for ISS. The district court then entered judgment as a matter of law in favor of Austral under Federal Rule of Civil Procedure 50(b). The district court held that ISS failed to show an advantageous business relationship, and, alternatively, that the privilege of competition justifies any interference by Austral in the ISS-Shannon relationship. ISS appeals.

II.

We review the district court's grant of summary judgment de novo. Ross v. Rhodes Furniture, Inc., 146 F.3d 1286, 1289 (11th Cir. 1998). Under Florida law, the elements of tortious interference with a business relationship are: (1) the existence of a business relationship that affords the plaintiff existing or prospective legal rights; (2) the defendant's knowledge of the business relationship; (3) the defendant's intentional and unjustified interference with the relationship; and (4) damage to the plaintiff. Ethan Allen, Inc. v. Georgetown Manor, Inc., 647 So.2d 812, 814 (Fla. 1994). 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." Id.

A.Existence of a Business Relationship

The district court held that ISS failed to demonstrate a business relationship with Shannon. The court emphasized that nothing bound Shannon to buy wire from ISS, leaving Shannon free to take its business elsewhere. The court concluded that it found "no case that holds that a history of discrete sales is not [sic] sufficient to demonstrate an advantageous business relationship."

In examining ISS's tortious interference claim, we are confronted with a seemingly divergent body of Florida law. Our analysis begins with Ethan Allen, where the Florida Supreme Court addressed a dispute between Ethan Allen, a furniture manufacturer, and its former furniture dealer, Georgetown Manor. 647 So.2d at 814. Georgetown decided to convert its Ethan Allen galleries to other furniture outlets. Id. Ethan Allen responded by placing an advertisement in several newspapers that announced its split with Georgetown and asked customers who had unfilled orders with Georgetown to contact the new Ethan Allen outlets. Id. Georgetown then sued Ethan Allen for tortious interference with its alleged business relationship with past Georgetown customers. Id. The Florida Supreme Court rejected Georgetown's claim, holding that Georgetown's relationship with its 89,000 past customers was not one upon which a tortious interference claim could be established because Georgetown's hope that some of its past customers would continue to buy from Georgetown was mere "speculation." Id. at 815. The court concluded that "Georgetown had no identifiable agreement with its past customers that they would return to Georgetown to purchase furniture in the future." Id.

In finding no business relationship between Georgetown and its past customers, the Florida Supreme Court distinguished Insurance Field Services, Inc. v. White & White Inspection & Audit Service, Inc., 384 So.2d 303 (Fla. 5th DCA 1980). In Insurance Field Services, the Florida District Court of Appeals held that the plaintiff, who had regularly been performing underwriting inspections, premium audits, and loss control work for sixteen insurance company clients, could establish a business relationship with these companies even though the plaintiff and his clients did not have written agreements. Id. at 306. The Ethan Allen court noted that the relationship in Insurance Field Services was "ongoing" and "far different than the one maintained by a retail furniture dealer with 89,000 past customers." 647 So.2d at 815 n.1.

In Ferguson Transportation, Inc. v. North American Van Lines, Inc., 687 So.2d 821 (Fla. 1996), the Florida Supreme Court recently reiterated the distinction made by Ethan Allen between relationships with the community at large and with an identifiable customer. The Ferguson court examined a tortious interference claim brought by Ferguson Transportation against North American Van Lines. Ferguson contracted with North American to be North American's exclusive agent in Broward County. Id. at 821-22. Subsequently, North American appointed Advance Relocation & Storage of Florida, Inc. as its agent in West Palm Beach. Id. at 822. After Advance Relocation intruded into Ferguson's territory in Broward County, Ferguson sued, alleging that North American and Advance Relocation tortiously interfered with Ferguson's relationships with its Broward County customers. Id. The Florida Supreme Court rejected Ferguson's claim, holding that Ferguson's relationship with Broward County's general population did not constitute a business relationship; instead, the court agreed with the lower court's determination that Ferguson was required to show a business relationship with an identifiable person. Id. at 822 (citing North Am. Van Lines, Inc. v. Ferguson Transp., Inc., 639 So.2d 32, 33-34 (Fla. 4th DCA 1994) ("At trial Ferguson was unable to bring forth a single customer who would have patronized Ferguson but for the interference by North American. Ferguson presented no one who booked a move with North American through Advance Relocation who had been a customer of Ferguson or was even a prospective customer of Ferguson.")); see also Sarkis v. Pafford Oil Co., 697 So.2d 524, 526-27 (Fla. 1st DCA 1997) (noting the distinction made by Ethan Allen and Ferguson between relationships with the community at large and with an identifiable customer).

In Dunn v. Air Line Pilots Ass'n, 193 F.3d 1185 (11th Cir. 1999), this Court recently recognized the distinction Florida courts draw between a relationship with the community at large and with an identifiable customer. In Dunn, a group of airline pilots that continued to work during a pilot strike sued a pilots' union that placed the group on a list of "scabs" for tortious interference. Id. at 1189-90. The pilots claimed that the union's "publication of the scab list prohibited them from obtaining employment with any commercial airline-in other words, that it interfered with the pilots' ability to sell their labor to the general community." Id. at 1191. This Court rejected the pilots' claim, holding that a tortious interference claim requires "a relationship with a particular party, and not just a relationship with the general business community." Id. (citing Ethan Allen, 647 So.2d at 815); see also Future Tech Int'l, Inc. v. Tae IL Media, Ltd., 944 F. Supp. 1538, 1570 (S.D. Fla. 1996) (Marcus, D.J.) (examining a tortious interference claim under Florida law and distinguishing between relationships with the community at large and ongoing relationships with existing customers).

In this case, ISS alleges a relationship with an identifiable customer, Shannon, whom ISS continually supplied with aviation wire from 1990 to...