Saab Auto. AB v. Gen. Motors Co.
| Decision Date | 24 October 2014 |
| Docket Number | No. 13–1899.,13–1899. |
| Parties | SAAB AUTOMOBILE AB ; Spyker N.V., Plaintiffs–Appellants, v. GENERAL MOTORS COMPANY, Defendant–Appellee. |
| Court | U.S. Court of Appeals — Sixth Circuit |
ARGUED:Benjamin Chew, Patton Boggs, LLP, Washington, D.C., for Appellants. Kathryn D. Kirmayer, Crowell & Moring LLP, Washington, D.C., for Appellee. ON BRIEF:Benjamin Chew, Andrew Zimmitti, Stephen A. Vaden, Patton Boggs, LLP, Washington, D.C., for Appellants. Kathryn D. Kirmayer, Crowell & Moring LLP, Washington, D.C., for Appellee.
Before SILER, BATCHELDER, and DONALD, Circuit Judges.
Saab Automobile AB (“Saab”) and its parent company, Spyker N.V. (“Spyker”) (collectively “Plaintiffs”), sued General Motors Company (“GM”) for tortious interference with economic expectancy under Michigan law, claiming that GM made public statements that caused a transaction between Saab and a Chinese investor to fall through, thereby driving Saab into bankruptcy. The district court granted GM's motion to dismiss for failure to state a claim, finding that Plaintiffs failed as a matter of law to establish a valid business expectancy and intentional interference by GM. For the reasons stated below, we AFFIRM.
In 2010, GM sold its wholly owned subsidiary Saab to Spyker, whereby Spyker acquired a majority interest in Saab, and GM retained a minority interest through preferred shares. As part of the sale, the parties entered into a series of agreements, including the Automotive Technology License Agreement (the “ATLA”). Pursuant to the ATLA, GM granted Saab a license to make and assemble certain Saab models using GM intellectual property. It prohibited Saab from assigning or otherwise transferring its rights under the ATLA without GM's prior written consent.1 It also granted GM the power to terminate the ATLA “if SAAB initiate[d] a sale or transfer of all or substantially all of its assets ... without the prior written consent of [GM]; ... [or] if SAAB initiate[d] a direct or indirect Change of Control to an [Original Equipment Manufacturer (“OEM”) ] or OEM related entity without the prior written consent of [GM].”2 Otherwise, the ATLA was set to expire in 2024.
In 2010 and 2011, Saab faced financial hardship, prompting it to seek financing deals to generate liquidity. In 2011, Saab attempted to enter into multiple investment arrangements with Zhejiang Youngman Lotus Automobile Co., Ltd. (“Youngman”), a large Chinese automobile manufacturer. However, when presented with the proposed deals, GM continually refused to approve any agreements that involved Chinese ownership or control of its licensed technology. In the meantime, Saab filed for voluntary reorganization under Swedish law. On December 7, 2011, Saab's reorganization administrator announced that it would apply for termination of Saab's voluntary reorganization because it appeared that Saab would be unable to obtain the necessary financing to continue the reorganization. A hearing before a Swedish court was set for Monday, December 19.
According to their complaint, Plaintiffs “determined that the only way to avoid imminent bankruptcy liquidation was to structure a deal in such a way that any outside ownership and control would be limited to Saab proprietary technology with no reliance upon the legacy GM technology licensed under the ATLA,” and thus not require any consent or approval from GM. Therefore, Saab and Youngman negotiated the Framework Agreement and circulated an unexecuted copy on the afternoon of Friday, December 16. Under the agreement, Youngman would provide Saab a 200 million loan, including an immediate cash infusion of 10 million, which would be converted into an equity interest in Saab after Saab ceased using GM technology in its vehicles. Under the terms of the deal, Youngman would ultimately “hold[ ] no less than 70% of the shares and voting power in Saab.”
The Framework Agreement outlined ten separate agreements and commitments that would need to be negotiated and entered into by Saab and Youngman in order to execute their proposed deal. The parties agreed to execute all of the agreements by December 19, the day of the bankruptcy hearing, or by closing, which was set for December 31. The agreement also required Saab and Youngman to procure regulatory approvals from multiple governing bodies as a pre-condition to closing.
According to Plaintiffs, Youngman was prepared to execute the Framework Agreement on the following day, Saturday, December 17. However, on that day, GM spokesperson James Cain made two statements regarding the proposed deal pursuant to its consent right under the ATLA. First, Cain issued a public statement that:
Saab's various new alternative proposals are not meaningfully different from what was originally proposed to [GM] and rejected. Each proposal results either directly or indirectly in the transfer of control and/or ownership of the company in a manner that would be detrimental to GM and its shareholders. As such, GM cannot support any of these proposed alternatives.
Second, a Swedish daily newspaper published an interview with Cain, wherein the reporter asked why GM would not approve of the Framework Agreement, and Cain responded:
[i]t is wrong that Saab claims that they can do this deal without consulting us. We cannot continue to provide Saab with components ... if this proposal remains. This proposal is similar to other proposals submitted in recent weeks.
Two days later, on the date of the scheduled bankruptcy hearing, Saab filed for bankruptcy liquidation. Youngman announced that it was unable to reach a deal with Plaintiffs “due to GM's position.” Plaintiffs then filed this action in 2012 pursuant to diversity jurisdiction, alleging tortious interference with economic expectancy under Michigan law.
GM filed a motion to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6), which the district court granted and thereby dismissed the action. The court found that Plaintiffs failed to show they had a valid business expectancy in the Framework Agreement, first, because it required numerous other agreements to be negotiated or approved in one weekend's time, and Plaintiffs did not present any evidence that the agreements were even in the negotiation process; and, second, because the agreements “were subject to the approvals and contingencies of multiple companies and governments.” The court then found that Plaintiffs failed to establish that GM intentionally interfered with their alleged economic expectancy because GM's actions were motivated by legitimate business reasons; because GM's statements were true and thus constitutionally protected; and because GM's motives were not malicious.
This matter was filed pursuant to 28 U.S.C. § 1332. “[F]ederal courts sitting in diversity ‘apply state substantive law and federal procedural law.’ ” Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393, 417, 130 S.Ct. 1431, 176 L.Ed.2d 311 (2010) (quoting Hanna v. Plumer, 380 U.S. 460, 465, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965) ). When deciding issues of substantive law, we apply the law of the state's highest court. Garden City Osteopathic Hosp. v. HBE Corp., 55 F.3d 1126, 1130 (6th Cir.1995). “If, however, the state's highest court has not decided the applicable law, then [we] must ascertain the state law from all relevant data,” which includes the state's appellate court decisions. Id. (internal quotation marks and citation omitted).
Plaintiffs argue that the district court erred in holding that they failed to establish a valid business expectancy in the Framework Agreement and in holding that they failed to establish that GM intentionally interfered with their alleged economic expectancy. We review de novo a district court's grant of a Rule 12(b)(6) motion to dismiss, construing the complaint in the light most favorable to Plaintiffs, accepting their well-pleaded allegations as true, and drawing all reasonable inferences in their favor. Jackson v. Sedgwick Claims Mgmt. Servs., 731 F.3d 556, 562 (6th Cir.2013).
To prevail on a claim of tortious interference with economic expectancy under Michigan law, Plaintiffs must prove:
(i) the existence of a valid business relationship or expectancy; (ii) knowledge of the relationship or expectancy on the part of the defendant; (iii) intentional interference causing or inducing a termination of the relationship or expectancy; and (iv) resultant actual damage.
Lucas v. Monroe Cnty., 203 F.3d 964, 979 (6th Cir.2000) ; see also Cedroni Assocs., Inc. v. Tomblinson, Harburn Assocs., Architects & Planners, Inc., 492 Mich. 40, 821 N.W.2d 1, 3 (2012).
Plaintiffs failed to establish that GM intentionally interfered with their alleged economic expectancy. Plaintiffs argue that they established intentional interference by GM because GM exercised a consent right that it in fact did not have due to the structure of the Framework Agreement and, therefore, GM acted with the necessary wrongful intent in making its statements.
As a preliminary matter, GM appears to have correctly interpreted its contract right under the ATLA to mean that it had a right to consent or withhold its consent to the proposed deal between Saab and Youngman. Under Michigan law, “[t]he primary goal in the construction or interpretation of any contract is to honor the intent of the parties.” Sault Ste. Marie Tribe of Chippewa Indians v. Engler, 271 F.3d 235, 238 (6th Cir.2001) (quoting Rasheed v. Chrysler Corp., 445 Mich. 109, 517 N.W.2d 19, 29 n. 28 (1994) ). To do so, we apply the plain language of the contract itself. Old Kent Bank v. Sobczak, 243 Mich.App. 57, 620 N.W.2d 663, 667 (2000). The plain language of the ATLA unambiguously grants GM a consent right regarding the Framework Agreement. Under the ATLA, GM could terminate the ATLA if Saab “initiate[d]” a sale of all or substantially all of its assets or a direct or indirect change of control...
To continue reading
Request your trial