Western Meat Co., Inc. v. IBP, Inc.

• Decision Date: 01 March 1988
• Docket Number: No. 86 Civ. 2134 (RLC).,86 Civ. 2134 (RLC).
• Citation: 683 F. Supp. 415
• Parties: WESTERN MEAT COMPANY, INC., Plaintiff, v. IBP, INC., f/k/a Iowa Beef Products, Inc. and Arthur Stern Meat Co., Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

683 F. Supp. 415

WESTERN MEAT COMPANY, INC., Plaintiff, v. IBP, INC., f/k/a Iowa Beef Products, Inc. and Arthur Stern Meat Co., Inc., Defendants.

No. 86 Civ. 2134 (RLC).

United States District Court, S.D. New York.

March 1, 1988.

Morris M. Karp, New York City, for plaintiff.

Phillips, Nizer, Benjamin, Krim & Ballon, New York City, for defendant IBP, Inc.; Janet P. Kane, Mitchell K. Aaron, of counsel.

Jerome M. Luks, New York City, for defendant Arthur Stern Meat Co., Inc.

OPINION

ROBERT L. CARTER, District Judge.

In this diversity action, Western Meat Company, Inc. ("Western Meat"), a New York wholesale meat merchant, alleges that its principal supplier and one of its competitors maliciously and unlawfully conspired to drive it out of business. On the pleadings, affidavits, and discovery materials presented to the court, the defendants move for summary judgment and an order dismissing the complaint pursuant to Rule 56, F.R.Civ.P.

Background

Once a profitable meat wholesaler at the Hunt's Point Co-operative in New York, Western Meat went out of business in March, 1985. For approximately twenty-five years, it had purchased meat from Iowa Beef Products, Inc. ("IBP"), a slaughterer that distributes carcasses to meat wholesalers. Because its customers demanded a very high grade of beef, Western Meat purchased almost exclusively "grade 1 or 2" beef, produced by Holstein cattle weighing more than 900 pounds. IBP became the plaintiff's principal supplier.

Arthur Stern Meat Co., Inc. ("Stern"), also operated out of Hunt's Point and purchased meat from IBP for more than twenty years. Stern usually bought a lower grade of beef, known as "grade 3, 4, or 5" meat, produced by native cattle in the 600-900 range.

On July 30, 1984, Western Meat received its last shipment of IBP beef. David Layhee, an IBP vice-president for sales and marketing, informed the plaintiff that IBP could no longer supply the type of beef that Western Meat needed: "Our inability to service your needs is created by a combination of reduced production numbers by IBP's kills, the unavailability of the type of carcasses that you prefer, and our need for the other carcasses in our own breaking plants." Layhee Letter, Sept. 4, 1984, ¶ 2; see IBP's Rule 3(g) Statement, ¶ 11. IBP now offers another explanation for its cessation of shipments to the plaintiff: Western Meat's checks to IBP were returned frequently for lack of sufficient funds.

Joseph Staiman, the president of Western Meat, flew to Iowa in October, 1984, to confront IBP officials about their decision to discontinue his shipments. He alleges that on this trip he learned of an illicit deal between IBP and Stern to drive him out of business. Staiman contends that Charles Mostek, an IBP vice-president; Thomas Connell, an IBP executive in charge of the plaintiff's account, and Burt Wartell, the president of Stern, agreed that IBP would cease shipments to Western Meat and sell high-grade beef to Stern, which would then resell it at a premium to the plaintiff.

Staiman attested that, during his meeting with IBP officials, Mostek told him, "I made a deal for you, you are going to get the same meat, you pay 2 cents more, Wartell's going to give you the same credit like sic Iowa Beef." Staiman Aff't, ¶ 11. Mostek and Connell further allegedly said: "You're going to get all the meat, number 1 and number 2 meat, as much as you want through Arthur Stern and you pay him 2 cents more a pound." Id., ¶ 12. When he challenged this arrangement, Staiman allegedly was told, "Joe, don't waste your time. The deal is made." Id., ¶ 10.

IBP denies that it conspired to force Western Meat to purchase beef at two cents more per pound from Stern. Kane Reply Aff't, ¶ 9. Stern adopts IBP's statement of facts and law.¹ See Luks Aff't, ¶ 2. It adds that, although it was unable to buy as much lean beef as it wanted from IBP in 1984, it nonetheless agreed to "accommodate" Western Meat by selling part of its IBP shipments to the plaintiff. Both defendants deny that their actions toward Western Meat were malicious or unlawful. See Kane Aff't, ¶ 12; Luks Aff't, ¶¶ 3-7; Luks Reply Aff't, ¶ 2.

Discussion

In this action, Western Meat alleges that IBP and Stern are liable in prima facie tort for maliciously conspiring to fix prices and deprive it of its meat supply; that Stern tortiously interfered with Western Meat's business relations with IBP; and that both defendants tortiously interfered with the plaintiff's business relations with its customers.² See Plaintiff's Mem. at 3-4; Staiman Aff't, ¶ 5.

Since Board of Educ. v. Farmingdale Classroom Teachers Ass'n, Inc., 38 N.Y.2d 397, 380 N.Y.S.2d 635, 644-645, 343 N.E.2d 278 (1975), it has been permissible under New York law to plead traditional tort and prima facie tort in the alternative, even where, as here, the claims rest upon a single set of allegations.³See Nat'l Nutritional Foods Ass'n v. Whelan, 492 F.Supp. 374, 383 (S.D.N.Y.1980) (Sofaer, J.). In Farmingdale, the New York Court of Appeals recognized that "there may be instances where the traditional tort cause of action will fail and plaintiff should be permitted to assert the alternative claim." Id. The contrary rule would be inconsistent with modern procedure and should not be "blindly applied." Belsky v. Lowenthal, 62 A.D.2d 319, 405 N.Y.S.2d 62, 65 (1st Dep't 1978), aff'd, 47 N.Y.2d 820, 418 N.Y. S.2d 573, 392 N.E.2d 560 (1979).

To prevent double recoveries, the court added that "once a traditional tort has been established, the allegation with respect to prima facie tort is rendered academic" and cannot be grounds for recovery. Id. At the pleading stage, the plaintiff is entitled to have both theories of recovery proceed in tandem.

Tortious Interference Claim

To prove tortious interference, Western Meat must establish that the defendants interfered with its business relations with third parties, and that they did so "either with the sole purpose of harming the plaintiff or by means that are `dishonest, unfair, or in any other way improper.'"⁴ Martin Ice Cream Co. v. Chipwich, Inc., 554 F.Supp. 933, 945 (S.D.N.Y. 1983) (Goettel, J.) (citation omitted); see NRT Metals, Inc. v. Laribee Wire, Inc., 102 A.D.2d 705, 476 N.Y.S.2d 335, 338 (1st Dep't 1984) (proof of malice or unlawful means is essential in an action for interference with at-will business relationships); Rosenberg v. Del-Mar Div., Champion Int'l Corp., 56 A.D.2d 576, 391 N.Y.S.2d 452, 453 (2d Dep't 1977) (interference with business relations is not generally actionable unless unlawful means were used or the actor's sole motive was to injure the plaintiff); Cosmopolitan Film Distribs., Inc. v. Feucht-Wanger Corp., 226 N.Y.S. 2d 584, 591 (Sup.Ct.1962) ("interference with an at will agreement may be actionable if accomplished by means which are themselves tortious or if motivated solely by malice").

At the summary judgment stage, the plaintiff must establish a genuine triable issue with respect to each of these elements. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 2552-2553, 91 L.Ed.2d 265 (1986); Republic Nat'l Bank of New York v. Eastern Airlines, Inc., 815 F.2d 232 (2d Cir.1987). Mere "metaphysical doubt as to the material facts" does not suffice. Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). The inquiry must be "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986).

IBP and Stern argue that the plaintiff has established neither that it had business relations with third parties nor that the defendants' actions were motivated by malice.⁵ In support of their first argument, the defendants point to Staiman's testimony that there is no such thing as an oral or written contract in the meat business. Kane Reply Aff't, ¶¶ 18-21. "Today you buy from me, tomorrow you buy from another guy. You don't want to buy, go buy from somebody else." Id. "There could have been no interference ... with plaintiff's business relations," they conclude, "since no continuing relations between plaintiff and a third party existed." Id.

The defendants' argument is tantamount to a claim that all at-will business relationships are incapable of suffering tortious interference. The law is clear, however, that interference with a voidable contract or an at-will arrangement is actionable if the interference was motivated by malice or was accomplished by tortious means. Cosmopolitan Film Distributors, Inc. v. Feucht-Wanger Corp., 226 N.Y.S.2d at 591; see Guard-Life Corp. v. S. Parker Hardware Mfg. Corp., 50 N.Y.2d 183, 428 N.Y.S.2d 628, 634, 406 N.E.2d 445, 450 (1980) (no liability for interference with a voidable contract absent employment of wrongful means, unlawful restraint of trade, or lack of competitive motive); Koeppel v. Schroder, 122 A.D.2d 780, 505 N.Y.S.2d 666, 669 (2d Dep't 1986) (tortious interference with a contract terminable at will requires proof of wrongful interference such as fraudulent representations or threats).

Western Meat has satisfactorily shown that it had recurring business relations with third parties. Staiman testified that he had been selling to one particular butcher for "twenty some odd years," Staiman Deposition at 33; that he sold beef to a pool of hundreds of butchers, id. at 40; and that he specialized in serving "Spanish and Italian trade" customers who demanded very lean beef. Id. at 55-57. The defendants concede that Western Meat had a particular clientele and "catered ... to the Spanish and Italian trade." Kane Aff't, ¶ 5. They therefore cannot be heard to deny that Western Meat had ongoing business relations with third parties.⁶

With respect to the element of malice, the plaintiff's proof is less than sufficient. Malice consists of a motivation to...