67 F.3d 1563 (11th Cir. 1995), 94-2479, GTE Directories Pub. Corp. v. Trimen America, Inc.

Docket Nº:94-2479.
Citation:67 F.3d 1563
Party Name:GTE DIRECTORIES PUBLISHING CORPORATION, Plaintiff-Appellant, v. TRIMEN AMERICA, INC., Defendant-Appellee.
Case Date:November 07, 1995
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit
 
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Page 1563

67 F.3d 1563 (11th Cir. 1995)

GTE DIRECTORIES PUBLISHING CORPORATION, Plaintiff-Appellant,

v.

TRIMEN AMERICA, INC., Defendant-Appellee.

No. 94-2479.

United States Court of Appeals, Eleventh Circuit

November 7, 1995

Page 1564

        James J. Kenny, Scott E. Perwin, Kenny Nachwalter Seymour Arnold Critchlow & Spector, P.A., Miami, FL, for Appellant.

        Jawdet I. Rubaii, Clearwater, FL, for Appellee.

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

        Before EDMONDSON, Circuit Judge, HILL, Senior Circuit Judge, and MILLS [*], District Judge.

        RICHARD MILLS, District Judge:

        Did this declaratory judgment action involve an actual case or controversy?

        The district court found that it did not.

        We respectfully hold that it did.

        Therefore, we must reverse and remand.

       I. Background

        GTE Directories Publishing Corporation (GTEDPC) is a publisher of yellow pages advertising--the familiar yellow pages that appear in almost every telephone book published. GTEDPC contracts with telephone companies to publish the yellow pages section of their telephone books. The advertising that is placed in these yellow pages is broken down into two categories: local advertising and national advertising.

        Local advertising consists of ads placed by small businesses which advertise solely in the yellow pages of their local phone book. GTEDPC's sales staff solicits and services local accounts.

        National advertising consists of ads placed by larger companies who advertise in the yellow pages in several different phone books. The various publishers of yellow pages advertising have formed the Yellow Pages Publishing Association (YPPA). YPPA defines a national account as an account which is placed with two or more publishers, is ordered in twenty directories or more and involves at least three states, and 30% of the advertising revenue comes from states outside of the primary state. GTEDPC (which is a member of YPPA) expanded the definition of "national accounts" for advertising placed with GTEDPC: an account is national if it appears in twenty or more GTE published directories in three states with at least 30% of the revenue from outside the primary state.

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        GTEDPC sales staff also solicits and services national accounts. However, GTEDPC will also accept national advertising placed through certified marketing representatives (CMRs). A CMR is a company that has been approved by YPPA to sell national yellow pages advertising directly to businesses and then place the ads with the publishers of the yellow pages, such as GTEDPC. Using a CMR allows a company which advertises in hundreds of telephone books to deal with one person regarding their advertising. Under this system, the yellow page publisher bills the CMR directly for the ads and the CMR must then bill and collect the cost of the ad from the advertiser. The CMR must pay for the advertising it places with the publisher regardless of whether it actually collects the money from the business placing the ad. In return for soliciting and servicing national advertising, CMRs are paid a twenty percent commission on each national account they place with the yellow page publisher.

        Trimen America, Inc., (Trimen) is a CMR owned by David Mendenhall. Joel Blumberg is the national sales manager for Trimen. Blumberg and GTEDPC have a long history with one another, set out in three published opinions from this court. Ad-Vantage Telephone Directory Consultants, Inc. v. GTE Directories Corp., 849 F.2d 1336 (11th Cir.1987) (Ad-Vantage I); Ad-Vantage Telephone Directory Consultants, Inc. v. GTE Directories Corp., 943 F.2d 1511 (11th Cir.1991) (Ad-Vantage II); Ad-Vantage Telephone Directory Consultants, Inc. v. GTE Directories Corp., 37 F.3d 1460 (11th Cir.1994) (Ad-Vantage III). Although a brief recap of this history is necessary for an understanding of this case, a more detailed account may be found in Ad-Vantage I.

        Twenty years ago Blumberg worked for GTEDPC. In 1975, Blumberg left GTEDPC to start his own company, Ad-Vantage Telephone Directory Consultants, Inc. (Ad-Vantage). Ad-Vantage became a CMR and Blumberg began placing national advertising with GTEDPC. Ad-Vantage had trouble paying its bills and GTEDPC decided to take action. GTEDPC sent a direct mailing to Ad-Vantage's customers apprising them of Ad-Vantage's cash flow problems and informing them that GTEDPC would bill them directly for their advertising space rather than have the billing go through Ad-Vantage and Blumberg.

        Blumberg was not happy with GTEDPC's actions and therefore sued GTEDPC for anti-trust violations, breach of contract, and tortious interference with business relations. The tortious interference claim is the only claim relevant to this case.

        At trial, the jury found GTEDPC's direct contact with Ad-Vantage's customers had tortiously interfered with Ad-Vantage's business relations. In Ad-Vantage II, this court upheld the jury's verdict of $500,000 in punitive damages against GTEDPC on the tortious interference claim. The amount of compensatory damages has yet to be finally adjudicated. Ad-Vantage III, 37 F.3d at 1466.

        In 1982, Ad-Vantage's CMR status was revoked by YPPA for failure to timely pay its bills. Blumberg continued to sell yellow pages advertising, however, placing his orders through a succession of CMRs. In March 1990, Blumberg was placing national accounts with GTEDPC through a CMR named Hometown Directory Service (Hometown). GTEDPC began scrutinizing Blumberg's accounts to insure they met GTEDPC's definition of a national account. The investigation revealed 64 accounts GTEDPC felt might not meet its definition of national. GTEDPC confronted Blumberg with the 64 accounts and Blumberg agreed that 12 of the accounts were not national. Upon further investigation, GTEDPC became satisfied that 18 of the 64 accounts were in fact national. Questions remained, however, on the status of the remaining 34 accounts.

        The publishing date for several Florida phone books was rapidly approaching, so GTEDPC processed the 34 accounts as national to ensure those businesses' advertisements made it into the phone books. GTEDPC, however, continued to investigate the true status of the remaining 34 accounts. Ultimately, GTEDPC concluded that of the remaining 34 accounts, 22 were local accounts rather than national. Thus, of the 64 accounts reviewed by GTEDPC, 30 were national; however, 34 were found to be local.

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        GTEDPC had already paid Blumberg commissions on some of the accounts he placed as national accounts which ultimately turned out to be local accounts. Since Blumberg was not entitled to commissions on local accounts, GTEDPC wanted the commissions it had paid on the local accounts back. By this time, Blumberg had ceased placing national advertising through Hometown and was now placing his advertising through Trimen. Because Blumberg was handling these accounts through Trimen, GTEDPC billed Trimen for the wrongfully obtained commissions on the accounts. Both Trimen and Blumberg refused to pay.

        Numerous letters were exchanged between GTEDPC and its in-house counsel and Blumberg and his counsel...

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