Feldman v. Am. Dawn, Inc.

• Decision Date: 03 March 2017
• Docket Number: No. 16-11663,16-11663
• Citation: 849 F.3d 1333
• Parties: Andrew FELDMAN, Plaintiff–Appellant, v. AMERICAN DAWN, INC., Vyto Tozer, Paul Rasband, Defendants–Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

849 F.3d 1333

Andrew FELDMAN, Plaintiff–Appellant,

v.AMERICAN DAWN, INC., Vyto Tozer, Paul Rasband, Defendants–Appellees.

No. 16-11663

United States Court of Appeals, Eleventh Circuit.

March 3, 2017

James B. Lieber, Jacob Matthew Simon, Brad R. Korinski, Lieber Hammer Huber & Paul, P.C., Pittsburgh, PA, Nathan L. Garroway, Jeffrey A. Zachman, Dentons US, LLP, Atlanta, GA, for Plaintiff–Appellant.

Brian E. Casey, South Bend, IN, John F. Meyers, Atlanta, GA, Barnes & Thornburg, LLP, for Defendants–Appellees American Dawn, Inc., Vyto Tozer.

Andrew McCampbell Gibson, Joseph Jackson Harris, The Finley Firm, PC, Atlanta, GA, for Defendant–Appellee Paul Rasband.

Before WILLIAM PRYOR, JORDAN, and BALDOCK,^* Circuit Judges.

WILLIAM PRYOR, Circuit Judge:

The main question presented by this appeal is whether an employee has antitrust standing to challenge a conspiracy directed at his employer because the alleged conspiracy caused the employee's termination. We must also decide whether the employee pleaded claims of racketeering, tortious interference, civil conspiracy, negligent misrepresentation, and fraud. American Dawn, Inc., a leading manufacturer of restaurant linens, fired Andrew Feldman, a restaurant linen salesman, for participating in a fraudulent scheme against ALSCO, a company that sells restaurant linens. Feldman later found employment with Baltic Linen Company, a competitor of American Dawn. After Feldman joined Baltic, Vyto Tozer, a sales manager at American Dawn, and Paul Rasband, a consultant for ALSCO, allegedly conspired to freeze Baltic out of the restaurant linens market. Feldman's job at Baltic was collateral damage of the alleged conspiracy, and he filed a complaint against American Dawn, Tozer, and Rasband that alleges violation of the antitrust laws, 15 U.S.C. § 1 et seq. , and several other civil claims, which the district court dismissed. Because Feldman lacks antitrust standing to challenge a conspiracy directed at Baltic and his complaint fails to state any other claim, we affirm.

I. BACKGROUND

According to his complaint, Andrew Feldman worked for fourteen years as a regional sales manager for American Dawn, Inc., a company that manufactures and sells textiles throughout the United States. Feldman was a leading salesman to ALSCO, a company that sells linens to restaurants, and one of the largest clients of American Dawn. Feldman's primary contact at ALSCO was a consultant named Paul Rasband. Feldman's supervisor at American Dawn was Vyto Tozer. Tozer and Rasband were personal friends.

American Dawn fired Feldman in 2011 for his participation in a deferred billing scheme. Under this practice, ALSCO ordered products from American Dawn, which shipped the products, and American Dawn billed ALSCO for the products at a later date. American Dawn used deferred billing to carry over its revenues from one fiscal year to the next and to hide its shipment of substandard goods to ALSCO. Employees of American Dawn deferred the bills of about thirty percent of its accounts with ALSCO. An internal audit of ALSCO revealed the deferred billing scheme, which prompted ALSCO to open an investigation. The investigation uncovered an email sent to Feldman about the deferred billing of an American Dawn account. When ALSCO confronted American Dawn with this evidence, American Dawn blamed Feldman and fired him.

Although Feldman admitted in his complaint that he participated in the deferred billing scheme, he alleged that American Dawn fired him as "punishment" for another questionable practice of employees of American Dawn—the shipment of substandard products to ALSCO. During Feldman's time at the company, American Dawn routinely substituted inferior goods for the goods that ALSCO ordered. To avoid product inspections implemented by ALSCO, Tozer directed Feldman and other employees to falsify product tests and to alter sales records. Rasband knew that the shipment of substandard products caused ALSCO to overpay American Dawn by as much as $175,000, but he requested that American Dawn repay less than half that amount. Feldman expressed concern about these practices to the management of American Dawn.

After American Dawn fired Feldman, Tozer encouraged Feldman to seek severance pay. But American Dawn refused to offer Feldman severance. Tozer told Feldman that American Dawn refused to pay him severance because Feldman accepted a position with another company, Baltic, within thirty days of his termination. When Feldman raised the issue with the owners of American Dawn, he received a different response. They told him that they fired him because of his participation in the deferred billing scheme: "your dishonesty detrimentally impacted [the] relationship [of American Dawn] with a valued customer." Feldman never received severance from American Dawn.

Baltic is a competitor of American Dawn. After it hired Feldman, Tozer and Rasband conspired to "freeze out Baltic ... from sourcing [or] supplying commercial textiles to the restaurant linen rental market." Rasband told Feldman's supervisors that it was a "big mistake" to have hired Feldman and that Feldman "was no longer welcome at ALSCO, and that no one else from Baltic could be used ... to secure ALSCO's business." Tozer told a Baltic executive that Feldman "post-dated and re-dated bills so that [Feldman] could receive more money" during his tenure at American Dawn and that Feldman acted as an "unethical ‘lone-wolf.’ " Tozer and Rasband made these accusations to ensure that ALSCO remained an American Dawn customer "and not to deal with [Feldman] or Baltic."

In early 2012, Rasband requested bids on behalf of ALSCO from linens manufacturers, including Baltic and American Dawn. Although Baltic submitted one of the lowest bids overall, American Dawn won the contract because before it submitted its final bid to ALSCO, Rasband informed Tozer of the details of competing bids and American Dawn altered its proposal in response. In exchange for this information, which American Dawn failed to give to Baltic or other companies, Tozer gave Rasband gifts "and other personal benefits." The conspiracy to freeze Baltic out of the market by refusing to deal with Feldman and manipulating the bidding process led to Feldman's discharge from Baltic in May 2013.

Feldman filed a ten-count complaint against American Dawn, Rasband, and Tozer in the district court. Against all defendants, Feldman alleged violations of the federal antitrust laws, 15 U.S.C. § 1 et seq. , violations of the federal and Georgia Racketeering Influenced and Corrupt Organizations acts, 18 U.S.C. § 1961 et seq. ,Ga. Code Ann. § 16–14–1 et seq. , and interference with business relations. Against Rasband and Tozer, Feldman alleged a conspiracy to violate the federal and Georgia racketeering acts, interference with employment, and civil conspiracy. Against American Dawn and Tozer, Feldman alleged claims of negligent misrepresentation and fraud. American Dawn, Tozer, and Rasband moved to dismiss the complaint for failure to state a claim, and the district court granted their motions.

II. STANDARD OF REVIEW

We review de novo the dismissal of a complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim and construe all the allegations as true. Hughes v. Lott , 350 F.3d 1157, 1159–60 (11th Cir. 2003). A plaintiff must plausibly allege all the elements of the claim for relief. Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

Conclusory allegations and legal conclusions are not sufficient; the plaintiffs must "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 557, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). For the claims of fraud, "a party must state with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b) ; see also Lamm v. State St. Bank & Trust , 749 F.3d 938, 951 (11th Cir. 2014) (negligent misrepresentation); Am. Dental Ass'n v. Cigna Corp. , 605 F.3d 1283, 1291 (11th Cir. 2010) (racketeering acts). "[A] plaintiff must allege: ‘(1) the precise statements, documents, or misrepresentations made; (2) the time, place, and person responsible for the statement; (3) the content and manner in which these statements misled the [p]laintiff[ ]; and (4) what the defendant[ ] gained by the alleged fraud.’ " Am. Dental , 605 F.3d at 1291 (quoting Brooks v. Blue Cross & Blue Shield of Fla., Inc. , 116 F.3d 1364, 1380–81 (11th Cir. 1997) ).

III. DISCUSSION

We divide our discussion in four parts. First, we explain that Feldman lacks antitrust standing because he did not suffer an antitrust injury. Second, we explain that the complaint fails to allege predicate acts of racketeering activity that were the proximate cause of Feldman's injury. Third, we explain that Feldman's complaint fails to state a claim of tortious interference with business relations, tortious interference with employment, or civil conspiracy, because American Dawn, Rasband, and Tozer were not strangers to the relationship between Feldman, Baltic, and ALSCO. Fourth, we explain that the complaint fails to state claims of fraud or negligent misrepresentation because Tozer's promise of severance pay was unenforceable as a contract.

A. Feldman Suffered No Antitrust Injury.

In addition to "the basic ‘case or controversy’ or ‘injury in fact’ required by Article III of the Constitution," a private plaintiff who seeks damages under the antitrust laws, such as Feldman, must establish "antitrust standing." Sunbeam Television Corp. v. Nielsen Media Research, Inc. , 711 F.3d 1264, 1270 (11th Cir. 2013). To do so, Feldman must allege that he suffered an antitrust injury and that he is an "efficient enforcer" of the antitrust laws. Id. at 1271. An antitrust injury is the kind of injury that "the antitrust laws were intended to prevent and that flows from [the conduct that] makes [the] acts [of a defendant] unlawful." Brunswick Corp. v. Pueblo Bowl–O–Mat, Inc. , 429 U.S....