Upjohn Co. v. Riahom Corp.
| Decision Date | 03 December 1986 |
| Docket Number | Civ. A. 86-203 CMW. |
| Citation | 650 F. Supp. 485 |
| Parties | The UPJOHN COMPANY, Plaintiff, v. RIAHOM CORPORATION and J.P. Utsick, Defendants. |
| Court | U.S. District Court — District of Delaware |
Jeffrey B. Bove, of Connolly, Bove, Lodge & Hutz, Wilmington, Del. of counsel: Thomas J. Macpeak, Peter D. Olexy, J. Frank Osha, and Cynthia Clarke Dale, of Sughrue, Mion, Zinn, Macpeak & Seas, Washington, D.C., Robert A. Armitage, and Lawrence T. Welch, of The Upjohn Co., Kalamazoo, Mich., for plaintiff.
David A. Anderson, of Potter, Anderson & Corroon, Wilmington, Del. of counsel: Berj A. Terzian, Brian M. Poissant, and Victor N. Balancia, of Pennie & Edmonds, New York City, for defendants.
This action has its roots in a Complaint filed May 6, 1986 by the Upjohn Company ("Upjohn") against Riahom Corporation ("Riahom") alleging unfair competition and patent infringement of Upjohn's widely publicized hair growth drug minoxidil. This Court granted Upjohn's Motion for a Preliminary Injunction on the unfair competition count on August 6, 1986. The Court's Opinion in Upjohn Co. v. Riahom Corp., 641 F.Supp. 1209 (D.Del.1986), narrates the factual background to the current controversy.
On June 13, 1986, defendant Riahom, and its president J.P. Utsick, filed an Answer and Counterclaim. The Counterclaim asserts a cause of action for tortious interference with business relations. Upjohn allegedly interfered with the business relationship between Riahom and one of its suppliers, Cad-Cam, by hiring a private detective to threaten Cad-Cam with reprisals if the company continued to assist Riahom in selling a drug in violation of the patent laws.
On August 23, 1986, Upjohn moved for summary judgment on Riahom's Counterclaim, pursuant to Fed.R.Civ.P. 56(a).
The Court denies the Motion.
This case has previously been described as a "hair raising saga." 641 F.Supp. at 1212. The facts relevant to this motion lend new meaning to that characterization.
In late May, 1986, Anthony Makonnen, a private investigator hired by the Upjohn Corporation, paid a visit to the San Francisco headquarters of Cad-Cam Corporation, a firm that manufactures boxes for Riahom, a distributor of its own hair growth drug.1 The investigator informed Robert DeNola, President of Cad-Cam, that he might be involved in manufacturing packaging for an illegal, mislabelled product that was not approved by the FDA and that violated Upjohn's patent. The investigator further told DeNola that Upjohn was suing Riahom "with all guns available."2 According to DeNola, the conversation transpired in the following manner:
The investigator said Upjohn was defending a patent and that he (the investigator) was here because he wanted to make certain anyone supplying printing or packaging for Riahom was stopped.
On April 4, 1986, Riahom had entered into a contract with Cad-Cam to produce ten thousand boxes for use in the packaging of Riahom's hair care product, RIVIXIL. This contract was confirmed in an April 5, 1986 letter written by Riahom's Treasurer. (DA-s 1, p. 1). Pursuant to the agreement, Cad-Cam would produce boxes in accordance with specifications to be provided by Riahom. Additionally, Riahom would pay a one-time charge not to exceed $1,200.00. Enclosed with the Treasurer's April 5th letter, was a check for $6,000.00, representing a fifty percent down payment on the total charge for the boxes. (DA-s 3, p. 2). It was agreed that delivery of the boxes would take place at the end of April, 1986. (DA-s 3, p. 2).
Mr. DeNola subsequently communicated to Riahom that the April delivery date would have to be postponed until the end of May, 1986. Riahom's Treasurer, in early May, 1986, sought to cancel the agreement with Cad-Cam, orally communicated this to Mr. DeNola, and confirmed it in a May 13, 1986 letter. (DA-s 4, p. 2). This letter was followed by telephone discussions between DeNola and Riahom. DeNola argued that Cad-Cam had made substantial preparations to produce the RIVIXIL boxes and intended to retain Riahom's $6,000 down payment. He suggested that the best solution for both parties would be for Cad-Cam to proceed with the box production. (DA-s 5, p. 2).
Around this time, however, Mr. DeNola was visited by Upjohn's private investigator. According to DeNola, this visit caused Cad-Cam to cease any further business relationship with Riahom. (DA-s 7, p. 2).
The Court will grant summary judgment only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). Any doubt as to the existence of genuine issues of fact will be resolved against the moving party and any reasonable inferences from the facts will be resolved in favor of the party against whom the judgment may be entered. Continental Insurance Co. v. Bodie, 682 F.2d 436, 438 (3d Cir.1982); Peterson v. Lehigh Valley Dist. Council, United Bhd. of Carpenters and Joinders, 676 F.2d 81, 84 (3d Cir.1982); Devex v. General Motors Corp., 579 F.Supp. 690, 693 n. 3 (D.Del.1984). See Goodman v. Mead Johnson & Co., 534 F.2d 566 (3d Cir.1976), cert. denied, 429 U.S. 1038, 97 S.Ct. 732, 50 L.Ed.2d 748 (1977).
As a practical matter, "if the parties disagree about material facts and if the non-moving party would be entitled to relief if the jury believed its version of the facts, then summary judgment is inappropriate." Landtect Corp. v. State Mutual Life Assur. Co., 605 F.2d 75, 79 (3d Cir. 1979); Adickes v. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970); see e.g., United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962); 6 J. Moore, Federal Practice s 56.133 (2d ed. 1966).
Defendants' counterclaim purports to state a claim for tortious interference with business relations. In this jurisdiction, this tort is known as an "inducement of breach of contract." Upjohn does not deny that its private investigator visited Cad-Cam. Instead, Upjohn makes two arguments. First, that as a factual matter, by the time Anthony Makonnen visited DeNola, Riahom had already cancelled its contract with Cad-Cam. Second, Upjohn contests that, as a matter of law, an assertion of a bona fide legal claim against Riahom for patent infringement cannot constitute tortious interference with business relations. Both arguments are too thin to prevail.
This Court adopts the Restatement (Second) of Torts definition of tortious interference with contractual relations:
One who intentionally and improperly interferes with the performance of a contract (except a contract to marry) between another and a third person by inducing or otherwise causing the third person not to perform the contract, is subject to liability to the other for the pecuniary loss resulting to the other from the failure of the third person to perform the contract. § 766 quoted in Manufactures Hanover Trust Co. v. Kearney Chemicals, Inc., 468 F.Supp. 1107, 1111 (D.Del.1979).
The comments to the Restatement further suggest that a contract is not a necessary precondition to maintaining a successful action for tortious interference with business relations. Restatement (Second) of Torts § 766 comment C.
Delaware law recognizes this expansive definition of tortious interference with business relations. In Unit, Inc. v. Kentucky Fried Chicken Corporation, 304 A.2d 320, 332 (Del.Super.1973), the Delaware Superior Court recognized that "one who, without privilege to do so, induces or otherwise purposely causes a third person not to ... enter into or continue a business relation with another is liable to the other for the harm caused thereby." See also Bowl-Mar Company v. Brunswick Corporation, 297 A.2d 61, 65 (Del.Ch.1972)4.
This broad definition has its historical roots in early English Law. In Lumley v. Gye, 2 El. & Bl. 216, 118 Eng.Rep. 749 (1893), a singer under contract to perform at the plaintiff's theatre was induced by the defendant, who operated a rival theatre, to break her contract with the plaintiff in order to sing for the defendant. The decision in favor of the plaintiff rested largely on the analogy of the rules relating to enticement of another's servants. Subsequent cases extend the rule of Gye to contracts other than contracts of service and to interference with advantageous business relations, even when they were not cemented by a contract. See Restatement, supra, § 766 comment C. See also R. Epstein "The Pirates of Pennzoil," 32 U.Chi.L.Sch. Record 3 (1986).
Upjohn's motion will be defeated if there is a reasonable factual dispute as to either of two separate issues: (1) whether there was a Riahom/Cad-Cam contract or (2) whether Riahom/Cad-Cam had an ongoing business relationship.
Cad-Cam rebuts Upjohn's contention that the Riahom/Cad-Cam contract was cancelled prior to the visit of Upjohn's agent to Mr. DeNola. In a sworn affidavit, DeNola confirms that the contractual relationship between Cad-Cam and Riahom did not terminate with the receipt of Riahom's May...
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...tort has not been pled in the Amended Complaint, and therefore will not be addressed by the Court. See, e.g., UpJohn Co. v. Riahom Corp., 650 F. Supp. 485, 487 (D. Del. 1986) (noting that Delaware law recognizes an independent tort "known as an 'inducement of breach of contract'"). 13. Beca......