Speakers of Sport, Inc. v. ProServ, Inc.

• Decision Date: 13 May 1999
• Docket Number: No. 98-3113,98-3113
• Citation: 178 F.3d 862
• Parties: SPEAKERS OF SPORT, INC., Plaintiff-Appellant, v. PROSERV, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

178 F.3d 862

SPEAKERS OF SPORT, INC., Plaintiff-Appellant, v. PROSERV, INC., Defendant-Appellee.

No. 98-3113.

United States Court of Appeals, Seventh Circuit.

May 13, 1999.

Argued March 31, 1999.

Decided May 13, 1999.

Jeffrey I. Cummings (argued), Miner, Barnhill & Galland, Chicago, IL, Charles Barnhill, Jr., Miner, Barnhill & Galland, Madison, WI, for Plaintiff-Appellant.

Chris C. Gair (argued), Freeman, Freeman & Salzman, Chicago, IL, for Defendant-Appellee.

Before POSNER, Chief Judge, and FLAUM and MANION, Circuit Judges.

POSNER, Chief Judge.

The plaintiff, Speakers of Sport, appeals from the grant of summary judgment to the defendant, ProServ, in a diversity suit in which one sports agency has charged another with tortious interference with a business relationship and related violations of Illinois law. The essential facts, construed as favorably to the plaintiff as the record will permit, are as follows. Ivan Rodriguez, a highly successful catcher with the Texas Rangers baseball team, in 1991 signed the first of several one-year contracts making Speakers his agent. ProServ wanted to expand its representation of baseball players and to this end invited Rodriguez to its office in Washington and there promised that it would get him between $2 and $4 million in endorsements if he signed with ProServ--which he did, terminating his contract (which was terminable at will) with Speakers. This was in 1995. ProServ failed to obtain significant endorsement for Rodriguez and after just one year he switched to another agent who the following year landed him a five-year $42 million contract with the Rangers. Speakers brought this suit a few months later, charging that the promise of endorsements that ProServ had made to Rodriguez was fraudulent and had induced him to terminate his contract with Speakers.

The parties agree that the substantive issues in this diversity suit are governed by Illinois law, and we do not look behind such agreements so long as they are reasonable, Spinozzi v. ITT Sheraton Corp., 174 F.3d 842, 849 (7th Cir.1999), as this one is. The contract between Speakers and Rodriguez was made in Illinois, and Speakers is an Illinois corporation with its principal place of business there, which means that performance of the contract--the rendition of Speakers' services as Rodriguez's agent--would occur largely there. Although Rodriguez is not an Illinoisan and the allegedly wrongful act--the promise that lured Rodriguez from Speakers to ProServ--occurred elsewhere, the injury (the disruption of the contractual relationship between Speakers and Rodriguez) occurred in Illinois if it occurred anywhere, and under Illinois conflicts principles the law of the place of the injury presumptively governs in a tort suit. Id. at 844-45.

Speakers could not sue Rodriguez for breach of contract, because he had not broken their contract, which was, as we said, terminable at will. Nor, therefore, could it accuse ProServ of inducing a breach of contract, as in J.D. Edwards & Co. v. Podany, 168 F.3d 1020, 1022 (7th Cir.1999). But Speakers did have a contract with Rodriguez, and inducing the termination of a contract, even when the termination is not a breach because the contract is terminable at will, can still be actionable under the tort law of Illinois, either as an interference with prospective economic advantage, e.g., Dowd & Dowd, Ltd. v. Gleason, 181 Ill.2d 460, 230 Ill.Dec. 229, 693 N.E.2d 358, 370-71 (1998); Fellhauer v. City of Geneva, 142 Ill.2d 495, 154 Ill.Dec. 649, 568 N.E.2d 870, 877-78 (1991); Restatement (Second) of Torts § 766B(b) (1979), or as an interference with the contract at will itself. Europlast Ltd. v. Oak Switch Systems, Inc., 10 F.3d 1266, 1274 (7th Cir.1993) (applying Illinois law); Restatement, supra, § 766 comment g. Nothing turns on the difference in characterization.

There is in general nothing wrong with one sports agent trying to take a client from another if this can be done without precipitating a breach of contract. That is the process known as competition, which though painful, fierce, frequently ruthless, sometimes Darwinian in its pitilessness, is the cornerstone of our highly successful economic system. Competition is not a tort, Keeble v. Hickeringill, 11 East. 574, 103 Eng. Rep. 1127 (K.B. 1706 or 1707); Frandsen v. Jensen-Sundquist Agency, Inc., 802 F.2d 941, 947 (7th Cir.1986), but on the contrary provides a defense (the "competitor's privilege") to the tort of improper interference. See, e.g., Soderlund Bros., Inc. v. Carrier Corp., 278 Ill.App.3d 606, 215 Ill.Dec. 251, 663 N.E.2d 1, 8 (1995); Mannion v. Stallings & Co., 204 Ill.App.3d 179, 149 Ill.Dec. 438, 561 N.E.2d 1134, 1141 (1990); Fred Siegel Co. v. Arter & Hadden, 85 Ohio St.3d 171, 707 N.E.2d 853, 860-61 (1999); Guard-Life Corp. v. S. Parker Hardware Mfg. Corp., 50 N.Y.2d 183, 428 N.Y.S.2d 628, 406 N.E.2d 445, 448-49 (1980); Restatement (Second) of Torts, supra, § 768. It does not privilege inducing a breach of contract, Soderlund Bros., Inc. v. Carrier Corp., supra, 215 Ill.Dec. 251, 663 N.E.2d at 8--conduct usefully regarded as a separate tort from interfering with a business relationship without precipitating an actual breach of contract--but it does privilege inducing the lawful termination of a contract that is terminable at will. Galinski v. Kessler, 134 Ill.App.3d 602, 89 Ill.Dec. 433, 480 N.E.2d 1176, 1182-83 (1985); Europlast Ltd. v. Oak Switch Systems, Inc., supra, 10 F.3d at 1274 (applying Illinois law); Prudential Ins. Co. v. Sipula, 776 F.2d 157, 162-63 (7th Cir.1985) (ditto); Restatement, supra, § 768 comment i. Sellers (including agents, who are sellers of services) do not "own" their customers, at least not without a contract with them that is not terminable at will. Ingle v. Glamore Motor Sales, Inc., 73 N.Y.2d 183, 538 N.Y.S.2d 771, 535 N.E.2d 1311, 1313-14 (1989).

There would be few more effective inhibitors of the competitive process than making it a tort for an agent to promise the client of another agent to do better by him, Triangle Film Corp. v. Artcraft Pictures Corp., 250 F. 981 (2d Cir.1918) (L. Hand, J.)--which is pretty much what this case comes down to. It is true that Speakers argues only that the competitor may not make a promise that he knows he cannot fulfill, may not, that is, compete by fraud. Because the competitor's privilege does not include a right to get business from a competitor by means of fraud, it is hard to quarrel with this position in the abstract, but the practicalities are different. If the argument were accepted and the new agent made a promise that was not fulfilled, the old agent would have a shot at convincing a jury that the new agent had known from the start that he couldn't deliver on the promise. Once a case gets to the jury, all bets are off. The practical consequence of Speakers' approach, therefore, would be that a sports agent who lured away the client of another agent with a promise to do better by him would be running a grave legal risk.

This threat to the competitive process is blocked by the principle of Illinois law that promissory fraud is not actionable unless it is part of a scheme to defraud, that is, unless it is one element of a pattern of fraudulent acts. HPI Health Care Services, Inc. v. Mt. Vernon Hospital, Inc., 131 Ill.2d 145, 137 Ill.Dec. 19, 545 N.E.2d 672, 682 (1989); Steinberg v. Chicago Medical School, 69 Ill.2d 320, 13 Ill.Dec. 699, 371 N.E.2d 634, 641 (1977); Doherty v. Kahn, 289 Ill.App.3d 544, 224 Ill.Dec. 602, 682 N.E.2d 163, 176 (1997); Desnick v. American Broadcasting Cos., 44 F.3d 1345, 1354 (7th Cir.1995). By requiring that the plaintiff show a pattern, by thus not letting him rest on proving a single promise, the law reduces the likelihood of a spurious suit; for a series of unfulfilled promises is better (though of course not conclusive) evidence of fraud than a single unfulfilled promise.

Criticized for vagueness, e.g., id. at 1354; Stamatakis Industries, Inc. v. King, 165 Ill.App.3d 879, 117 Ill.Dec. 419, 520 N.E.2d 770, 772-73 (1987) (and think only of the difficulty that courts have had in defining "pattern" under the RICO statute), and rejected in most states, e.g., Engalla v. Permanente Medical Group, Inc., 15 Cal.4th 951, 64 Cal.Rptr.2d 843, 938 P.2d 903, 917 (1997); Palm Harbor Homes, Inc. v. Crawford, 689 So.2d 3, 9 (Ala.1997); 2 Fowler V. Harper, Fleming James, Jr. & Oscar S. Gray, The Law of Torts § 7.10, p. 477 n. 19 (2d ed.1986), the Illinois rule yet makes sense in a case like this, if only as a filter against efforts to use the legal process to stifle competition. Consider in this connection the characterization by Speakers' own chairman of ProServ's promise to Rodriguez as "pure fantasy and gross exaggeration"--in other words, as puffing. Puffing in the usual sense signifies meaningless superlatives that no reasonable person would take seriously, and so it is not actionable as fraud. Noll v. Peterson, 338 Ill. 552, 170 N.E. 756, 761 (1930); Evanston Hospital v. Crane, 254 Ill.App.3d 435, 193 Ill.Dec. 870, 627 N.E.2d 29, 36 (1993); All-Tech Telecom, Inc. v. Amway Corp., 174 F.3d 862, 867-68 (7th Cir.1999). Rodriguez thus could not have sued ProServ (and has not attempted to) in respect of the promise of $2-$4 million in endorsements. If Rodriguez thus was not wronged, we do not understand on what theory Speakers can complain that ProServ competed with it unfairly.

The promise of endorsements was puffing not in the most common sense of a cascade of extravagant adjectives but in the equally valid sense of a sales pitch that is intended, and that a reasonable person in the position of the "promisee" would understand, to be aspirational rather than enforceable--an expression of hope rather than a commitment. It is not as if ProServ proposed to employ Rodriguez and pay him $2 million a year. That would be the kind of promise that could found an enforceable obligation. ProServ proposed merely to...