Kempner Mobile Inc v. Southwestern Bell Mo ( 2005 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
Nos. 04-3411 & 04-3561
KEMPNER MOBILE ELECTRONICS,
INCORPORATED,
Plaintiff-Appellant,
Cross-Appellee,
v.
SOUTHWESTERN BELL MOBILE SYSTEMS,
doing business as Cingular Wireless,
Defendant-Appellee,
Cross-Appellant.
____________
Appeals from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 02 C 5403—Sidney I. Schenkier, Magistrate Judge.
____________
ARGUED FEBRUARY 8, 2005—DECIDED NOVEMBER 3, 2005
____________
Before RIPPLE, EVANS, and WILLIAMS Circuit Judges.
WILLIAMS, Circuit Judge. This continuing litigation has
spawned a preliminary injunction hearing, two trials
and now this appeal of several rulings in Cingular’s favor.
We affirm all the rulings except that we find that judgment
as a matter of law should have been entered in Cingular’s
favor on Kempner’s tortious interference with prospective
economic advantage claim because the evidence in this case
reveals that Cingular did nothing more to “interfere” with
2 Nos. 04-3411 & 04-3561
Kempner than compete for business in the cellular phone
market. We, therefore, reverse the district court’s denial of
Cingular’s motion for judgment as a matter of law on this
claim. We affirm all the remaining rulings of the district
court.
I. BACKGROUND
This diversity lawsuit arises out of disputes between
Kempner Mobile Electronics, Inc. (“Kempner”), an Illinois
corporation with its principal place of business in Illinois,
and Southwestern Bell Mobile Systems, d/b/a as Cingular
Wireless (“Cingular”), a Delaware limited liability corpora-
tion with its principal place of business in Georgia.
Kempner engaged in the marketing and sale of, among
other things, cellular telephone products and services.
Cingular was involved in the development, establishment
and sale of cellular telephones and services in various parts
of the United States, including the Chicago metropolitan
area. In late 1999, Kempner and Cingular entered into an
Authorized Agency Agreement (“1999 Agreement”), which
was the last of several written agreements entered into by
the parties dating back to the beginning of their relation-
ship in 1989.
The 1999 Agreement expressly states that the relation-
ship between the parties was not a “general agency, joint
venture, partnership, employment relationship or fran-
chise.” The 1999 Agreement defines “Authorized Services”
as the services offered by Cingular that Kempner was
allowed to sell under the 1999 Agreement. Under the
1999 Agreement, Kempner was to sell only cellular radio
service (“CRS”), not commercial radio services (“CMRS”). In
addition, Kempner could also sell paging services or other
customer premises equipment (“CPE”) offered by companies
other than Cingular. And Kempner was authorized to sell
or lease CPE, the cellular telephones or other related
hardware necessary for the customer to use the Cingular
Nos. 04-3411 & 04-3561 3
cellular services marketed by Kempner. The 1999 Agree-
ment authorized Kempner to sell these products and
services in a specific “Area,” the six-county Chicago metro-
politan area, defining “Subscribers” as customers of the
Authorized Services provided by Cingular; each telephone
number assigned to a customer of Authorized Services was
counted as a separate “Subscriber.”
Under the 1999 Agreement, Kempner was a “non-exclu-
sive authorized agent” for Cingular, in that Cingular
reserved the right to market its own cellular services and
CPE “in the same geographical areas served by [Kempner],
whether through [Cingular’s] own representatives or
through others including, but not limited to, other autho-
rized agents, retailers, resellers and distributors.” However,
the 1999 Agreement prohibited Kempner from acting as a
representative or agent of any other reseller or provider of
cellular services in the six-county Chicago metropolitan
area, or to attempt to persuade Subscribers of Cingular’s
services to obtain cellular service from another provider.
Cingular retained sole authority to establish the rates,
terms and conditions of the sale by Kempner of Author-
ized Services. The 1999 Agreement contains no provision
that specifies how the rates, terms and conditions for
the sale of services offered by Kempner would compare
to that offered by other outside agencies, or to company
stores or in-house sales outlets. The persons to whom
Kempner sold cellular service on behalf of Cingular became
customers of Cingular. On the other hand, individuals who
bought from Kempner CPE, but not Cingular cellular
services became customers of Kempner, and Kempner had
the authority to set the price at which it would sell CPE.
Under the 1999 Agreement, Kempner was compensated
for sales on a commission basis. Kempner received a com-
mission on both pre-paid and post-paid contracts based on a
percentage of the initial payments. With respect to
4 Nos. 04-3411 & 04-3561
post-paid contracts, Kempner also received a residual
commission, based on the payments made by the customer
on their cellular contract going forward. The 1999 Agree-
ment also provided that Cingular could withhold an offset
against this commission stream for amounts past due
and owing from Kempner to Cingular.
In addition to requiring that Cingular pay Kempner
commissions for sales made, the 1999 Agreement required
Cingular to provide Kempner with promotional literature,
sales brochures and information for preparation of catalogs,
advertising and other promotional activities, and a reason-
able amount of sales training. The 1999 Agreement also
allowed Kempner to use certain Cingular marks in market-
ing Cingular’s services.
The 1999 Agreement provided that for a period of one
year after its termination or expiration, Kempner could
not engage in any of the following acts:
(1) directly or indirectly, induce, influence or sug-
gest to any Subscriber of CRS to purchase CRS or
any other CMRS from another reseller or provider
of CRS or CMRS in the Area;
(2) directly or indirectly, induce, influence or sug-
gest to any Subscriber of any other Authorized
Service to purchase a competing service from any
provider or reseller of such competing service in the
Area, whether or not the competing service
is technologically the same as the Authorized Ser-
vice in question;
(3) under any circumstances or conditions whatso-
ever, directly or indirectly, as an individual, part-
ner, stockholder, director, officer, employee, man-
ager or in any other relation or capacity whatsoever
engage in the sale or promotion of CRS, CMRS, or
any other authorized service on behalf of any
Nos. 04-3411 & 04-3561 5
competing reseller or provider of such service in the
Area;
(4) directly or indirectly, allow any other person,
firm or other entity to use the name, trade name,
goodwill or any other assets or property of
[Kempner or Cingular] in any manner in connection
with such other entities’ sale of CRS, CMRS or any
other Authorized Service on behalf of a competing
reseller or provider in the Area, . . . and [Kempner]
specifically agrees not to transfer, assign, authorize
or consent to the transfer of [a Kempner] telephone
number to any other person, firm or other entity
upon expiration or termination of this Agreement.
The 1999 Agreement states that the consideration
provided by Cingular for these non-compete provisions
was Cingular’s grant to Kempner “of the right to use
the Marks, the right to advertise affiliation with [Cingular]
as an authorized agent of [Cingular] and great value of
the goodwill associated with [Kempner’s] ability to use
the Marks . . . and . . . the value of specialized, technical
knowledge of the cellular industry and other Services to
be imparted by [Cingular] to [Kempner] from time to time.”
On May 6, 2002, Kempner filed an eleven-count complaint
against Cingular seeking damages relating to the 1999
Agreement. Kempner asserted various claims for breach of
contract, common law tort and statutory tort, arguing that
it should prevail in its suit because (1) the restrictive
provisions in the 1999 Agreement were unenforceable as
Cingular had allegedly breached the 1999 Agreement, (2)
Cingular made misrepresentations to Kempner and (3)
Cingular wrongfully contacted Kempner’s customers. In
addition, Kempner sought a declaration that Kempner was
not bound by any of the terms of the 1999 Agreement,
including its exclusivity and non-compete provisions, which,
among other things, prohibited Kempner from selling
6 Nos. 04-3411 & 04-3561
competitive services. Kempner also sought an injunction to
prevent enforcement of the exclusivity and non-compete
provisions of the Agreement and to require Cingular to
maintain Kempner as an authorized agent but excusing
Kempner from remaining exclusive.
On August 20, 2002, after removing the action to fed-
eral court, Cingular filed a cross-motion for preliminary
injunction to enforce the exclusivity and non-compete
provisions of the Agreement and preclude Kempner from
selling wireless services on behalf of competing carriers.
The court held a preliminary injunction hearing on the
issues and held that: (a) the exclusivity provision of the
Agreement was enforceable and that Cingular had properly
terminated Kempner’s agency for violation of the exclusive
agency provision; (b) the post-termination, non-compete
provision was enforceable with respect to Kempner’s sales
to existing Cingular customers activated by Kempner; and
(c) the non-compete provision was not enforceable to
preclude Kempner from selling to non- Cingular customers
on behalf of carriers competing with Cingular.
As a result of voluntarily withdrawing some claims and
the district court’s grant of summary judgment in favor
of Cingular on other claims, for trial Kempner was left with
two claims of breach contract, as well as a claims
for common-law fraud and tortious interference with
economic advantage. In addition, Cingular’s two counter-
claims for breach of contract remained. On November 17,
2003, the first day of trial, Cingular presented a motion
to bar Kempner’s expert, which the district court denied
without prejudice. With the consent of the parties, the
trial was bifurcated on issues of liability and damages.
At the close of Kempner’s case in chief on liability,
Cingular moved for judgment as a matter of law under
Federal Rule of Civil Procedure 50(a) on all Kempner’s
claims. The court denied the motion in its entirety.
Nos. 04-3411 & 04-3561 7
Cingular did not renew its Rule 50(a) motion at the close of
its case in chief, or at any other time before submission of
the case to the jury. On November 21, 2003, the case was
submitted to the jury, and the jury returned verdicts in
favor of Kempner and against Cingular on all four of
Kempner’s claims and on both of Cingular’s counterclaims.
After trial, Cingular filed a motion for judgment as a matter
of law, or in the alternative, for a new trial on all claims.
Following briefs and oral argument, the district court
granted Cingular a new trial on Kempner’s tortious inter-
ference claim and on Cingular’s equipment receivable
counterclaim.
In preparation for the damages phase of the first trial,
Cingular renewed its motion to bar Kempner’s evidence
concerning fraud damages, and Kempner filed a memoran-
dum in support of its request for punitive damages. The
district court granted Cingular’s motion to bar expert
testimony on the fraud claim and granted Kempner’s
motion to submit evidence for award on punitive damages.
On July 22, 2004, at the pre-trial conference before the
second liability trial, the district court precluded Kempner
from offering evidence or argument that Kempner was
not liable for paying amounts due on Cingular’s equip-
ment receivables counterclaim because of a claimed offset
from the 1999 Agreement. As a consequence, the parties
stipulated to liability and damages on the equipment
receivables claim.
The second trial on liability regarding Kempner’s
claims of tortious interference began on August 2, 2004, and
at the close of Kempner’s presentation of evidence, the court
denied Cingular’s motion for judgment as a matter of law on
the tortious interference claim and on Kempner’s claim for
punitive damages. At the close of all evidence, Cingular
renewed its motion for judgment as a matter of law. This
time the court granted the motion as to punitive damages
8 Nos. 04-3411 & 04-3561
but again denied the motion as to tortious interference. The
jury returned a verdict in favor of Kempner. Thereafter, the
parties stipulated to the actual damages to be awarded on
each of the remaining claims, eliminating the need for any
further damages proceedings. On August 17, 2004, the court
entered judgment on all the parties’ respective claims.
II. ANALYSIS
A. The Trial Court Properly Excluded Kempner’s Evidence
of Fraud Damages.
In its fraud claim, Kempner claimed that in May 2001,
Cingular represented to Kempner that Kempner would
receive the same equipment and service pricing as was
available to Cingular’s internal distribution channels.
Kempner argues that these representations were false, and
that Kempner decided not to terminate its relationship with
Cingular and accept an attractive offer to become a master
agent for Nextel in justifiable reliance on Cingular’s
representations. Kempner claims that by the time it fully
recognized that Cingular’s representations were indeed
false, the offer with Nextel was no longer available. A jury
returned a verdict in favor of Kempner and against
Cingular on this fraud claim.
Following the jury verdict, but before proceeding on
damages, the court granted Cingular’s motion to bar
Kempner’s expert testimony on fraud damages. In grant-
ing Cingular’s motion, the court held that Kempner’s evi-
dence of damages failed to match the theory of fraud upon
which Kempner had prevailed at trial. The court found that
Kempner’s expert assumed that Kempner would have been
able to sell for both Nextel and Cingular simultaneously,
while the theory that Kempner presented at trial was that
Kempner would have sold for Nextel, and not for Cingular,
Nos. 04-3411 & 04-3561 9
but for misrepresentations made by Cingular. Furthermore,
the court noted that the damages calculation also included
several months of profit that preceded the alleged fraud,
which would be unrecoverable under any set of facts.
We review de novo whether the district court applied
the appropriate legal standard in making its decision to
admit or exclude expert testimony, and we review for abuse
of discretion the district court’s choice of factors to include
within that framework as well as its ultimate conclusions
regarding the admissibility of expert testimony. U.S. v.
Parra, 402 F.3d 752, 758 (7th Cir. 2005). Expert testimony
is admissible “[i]f scientific, technical, or other specialized
knowledge will assist the trier of fact to understand the
evidence or to determine a fact in issue” FED. R. EVID. 702.
Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993)
laid the foundation for this rule, which was designed to
ensure that “any and all scientific testimony or evidence
admitted is not only relevant, but reliable.” Parra, 402 F.3d
at 758 (quoting Smith v. Ford Motor Co., 215 F.3d 713, 718
(7th Cir. 2000)). A court abuses its discretion when it
commits “a serious error of judgment, such as reliance on a
forbidden factor or failure to consider an essential factor [in
admitting or excluding expert testimony].” Smith, 215 F.3d
at 717 (quoting Powell v. AT&T Comm., Inc., 938 F.2d 823,
825 (7th Cir. 1991)).
On appeal, Kempner never addresses the disconnect
between its damages evidence and the theory of liability
it prevailed upon at trial. Instead, Kempner concedes
that its damages evidence assumed that the exclusivity
provision of the 1999 Agreement was unenforceable such
that Kempner would have been able to sell both Nextel and
Cingular services. (Appellant Opening Br. at 23.) Even if
evidence regarding whether the restrictive covenant
was enforceable had been allowed to go trial, Kempner’s
damages evidence could not be offered as a basis for its
10 Nos. 04-3411 & 04-3561
theory of fraud because Kempner’s damages evidence failed
to separate profits Kempner would have gained from sales
of Nextel products and services from profits gained from
sales of Cingular products and services. Kempner admits
that the “[d]amages [evidence was] not individually calcu-
lated on each theory [of fraud presented at trial], as the
damages model reflect[ed] overall profitability levels.”
(Appellant’s Opening Br. at 20.) We agree with the decision
of the district court that the expert testimony submitted by
Kempner would not assist the trier of fact to determine the
issue of fraud damages in this case. We find, therefore, that
the district court properly applied Federal Rule of Evidence
702 to exclude the damages evidence submitted by
Kempner’s expert as irrelevant and inapplicable to its
theory of liability.
In the alternative, Kempner argues that it should have
been allowed to amend its damage disclosures. In excluding
Kempner’s theory of damages, the court found that
Kempner’s failure to disclose relevant expert testimony was
neither justified nor harmless. The court explained, on the
record, that after its ruling on summary judgment only a
single fraud claim remained for Kempner to pursue at trial,
and that Kempner had ample opportunity to submit
damages calculations that matched the remaining theory,
but Kempner failed to do so. Instead, Kempner submitted
a modified damages report that did not match the remain-
ing fraud theory of the case. In explaining that Kempner’s
time to amend included the time between the court’s ruling
on summary judgment and trial, the court reasoned that
not only did Kempner not take advantage of the time
available and allotted to amend its disclosure, but Kempner
never requested to amend the expert report or to continue
the trial to prepare a new expert report.
In addition, the district court found Kempner’s failure
to amend was not harmless as Cingular would be prejudiced
Nos. 04-3411 & 04-3561 11
if the court allowed Kempner, after trial and after a jury
verdict, to submit a new damages report. The
court determined that if it would have allowed Kempner
to amend, then its allowance would have a prolonged de-
lay in the already protracted proceedings requiring addi-
tional discovery and increased costs. Moreover, the court
found that allowing Kempner to offer a different damages
theory at such a late stage in the game after a liability
finding would have unfairly changed the entire landscape
of the case to the detriment of Cingular. We agree with the
district court’s reasoning and find that the district court did
not abuse its discretion in denying Kempner the opportu-
nity to amend its damages report.
Finally, Kempner argues that district court erred by
not letting Kempner at least submit out-of-pocket dam-
ages in lieu of actual damages. The district court denied
Kempner’s request to pursue out-of-pocket damages because
Kempner failed to identify any out-of-pocket cost damages
attributable to fraud in its final pretrial order. The district
court found Kempner’s omission unjustifiable and prohib-
ited Kempner from proceeding with testimony on the issue
at trial. Based on these findings and our review of the
record, we find that the district court did not abuse its
discretion in denying Kempner’s request to offer evidence
not disclosed in its final pretrial order.
12 Nos. 04-3411 & 04-3561
B. The District Court Did Not Abuse Its Discretion in
Refusing to Permit Kempner to Challenge the Exclusiv-
ity Provision of the Contract at Trial.
During the preliminary injunction hearing, Kempner
presented evidence regarding Cingular’s lax enforcement of
the exclusivity provisions of its contract. The district court
concluded that this evidence did not demonstrate a likeli-
hood of success on the issue, but left open the possibility
that the exclusivity provision could be deemed unenforce-
able at a trial on the merits. Before trial, Cingular filed a
motion in limine to preclude evidence at trial challenging
the exclusivity provision. At the hearing on the motion to
exclude, the district court asked Kempner what additional
evidence it possessed that was not presented at the prelimi-
nary injunction hearing that would bolster its claims at
trial. Kempner proffered no additional evidence, which led
the district court to grant Cingular’s motion, and Kempner
argues that the district court erred. We disagree.
We review the district court’s rulings on motions in limine
for an abuse of discretion. Heft v. Moore, 351 F.3d 278, 284
(7th Cir. 2003) (citation omitted). Kempner’s arguments are
inconsistent. On one hand, Kempner argues that Cingular
forced Kempner to forego a lucrative contract with Nextel
by, in part, enforcing its exclusivity provision. On the other
hand, Kempner argues that Cingular should not be allowed
to enforce its exclusivity provision so the Kempner can sign
with Nextel. We find that the court did not abuse its
discretion by excluding this evidence because Kempner
failed to proffer additional evidence to bolster its claims.
C. The District Court Properly Refused to Permit Kempner
to Recover Punitive Damages.
In a diversity action such as this one, state law gov-
erns the factors a jury may consider in determining the
amount of punitive damages, while federal law governs the
Nos. 04-3411 & 04-3561 13
district court’s review of the jury award and appellate
review of the district court’s decision. Republic Tobacco Co.
v. North Atlantic Trading Co., Inc., 381 F.3d 717, 735 (7th
Cir. 2004). Under Illinois law, while the measurement
of punitive damages is a jury question, the preliminary
question of whether the facts of a particular case justify the
imposition of punitive damages is properly one of law and
our review is therefore de novo. Brandon v. Anesthesia &
Pain Mgmt. Assocs., Ltd., 277 F.3d 936, 946 (7th Cir. 2002)
(interpreting Illinois law) (quotations and citations omit-
ted).
In general, the Illinois Supreme Court does not favor
punitive damages and such damages may only be awarded
where torts are committed with fraud, actual malice,
deliberate violence or oppression, or when the defendant
acts willfully, or with such gross negligence as to indicate
a wanton disregard of the rights of others. Id. In refusing to
submit the question of punitive damages to the jury, the
court made the following findings based on the evidence
of Kempner’s claim of tortious interference adduced at
the second trial: that Cingular (1) did not act with malice,
or with the intention of injuring Kempner, (2) simply
advanced its own interests in contacting its own cus-
tomers subscribed through Kempner, (3) never made
improper or untrue statements about Kempner to the
customers at issue, (4) did not engage in a pattern of
tortious conduct, and (5) did not attempt to conceal tortious
conduct.
On appeal, Kempner can point to no evidence of fraud,
aggravation, malice, or wanton disregard on the part of
Cingular in contacting its customers. Instead, Kempner
argues that the district court failed to consider the inter-
relationship between Cingular’s misrepresentations to
Kempner and its tortious interference with Kempner’s
economic advantage. We find no evidence of any inter-
relationship between the two. Although we acknowledge the
14 Nos. 04-3411 & 04-3561
evidence presented at trial of misrepresentations between
Cingular and Kempner, we find no evidence of a repeated
pattern of misrepresentations in connection with the
alleged tortious interference, of any misrepresentations
concealed over extended periods of time or any type of
outrageous conduct that would justify a jury awarding
punitive damages. Therefore, the district court correctly
determined that the facts of this case do not justify the
imposition of punitive damages.
D. The District Court Properly Refused to Order an
Equitable Accounting.
We review the district court’s denial of an equitable
remedy for abuse of discretion. ABM Marking, Inc. v.
Zanasi Fratelli, S.R.L., 353 F.3d 541, 544-45 (7th Cir. 2003)
(citations omitted). To state a claim for the equitable relief
of an accounting, a plaintiff must allege the absence of an
adequate remedy at law. Mann v. Kemper Fin. Cos., 618
N.E.2d 317, 327 (Ill. App. Ct. 1992); see also Zell v.
Jacoby-Bender, Inc., 542 F.2d 34, 36 (7th Cir. 1976) (finding
that the necessary prerequisite to maintain a suit for an
equitable accounting, like all other equitable remedies, is
the absence of an adequate remedy at law). In addition to
the absence of an adequate remedy at law, the plaintiff
must allege at least one of the following: (1) a breach of a
fiduciary relationship, (2) a need for discovery, (3) fraud, or
(4) the existence of mutual accounts which are of a complex
nature. Mann, 618 N.E.2d at 327.
In this case, Kempner has not alleged that it is with-
out an adequate remedy at law. Moreover, Kempner
never pled a claim for accounting, but instead waited
until receiving a verdict on liability to request an account-
ing. We find that this case is nothing more than a garden-
variety contract dispute. Indeed, damages in this case are
not speculative, and the amount of damages is neither
Nos. 04-3411 & 04-3561 15
difficult nor impossible to measure. Furthermore, all of the
accounting information pertinent to Kempner’s claims could
and should have been revealed through discovery, and there
is no showing that the “accounts between the parties” are of
such a “complicated nature” that only a court of equity can
satisfactorily unravel them. See Zell, 542 F.2d at 36. As a
result, we find that the district court did not abuse its
discretion in refusing to allow Kempner an accounting.
E. The District Court Properly Granted Cingular’s Motion
for a New Trial on Its Counterclaim.
At the first trial, Cingular offered evidence that it shipped
cellular equipment to Kempner under a contract separate
from the 1999 Agreement, and that Kempner kept and used
the equipment, but did not pay for it. Over Cingular’s
objections, the district court instructed the jury that in
order to establish this counterclaim, Cingular would have
to prove, among other things, that it “substantially per-
formed all obligations required of it under the agreement.”
After the jury verdict against Cingular on this claim,
Cingular moved for a new trial on its counterclaim, arguing
that the district court confused the jury by combining the
two separate agreements at issue: the 1999 Agreement
which governed Cingular’s obligation to pay commissions,
and the separate agreement between Kempner and
Cingular for the sale of equipment. The district court
agreed, finding that the jury instruction improperly recast
the two agreements into one which confused the jury, and
granted a new trial on Cingular’s equipment receivable
counterclaim. The court also ruled that Kempner would be
prohibited from offering evidence in the second trial that it
was not liable under the equipment contract as the result
of outstanding commissions due to it under the 1999
Agreement.
Appellate review of a district court’s order for a new
trial is limited. Because the trial judge is uniquely sit-
16 Nos. 04-3411 & 04-3561
uated to rule on such a motion, the district court has great
discretion in determining whether to grant a new trial.
Latino v. Kaizer, 58 F.3d 310, 314 (7th Cir. 1995). We,
therefore, review a district court’s decision to grant a
new trial for a clear abuse of discretion. Id. On appeal,
Kempner does not address in any fashion the confusing jury
instruction given to the jury. Instead, Kempner implicitly
concedes the court erred in giving the shortened jury
instruction and focuses its argument on whether the court
erred in denying Kempner the opportunity to introduce
evidence establishing that payment under the equipment
receivable contract was not due until Cingular accounted to
Kempner for unpaid commissions. Therefore, we find that
the district court’s grant of a new trial was not a clear
abuse of discretion, and the limits the district court put on
the evidence to be presented at the second trial was not an
abuse of discretion.
F. The District Court Erred by Not Entering Judgment as
a Matter of Law in Favor of Cingular on Kempner’s
Tortious Interference Claim.
The elements of a claim of tortious interference with
prospective business or economic advantage are: (1) plaintiff
’s
reasonable expectation of entering into a valid business
relationship, (2) defendant’s knowledge of plaintiff’s
expectancy, (3) purposeful or intentional interference by
defendant that prevents plaintiff’s legitimate expectancy
from ripening into a valid business relationship, and (4)
damages to plaintiff resulting from the interference.
Cromeens, Holloman, Sibert, Inc. v. AB Volvo, 349 F.3d 376,
398 (7th Cir. 2003).
In Cromeens, authorized dealers of Volvo claimed that
Volvo tortiously interfered with its prospective business
advantage where Volvo encouraged customers to buy
products from Volvo dealers rather than from the
Nos. 04-3411 & 04-3561 17
independently-owned authorized dealers. The court found
that Volvo used truthful statements to the customers
to encourage their switch and held that the plaintiff’s claim
of interference failed because there is no liability
for interference with a prospective contractual relation
on the part of one who merely gives truthful information to
another and does nothing more than compete with a
competitor for business. Cromeens, 349 F.3d at 399 (cit-
ing Soderlund Bros., Inc. v. Carrier Corp., 663 N.E.2d 1,
10 (Ill. 1995)).
In this case, Kempner argues that Cingular interfered
with Kempner’s relationship with Kempner’s customers
for the sale of cellular telephone equipment by improp-
erly contacting Kempner’s customers and soliciting them to
purchase equipment from Cingular directly. Kempner
argues that these contacted third parties were
long-standing customers of Kempner, and as a result,
Kempner had a reasonable business expectation of entering
into future contractual relationships with these customers.
We disagree.
The evidence in this case establishes that the third
parties contacted by Cingular were not Kempner’s custom-
ers but in fact Cingular’s customers. Kempner has not
pointed to any evidence in the record which shows that
Cingular contacted Kempner customers, defined as cus-
tomers who were not subscribed to Cingular’s cellular
services, or that Cingular was prohibited in any way from
contacting its own customers about upgrading their
Cingular equipment or service. Additionally, there is no
evidence that Cingular said anything dishonest or false
to their customers. In the end, Kempner cannot distinguish
Cingular’s behavior to that of any other competitor in the
cellular phone market.
In denying Cingular’s motion for judgment as a matter of
law, the district court improperly reviewed Cingular’s
18 Nos. 04-3411 & 04-3561
motion as a question of whether Kempner could legally
state a claim for tortious interference in light of its claims
for breach of contract. In addressing this subsidiary issue
raised by Cingular’s motion for judgment as a matter
of law, the district court failed to analyze the underly-
ing merits of Kempner’s tortious interference claim to
determine whether there was sufficient evidence to estab-
lish such a claim. Accordingly, judgment as a matter of law
should have been entered in Cingular’s favor on Kempner’s
tortious interference claim as there is simply no evidence in
the record that Cingular was doing anything more than
encouraging its own clients to upgrade equipment and/or to
continue to use its cellular services.
III. CONCLUSION
For all the foregoing reasons, the district court’s denial of
Cingular’s motion for judgment as a matter of law on
Kempner’s claim of tortious interference with prospective
business is REVERSED, and judgment as a matter of law on
Kempner’s claim of tortious interference is GRANTED in
favor of Cingular. The remaining rulings of the district
court are AFFIRMED.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—11-3-05