Opinion
Civil Action No. 04-1362.
November 30, 2004
ORDER AND REASONS
SECTION: 1/1
Before the Court is a motion for a judgment on the pleadings filed on behalf of defendant, Tidy Building Services, Inc. ("Tidy"). Plaintiff, Southern Service Corporation ("SSC"), opposes the motion. After consideration of the motion, the legal memoranda submitted by the parties, the undisputed facts and the law, for the reasons assigned, Tidy's motion is GRANTED IN PART AND DENIED IN PART.
Rec. Doc. No. 5.
BACKGROUND
Plaintiff, SSC, and defendant, Tidy, are two companies that provide cleaning and maintenance services to the owners and operators of large public and semi-public buildings. SSC is a Florida corporation with its principal place of business in Miami, Florida. Tidy is a Louisiana corporation with its principal place of business in Metairie, Louisiana.According to the complaint, SSC and Tidy compete directly with one another to procure contracts for cleaning and maintenance services through a competitive bidding process. SSC alleges that because a sizeable number of individual workers are required to perform large-scale cleaning and maintenance operations, labor and payroll costs are often the most significant costs incurred by companies which provide such services.
Id., ¶¶ 4-6.
Id, ¶ 7.
SSC alleges that Tidy has reduced its payroll and labor expenses by misrepresenting and impermissibly classifying the employment status of its individual workers. According to SSC, Tidy treats its individual workers as independent contractors when such individuals are, in fact, Tidy's employees. SSC alleges that by unlawfully treating the individual workers as independent contractors, Tidy is able to avoid certain costs and obligations incurred by an ordinary employer, such as overtime pay, state and federal payroll taxes, contributions required pursuant to the Federal Insurance Contributions Act ("FICA"), and costs associated with preparing and maintaining documentation associated with tax withholding and reporting. Additionally, SSC avers that Tidy does not maintain the proper documentation to ensure that the individuals working for Tidy are United States citizens or resident aliens with permission to work in the United States. According to SSC, Tidy's conduct allows it to offer its cleaning services at rates lower than SSC and other companies that comply with the law.
Id, ¶¶ 8-10.
SSC further alleges that Tidy, either directly or indirectly through various entities acting on Tidy's behalf, approached SSC's employees who were working in the Hyatt Regency in Atlanta, Georgia, and informed the employees that SSC was not renewing its cleaning and maintenance contract with that hotel. Tidy then allegedly offered SSC personnel the opportunity to work for Tidy as independent subcontractors at the Hyatt Regency Atlanta and other hotels with which SSC had business relationships. SSC alleges that Tidy's conduct disrupted the work of SSC's employees by suggesting that their jobs with SSC were in jeopardy. According to SSC, Tidy's alleged conduct affected the morale of its employees to such a degree that their performance declined which, in turn, caused SSC's clients to complain to SSC about the quality of the services being provided. Consequently, SSC claims that several of SSC's employees resigned and certain hotels, including the Hyatt Regency Atlanta, terminated their business relationships with SSC and contracted with Tidy to replace SSC.
See id., ¶ 14.
On May 11, 2004, SSC filed a complaint invoking this Court's diversity jurisdiction pursuant to 29 U.S.C. § 1332. Plaintiff alleged a violation of the Louisiana Unfair Trade Practices Act, LSA-R.S. §§ 51:1401-1430 ("LUPTA") and state law claims for intentional misrepresentation, negligent misrepresentation, and negligence. Additionally, SSC alleged that Tidy's conduct tortiously interfered with SSC's business relationships and contracts. On June 10, 2004, Tidy filed an answer denying the allegations of the complaint. On August 3, 2004, Tidy filed this motion for judgment on the pleadings seeking dismissal of SSC's complaint.
Rec. Doc. No. 1, Comp., ¶¶ 16-28.
See Comp., ¶¶ 24-25.
Rec. Doc. No. 2. Tidy attached to the answer a contract that, according to the allegations in the answer, is a standard contract between it and its third party contractors. See id., Ex. 1, subcontractor agreement.
LAW AND ANALYSIS
I. Standard Applicable to Motion for Judgement on the PleadingsRule 12(c) of the Federal Rules of Civil Procedure provides that "[a]fter the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings." When analyzing a Rule 12(c) motion, the pleadings should be construed liberally, and a judgment on the pleadings is appropriate only if there are no material facts in dispute and questions of law are all that remain. Brittan Comm. Int'l Corp. v. Southwestern Bell Telephone Co., 313 F.3d 899, 904 (5th Cir. 2002); Voest-Alpine Trading USA Corp. v. Bank of China, 142 F.3d 887, 891 (5th Cir. 1998); Hebert Abstract Co. v. Touchstone Props., Ltd., 914 F.2d 74, 76 (5th Cir. 1990) (citing 5A Wright Miller, Federal Practice Procedure § 1367 at 510). A motion brought pursuant to Rule 12(c) is designed to dispose of cases when a judgment on the merits can be rendered by looking to the substance of the pleadings and any judicially noticed facts. Great Plains Trust Co. v. Moran Stanley Dean Witter Co., 313 F.3d 305, 313 (5th Cir. 2000).
In determining whether to grant a Rule 12(c) motion, a court "must look only to the pleadings and accept all allegations in them as true." St. Paul Fire Marine Ins. Co. v. Convalescent Serv., Inc., 193 F.3d 340, 342 (5th Cir. 1999). However, when no evidence outside the pleadings is presented, the allegations in the answer are accepted as true only to the extent that they are not denied or do not conflict with the allegations in the complaint. Stanton v. Larsh, 239 F.2d 104, 106 (5th Cir. 1957). "[T]he central issue is whether, in the light most favorable to the plaintiff, the complaint states a valid claim for relief." Brittan, 313 F.3d at 904 (internal quotations omitted).
When a party moves for judgment on the pleadings on the ground that the non-moving party has failed to state a claim, the standard for analyzing the pleadings is substantially the same as that which governs a motion to dismiss brought pursuant to Fed.R.Civ.P. 12(b)(6). See Jones v. M.L Greninger, 188 F.3d 322, 324 (5th Cir. 1999); Boswell v. Hon. Gov. of Texas, 138 F.Supp.2d 782, 784-85; see also Scott v. The Houma-Terrebonne Housing Authority, 2002 WL 31007412, at *3 (E.D.La. Sept. 6, 2002) (citing St. Paul Ins. Co. of Bellaire, Texas v. AFIA Worldwide Ins. Co., 937 F.2d 274, 279 (5th Cir. 1991)). Pursuant to that standard, the Court will not dismiss a claim "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957); Blackburn v. City of Marshall, 42 F.3d 925, 931 (5th Cir. 1995). Accordingly, the court should not dismiss a claim "unless the plaintiff would not be entitled to relief under any set of facts or any possible theory that he could prove consistent with the allegations in the complaint." Id. (citing Vander Zee v. Reno, 73 F.3d 1365, 1368 (5th Cir. 1996)); see also Indest v. Freeman Decorating, Inc., 164 F.3d 258, 261 (5th Cir. 1999) ("A dismissal will not be affirmed if the allegations support relief on any possible theory."). However, "a plaintiff must plead specific facts, not mere conclusory allegations. . . ." Guidry v. Bank of LaPlace, 954 F.2d 278, 281 (5th Cir. 1992) (quoting Elliott v. Foufas, 867 F.2d 877, 881 (5th Cir. 1989)) (alteration in original). Additionally, "'legal conclusions masquerading as factual conclusions will not suffice to prevent a motion to dismiss.'" Blackburn, 42 F.3d at 931 (quoting Fernandez-Montes v. Allied Pilots Ass'n, 987 F.2d 278, 284 (5th Cir. 1993)). "[T]he complaint must contain either direct allegations on every material point necessary to sustain a recovery . . . or contain allegations from which an inference fairly may be drawn that evidence on these material points will be introduced at trial." Campbell v. City of San Antonio, 43 F.3d 973, 975 (5th Cir. 1995) (internal quotation and citation omitted). "The issue is not whether the plaintiff will ultimately prevail, but whether he is entitled to offer evidence to support his claim." Jones, 188 F.3d at 324 (citing Doe v. Hillsboro Indep. Sch. Dist., 81 F.3d 1395, 1401 (5th Cir. 1996)).
II. Potential Choice of Law Issues Preclude Dismissal of SSC's Complaint in its Entirety
When a federal court exercises diversity jurisdiction pursuant to 28 U.S.C. § 1332, the court must apply the substantive law of the forum state. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S. Ct. 817, 822, 82 L. Ed. 1188 (1938). Additionally, it is well-established that a federal court sitting in diversity is bound to apply the conflict of laws rules of the forum state. Klaxon v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S. Ct. 1020, 1021-22, 85 L. Ed. 1477 (1941); Vasquez v. Bridgestone/Firestone, Inc., 325 F.3d 665, 674 (5th Cir. 2003); Denman by Denman v. Snapper Div., 131 F.3d 546, 548 (5th Cir. 1998); Duhon v. Union Pac. Resources Co., 43 F.3d 1011, 1016 (5th Cir. 1995).
Tidy moves for a judgment on the pleadings on the ground that SSC has failed to allege facts to support its claims pursuant to Louisiana law. Tidy argues that because plaintiff chose to bring its action in a federal district court in Louisiana, this Court must, in connection with this judgment on the pleadings, apply Louisiana law when analyzing plaintiff's claims. SSC counters that the factual allegations in the pleadings demonstrate that Louisiana law will not necessarily govern all of the issues present in this litigation and, therefore, an analysis of its claims solely by reference to Louisiana law is inappropriate. Citing the Louisiana Civil Code, article 3543, SSC argues that Georgia law will govern its claims with respect to Tidy's conduct in Georgia because the conduct occurred and the injury was sustained in Georgia. Additionally, SSC asserts that the law of Florida might apply if Tidy's conduct caused injury to SSC in Florida. Finally, SSC notes that to the extent that Tidy's allegedly impermissible practice of classifying the individuals who provide Tidy's cleaning services as independent contractors avoids state tax law, the law of such states may be relevant.
Article 3542 of the Louisiana Civil Code, which sets forth the general conflict of law rule applicable to tort actions in Louisiana, directs a court to determine "the law of the state whose policies would be most seriously impaired if its law were not applied. . . ." La. Civ. Code 3542; see Marchesani v. Pellerin-Milnor Corp., 269 F.3d 481, 486 (5th Cir. 2001). Article 3543 "establishes the rules for determining what law applies to '[i]ssues pertaining to standards of conduct and safety' in tort actions." Mendonca v. Tidewater, 862 So.2d 505, 510 (La.App. 4th Cir. 2003). Pursuant to revision comments, the specific rule set forth in article 3543, if applicable, governs over the general rule set forth in article 3542. Art. 3542, Revision Comments — 1991 (b).
Article 3543 directs that the choice of law determination with respect to standards of conduct in tort actions is made by determining the state in which the alleged tortious conduct occurred and the state in which an alleged injury was sustained. See art. 3543. For example, if the conduct complained of and the injury occurred in the same state, the law of such state governs the particular claim arising from that conduct and injury. See id., Revision Comments — 1991 (d) ("[W]hen both the tortfeasor's conduct and the victim's injury occur in the same state, the law of that state applies, regardless of the domicile of the parties or any other factors."). In other cases, the choice of law question is determined by, inter alia, a comparative analysis of various states' standards of conduct and by whether a tortfeasor should have foreseen an injury in a particular state. See id.
Article 3543 provides:
Issues pertaining to standards of conduct and safety are governed by the law of the state in which the conduct that caused the injury occurred, if the injury occurred in that state or in another state whose law did not provide for a higher standard of conduct.
In all other cases, those issues are governed by the law of the state in which the injury occurred, provided that the person whose conduct caused the injury should have foreseen its occurrence in that state.
The preceding paragraph does not apply to cases in which the conduct that caused the injury occurred in this state and was caused by a person who was domiciled in, or had another significant connection with, this state. These cases are governed by the law of this state.
Courts in this circuit have held that factual determinations which are antecedent to the choice of law determination may properly be determined by the district court "after considering the affidavits, depositions, and other matters submitted by the parties." Nunez v. Hunter Fan Co., 920 F. Supp. 716, 718 (S.D.Tex. 1996) (holding that the summary judgment standard with regard to disputed facts does not apply when choice of law is the dispositive issue) (citing Vaz Borralho v. Keydril Co., 696 F.2d 379, 386-87 (5th Cir. 1983)). Tidy's motion for a judgment on the pleadings is predicated solely on the application of Louisiana law. Neither party has adequately briefed the choice of law issue or presented the Court with sufficient facts on which to make a definitive determination with respect to the applicability of other states' laws to the facts alleged in the complaint. However, the Court notes that SSC has alleged facts which may implicate the laws of states other than Louisiana pursuant to Louisiana conflict of laws rules. Specifically, SSC has alleged that Tidy engaged in conduct in Georgia that interfered with SSC's contractual and business relationship with the Hyatt Regency in Atlanta, Georgia. Taking SSC's allegations as true, Georgia law would apply to SSC's tortious interference claim with respect to Tidy's alleged disruption of SSC's business relationship in Georgia. Consequently, on that basis alone, this Court cannot conclude that it appears beyond doubt that all of SSC's claims will be governed exclusively by Louisiana law. Therefore, because Tidy's motion only addresses SSC's claims pursuant to Louisiana law, Tidy is not entitled to a judgment on the pleadings with respect to the entirety of SSC's complaint. However, SSC has clearly alleged claims pursuant to Louisiana law and, therefore, the Court addresses Tidy's motion with respect to such claims.
Because Tidy's motion is limited to SSC's claims pursuant to Louisiana law, this Court expresses no opinion on whether SSC's complaint states a valid claim pursuant to Georgia law. For purposes of the present motion, this Court's conclusion that the law of Georgia could, in part, govern some of the issues present in this action is sufficient to preclude a judgment on the pleadings in favor of Tidy with respect to the entirety of SSC's complaint.
III. SSC's Claims Pursuant to Louisiana Law A. Intentional/Negligent Misrepresentation
Pursuant to Louisiana law, "[f]raud is a misrepresentation or a suppression of the truth made with the intention either to obtain an unjust advantage for one party or to cause a loss or inconvenience to the other." Ballard's Inc. v. N. Am. Land Development Corp., 677 So.2d 648, 650 (La.App. 2d Cir. 1996); see also La. Civ. Code art. 1953. The elements of a Louisiana delictual fraud or intentional misrepresentation claim are (1) a misrepresentation of a material fact, (2) made with the intent to deceive, and (c) causing justifiable reliance with resultant injury. Guidry v. United States Tobacco, 188 F.3d 619, 627 (5th Cir. 1999) (citations omitted). Fraud may also result from silence or inaction. La. Civ. Code art. 1953; Ballard's, 677 So.2d at 650. To sustain a claim for intentional misrepresentation by silence or inaction, a plaintiff must demonstrate that there is a duty to disclose information. Greene v. Gulf Coast Bank, 593 So.2d 630, 632 (La. 1992); Bunge Corp. v. GATX Corp., 557 So.2d 1376, 1383 (La. 1990); Ballard's, 677 So.2d at 651; Guidry v. Bank of LaPlace, 661 So.2d 1052, 1059 (La.App. 4th Cir. 1995); First Downtown Development v. Cimochowski, 613 So.2d 671, 677 (La.App. 2d Cir. 1993). If a misrepresentation claim is based on a failure to disclose, "even fraudulent intent is insufficient to confer liability . . . in the absence of a duty to disclose." First Downtown, 613 So.2d at 677.
With respect to a claim for negligent misrepresentation, the Louisiana Supreme Court has held that a duty-risk negligence framework governs the analysis of the claim. Daye v. Gen. Motors Corp., 720 So.2d 654, 659 (La. 1998). In order to sustain a claim for negligent misrepresentation, whether the plaintiff is a third-party or a party to the alleged negligent misrepresentation, there must be a legal duty on the part of the defendant to supply correct information to the plaintiff, there must be a breach of that duty, and the breach must have caused plaintiff damage. Daye, 720 So.2d at 659; Barrie v. V.P. Exterminators, Inc., 625 So.2d 1007, 1013-14 (La. 1993). With respect to a claim of negligent misrepresentation brought by a non-party to the communication, the obligation giving rise to liability "is imposed by law based upon policy considerations due to the tortfeasor's knowledge of the prospective use of the information which expands the bounds of his duty of reasonable care to encompass the intended user." Barrie, 625 So.2d at 1016.
Whether a duty to disclose information exists is a question of law. E.g., Bunge, 557 So.2d at 1384. "[A]bsent a duty to disclose, silence with respect to the details of a business transaction does not constitute fraud." Wilson v. Mobil Oil Corp., 940 F. Supp. 944, 955 (E.D.La. 1996). A duty to disclose information will not exist absent some confidential, fiduciary, or other special relationship which, under the circumstances of the case, justify the imposition of a duty to disclose information. Wilson, 940 F. Supp. at 955 ("A duty to disclose does not arise absent special circumstances, such as a fiduciary or confidential relationship between the parties."); see also Greene, 593 So.2d at 632; Bunge, 557 So.2d at 1383-84; First Downtown, 613 So.2d at 677 (holding that the sole shareholder and officer of a corporation did not owe a duty to a commercial property lessor to disclose his intention to breach a commercial property lease).
As noted by the Louisiana Supreme Court in Bunge,
The confidential relationship is not restricted to any specific association of the parties. While the most frequent illustrations are those of trustee and beneficiary, attorney and client, parent and child, or husband and wife, the term also embraces partners and co-partners, principal and agent, master and servant, physician and patient, "and generally all persons who are associated by any relation of trust and confidence." Appeal of Darlington, 147 Pa. 624, 23 A. 1046, 1047 (1892).557 So.2d at 1384. The Louisiana courts have also imposed a duty to disclose information on vendors with respect to material facts that are not within the reach of the diligent attention, observation and judgment of a plaintiff/buyer. Id.
SSC alleges that Tidy intentionally misrepresented its costs when it bid for cleaning and maintenance service contracts. However, SSC does not allege any facts that suggest that Tidy affirmatively communicated its employment and payroll practices to either SSC or to the owners and operators of the buildings to whom bids were submitted. The gravamen of the complaint is that SSC's business was harmed because Tidy failed to disclose to the building owners and operators the fact that Tidy's costs for labor were low due to Tidy's alleged unlawful and impermissible employment practices. According to the complaint, Tidy's bids gave potential clients the impression that the costs associated with labor and payroll were legitimately lower than the amounts contained in SSC's bids. Accordingly, SSC claims that Tidy's bids suggested to potential clients that SSC inflated its labor costs causing damage to SSC's business. In sum, SSC asserts that Tidy was required to treat its workers as employees instead of independent contractors and to disclose its labor and payroll practices to potential clients.
Comp., ¶ 24.
Comp., ¶ 25.
In order to sustain a claim for either intentional or negligent misrepresentation, SSC must identify a legal duty on Tidy's part to disclose to potential clients its labor and payroll practices when submitting bids for cleaning and maintenance service contracts. In its memorandum of law, SSC argues that Tidy has a duty to disclose that the labor and payroll costs contained in its bid were low due to the alleged unlawful classification of its workers as independent contractors. Unsurprisingly, SSC provides no legal authority for the imposition of such a duty and, upon canvassing Louisiana cases, this Court has been unable to unearth any case imposing such a duty. The relationships between Tidy and its customers and Tidy and SSC do not fall within the class of special relationships of trust and confidence; they are ordinary commercial relationships. SSC has not identified any legal duty that requires a business owner to disclose its labor and employment practices to potential clients when, as here, the actual costs submitted in a bid for a contract are, in fact, the costs that will be charged to such client. Moreover, even if Tidy owed such a duty, SSC cannot demonstrate that the potential clients were injured by Tidy's alleged failure to disclose. See Ballard's, 677 So.2d at 652 (holding that when a plaintiff-in-counterclaim accepted the lowest bid for services, such plaintiff did not sustain a loss or inconvenience as required to prove fraud). Finally, SSC has not alleged facts from which an inference may be drawn that SSC was within a class of intended beneficiaries of the information provided in Tidy's bids to potential clients, that Tidy knew that such information would be provided by the potential clients to SSC, or that SSC actually relied on such information to its detriment. Therefore, even construing the complaint broadly, SSC cannot sustain a claim for either intentional or negligent misrepresentation.
B. Tortious Interference with Contract
The Louisiana Supreme Court has recognized a cause of action for tortious interference with contract within the limited confines of a corporate officer's duty to refrain from intentional and unjustified interference with a contractual relationship between his employer and a third party. See Am. Waste Pollution Control Co. v. Browning-Ferris, Inc., 949 F.2d 1384, 1387-91 (5th Cir. 1991) (discussing 9 to 5 Fashions v. Spruney, 538 So.2d 228 (La. 1989)). Additionally, the Fifth Circuit has recognized that the Louisiana Supreme Court has established that under some circumstances, a tort action may lie for interference with an attorney-client contract. Dodson v. Spiliada Maritime Corp., 951 F.2d 40, 44 (5th Cir. 1992) (citing Chaffin v. Chambers, 584 So.2d 665 (La. 1991); Penalber v. Blount, 550 So.2d 577 (La. 1989)). The Fifth Circuit, federal district courts in Louisiana, and various Louisiana courts of appeal since 9 to 5 Fashions have "uniformly recognized the narrowness of Louisiana's tortious interference action." Egrov, Puchinsky, Afanasiev Juring v. Terriberry, Carroll Yancey, 183 F.3d 453, 457 (5th Cir. 1999); see America's Favorite Chicken Co. v. Cajun Enter., 130 F.3d 180, 184 (5th Cir. 1997); Am. Waste Pollution Control, 949 F.2d at 1386-87; Oreck Holdings, L.L.C. v. Euro-Pro Corp., 2002 WL 59405, at *2 (E.D.La. Jan. 15, 2002); White v. White, 641 So.2d 538, 541 (La.App. 3d Cir. 1994). The Fifth Circuit has noted that even the Louisiana appellate courts which have purported to expand the cause of action have done so only within the limited confines of 9 to 5 Fashions. Egrov, 183 F.3d at 457 (citiations omitted).
There are no allegations in SSC's complaint of a corporate officer intentionally and unjustifiably interfering with a contract between his corporate employer and a third party. Nor are there any allegations that implicate an attorney-client contract. Moreover, the Fifth Circuit has explicitly held that allegations that a competing company induced a repudiation of a contract between the plaintiff and a third party by offering substantial sums of money and other incentives to the third party fail to state a cause of action for tortious interference with contract because competitors have no relationship on which to base the requisite tort duty. Am. Waste Pollution Control, 949 F.2d at 1385, 1390. Accordingly, SCC cannot sustain a claim for tortious interference with contract pursuant to Louisiana law.
C. Tortious Interference with Business
Louisiana courts have recognized a cause of action for tortious interference with business. Junior Money Bags, Ltd. v. Segal, 970 F.2d 1, 10 (5th Cir. 1992) (citations omitted); Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 601 (5th Cir. 1981). "In Louisiana, the delict is based on the principle that the right to influence others not to deal is not absolute." Junior Money Bags, 970 F.2d at 10 (citing Ustica Enters., Inc. v. Costello, 434 So.2d 137, 140 (La.App. 5th Cir. 1983)). The Fifth Circuit has summarized the governing rule stating that "Louisiana law protects the businessman from 'malicious and wanton interference', permitting only interferences designed to protect a legitimate interest of the actor." Dussouy, 660 F.2d at 601. A plaintiff bringing a claim for tortious interference with business must ultimately show "'by a preponderance of the evidence that the defendant improperly influenced others not to deal with the plaintiff.'" Junior Money Bags, 970 F.2d at 10 (quoting McCoin v. McGehee, 498 So.2d 272, 274 (La.App. 1st Cir. 1986) (citation omitted)). It is not sufficient for plaintiff to allege conduct which merely has an effect on its business relationships or economic opportunities absent allegations that a defendant maliciously attempted to prevent a third-party from dealing with the plaintiff. See Nowling v. Aero Servs. Int'l, Inc., 752 F.Supp. 1304, 1312 n. 7 (E.D. La. 1990); Ustica, 434 So.2d at 140.
Such a claim is distinct from a claim of tortious interference with contract. Endotech USA v. Biomcompatibles Int'l PLC, 2000 WL 1594086, at *13 (E.D.La. Oct. 24, 2000).
The cause of action for tortious interference with business derives from article 2315 of the Louisiana Civil Code that provides: "Every act whatever of man that causes damage to another obliges him by whose fault it happened to repair it." La. Civ. Code art. 2315(A); Dussouy, 660 F.2d at 601.
The Louisiana Fourth Circuit Court of Appeals has noted:
Although this cause of action has an ancient vintage, Louisiana jurisprudence has viewed it with disfavor. Louisiana courts have limited this cause of action by imposing a malice element, which requires that the plaintiff show the defendant acted with actual malice. Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 602 (5th Cir. 1981). "Although its meaning is not perfectly clear, the malice element seems to require a showing of spite or ill will, which is difficult (if not impossible) to prove in most commercial cases in which conduct is driven by the profit motive, not by bad feelings. In fact, there appear to be no reported cases in which anyone actually has been held liable for the tort." George Denegre, Jr., et al., Tortious Interference and Unfair Trade Claims: Louisiana's Elusive Remedies for Business Interference, 45 Loy. L.Rev. 395, 401 (1999).JCD Marketing Co. v. Bass Hotels and Resorts, Inc., 812 So.2d 834, 841 (La.App. 4th Cir. 2002); see also Junior Money Bags, 970 F.2d at 11 (noting that tortious interference with business is a "very limited form of recovery" in Louisiana). Malice is an essential element of a claim and actual malice must be plead in the complaint. Dussouy, 660 F.2d at 602. However, the failure to plead malice does not warrant dismissal of a claim. Id. Instead, "the appropriate course is to allow the plaintiff to amend his complaint to make the necessary allegations." Id.
Tidy argues that SSC's tortious interference claim must be dismissed because the complaint does not contain allegations of ill will or malice. Tidy argues that its conduct was only an effort to maximize profits and that it had no specific intent to harm SSC. At this stage of the litigation, Tidy's arguments are unpersuasive because such arguments merely raise factual issues which this Court may not resolve on a judgment on the pleadings. Although SSC's complaint does not contain specific allegations supporting the essential element of actual malice on the part of Tidy, such a failure in pleading does not warrant dismissal of the claim pursuant to Dussouy and, therefore, it does not constitute grounds for a judgment on the pleadings. If plaintiff so desires, plaintiff shall be permitted to amend the complaint to make the necessary allegations within ten days of the entry of this order and reasons or this cause of action will be dismissed.
By permitting SSC's tortious interference claim to continue in light of Tidy's limited and narrow argument for a judgment on the pleadings, this Court expresses no opinion on the merits of SSC's claim or the likelihood of success on such a claim. SSC will be required to plead and prove that Tidy's conduct was motivated by actual malice with respect to SSC instead of a desire to compete for business or maximize profits. See JCD Marketing Co., 812 So.2d at 841; Dussouy, 660 F.2d at 601 (noting that "interferences designed to protect a legitimate interest of the actor" are permissible pursuant to Louisiana law); Lewis v. Huie-Hodge Lumber Co., 46 So. 685 (La. 1908) (holding that actionable conduct consists of "wanton or malicious acts of others, without the justification of competition or service of any interest or lawful purpose").
D. Violation of the Louisiana Unfair Trade Practices and Consumer Protection Act
The Louisiana Unfair Trade Practices and Consumer Protection Act ("LUTPCPA") provides that "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful." La.Rev.Stat. § 51:1405(A). The broad language of the statute "necessarily requires a case-by-case determination of what constitutes unfair competition or an unfair trade practice." Capitol House Preservation Co., L.L.C. v. Perryman Consultants, Inc., 725 So.2d 523, 529 (La.App. 1st Cir. 1998) (citations omitted); Strahan v. State of Louisiana, Dept. of Agriculture and Forestry, 645 So.2d 1162, 1165 (La.App. 1st Cir. 1995). "A trade practice is unfair when it offends public policy and when the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers." Marshall v. Citicorp, 601 So.2d 669, 670 (La.App. 5th Cir. 1992); see also Turner v. Purina Mills, Inc., 989 F.2d 1419, 1422 (5th Cir. 1993); Camp, Dresser McKee, Inc. v. Steimle and Associates, Inc., 652 So.2d 44, 48 (La.App. 5th Cir. 1995); Capitol House, 725 So.2d at 529. "Conduct is considered unlawful or when it involves 'fraud, misrepresentation, deception, breach of fiduciary duty, or other unethical conduct.'" Wyatt v. PO2, Inc., 651 So.2d 359, 361 (La.App. 2d Cir. 1995) (quoting Core v. Martin, 543 So.2d 619 (La.App. 2d Cir. 1989)). Louisiana has left the determination of what constitutes an unfair trade practice to the courts. Turner, 989 F.2d at 1422; Capitol House, 725 So.2d at 529.
The Fifth Circuit has noted that LUTPCPA "does not prohibit sound business practices, the exercise of permissible business judgment, or appropriate free enterprise transactions." Turner, 989 F.2d at 1422. "Businesses in Louisiana are still free to pursue profit, even at the expense of competitors, so long as the means used are not egregious." Id. An intent to eliminate the competition does not alone violate LUTPCPA. Id., at 1423. Instead, "the statute forbids businesses to destroy each other through improper means." Id. (emphasis in original).
In Capitol House, a Louisiana court of appeal held that a violation of a statutory duty owed to a government agency could constitute an unfair trade practice notwithstanding that the statute did not specifically provide that its violation constituted an unfair trade practice. 725 So.2d at 530. The court reasoned that because the broad language of the LUTPCPA vested discretion in the trial court to decide whether a particular statutory violation constituted an unfair trade practice in the particular circumstances of a case, the trial court would be required to ultimately determine, inter alia, whether the plaintiff/competitor had violated the statute and whether such a violation would, in the particular factual context presented, constitute an "unfair or deceptive act or practice." Id.
Tidy argues that it is in the business to make money and that in any competitive bid process the losing bidder's business interests and relationships will always be adversely affected. In Tidy's view, simply bidding on a contract and winning such contract cannot be actionable pursuant to LUTPCPA. SSC responds that it is not simply challenging the submission of the bids or the bidding process. Instead, SSC points to the allegations of numerous violations of federal and state tax and labor laws which SSC contends give Tidy an unfair competitive edge over companies that comply with these laws. According to SSC, capitalizing on illegal labor and tax practices in order to underbid competitors is precisely the type of improper means of competition that the statute forbids.
Taking plaintiff's allegations as true, the Court finds that SSC has sufficiently pled facts which preclude a judgment on the pleadings. The Court must be cognizant that a judgment on the pleadings is only appropriate if there are no factual issues in dispute and that the mover is entitled to a judgment on the merits of a claim. Given the holding in Capitol House and the analysis required by the court's holding, this Court cannot conclude that SSC's LUTPCPA claim is so clearly invalid that it is not entitled to offer evidence on this claim.
Accordingly, for the above and foregoing reasons,
IT IS ORDERED that the motion for judgment on the pleadings filed on behalf of defendant, Tidy Building Services, is GRANTED with respect to SSC's claims of intentional misrepresentation, negligent misrepresentation, and tortious interference with contract pursuant to Louisiana law. With respect to the remainder of SSC's claims, the motion is DENIED. IT IS FURTHER ORDERED that should plaintiff desire to amend the complaint, such amendment shall be filed within ten (10) days of the date of entry of this order and reasons. Failure to file an amended complaint setting forth the necessary allegations as discussed above will result in the dismissal of plaintiff's claim for tortious interference with business pursuant to Louisiana law.