2009 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

3-20-2009

Acumed LLC v. Advanced Surgical

Precedential or Non-Precedential: Precedential

Docket No. 07-1869

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

 

Nos. 07-1869 and 07-2562

 

 

ACUMED LLC, A DELAWARE LIMITED

LIABILITY CORPORATION; SURGICAL

RESOURCES OF PENNSYLVANIA, INC.

v.

ADVANCED SURGICAL SERVICES, INC.;

ROBERT MORRIS, AN INDIVIDUAL,

Appellants

 

On Appeal from the United States District Court

for the Eastern District of Pennsylvania

(D.C. Civ. No. 05-02711)

Honorable Juan R. Sanchez, District Judge

 

Argued December 2, 2008

 
2

BEFORE: AMBRO and GREENBERG, Circuit Judges, 

and RODRIGUEZ,* District Judge

Filed: March 20, 2009

 

Michael L. Eidel (argued)

Erin L. Ginsburg

DLA Piper

1650 Market Street

One Liberty Place, 50th Floor

Philadelphia, PA 19103-0000

Bruce W. McCullough (argued)

McCullough & McKenty

1225 North King Street

P.O. Box 397, Suited 1100

Wilmington, DE 19899-0000

 

Attorneys for Appelles

Gary Green (argued)

Sidkoff, Pincus & Green

1101 Market Street

 

*The Honorable Joseph H. Rodriguez, Judge of the United

States District Court for the District of New Jersey, sitting by

designation.
 1

The notice of appeal as amended specifies earlier orders

included in the May 21, 2007 order, but it is unnecessary to list

them as our disposition of this appeal is clear without the

3

Suite 2700

Philadelphia, PA 19107-0000

 Attorneys for Appellants

 

OPINION OF THE COURT

 

GREENBERG, Circuit Judge.

I. INTRODUCTION

This matter comes on before this Court on an appeal from

a final order entered in the District Court on May 21, 2007,

accompanying an opinion dated May 18, 2007, as well as from

a separate judgment for compensatory and punitive damages in

this case involving claims and counterclaims among parties in

the surgical implant business. See Acumed LLC v. Advanced

Surgical Servs., Inc., Civ. No. 05-2711, 2007 WL 1500051

(E.D. Pa. May 18, 2007). The District Court entered the order

and judgment from which appellants, Advanced Surgical

Services, Inc. (“Advanced”) and Robert C. Morris (“Morris”),

have taken their appeal, in favor of appellees Acumed LLC

(“Acumed”) and Surgical Resources of Pennsylvania, Inc.

(“Surgical”).1

 Inasmuch as Morris is the president and sole
specification.

 2

In its opening brief, appellant listed an issue whether “the

District Court erred in allowing two lawyers for Surgical to

4

owner of Advanced, as a matter of convenience we usually refer

to appellants singularly as “appellant.” In addition, appellant

filed an earlier appeal from a March 22, 2007 order holding it in

contempt of court and ordering it to pay a counsel fee that

appellant characterizes as a fine. The clerk of this Court

consolidated the appeals by order of May 31, 2007, and we

address both in this opinion. The May 21, 2007 order, as well

as providing for damages, entered an injunction against

appellant and denied its post-trial motions in which it sought a

judgment as a matter of law under Fed. R. Civ. P. 50(b) or, in

the alternative, an order amending the judgment and a remittur

of damages, a new trial, and orders assessing attorneys’ fees and

sanctions against appellees.

Appellant challenges (1) the denial of its motion for

judgment as a matter of law on appellees’ claims; (2) the award

of damages, particularly punitive damages, against it; (3) the

grant of partial summary judgment in favor of appellees on

appellant’s counterclaim for abuse of process, unfair

competition, and defamation; (4) the grant of a judgment as a

matter of law in favor of appellees on appellant’s counterclaim

for tortious interference with contractual relationships; (5)

certain of the District Court’s evidentiary rulings; (6) the denial

of appellant’s application for attorneys’ fees; (7) the grant of

injunctive relief against it; and (8) the order holding appellant in

contempt of court.2

 Though both appellees prevailed only in
participate in the trial as if they represented separate parties.”

Appellant’s br. at 3. Appellant, however, did not advance this

issue in the substantive portions of its briefs beyond reiterating

in the summary of its argument that the District Court

“improperly allowed two lawyers for Surgical to participate in

the trial as if they represented separate parties,” appellant’s br.

at 24, and thus it has waived the issue. See United States v.

Pelullo, 399 F.3d 197, 222 (3d Cir. 2005) (“It is well settled that

an appellant’s failure to identify or argue an issue in his opening

brief constitutes waiver of that issue on appeal.”). In any event,

the argument is not meritorious as it was well within the District

Court’s discretion in managing the trial to allow the

representation. See United States v. Wecht, 484 F.3d 194, 217

(3d Cir. 2007) (“[D]istrict courts have wide discretion in the

management of their cases.”).

 3

As a matter of convenience we usually will refer to the

tortious interference with existing or prospective contractual

relationships claim as the tortious interference with contractual

relationships claim or the tortious interference claim.

5

certain aspects of this case, neither cross-appeals from any

disposition in the District Court adverse to it. 

For the reasons we discuss below, we conclude that the

application of legal principles required the District Court to have

granted appellant’s post-trial Rule 50(b) motion seeking to set

aside the jury’s verdict in favor of appellees on a tortious

interference with contractual relationship claim that appellees

pled against appellant and attempted to prove at trial.3

Therefore, we will reverse the District Court’s determination
6

that appellant was not entitled to judgment as a matter of law on

that claim and reverse, as well, the judgment for compensatory

and punitive damages, as the jury predicated the damages

verdict solely on the tortious interference claim. Furthermore,

we will reverse the order for the injunction against appellant

inasmuch as the District Court predicated the injunction on the

jury’s liability finding on the tortious inference claim, but we

will affirm all of the District Court’s remaining orders.

Inasmuch as we are not remanding the case for a new trial or

other proceedings, our disposition on this appeal will bring this

litigation to a close.

II. BACKGROUND

A. Facts

To the extent that appellant challenges the order granting

partial summary judgment against it, we state the facts most

favorably to it, but to the extent that the appeal challenges the

jury’s verdict, we state the facts on any disputed issue most

consistently with the verdict. See Johnson v. Campbell, 332

F.3d 199, 204 (3d Cir. 2003). 

Acumed is a manufacturer of surgical implants and

related devices, and appellant and Surgical are in the business of

distributing surgical implants and other medical devices for

various manufacturers, including Acumed, to hospitals and

surgeons. Acumed and Morris began a relationship in 1996

when Joe Richioni, then Acumed’s authorized sales
 4

The “M” in RMW is Morris.

7

representative for eastern Pennsylvania, retained Morris as an

independent contractor to sell Acumed’s products. In 1998, due

to Acumed’s dissatisfaction with Richioni’s performance,

Morris and two other individuals formed a “loose partnership”

called RMW Orthopedics (“RMW”) that contracted with

Acumed to take over Richioni’s territory.4

 App. at 2955. At

that time Acumed and RMW signed a Manufacturer’s

Representative Agreement (“RMW Agreement”) designating

RMW as Acumed’s exclusive representative for its products in

eastern Pennsylvania. Morris became Acumed’s authorized

representative for the greater Philadelphia area. The RMW

Agreement contained a provision that prevented RMW from

making unauthorized disclosure of Acumed’s confidential

information. The non-disclosure provision provided for the

award of attorney’s fees to the prevailing party in the event of

litigation related to the provision. 

In late 1999, its “loose partners” dissolved RMW,

following which Acumed contracted with Morris’s company,

Advanced, for it to become Acumed’s exclusive sales

representative in southeastern Pennsylvania. Appellant and

Acumed differ, however, on the nature of their sales

representative agreement. Ordinarily the written terms of an

agreement should be clear, though their meaning may be in

dispute, but the situation here varies from the ordinary because

Acumed presented evidence explaining the terms of its

agreement with Advanced, but did not produce a written

contract between Advanced and Acumed. For its part, appellant

produced a contract purportedly evidencing the agreement
8

Advanced and Acumed reached, but neither party had signed

that version of the contract, and the parties’ versions of the

agreement significantly varied. Nevertheless, we will refer to

the agreement, as uncertain as its terms may be, between

Advanced and Acumed as the “Advanced-Acumed Agreement.”

Throughout the trial and this appeal, Acumed has

maintained that Advanced was its commissioned sales

representative under an agreement identical to the earlier RMW

Agreement, and, in that capacity, placed orders from surgeons

and hospitals with Acumed, who then shipped the product

directly to its purchaser. Nevertheless, even as a sales

representative appellant may have had Acumed’s products on

hand as consignment inventory for direct delivery to an ordering

surgeon or hospital. In any event, regardless of how appellant

or Acumed filled the order, when a purchaser paid Acumed on

an invoice for a sale that appellant had obtained, Acumed paid

appellant a commission. 

In contrast to Acumed’s version of their contractual

relationship, appellant argued and still argues that its contract

with Acumed was a “hybrid” agreement under which it acted

both as a sales representative and a stocking distributor.

Appellant contended that in its role as a stocking distributor, it

purchased products directly from Acumed for resale to hospitals

or surgeons. Appellant further alleged that under the terms of

the Advanced-Acumed Agreement, if Acumed terminated the

agreement, Acumed would pay a “buy-out” fee to appellant.

Appellant explains that it sought “buy-out” fees from the

manufacturers it represented to compensate it for its expenses in
 5

On the other hand, at oral argument appellant’s attorney told

us that “[Morris] was terminated in this case because he refused

to accept Acumed’s sales representative agreement after he had

already been operating under his hybrid agreement for about 18

months. He was not terminated. It was not renewed . . . . [H]e

was told that we are not renewing your contract because the new

owners only want to have sales rep contracts.” Transcript of

oral argument at 8, 11.

9

promoting a manufacturer’s product if the manufacturer

terminated appellant as a representative and thereby deprived

appellant of the opportunity to earn further commissions on the

sales of the manufacturer’s products. Appellant believed that

when a manufacturer terminated its distributorship it should pay

appellant such a fee, inasmuch as appellant would have

promoted the manufacturer’s products while representing the

manufacturer and there could be further sales of a

manufacturer’s products attributable to appellant’s efforts after

a manufacturer terminated appellant as a sales representative.

It appears that sometimes a buy-out fee became payable when

another company acquired the manufacturer that appellant had

represented and appellant then lost the account. Indeed,

appellant sets forth in its brief that Acumed “was bought out by

a conglomerate in around 2000.” Appellant’s br. at 11 n.4.5

In January 2000, during the time of the AdvancedAcumed relationship, appellant sometimes bought Acumed

products under the name Allied Surgical (“Allied”), an

unincorporated entity not to be confused with appellee Surgical

Resources of Pennsylvania or appellant Advanced Surgical

Services. Appellant contended that it formed Allied so that it
10

could sell products in hospitals that had not approved Acumed

as a vendor. On the other hand, Acumed contended that it

believed during the Advanced-Acumed relationship that Allied

was an entity separate from and independent of appellant.

Moreover, it contended that Morris formed Allied in order to

purchase Acumed products secretly for resale on his own

account to hospitals and surgeons. 

In January 2001, Acumed, citing what it believed was

appellant’s poor sales performance, terminated the AdvancedAcumed Agreement. Morris testified that after the termination

of the contract he returned the inventory that appellant had

acquired in its sales representative role from Acumed and

attempted to sell back to Acumed inventory it had acquired as

a stocking distributor, but Acumed refused to buy back the

inventory. Morris also testified that after Acumed terminated

Advanced’s contract, appellant continued to sell Acumed

products from 2001 to 2004 in eastern Pennsylvania and New

Jersey as well as in areas beyond its former exclusive territory

under the Advanced-Acumed Agreement. According to

appellant, the sales, however, were sporadic, and appellant only

sold Acumed products when customers specifically requested

them. Morris estimated that appellant made approximately 25

sales of Acumed products to ten different customers during the

three-year period. 

In September 2002, Surgical and Acumed entered into an

agreement designating Surgical as Acumed’s exclusive sales

agent in eastern Pennsylvania and southern New Jersey;

Surgical thus took over what had been Advanced’s territory. It

is, of course, evident that there was a hiatus between the periods
11

in which appellant and Surgical served as sales representatives

for Acumed. 

Sometime after Surgical became an Acumed sales

representative, an employee at Bloomsburg Hospital in

Pennsylvania advised Fred Zullo, then the Vice President of

Surgical, that a representative from another company had

indicated to the hospital staff that he could provide Acumed

products. This information led Acumed to send a memorandum

dated October 9, 2003, to its customers in eastern Pennsylvania

and New Jersey informing them that Surgical was its only

authorized representative in that territory and Acumed would

not extend its warranty to its products sold by anyone other than

its authorized sales representative. 

In December 2004, Chad Casey, a Surgical sales

representative, brought Acumed implants and instruments to

Nazareth Hospital for use in a surgical procedure. When Casey

arrived at Nazareth, he discovered that another person already

had delivered a set of Acumed implants to Nazareth for the

procedure. 

At the trial, Ryan Crognale, a sales representative for

appellant, explained his view of the events that Casey described

at Nazareth Hospital. Crognale testified that Morris directed

him to deliver the implants to Nazareth and to attend the

surgery. He then stated that after his earlier delivery of Acumed

implants, he returned to the hospital and saw Casey in the

operating room and observed that the physician doing the

procedure was “not using my stuff anyway.” App. at 2158.

Consequently, Crognale took the tray of instruments he
12

previously had delivered and left the operating room. Thus, it

appears that the physician performing the procedure used

materials Acumed supplied through Surgical, its authorized

representative.

As Crognale was leaving the surgery center, he

encountered Casey, and an argument between the two

representatives ensued. Appellant contends that during the

argument Casey loudly accused Crognale of illegally selling

Acumed inventory, an incident that appellant contends led Dr.

Robert Frederick, a doctor at Nazareth, to stop doing business

with it. Moreover, appellant contends that because of Dr.

Frederick’s connection with a large group of physicians in

Philadelphia, the confrontation was a factor in a decision by

Jefferson Hospital in Philadelphia to exclude Morris from its

operating theater for one year. As a result of the incident at

Nazareth Hospital, Acumed sent another notice to its customers

stating that Surgical was its only authorized representative in

eastern Pennsylvania and southern New Jersey. 

B. Procedural History 

Appellees filed the complaint in this action against

appellant in the District Court charging it with violation of the

Lanham Act, 15 U.S.C. § 1125, violation of Pennsylvania’s

Anti-Dilution statute, 54 Pa. Cons. Stat. Ann. § 1124 (West

1996), unfair competition, breach of a non-disclosure provision

in the Advanced-Acumed Agreement, conversion, unjust

enrichment, and tortious interference with existing or

prospective contractual relationships. Appellees sought

compensatory and punitive damages and an injunction
13

precluding appellant from making what Acumed regarded as

unauthorized sales of its products. Later, when appellees claim

they just had become aware that Morris had formed Allied,

appellees amended their complaint to include a charge of

intentional misrepresentation. The amendment to the complaint

asserted that Acumed had made sales to Allied believing, on the

basis of Morris’s representations, that Allied was an entity

separate from and independent of Advanced and was “wholly

distinct from” appellant whereas, in fact, “Allied was the alter

ego of Advanced.” App. at 346. Acumed alleged that but for

Morris’s misrepresentations it would not have sold its products

to Allied. Appellees brought all of their claims under state law

except for the Lanham Act claim which, of course, was a federal

law claim. 

Appellees asserted their claims for tortious interference

with contractual relationships on two theories. First, appellees

alleged that appellant tortiously interfered with Acumed’s and

Surgical’s contractual relationship providing for Surgical within

its territory to be Acumed’s sole authorized dealer by making

false and misleading statements regarding Advanced’s status.

Second, Acumed alleged that appellant’s sale of Acumed

products and false and misleading statements tortiously

interfered with Surgical’s and Acumed’s relationships with

existing and prospective customers. Appellees charged in their

Lanham Act claim that appellant made false and misleading

statements to hold itself out as an authorized representative of

Acumed in southeastern Pennsylvania and New Jersey. 

Appellant filed a four-count counterclaim against

appellees. In counts I, II, and III appellant charged that Acumed
 6

In their brief on this appeal, appellees state that the District

Court “gave the parties two weeks notice that it would hear

arguments on summary judgment issues and directed the parties

to brief those issues.” Appellees’ br. at 87. However, the order

which appellees cite as supporting this statement was dated

December 4, 2006, and did not refer to briefs, though it did

provide that “[d]ispositive motions shall be filed on or before

February 9, 2007.” App. at 3. In an order dated February 6,

2007, the Court ordered that “a pre-motion argument is

scheduled for February 23, 2007.” App. at 3D. The record,

however, makes clear that appellant filed a letter brief dated

February 22, 2007, and appellees filed two letter briefs also

14

breached its contract with appellant by not providing timely

notice of termination of their relationship and by failing to pay

the contractually required buy-out fee that became due to

appellant when Acumed terminated their relationship. In

addition, appellant charged that Acumed’s failure to pay the

buy-out fee violated the Pennsylvania Commissioned Sales

Representatives statute, 43 Pa. Cons. Stat. Ann. §§ 1471 et seq.

(West 1991). In count IV (“counterclaim IV”) appellant alleged

that Acumed and Surgical “. . .converted property belonging to

Advanced, defamed and disparaged Advanced maliciously and

falsely, intentionally interfered with Advanced’s contractual and

business relationships and competed unfairly against

Advanced.” App. at 103. 

After completion of discovery, appellant filed a motion

to dismiss or, in the alternative, for summary judgment, and the

parties submitted letter briefs addressing summary judgment

issues.6

 After hearing oral arguments on the letter briefs on
dated February 22, 2007, on the merits of certain summary

judgment issues. 

15

February 23, 2007, the District Court signed an order on March

6, 2007, entered on March 7, 2007, which dismissed

counterclaim IV insofar as it alleged that appellees were liable

to appellant for instituting groundless litigation, defamation, and

unlawful restraint of trade. But the District Court allowed

appellant to proceed with counterclaim IV to the extent that it

alleged that appellees were liable for tortious interference with

one of its contracts, and it also permitted appellant to proceed on

its conversion claims. The trial commenced on March 12, 2007,

and on the same day, the Court granted a motion appellees made

in limine to preclude appellant from introducing evidence of

defamation. 

On March 19, 2007, at the conclusion of appellant’s

testimony, Surgical moved for a judgment as a matter of law

with respect to the remaining claims in counterclaim IV, and

both appellees moved for judgment as a matter of law on other

portions of the case. The following day the District Court

entered an order granting Surgical’s motion against appellant

with respect to counterclaim IV but reserving judgment on the

other aspects of appellees’ motions for judgment, including the

tortious interference with contractual relationships, conversion,

and unfair competition claims. Ultimately, however, the Court

granted judgment as a matter of law dismissing certain of

appellant’s claims that had survived the earlier dismissal of

portions of counterclaim IV. 

The jury returned a verdict on March 21, 2007, finding
 7

There seems to be a discrepancy as to when the Court

ordered appellant to produce the documents, as the order

requiring their production is dated March 20, 2007, but the jury

16

for appellees on their count against appellant for tortious

interference with existing or prospective contractual

relationships with appellees’ customers. The jury, however,

rejected appellees’ claim that appellant had tortiously interfered

with Acumed’s and Surgical’s contractual relationship between

themselves and also rejected appellees’ other claims, including

appellees’ Lanham Act claims. The jury also found against

appellant on the portions of its counterclaims that had survived

the District Court’s dismissals, i.e., the claims predicated on

breach of contract and violation of the Pennsylvania

Commissioned Sales Representatives statute. The jury awarded

$20,000 in compensatory damages to Surgical and $0 in

compensatory damages to Acumed on the tortious interference

claim but found that both Acumed and Surgical were entitled to

punitive damages. Thus, by the time the jury returned its

verdict, either the Court or the jury had rejected all the parties’

claims, except that appellees had obtained a verdict in their

favor on the count for tortious interference with existing or

prospective contractual relationships, though not on interference

with their own relationship. Nevertheless, the Court did not

discharge the jury on March 21, 2007, when it returned its initial

verdict, inasmuch as the jury had not determined the quantum of

punitive damages.

In anticipation of proceedings to determine the quantum

of punitive damages, the Court required appellant to produce

financial documents relating to its net worth.7

 On March 22,
returned the liability verdict on March 21, 2007.

17

2007, when appellant failed to produce some of the documents,

the District Court entered an order holding it in civil contempt

of court and ordering it to pay appellees’ attorneys a fee of

$1350. The Court also granted appellees access to appellant’s

computer hard drive, and allowed appellees to cross-examine

Morris about the missing documents. On March 27, 2007,

appellant filed a notice of appeal from the District Court’s

contempt order. 

On March 23, 2007, the District Court, two days after the

jury returned its original verdict, allowed the parties to make

arguments to the jury on the question of punitive damages. At

that time the Court instructed the jury that to award punitive

damages it “must return a verdict for [Acumed] in a nominal

sum, such as one dollar.” App. at 3494. The jury then returned

a verdict awarding $1 in nominal damages to Acumed and

punitive damages to both Acumed and Surgical Resources in the

amount of $100,000 each.

Appellant filed post-verdict motions requesting entry of

a judgment as a matter of law in its favor under Rule 50(b), or,

in the alternative, entry of an amended judgment, a remittur of

damages, and/or a new trial. In addition, appellant sought

attorneys’ fees under the Lanham Act and the AdvancedAcumed Agreement even though Acumed, but not appellant,

contended that the Advanced-Acumed Agreement followed the

earlier RMW Agreement and consequently contained a nondisclosure provision providing for a counsel fee in the event of

litigation regarding it. Moreover, appellant requested that the
18

District Court impose sanctions against appellees. On the other

hand, appellees filed a post-trial motion seeking an order for an

injunction barring appellant from selling Acumed products. The

District Court denied appellant’s motions but granted appellees’

request for an injunction against appellant. Accordingly, the

District Court proceedings resulted in appellees recovering a

judgment against appellant for compensatory and punitive

damages for tortious interference with existing or prospective

contractual relationships, and with the Court entering an

injunction barring appellant from selling Acumed’s products.

No party, however, obtained any other substantive relief,

though, as we have indicated, the Court made an award of

attorneys’ fees to appellees on the contempt of court order.

Appellant then filed its second notice of appeal, which it later

amended. Thus, appellant has appealed twice, but appellees,

though only partially successful, have not cross-appealed.

III. JURISDICTION AND STANDARDS OF REVIEW

The District Court had jurisdiction over the Lanham Act

claims pursuant to 28 U.S.C. §§ 1331 and 1338(a) and

supplemental jurisdiction over all the remaining claims under 28

U.S.C. § 1367, as they were under state law and the Court did

not have diversity of citizenship jurisdiction. 

Courts of appeals have jurisdiction under 28 U.S.C. §

1291 over “appeals from all final decisions of the district

courts.” As we have indicated, appellant filed two distinct

notices of appeal, the first after the District Court entered its
 8

The parties brief certain aspects of the counsel fee issue

under Oregon law, apparently because Acumed contended in its

complaint that its contract with appellant followed the earlier

19

contempt order and the second, subsequently amended, after the

District Court ruled on the parties’ post-trial motions.

When appellant filed its first notice of appeal, the case

still was pending in the District Court, a procedural posture that

regularly presents a question whether a court of appeals has

jurisdiction over an appeal. We need not determine, however,

whether the contempt of court order was final and appealable

under section 1291, or on another basis, when appellant filed its

appeal from that order, because the District Court subsequently

resolved all the outstanding issues and, on any theory, the case

in all of its aspects then became final in the District Court and

thus became appealable. Therefore, the contempt of court order,

if not appealable earlier, became appealable at that time. See

Aluminum Co. of Am. v. Beazer East, Inc., 124 F.3d 551, 557

(3d Cir. 1997) (“Even if the appeals court would have lacked

jurisdiction at the time an appeal was filed, the court has

jurisdiction if, as a result of subsequent events, there are no

longer any claims left to be resolved by the district court.”). 

Various standards of review are applicable on this appeal.

First, “[w]e review a denial of judgment as a matter of law de

novo, viewing the evidence in the light most favorable to the

prevailing party.” Monteiro v. City of Elizabeth, 436 F.3d 397,

404 (3d Cir. 2006). On this appeal the parties have treated the

applicable state law as that of Pennsylvania, and therefore so do

we.8

 Ordinarily, a court may grant a judgment as a matter of law
RMW Agreement that specified disputes under it would be

governed by Oregon law, probably because Acumed is an

Oregon corporation. We, however, decide the counsel fee

dispute without reference to Oregon law, as we hold that the

provisions of the RMW Agreement are not relevant to resolution

of any issue on this appeal. 

20

contrary to the verdict only if “the record is critically deficient

of the minimum quantum of evidence” to sustain the verdict.

Gomez v. Allegheny Health Servs., Inc., 71 F.3d 1079, 1083 (3d

Cir. 1995). Thus, the usual formulation of the standard of

review on an appeal from the denial of a defendant’s motion for

judgment as a matter of law requires an appellate court to

determine “whether the evidence is sufficient to sustain

liability,” and in considering that issue the court “may not weigh

the evidence, determine the credibility of witnesses, or substitute

its version of the facts for the jury’s version.” Lightning Lube,

Inc. v. Witco Corp., 4 F.3d 1153, 1166 (3d Cir. 1993). Here,

however, though we apply the well-established standard of

review to our recitation of the facts, the traditional standard of

review will become insufficient because we will be constrained

to reverse the judgment on the appellees’ tortious interference

claim on a purely legal basis that does not depend on rejecting

the jury’s findings on the evidence at the trial. Rather, we

accept those findings but conclude that the verdict itself requires

that we reverse the tortious interference claim judgment against

appellant by granting its motion for judgment as a matter of law.

Second, our review of a grant of summary judgment is

plenary, and in making that review we use the same standard as

a district court: whether there are genuine issues of material fact
21

precluding entry of summary judgment. E.T. Browne Drug Co.

v. Cococare Prods., Inc., 538 F.3d 185, 191 (3d Cir. 2008).

Third, we review a district court’s evidentiary rulings for abuse

of discretion. See Moyer v. United Dominion Indus., 473 F.3d

532, 542 (3d Cir. 2007). To demonstrate that a district court

abused its discretion, an appellant must show that the court’s

decision was “arbitrary, fanciful or clearly unreasonable.” Id.

(citation omitted).

To the extent that a district court as a matter of law is

empowered to award attorneys’ fees, we review its disposition

of a request for attorneys’ fees on an abuse of discretion basis.

Pardini v. Allegheny Intermediate Unit, 524 F.3d 419, 422 (3d

Cir. 2008). There is “[a]n abuse of discretion . . . when a district

court’s decision rests upon a clearly erroneous finding of fact,

an errant conclusion of law or an improper application of law to

fact. However, if the District Court denied the fees based on its

conclusion on questions of law, our review is plenary.” Id.

(citation and quotation omitted). We review a contempt order

on an abuse of discretion basis as well. Harris v. City of

Philadelphia, 47 F.3d 1311, 1321 (3d Cir. 1995).

IV. DISCUSSION

A. Tortious Interference

We begin our analysis by addressing appellant’s

contention that appellees failed to establish sufficiently their

claim for tortious interference with existing or prospective
22

contractual relationships. Under Pennsylvania law, to prevail on

a claim for tortious interference with existing or prospective

contractual relationships, a party must prove: (1) the existence

of a contractual or prospective contractual or economic

relationship between the plaintiff and a third party; (2)

purposeful action by the defendant, specifically intended to

harm an existing relationship or intended to prevent a

prospective relation from occurring; (3) the absence of privilege

or justification on the part of the defendant; (4) legal damage to

the plaintiff as a result of the defendant’s conduct; and (5) for

prospective contracts, a reasonable likelihood that the

relationship would have occurred but for the defendant’s

interference. Brokerage Concepts, Inc. v. U.S. Healthcare, Inc.,

140 F.3d 494, 530 (3d Cir. 1998). 

As the foregoing formulation of the components of a

tortious interference claim makes clear, Pennsylvania

distinguishes between claims for interference with existing

contractual relations and claims for interference with

prospective contractual relations. See Thompson Coal Co. v.

Pike Coal Co., 412 A.2d 466, 470-71 (Pa. 1979). In this case,

though the jury found that appellant interfered with appellees’

existing and prospective relationships with purchasing surgeons

and hospitals, appellees do not direct our attention to evidence

setting forth the existing contracts with which they believed

appellant interfered. In fact, the only evidence appellees

presented of a material existing contract was the contract

between themselves. The jury, however, found that appellant’s

sales of Acumed products after 2001 did not interfere with the

contract between Surgical and Acumed, and appellees do not

challenge that outcome on this appeal. We therefore conclude
 9

The possibly confused nature of the jury’s findings is

unsurprising given the instructions and verdict slip here. The

instructions specifically did not (1) distinguish between tortious

interference with existing contractual relations and tortious

interference with prospective business relations, (2) review the

relevant factors for the jury to consider beyond those pertinent

once an existing contract is established, (3) mention that

Acumed and Surgical needed to demonstrate that appellant

specifically intended to interfere with their contracts or

prospective business relations, or (4) properly state the law by

noting that, in Pennsylvania, a party is not liable for tortious

interference with prospective business relations for “merely

making a third party’s performance of his contract with another

party more expensive or burdensome.” Gemini Physical

Therapy & Rehab., Inc. v. State Farm Mut. Auto. Ins. Co., 40

F.3d 63, 66 (3d Cir. 1994). Similarly, the verdict sheet required

the jury to answer “yes” or “no” to the following questions:

15. Do you find by a preponderance of the

evidence that Advanced and/or Morris

intentionally interfered with the plaintiff’s

23

that the jury must have based its verdict on appellant’s

interference with prospective sales of Acumed products that

Surgical would have made to customers in the territory in which

Acumed had granted an exclusive relationship to Surgical.

Indeed, the jury’s award of compensatory damages only to

Surgical and not to Acumed suggests that it probably reached

this conclusion because, though appellees complained of

appellant’s sales, those sales, after all, were of Acumed

products.9
existing or prospective contractual and

business relationships with plaintiff’s

customers?

. . . .

17. Do you find that the plaintiffs are entitled

to an award of punitive damages as a result

of defendants’ interference with plaintiffs’

contractual relations?

App. at 4121.

These questions merged interference with existing contractual

relationships and interference with prospective contractual

relationships into one tort, seemingly violating the general rule

that verdict slips should “avoid questions that combine two

issues disjunctively because a ‘yes’ or ‘no’ answer may refer to

either issue.” 9A Wright & Miller, Fed. Practice & Procedure

§ 2508, at 189 (1995). They also grouped Acumed and Surgical

together even though their contractual interests and claimed

damages were different. Nevertheless, considering our overall

conclusion in this case, the possible errors in the charge that we

identify were harmless to appellees against whom we are

holding on this appeal from their favorable tortious interference

judgment, and even if they objected at trial on the basis of these

errors, we would not order a new trial by reason of the form of

the verdict.

24

In determining whether there is a prospective contractual

relationship in a tortious interference case, Pennsylvania courts

have considered whether the evidence supports a finding that

there was an objectively “reasonable likelihood or probability”
 10Acumed terminated its contract with Advanced in January

2001, but Acumed and Surgical did not initiate their contractual

relationship until September 2002. Therefore, inasmuch as the

parties did not pinpoint the dates of appellant’s 25 sales after

January 2001, it is possible that Advanced made some of the

25

that the contemplated contract would have materialized absent

the defendant’s interference. See Glenn v. Point Park Coll., 272

A.2d 895, 898-99 (Pa. 1971); Kachmar v. SunGard Data Sys.,

Inc., 109 F.3d 173, 184 (3d Cir. 1997). A “reasonable

likelihood” of occurrence is something less than a contractual

right but more than a mere hope that there will be a future

contract. Phillips v. Selig, 959 A.2d 420, 428 (Pa. Super. Ct.

2008). Furthermore, a plaintiff must base its claim that there

was a prospective contractual relationship on something other

than an existing or current relationship. Id. at 429.

Morris, in uncontradicted testimony, explained that

appellant only sold Acumed products after the termination of the

Advanced-Acumed Agreement when customers specifically

requested that appellant supply the Acumed brand.

Furthermore, it is undisputed that at the times material to this

case appellant and Surgical were the only distributors of

Acumed products in the eastern Pennsylvania and southern New

Jersey region. Therefore, inasmuch as it appears that Surgical

was the only distributor of Acumed products in its territory other

than appellant, and the customers stated their preference

specifically for Acumed products, the customers may have

entered into contractual relationships with Acumed or its

authorized representative, Surgical, for the purchase of Acumed

products but for appellant’s sales of those products.10 On the
sales before Surgical became the exclusive dealer for Acumed

products in eastern Pennsylvania and New Jersey. When

questioned on this matter at oral argument, Acumed’s counsel

conceded that any sales which were proven to be between

January 2001 and September 2002 could not constitute tortious

interference, but also asserted that any Acumed sales appellant

made during that time outside of the Pennsylvania and New

Jersey territory constituted interference in some sales

representative’s exclusive territory. These circumstances

undermine the basis for the jury’s calculation of compensatory

damages in favor of Surgical because the jury may have based

its award of those damages on all 25 sales, and there could be a

question of the relevancy of a portion of the evidence supporting

the verdict. This problem would cast doubt on the validity of

the damages verdict even though the law does not require exact

precision in the calculation of damages. See Rochez Bros., Inc

v. Rhoades, 527 F.2d 891, 895 (3d Cir. 1975). However, we

need not linger on the question whether the evidence supporting

the jury’s award of compensatory damages to Surgical has been

undermined inasmuch as we find that appellees did not establish

that appellant’s sales of Acumed products were wrongful.

Accordingly, the sales, whenever appellant made them, could

not be the predicate for a finding that appellant tortiously

interfered with the relationship between Surgical and Acumed

or between appellees and third-party purchasers of Acumed

products. 

26

other hand, there was evidence at the trial that there was a

secondary market for Acumed products in which suppliers other

than the parties to this litigation supplied those products and, in

addition, there was evidence that former stocking distributors of
27

Acumed products sold their inventory in an unrestricted manner

after the termination of their authorized distributorships.

Accordingly, we cannot be confident that appellees have

satisfied their burden to prove that if appellant had not sold

Acumed products there is a reasonable likelihood that appellees

would have made those sales. 

Moreover, even if we concluded that appellees

established that but for appellant’s sales of Acumed products

there is a reasonable likelihood that the customers to whom

appellant made sales would have entered into contractual

relationships with appellees, and appellees therefore satisfied a

necessary part of their case, we still would have to consider

whether appellees were able to establish the second and third

elements of the tortious interference with contractual

relationships formulation, i.e., whether appellees demonstrated

that there was a sufficient showing of appellant’s intent to

interfere with appellees’ prospective relationships and whether

appellant was privileged or justified in its actions. We prefer to

pass directly to a consideration of those elements, particularly

the third element, of appellees’ case. The second and third

elements are related closely because in most cases a defendant’s

intentional conduct is done “at least in part for the purpose of

protecting some legitimate interest which conflicts with that of

the plaintiff . . . .” Id. at 430 (quoting Glenn, 272 A.2d at 899).

We will discuss only the third element of a tortious interference

claim inasmuch as we find that regardless of whether appellant

intended to interfere with appellees’ prospective contractual

relationships, even viewing the evidence in a way so that it is

most consistent with the verdict, as a matter of law appellant

was privileged to interfere with those prospective
 11Though we discuss the privilege issue in terms of

prospective relationships because the 25 sales after termination

of the Advanced-Acumed Agreement constitute the alleged

interfering conduct, our analysis would not change if we

characterized the question of privilege in terms of existing

relationships.

28

relationships.11

As we indicated above, to recover on a tortious

intentional interference with existing or prospective contractual

relationships claim in Pennsylvania, a plaintiff must prove that

the defendant was not privileged or justified in interfering with

its contracts: “While some jurisdictions consider a justification

for a defendant’s interference to be an affirmative defense,

Pennsylvania courts require the plaintiff, as part of his prima

facie case, to show that the defendant’s conduct was not

justified.” Triffin v. Janssen, 626 A.2d 571, 574 n.3 (Pa. Super.

Ct. 1993) (citing Thompson Coal 412 A.2d at 471 n.7); Silver v.

Mendel, 894 F.2d 598, 602 n.6 (3d Cir. 1990). We hasten to

add, however, that our conclusion does not depend on the

allocation of the burden of proof on the privilege issue, as we

would reach our result even if appellant had the burden of proof

to establish the privilege as a defense, because the evidence

established conclusively that appellant did so.

Pennsylvania has adopted section 768 of the Restatement

(Second) of Torts, which recognizes that competitors, in certain

circumstances, are privileged in the course of competition to

interfere with others’ prospective contractual relationships. See

Gilbert v. Otterson, 550 A.2d 550, 554 (Pa. Super. Ct. 1988). 
29

The law necessarily recognizes this privilege because if more

than one party seeks to sell similar products to prospective

purchasers, both necessarily are interfering with the other’s

attempt to do the same thing. Moreover, even if an entity has an

existing contractual relationship with another entity, a stranger

to the relationship must be privileged to seek to replace one of

the entities lest competition be stifled. Thus, under section 768:

“[o]ne who intentionally causes a third person not to enter into

a prospective contractual relation with another who is his

competitor or not to continue an existing contract terminable at

will does not interfere improperly with the other’s relation if: (a)

the relation concerns a matter involved in the competition

between the actor and the other; (b) the actor does not employ

wrongful means; (c) his action does not create or continue an

unlawful restraint of trade; and (d) his purpose is at least in part

to advance his interest in competing with the other.” 

Clearly, the record requires a conclusion that appellant’s

sales met the four components of a section 768 justification

defense with the possible exception of the second element, the

use of wrongful means in the interference. Thus, we confine our

discussion to that element, which is the only one that we regard

as being in real issue on this appeal. With respect to this

element, appellant argues that it was not precluded from

competing with Surgical within Surgical’s exclusive territory

and it did not employ wrongful means in selling its inventory of

Acumed products after Acumed terminated its relationship with

it. Appellees counter this argument by pointing to evidence that

they believe shows that appellant illegitimately acquired

Acumed products. Moreover, appellees contend that even if

appellant acquired the Acumed products legitimately, appellant
30

is not entitled to the shield of the competition privilege because

it used wrongful means to make the sales after the termination

of the Advanced-Acumed Agreement by selling Acumed

products in Surgical’s exclusive territory.

Comment e to section 768 elaborates on the type of

conduct that constitutes wrongful means: “If the actor employs

wrongful means, he is not justified under the rule stated in this

Section. The predatory means discussed in § 767, Comment c,

physical violence, fraud, civil suits and criminal prosecutions,

are all wrongful in the situation covered by this Section.”

Courts relying on comment e have interpreted the wrongful

means element to require that a plaintiff, to be successful in a

tortious interference action, demonstrate that a defendant

engaged in conduct that was actionable on a basis independent

of the interference claim. See Brokerage Concepts, 140 F.3d at

531 (citing DP-Tek, Inc. v. A T & T Global Info. Solutions Co.,

100 F.3d 828, 833-35 (10th Cir. 1996)). Moreover, we noted in

2000 that even though the Pennsylvania courts have not

interpreted the “wrongful means” element of section 768, it is

likely that the Pennsylvania Supreme Court would adopt this

meaning, that is, for conduct to be wrongful it must be

actionable for a reason independent from the claim of tortious

interference itself. See Nat’l Data Payment Sys., Inc. v.

Meridian Bank, 212 F.3d 849, 858 (3d Cir. 2000); see also CGB

Occupational Therapy, Inc. v. RHA Health Servs. Inc., 357 F.3d

375, 389 (3d Cir. 2004). Nothing in later Pennsylvania Supreme

Court decisions to which the parties have directed our attention

or of which we are aware leads us to change our view of this

issue. 
31

We addressed the wrongful means element of section 768

in National Data, a case in which the plaintiff, National Data

Payment Systems (“NDPS”), sued Meridian Bank and

Corestates Financial Group (“Corestates”) under Pennsylvania

law for tortious interference with, and breach of, a contract for

NDPS to purchase Meridian’s merchant credit card business.

212 F.3d at 851. NDPS alleged that Corestates made fraudulent

statements to induce Meridian not to sell its credit card business

to NDPS, the interest of Corestates in blocking that potential

sale being that it had announced its intent to acquire Meridian,

an acquisition that Corestates wanted to include Meridian’s

credit card business. Id. at 858. We found that statements made

by a Corestates senior executive did not meet the Pennsylvania

requirements for fraud and therefore Corestates was privileged

to compete with NDPS under section 768. Accordingly,

Corestates was “protected for liability for tortious interference

with contractual relations” because NDPS did not demonstrate

that Corestate’s interference gave rise to an independent cause

of action. Id.

In our case, the jury, in an unappealed determination,

found that appellees did not prove their cause of action

predicated on appellant’s allegedly fraudulent conduct.

Appellees thus did not establish that appellant was

independently liable to them for that conduct. In this regard,

we note that although appellees submitted documentary and

testimonial evidence of a dispute between appellant and

Acumed over inventory after the Advanced-Acumed contractual

relationship ended in 2001, the jury rejected appellees’

allegations that appellant was liable to Acumed on theories of

conversion, breach of contract, and unjust enrichment based on
32

appellant’s retention of Acumed products after termination of its

relationship with Acumed. 

In view of the jury’s determination that the evidence did

not support a verdict that appellant’s conduct was independently

actionable, we conclude as a matter of law that the tortious

interference verdict cannot stand against appellant, even if

without the adverse verdict appellees’ case would have survived

appellant’s Rule 50(b) motion. In reaching that conclusion, we

have not overlooked appellees’ allegation set forth in an

amendment to its complaint that during the time appellant was

Acumed’s exclusive sales representative, Morris secretly formed

Allied to buy products directly from Acumed and resell them to

their users. Rather, we conclude that the allegation cannot save

appellees’ verdict on the tortious interference with contractual

relationships claim because the jury did not find that appellant’s

conduct through Allied constituted fraudulent misrepresentation.

Finally, appellees’ Lanham Act charge against appellant cannot

save their tortious inference claim because the jury did not find

that appellant violated federal trademark laws through its sales

of Acumed products. In short, appellees do not direct our

attention to any claim that appellant engaged in legally

actionable conduct which the jury did not reject at the trial. It

therefore follows that appellees did not establish that appellant’s

actions in interfering with their contracts were not justified.

In reaching our conclusion that appellant is entitled to a

judgment as a matter of law on the tortious interference claim

because the jury found that appellant’s conduct was not

independently actionable, we have considered Mosley v.

Wilson, 102 F.3d 85 (3d Cir. 1996), and Boyanowski v. Capital
33

Area Intermediate Unit, 215 F.3d 396 (3d Cir. 2000). In

Mosley, we held that the district court erroneously granted

judgment as a matter of law to resolve a jury’s legally

inconsistent verdicts. The plaintiff in Mosley sued the

defendant, a police officer, under 42 U.S.C. § 1983 alleging that

the defendant arrested him without probable cause. The plaintiff

also brought, inter alia, a supplemental state law tort action for

malicious prosecution. Mosley, 102 F.3d at 88. The jury

returned a verdict in favor of the plaintiff on the state law claim

of malicious prosecution but found for the defendant on the

section 1983 arrest without probable cause count. Id. The

defendant then moved for judgment as a matter of law pursuant

to Fed. R. Civ. P. 50, arguing that the verdict on the malicious

prosecution charge was inconsistent with the verdict in his favor

on the civil rights claim. The district court granted the motion,

reasoning that “because the jury must have found probable cause

existed to find for [the defendant] on the unlawful arrest claim,

and because probable cause for arrest is a necessary element in

the malicious prosecution claim, the verdicts were legally

inconsistent.” Mosley, 102 F.3d at 88-89 (internal quotation

marks omitted).

On the plaintiff’s appeal, we found that the district court

erred as a matter of law in reversing the jury’s verdict on the

malicious prosecution claim merely because the verdict was

inconsistent with the jury’s verdict on the civil rights claim. Id.

at 91. First, we noted that the Federal Rules of Civil Procedure

suggested the inappropriateness of entering judgment as a matter

of law solely on the basis of inconsistent verdicts. Id. at 90.

Specifically, we pointed out that a Rule 50 post-trial motion

must be made on grounds that the movant raised previously in
 12 In Heller, the plaintiff sued two police officers and the City

of Los Angeles and its police department alleging unlawful

arrest and excessive force under 42 U.S.C. § 1983. The district

court granted summary judgment in favor of one of the officers

and held a bifurcated trial allowing the plaintiff to present his

claims against the remaining officer. After the jury found in

favor of the police officer, the court dismissed all charges

against the City of Los Angeles and its police department.

Heller, 475 U.S. at 798, 106 S.Ct. at 1572. The Supreme Court

agreed with the district court, reasoning that the city and the

police department could not be held liable if the jury exonerated

the individual police officers: “if the [police officer] inflicted no

constitutional injury on the respondent, it is inconceivable that

petitioners could be held liable.” Heller, 475 U.S. at 799, 106

S.Ct. at 1573.

 13 “Those circumstances are where the verdict appears to be

the result of compromise as opposed to jury confusion.”

Montgomery County v. Microvote Corp., 320 F.3d 440, 451 n.5

(3d Cir. 2003) (citing Heller, 475 U.S. at 805 n.12, 806 n.13,

106 S.Ct. at 1576 n.12, n.13) (Stevens, J., dissenting)).

34

a motion for a directed verdict before the submission of the case

to the jury, an obvious impossibility when the claim is that a

verdict is inconsistent. Id. 

Next, looking to Justice Stevens’ dissent in City of Los

Angeles v. Heller, 475 U.S. 796, 106 S.Ct. 1571 (1986) (per

curiam),12 we outlined four approaches that a district court may

take when facing an inconsistent verdict: a court may (1) allow

an apparently inconsistent verdict to stand;13 (2) read the verdict
 14 Justice Stevens noted that the Court’s rule in criminal cases,

which allows inconsistent verdicts to stand, is less clear than the

rule in civil cases. Heller, 475 U.S. at 804-05, 106 S.Ct. at

1576. 

35

in a manner that will resolve the inconsistencies; (3) resubmit

the question to the jury; and finally, (4) “if verdicts are

genuinely inconsistent and if the evidence might support either

of the ‘inconsistent’ verdicts, the appropriate remedy is

ordinarily . . . not simply to accept one verdict and dismiss the

other, but to order an entirely new trial.” Mosley, 102 F.3d at

90-91 (quoting Heller, 475 U.S. at 806, 106 S.Ct. at 1577).14

We pointed out “none of the approaches referred to by Justice

Stevens supports the action of the district court in [Mosley], i.e.,

directing a judgment notwithstanding the jury’s verdict on one

claim on the sole ground that it was inconsistent with the jury’s

verdict on another claim.” Id. at 91.

Notwithstanding Mosley, four years later we held that a

judgment as a matter of law was the proper remedy where a jury

reached an internally incompatible verdict in a civil conspiracy

case, though we did not cite Rule 50(b). Boyanowski, 215 F.3d

at 407. Boyanowski involved two separate jury verdicts in favor

of a husband and wife in their respective suits against a local

government and its officials. Dorothy Boyanowski alleged that

the defendant, CAIU, conspired to tortiously interfere with her

contractual rights. Id. at 398. The jury found in her favor on her

civil conspiracy complaint while rejecting her claim for tortious

interference. The district court entered judgment for Dorothy

Boyanowski on the conspiracy claim and for the CAIU on the

tortious interference claim. On appeal, we reversed and
36

ordered the district court to enter judgment in favor of the

defendants on all counts. Id. at 407. As germane to Dorothy

Boyanowski’s claim, under Pennsylvania law a claim for civil

conspiracy cannot be pled without also alleging an underlying

tort. See, e.g., Pelagatti v. Cohen, 536 A.2d 1337, 1342 (Pa.

Super. Ct. 1987). We predicted that the Pennsylvania Supreme

Court would extend that rule to overturn a jury verdict for civil

conspiracy if the jury did not find liability on the underlying

tort. Boyanowski, 215 F.3d at 407. In reaching our conclusion,

we cited to a Pennsylvania Superior Court decision in a

conspiracy to commit fraud action in which the court found that

the “failure of the underlying fraud claim sufficed as a matter of

law to vitiate the finding of civil conspiracy notwithstanding the

fact that it had been successfully pled as an independent cause

of action.” Id. (emphasis in original). While acknowledging

Mosley, and citing to the practice of other jurisdictions, we

found that “[a] verdict on civil conspiracy should yield to a

finding for the defendant on the underlying tort because the

cause of action is wholly subordinate to the underlying tort’s

existence.” Id. at 407.

Clearly, Boyanowski is more analogous than Mosley to

the present case. Appellant in this case was entitled to a

judgment as a matter of law not solely, if at all, because the

verdict was internally inconsistent, as in Mosley, but rather

because the verdict for tortious interference against the appellant

cannot stand without appellees showing that appellant had

committed a particular underlying tort, precisely what we held

that Boyanowski required. That is, it is not that some element

of the jury’s fraud finding is legally irreconcilable with an

element of the tortious interference with contractual
 15The error in the charge does not require a remand, because

it would be pointless; inasmuch as the jury already has

determined that there was not an independently actionable tort

and appellees do not challenge that verdict, that verdict must

stand. We certainly are not going to remand the case for a new

trial to give the appellees a chance to prove in the context of and

as an element of a tortious interference claim that appellant

engaged in independently actionable tortious conduct after

appellees were unable to prove that claim on a free standing

37

relationships verdict, but rather that the jury rejected any

underlying tort claims that could have served as the basis for a

subordinate tortious interference claim verdict. Thus, the

verdict in this case is better characterized as reflecting

conclusions that are internally incompatible rather than

conclusions that are inconsistent.

Moreover, it is important to recognize that in one respect

this case presents even more compelling circumstances for

granting appellant a judgment as a matter of law than the

circumstances did in Boyanowski, because in Boyanowski we

did not suggest, as we will here, that strange as it may seem, an

improper jury instruction could have cured any inconsistency

problem. Here, the Court did not instruct the jury, as it should

have done, that if the parties are competitors, it must find that

appellant engaged in independently actionable conduct for it to

find in favor of appellees on the tortious interference claim.

Thus, the Court’s charge allowed the jury to return a verdict for

appellees on the tortious interference claim without making a

finding that appellant engaged in independently actionable

conduct, a conclusion that the jury rejected.15 Therefore,
basis.

 16We find it ironic that, with the benefit of hindsight, we can

see how appellees might have pleaded themselves out of the

tortious interference claim verdict. They may have done so

because while appellees were required to establish that appellant

was not privileged or justified in making its sales by showing

that appellant employed wrongful means in doing so through

actionable conduct, we do not see why appellees had to plead a

separate cause of action requiring its own verdict to establish

that aspect of the tortious interference claim count.

38

regardless of the Pennsylvania rule on justification in tortious

interference claim cases, under the law as the District Court

explained it to the jury, there was no inconsistency in the jury’s

verdict.16

We have not overlooked appellees’ attempt to support the

verdict on the tortious interference claim by relying on the jury’s

rejection of appellant’s counterclaim for breach of contract. In

this regard, appellees contend that the verdict establishes that

appellant did not lawfully possess Acumed’s inventory. We

recognize that it certainly is true that if the jury had accepted as

accurate appellant’s version of the contract between Acumed

and Advanced, then appellant would have had a valid reason to

retain the Acumed inventory. However, the jury’s verdict

against appellant on its breach of contract counterclaim does not

prove the contrapositive: that appellant did not legitimately

possess Acumed inventory after the termination of the

Advanced-Acumed Agreement. Indeed, as noted above, the jury

specifically rejected appellees’ conversion claim based on

appellant’s failure to return its Acumed inventory. Thus, though
 17Though our determination that appellant’s actions were

within the bounds of competitive privilege eliminates the need

to examine any damages element of that claim, we note that

appellant’s legitimate acquisition of the Acumed goods it sold

after 2001 further undermines the claim that appellant interfered

with Acumed’s prospective sales. Under Pennsylvania law,

proof of “actual legal damages” is necessary to establish tortious

interference with prospective contractual relationships.

Brokerage Concepts, 140 F.3d at 530. If appellant purchased its

Acumed goods in a fair and lawful fashion, Acumed cannot

establish that it suffered such damages on account of lost profits.

39

they make the conclusory assertion that appellants acquired their

Acumed products through “illegitimate means,” appellees’ br.

at 18, appellees do not demonstrate that appellant engaged in

independently actionable conduct in its acquisition or retention

of Acumed products. Accordingly, appellees’ reliance on the

jury’s rejection of appellant’s breach of contract counterclaim as

a basis to uphold their tortious interference claim verdict is

unavailing.17

Appellees assert that even if appellant acquired the

products legitimately, appellant was aware of the customs and

practices of the surgical supplies industry, which include an

expectation that hospitals and surgeons will purchase surgical

products and tools from authorized dealers. Consequently,

appellees contend that appellant should not have made the 25

Acumed sales from its inventory after it no longer was an

Acumed authorized representative. While appellant may not

have honored the “customs and practices” of the industry, that

conduct, in and of itself, does not violate any principle of
40

statutory or common law of which we are aware that imposes

liability on it for its actions. 

Likewise, appellees’ argument that appellant knew it

would be displacing Surgical in making potential sales is not

independently actionable. To the contrary, the Restatement

encourages a stranger to a relationship to engage in such

conduct: 

One’s privilege to engage in business and to

compete with others implies a privilege to induce

third persons to do their business with him rather

than with his competitors. In order not to hamper

competition unduly, the rule stated in this Section

entitles one not only to seek to divert business

from his competitors generally but also from a

particular competitor.

Restatement (Second) of Torts § 768 cmt. b (1979).

In the absence of some evidence that appellant engaged

in independently actionable conduct, it is shielded from liability

by the competition privilege, and thus the verdict on the tortious

interference claim against it cannot stand. Therefore, viewing

the evidence in the light most favorable to appellees, and even

acknowledging that the evidence could support the verdict, we

find that the District Court erred in not granting appellant’s

motion for judgment as a matter of law on appellees’ tortious

interference with existing or prospective contractual

relationships claim. Our disposition of this claim requires that

we reverse the judgment for both the compensatory and punitive
 18We realize that even though appellant filed its motion for a

judgment as a matter of law under Fed. R. Civ. P. 50(b), it did

not move for a judgment as a matter of law or a directed verdict

in its favor on the tortious interference with contractual

relationships claim against it on the basis on which we are

reversing prior to the end of the trial and the discharge of the

jury. It therefore might be thought that under our jurisprudence

we “cannot reverse the district court’s decision denying

[appellant’s] Rule 50(b) motion.” Simmons v. City of

Philadelphia, 947 F.2d 1042, 1077 (3d Cir. 1991). See also

Abraham v. Pekarski, 728 F.2d 167 172 (3d Cir. 1984) (“[A]

Rule 50(b) motion for judgment notwithstanding the verdict may

not be made on grounds that were not asserted in a motion for

directed verdict.”). Moreover, in Mosley we commented that 

the inappropriateness of entering judgment as a

matter of law solely on the basis of inconsistent

verdicts is evident [because a] motion for

judgment as a matter of law rendered after trial

must be made on grounds that were previously

asserted in a motion for directed verdict prior to

submission of the case to the jury [and o]bviously

the inconsistency of the verdicts could not have

been raised in a motion for directed verdict prior

to jury deliberations.

102 F.3d at 90 (internal citations omitted).

Nevertheless there are several reasons why the foregoing

41

damages predicated on it as well.18 
jurisprudence does not preclude us from reversing the judgment

predicated on the jury verdict against appellant on the tortious

interference claim. First, appellees do not make the possible

procedural argument we mention now. Second, as we explained

in Greenleaf v. Garlock, Inc., 174 F.3d 352, 364 (3d Cir. 1999),

the Rule 50(b) requirement for an underlying motion for a

judgment as a matter of law or a directed verdict is applicable

when the post-trial Rule 50(b) movant asserts “that there is

insufficient evidence to support the verdict.” Here, there was

ample evidence to support the tortious interference claim

verdict. Appellees’ problem is that the jury rejected the

evidence, so that while appellees obtained a partially favorable

verdict, it was as a matter of law internally incompatible. Third,

in Boyanowski, though not citing Rule 50(b), we effectively

granted a Rule 50(b) judgment when we held that the failure of

the underlying tort claim “sufficed as a matter of law to vitiate

the finding of civil conspiracy . . . .” Boyanowski, 215 F.3d at

406. Accordingly, we reversed the judgment and set aside the

verdict on the basis of the internal incompatibility of the verdict

even though the appellants did not and could not raise the

incompatibility point prior to the verdict. Fourth, the law must

afford appellant some means to challenge the verdict after its

return when an earlier challenge would have been impossible.

Cf. Surrick v. Killon, 449 F.3d 520, 531 (3d Cir. 2006) (federal

courts have “inherent authority” to manage and conduct cases

before them). Thus, regardless of how we characterize

appellant’s Rule 50(b) motion, substantively we must consider

it, for we will not hold that a party aggrieved by an outcome of

a trial cannot challenge an order where the rules of court at no

time provided a procedure for the challenge. The situation here

42
is completely different than one in which a litigant lost its right

to raise an issue by not doing so at the appropriate time or does

not have the right to raise an issue because an attempt to do so

would be premature.

 19Appellant raises contentions about the form of the verdict on

the tortious interference claim, challenges the District Court’s

action in instructing the jury to deliberate further on the tortious

interference claim after it returned its initial verdict, and raises

various theories for seeking a reversal of the judgment for

punitive damages. We, however, do not address these

contentions, as they are moot.

43

Finally, on this competition point we observe that our

opinion does not preclude Acumed from protecting the market

for its products. Quite the contrary is true, for Acumed was free

to notify Pennsylvania and New Jersey hospitals and surgeons

that Surgical was its exclusive representative and urge potential

customers not to buy any Acumed products from unauthorized

dealers. In fact, it took that step when it sent letter notifications

to its customers advising them to deal with its authorized

representative.19

In a manner in harmony with the verdict, the District

Court in its May 21, 2007 order, at appellees’ request enjoined

appellant from selling its remaining inventory of Acumed

products. Of course, for a court to grant an injunction, it is

“essential that the activity sought to be restrained is actionable.”

Maritrans GP Inc. v. Pepper, Hamilton & Scheetz, 602 A.2d
 20In our disposition of appellees’ claim of tortious interference

with their existing or prospective contractual relationships, we

have referred to Advanced and Morris singularly as appellant

even though appellant in its brief contends that the District

Court erred in joining them on the verdict slip on this tort and

that the Court should not have joined them with respect to

punitive damages, “since punitive damages should be assessed

against each defendant individually.” Appellant’s br. at 41.

Though appellant probably is correct in this contention, see

supra note 9, so that it might follow from the foregoing

argument that we should not have joined Advanced and Morris

as a single appellant on the appeal with respect to the tortious

interference claim, obviously we have not prejudiced either

Advanced or Morris by our joinder of them, as both have been

completely successful on this appeal with respect to the tortious

interference claim and punitive damages.

 21These contentions are not rendered moot by reason of our

reversal of the judgment against appellant because we are

affirming the negative disposition on appellant’s counterclaims

44

1277, 1283 (Pa. 1992) (quotations and citation omitted). In

view of our result, it necessarily follows that because appellant’s

sale of Acumed products was not actionable, the injunction

against it cannot stand. Accordingly, we will reverse the

District Court’s order granting the injunction prohibiting

appellant from selling Acumed products.20 

B. The Best Evidence Rule

Appellant challenges several of the District Court’s

evidentiary rulings.21 First, appellant argues that the District
and the evidence excluded could have affected that outcome.

45

Court erred in excluding certain evidence on the basis of Fed. R.

Evid. 1001-1002, the best evidence rule. Rule 1002 requires

that “[t]o prove the content of a writing, recording, or

photograph, the original writing, recording, or photograph is

required, except as otherwise provided in these rules or by Act

of Congress.” The District Court applied Rule 1002 to bar

Morris’s testimony regarding “buy-out” clauses in contracts

appellant had with other medical devices manufacturers and

suppliers because Morris did not produce the contracts at trial.

Morris sought to testify to the contents of the contracts to prove

that he requested and secured a buy-out clause from Acumed, a

contention which appellees disputed. Obviously, this point is

important to appellant because one aspect of its counterclaim

was that Acumed failed to pay appellant a sum due to it as a

buy-out payment. 

Appellant argues that because the contracts with other

suppliers were not at issue in this litigation, the District Court

erred in barring Morris’s testimony under Rule 1002. Though

appellant certainly did not seek to recover on contracts it had

with manufacturers other than Acumed, we nevertheless

disagree with appellant’s contention that the contracts with those

manufacturers were not at issue in this litigation. It has been

explained that:

[E]ven where the substantive law does not make

the contents of a writing, recording, or photograph

a primary issue, evidence of those contents may

still be relevant. This is true where pertinent
 22In fact, we question whether evidence of appellant’s buy-out

clauses in other contracts could be relevant evidence of the

contents of the Advanced-Acumed Agreement, but in view of

the jury verdict and rejection of the buy-out clause evidence on

the basis of the best evidence rule, we will assume without

deciding that the evidence if satisfying the best evidence rule

would have been admissible.

46

events occurred independent of a writing,

recording, or photograph but are nonetheless

evidenced by the contents of such an item. Rule

1002 applies if evidence of those contents is

offered.

31 Charles Alan Wright & Victor James Gold, Federal Practice

and Procedure § 7184, at 388 (2008). 

The best evidence rule clearly applied to Morris’s

testimony regarding buy-out clauses contained in appellant’s

contracts with other manufacturers and suppliers, as the clauses

would have been relevant in this litigation only if they tended to

support Morris’s testimony that appellant insisted on a buy-out

clause in all of its representation contracts and thus did so in its

contract with Acumed. Therefore, inasmuch as the best

evidence rule applied, the District Court did not abuse its

discretion in barring Morris’s testimony regarding the contents

of contracts not submitted into evidence or even produced for

review at the trial.22

Similarly, appellant’s argument that the District Court

erroneously allowed appellees to introduce speculative
47

testimony regarding appellant’s contracts is meritless.

Appellant asserts that the testimony of several witnesses was

“ill-founded,” based on “hunches,” and “hearsay.” Appellant’s

br. at 57. Appellant, however, does not point to any part of the

record where a witness for appellees improperly testified to the

contents of appellant’s contracts with its manufacturers and

suppliers. After a review of the very extensive record, we find

that the testimony of witnesses to which appellant objects was

both competent and relevant. Therefore, the District Court did

not abuse its discretion in allowing the testimony of appellees’

witnesses with respect to these contracts. 

C. Summary Judgment Procedure

Appellant challenges the District Court’s March 6, 2007

summary judgment order dismissing the institution of

groundless litigation, defamation, and unlawful restraint of trade

portions of counterclaim IV. It argues that the District Court did

not follow the procedural requirements required for the granting

of summary judgment inasmuch as it directed the parties to

submit letter briefs in lieu of formal summary judgment

motions, which it did not permit. In appellant’s view, the letter

briefs, even when combined with subsequent oral argument, did

not provide it with a full and fair opportunity to support its

claims before the District Court granted summary judgment

rejecting its claims.

Appellant asserts that the District Court, during a

telephone conference on February 6, 2007, requested that the

parties file letter briefs on any issue they wished to raise in

dispositive motions. According to appellant, the District Court
 23The transcript, if there is one, of the telephone conference is

not included in the record on appeal. The Court, however, on

February 6, 2007, signed an order memoralizing certain of the

determinations it made during the telephone conference call,

though the order did not mention filing briefs.

48

stated in the telephone conference that “if a party wanted to file

a dispositive motion, it could file a five page letter brief . . .

outlining what the motion would cover.”23 Appellant’s br. at 59.

The parties served their briefs on February 22, 2007, and the

Court held oral arguments on the briefs the next day. Appellant

contends that because the Court held the oral arguments on the

day after parties served their letter briefs, it did not have an

opportunity to respond to appellees’ arguments. Moreover,

appellant, believing that the letter briefs were only “premotions,” a term that the Court itself used and seemingly

created, asserts that it was taken by surprise when the Court

granted summary judgment for appellees dismissing portions of

counterclaim IV. 

In reviewing appellant’s summary judgment procedure

contentions, we start with the principle that “[i]t has long been

established that, under the right circumstances, district courts are

entitled to enter summary judgment sua sponte.” Gibson v.

Mayor & Council of Wilmington, 355 F.3d 215, 222 (3d Cir.

2004). A court, however, must provide the parties with notice

of its intention to consider granting summary judgment so that

they have an opportunity to marshal evidence on the motion for

submission to the court. See Bradley v. Pittsburgh Bd. of Educ.,

913 F.2d 1064, 1069-70 (3d Cir. 1990). Our review of the

parties’ letter briefs leads us to conclude that the parties treated
49

the “pre-motions” as an opportunity to marshal evidence and

make arguments with respect to granting or denying summary

judgment. In fact, contrary to what appellant argues now, while

the case was pending in the District Court it surely had that

view, for it used the last paragraph of its February 22, 2007

letter brief to request summary judgment in its favor on its

counterclaim for conversion. We have held that a party has

sufficient notice before a summary judgment is entered against

it if it had reason to believe that the court might reach the matter

at issue on the pending summary judgment application and the

party had an opportunity to support its position fully. See

Gibson, 355 F.3d at 223-24. Inasmuch as appellant requested

partial summary judgment in its letter brief, arguably it should

have recognized that appellees in their letter brief could request

summary judgment dismissing the counterclaims. 

It is entirely appropriate for courts to recognize a

procedure allowing them to grant summary judgment on their

own initiative, for courts’ resources are limited and they should

not be required to use those resources to conduct an unnecessary

trial merely because a party entitled to a summary judgment in

whole or in part does not seek that outcome to litigation. Yet we

have been clear that “the sua sponte grant of summary judgment,

without giving notice to the parties, is not the preferred method

by which to dispose of claims.” Gibson, 355 F.3d at 224.

Moreover, as we emphasized in Bradley, it is important that

before a court grants summary judgment on its own initiative it

give notice to the parties that it is considering doing so and that

it give the parties the opportunity to marshal evidence and make

arguments on whether the court should grant summary

judgment. We think that in this case it is doubtful that the
50

District Court gave the parties adequate opportunity to present

evidence or make arguments with respect to granting summary

judgment, though, as we now will explain, it is clear that even

if the Court made an error in the summary judgment procedure,

the error was harmless. 

In making a harmless error analysis we point out that

appellant filed its brief on this appeal using materials bearing on

the issues raised on this appeal that were not part of the record,

but has sought to expand the record to include these materials.

Nevertheless, as we further explain below, even if we

considered for use on the merits the materials appellant seeks to

add to the record, we would affirm the District Court’s order to

the extent that it granted summary judgment against appellant on

portions of its counterclaim. Appellant’s brief makes clear that

it predicates its objection to the grant of summary judgment on

“Advanced [being] denied a full and fair opportunity to defend

its claims, in violation of its rights to due process.” Appellant’s

br. at 61 (emphasis in original). It thus follows that if upon

exercising plenary review, as we are on appellant’s appeal from

the granting of summary judgment against it, we would affirm

the District Court’s order to the extent that it granted summary

judgment against appellant on its counterclaim even considering

all of the materials with which appellant seeks to supplement the

record and has placed in the appendix, then the procedure in the

District Court could not have been prejudicial to appellant.

Furthermore, there is an even more fundamental reason

why the error, if there was one in the summary judgment

procedure, was harmless, namely that for the reasons we set

forth with respect to summary judgment, appellant’s
51

counterclaim to the extent that the Court granted summary

judgment dismissing it, did not state a claim upon which relief

could be granted and thus was subject to dismissal under Fed. R.

Civ. P. 12(b)(6). In this regard we point out that in appellees’

reply to appellant’s answer and counterclaim they asserted a

Rule 12(b)(6) defense and this defense remained open during the

disposition of the case in the District Court. The unmistakeable

conclusion that must be drawn from the facts as appellant

alleges them in its counterclaim and the applicable law is that

appellant could not recover on the counterclaim to the extent

that the Court granted summary judgment against it. Thus, the

Court’s possible procedural error in granting summary judgment

was harmless. See Bradley, 913 F.2d at 1069-70.

D. The Merits of Counterclaim IV 

Appellant asserts that the District Court erred in granting

summary judgment and dismissing counterclaim IV to the extent

that it did. We reject this contention as we agree with appellees

that counterclaim IV is a “mish-mash of multiple claims,”

appellees’ br. at 57, some of which appellant did not present

properly to the District Court and none of which is meritorious.

Appellant makes the following arguments under the

rubric of counterclaim IV: (1) appellees instituted the Lanham

Act claim in order to “manufacture federal jurisdiction” as well

as to tortiously interfere with appellant’s contracts with other

medical suppliers; (2) during the litigation, appellees used

depositions to impugn appellant’s reputation and to injure

appellant’s relations with other medical products suppliers,
 24Appellant’s motion to supplement the appendix explains that

it wants to add “additional documents relevant and material to

the issues on appeal” from various orders, including the “order

granting partial summary judgment.” It attempted to justify the

motion with the contention that the “additional documents were

not already part of the record because they were not necessary

on the trial level but rather are relevant and material to issues

raised on appeal.” We reject that flawed approach, as an

appellant should raise its issues in the district court in the first

instance.

52

actions constituting abuse of process, defamation, tortious

interference with contract, and unfair competition; (3) the

District Court erred in denying appellant’s request to enter

certain witnesses’ statements into evidence, thus crippling

appellant’s tortious interference with contract claim; and (4)

appellees’ conduct during the Nazareth Hospital incident led to

Morris’s banishment from the Jefferson Hospital surgery

operating theater and Acumed’s action in sending the letters to

customers with respect to its representative constituted tortious

interference with appellant’s contractual relationships and unfair

competition. The District Court dismissed all of these claims,

either on summary judgment or by granting judgment as a

matter of law at the conclusion of the trial.

 As we indicated above, in considering appellant’s

arguments on this appeal, we have taken into account

appellant’s motion to supplement the record with various

documents not in the District Court record but in the appendix

and, even though we have not granted that motion, we

nevertheless have considered that evidence.24 We have taken
53

that step notwithstanding our practice of generally not reviewing

evidence or issues that a party did not present to the District

Court. See Appalachian States Low-Level Radioactive Waste

Comm’n v. Pena, 126 F.3d 193, 196 (3d Cir. 1997); see also

Arnold M. Diamond, Inc. v. Gulf Coast Trailing Co., 180 F.3d

518, 524 n.6 (3d Cir. 1999) (holding that the appellant waived

an equitable subrogation argument on appeal because,

“[a]lthough [appellant] claims that it made this argument in its

brief opposing Gulf Coast’s motion for summary judgment . .

.[,] our review of that brief convinces us that this argument was

not fairly raised”); United States v. Genser, 582 F.2d 292, 311

(3d Cir. 1978) (evidence not presented to district court may not

be considered by court of appeals). Thus, even though we

recognize that as a practical matter our disposition of the motion

to expand the record cannot matter, we will consider that motion

as well as an earlier motion appellees filed to strike all material

outside of the District Court record. 

1. The record on appeal

The first indication to us that there was a problem with

the record on the appeal came when, after appellant filed its

brief and appendix, appellees filed a motion requesting that we

strike all material outside of the District Court record from the

appendix. Only then, in response, did appellant file a motion to

include in the record on appeal additional documents that it

considered to be relevant and material to the issues on appeal

that were not part of the District Court record. We grant

appellees’ motion and deny appellant’s motion.

Fed. R. App. P. 30(a)(1) provides that the contents of the
54

appendix include: (1) the relevant docket entries in the district

court proceeding; (2) the relevant portions of the pleadings,

charge, findings, or opinion; (3) the judgment, order, or decision

in question; and (4) other parts of the record to which the parties

wish to direct the court’s attention. The record, in turn, consists

of: (1) the original papers and exhibits filed in the district court;

(2) the transcript of proceedings; and (3) a certified copy of the

docket entries prepared by the district clerk. Fed. R. App. P.

10(a). 

It is established that although “[t]he only proper function

of a court of appeals is to review the decision below on the basis

of the record that was before the district court,” Fassett v. Delta

Kappa Epsilon, 807 F.2d 1150, 1165 (3d Cir. 1986), in

exceptional circumstances a court of appeals may allow a party

to supplement the record on appeal. We listed what these

circumstances might be in In re Capital Cities/ABC Inc.’s

Application for Access to Sealed Transcripts, 913 F.2d 89, 97

(3d Cir. 1990) (citing Ross v. Kemp, 785 F.2d 1467, 1475 (11th

Cir. 1986)), as follows: 

(1) whether the proffered addition would establish

beyond any doubt the proper resolution of the

pending issue; (2) whether remanding the case to

the district court for consideration of the

additional material would be contrary to the

interests of justice and the efficient use of judicial

resources; and (3) whether the appeal arose in the
 25Of course, sometimes a case becomes moot on appeal by

reason of circumstances arising after the completion of a case in

a district court. Such circumstances can and should be brought

to the attention of the court of appeals.

 26In this regard, we point out that our review on an appeal

from the granting of a summary judgment is plenary and that a

court should not grant a summary judgment if there is a genuine

issue as to a material fact. It therefore follows that, if the

materials with which an appellant against whom a district court

has granted summary judgment seeks to expand the record on

appeal would have precluded the court from granting the

summary judgment had they been presented to it, the appellant

necessarily has satisfied the beyond doubt standard for

expanding the record on appeal. Nevertheless, we do not intend

by this opinion to set a precedent that a litigant can withhold

materials from a district court or not obtain all materials that it

could obtain on a summary judgment motion and then submit

them on appeal. Quite to the contrary, a party should present

55

context of a habeas corpus action.[25]

None of the circumstances we listed in Capital Cities is

present in this case. Here, the documents that appellant wishes

to submit for our consideration do not establish beyond doubt,

or indeed even under the less demanding showing that a party

must make in opposing summary judgment, that the District

Court’s rulings on its summary judgment disposition were

incorrect. Thus, taking into account the record as appellant

wishes it to be, we would affirm the order for summary

judgment.26 Therefore, in considering the appeal from the
everything it needs for a complete presentation on the motion

and, if necessary, seek additional time under Fed. R. Civ. P.

56(f) to marshal its evidence. We, however, are considering the

materials on the appeal beyond the record in part because the

procedure in the District Court in this case though, as we have

explained, ultimately permitting appellant to present all of its

material nevertheless was irregular.

 27We believe that the parties should be able to agree on the

documents to be stricken, as there seems to be little dispute as

to what the record was before the District Court. But it does not

matter if they cannot do so, for, as we have indicated, even

considering the totality of appellant’s submissions with respect

to the summary judgment, we would uphold it. Thus, the

inclusion of the documents that appellant seeks to add would not

change our result. We do note that to the extent that it appears

that the parties presented the deposition of Dr. Robert Frederick

to the District Court during the summary judgment proceedings,

that deposition properly is included in the appendix. In any

event, regardless of what happened in the District Court, we

think that it is particularly appropriate that we consider Dr.

Frederick’s deposition because notwithstanding appellees’

contention that his deposition, along with numerous other items,

56

summary judgment on the merits, we deny appellant’s motion

to expand the record and grant appellees’ motion to strike

material outside the record. Accordingly, though perhaps our

limitation of the record may be regarded as a legal fiction

inasmuch as we have considered the record as though it has been

expanded, we only will consider materials that were part of the

record before the District Court.27 
was not “part of the district court record” and was “improperly

included in the Appellants’ Appendix,” in appellees’ brief they

cite and rely on that deposition. We do not think that the

appellees can have Dr. Frederick’s deposition treated in opposite

ways.

 28In its March 6, 2007 summary judgment order, the District

Court referred to “unfair competition” as “unlawful restraint of

trade.”

 29Several district courts and Pennsylvania state trial courts

have recognized a cause of action for unfair competition under

57

2. Instituting Groundless Litigation, Defamation and Unfair

Competition28

Under Pennsylvania law, a plaintiff bringing a

defamation action must prove: (1) the defamatory character of

the communication; (2) its publication by the defendant; (3) its

application to the plaintiff; (4) the understanding by the recipient

of its defamatory meaning; (5) the understanding by the

recipient of it as intended to be applied to the plaintiff; (6)

special harm resulting to the plaintiff from its publication; and

(7) abuse of a conditionally privileged occasion. 42 Pa. Cons.

Stat. Ann. § 8343 (West 1998).

Appellant relies on Restatement (Third) of Unfair

Competition § 1 to support its unfair competition allegation but

does not cite any state-court appellate decision that has adopted

section 1 in Pennsylvania. Nevertheless, inasmuch as we reject

appellant’s section 1 contentions, we will assume without

deciding that Pennsylvania courts would follow that section.29
certain circumstances. See ID Sec. Sys. Canada, Inc. v.

Checkpoint Sys., Inc., 249 F. Supp. 2d 622, 687 (E.D. Pa. 2003)

(listing cases).

58

Section 1 states, in relevant part, that: 

One who causes harm to the commercial relations

of another by engaging in a business or trade is

not subject to liability to the other for such harm

unless: 

(a) the harm results from . . . acts or practices of

the actor determined to be actionable as an unfair

method of competition, taking into account the

nature of the conduct and its likely effect on both

the person seeking relief and the public; or

(b) the acts or practices of the actor are actionable

by the other under federal or state statutes . . . or

general principles of common law apart from

those considered in this Restatement. 

Appellant maintains that in the incident in December

2004 that we already have described, a Surgical sales

representative “loudly accused” Advanced’s sales representative

of illegally selling Acumed products at Nazareth Hospital.

According to appellant, the Nazareth Hospital incident led Dr.

Robert Frederick, a Nazareth doctor, to stop doing business with

appellant and also resulted in Morris’s exclusion from the
59

operating theater at Jefferson Hospital. Dr. Frederick, however,

at a deposition on January 31, 2007, denied overhearing the

argument between the two sales representatives and had no

recollection of refusing to do business with appellant.

Moreover, appellant did not present evidence that a Surgical

sales representative made defamatory statements about

appellant’s Acumed inventory and does not point to evidence

connecting Morris’s exclusion from the Jefferson Hospital

operating theater to the Nazareth Hospital incident. Therefore,

the District Court properly dismissed this claim on summary

judgment. See Lexington Ins. Co. v. W. Pa. Hosp., 423 F.3d

318, 332-33 (3d Cir. 2005) (speculation and conjecture may not

defeat a motion for summary judgment). 

Further, the letters Acumed sent to appellant’s customers,

despite appellant’s view that they “disparage[d] the inventory

Advanced was selling,” appellant’s br. at 18, do not qualify as

defamation or unfair competition. The letters informed

Acumed’s customers—without mentioning appellant by

name—that Acumed only would insure and warrant products its

authorized dealers sold and further informed its customers that

Surgical was its authorized representative in eastern

Pennsylvania and southern New Jersey. Thus, inasmuch as the

letters did not specifically name appellant and were not

defamatory under Pennsylvania law, the District Court

appropriately granted appellees summary judgment on this

claim. Likewise, because Acumed’s conduct in sending the

letters was not actionable but rather was justified, the letters did

not constitute unfair competition.

Appellant argues that certain questions that appellees’
 30Our disposition of this issue makes it unnecessary to

examine the litigation privilege on the point.

 31We note, however, that appellant does not appear to have

pleaded properly in a counterclaim that appellees instituted

groundless litigation. Inasmuch as the District Court did not

issue an opinion on its summary judgment disposition, we are

not certain whether it dismissed this portion of the counterclaim

because appellant improperly pleaded it or because of its lack

of merit. We, however, are upholding the dismissal of the claim

on the merits.

60

counsel asked witnesses during depositions constituted an abuse

of process. To the extent that appellant did not raise these

claims in the District Court, it waived them. Arnold M.

Diamond, 180 F.3d at 524 n.6. In any event, appellees in asking

the questions did not engage in conduct constituting an abuse of

process.30

Finally, appellant contends that Acumed pleaded a

Lanham Act claim in order to “manufacture federal

jurisdiction.”31 Appellees’ Lanham Act claim survived

appellant’s pretrial motion seeking an order dismissing the case

for want of federal jurisdiction, but the jury rejected the Lanham

Act claim at trial. We believe that in alleging that appellees

instituted groundless litigation, appellant was attempting to

bring a malicious prosecution claim under Pennsylvania law

and, in any event, we see no other way to treat the claim. In

Pennsylvania, a party engages in malicious prosecution when it

institutes a lawsuit with a malicious motive and without

probable cause. Werner v. Plater-Zyberk, 799 A.2d 776, 785
 32Appellees contend that appellant could not bring its

malicious prosecution counterclaim in the very action appellant

claimed was being maliciously prosecuted. See T.C.R. Realty,

Inc. v. Cox, 372 A.2d 721, 728 (Pa. 1977). We need not address

this point.

61

(Pa. Super. Ct. 2002). Based on the Nazareth Hospital incident

and other reports that unauthorized sales representatives were

selling its products, Acumed had cause to believe, even though

the jury’s verdict did not support that belief, that appellant was

causing confusion in the marketplace with regard to appellant’s

relationship with Acumed. Therefore, the District Court did not

err in granting summary judgment on appellant’s claim that

appellees instituted groundless litigation against it.32 

3. Tortious Interference with Contractual Relationships

We already have discussed Pennsylvania’s requirements

for a tortious interference with contractual relationships claim

when considering appellant’s appeal from the judgment in favor

of appellees on their similar claim, and thus we do not repeat

them here. We find that the District Court did not err in granting

appellees a judgment as a matter of law on this portion of

counterclaim IV, inasmuch as appellant did not present any

evidence of conduct that could have led a reasonable jury to

conclude that appellees interfered with appellant’s contracts.

Appellant based its tortious interference counterclaim on

the same incidents that it alleges constituted defamation: the

Nazareth Hospital incident and Acumed’s letters to its

customers. To the extent that appellant claims that Acumed’s
62

letters constituted tortious interference, these claims are

meritless as a matter of law. As we discussed above, the letters

do not even mention appellant, and Acumed certainly had a

right, if not an obligation, to notify the purchasers of its products

of its warranty policies. Further, there was no evidence at the

trial that Casey or anyone else representing appellees made false

statements or misrepresentations to third parties during the

Nazareth hospital incident. Finally, appellant challenges the

exclusion of the testimony of Jeanne Mikalauskas, one of its

sales representatives, arguing that her testimony would have

supported appellant’s version of the Nazareth incident. The

District Court, however, properly excluded Mikalauskas’

testimony, as she was not present during the incident and

attempted to testify to out-of-court statements of Dr. Frederick

precluded by the hearsay rule. See Fed. R. Evid. 802.

E. Attorneys’ Fees

After the jury’s verdict, appellant filed two motions for

attorneys’ fees. First, appellant sought to recover attorneys’ fees

from appellees based on the non-disclosure provision of the

RMW Agreement, as appellant believed that appellees

contended that the non-disclosure provision had been included

in the Advanced-Acumed Agreement. The RMW Agreement

non-disclosure provision recited that “[i]f any action at law or

inequity [sic] is brought to enforce or interpret the provisions of

this Agreement, the prevailing party in such action shall be

entitled to reasonable attorney’s fees.” App. at 3534. Appellant

reasons that because appellees unsuccessfully sued it for breach

of the non-disclosure agreement from the RMW Agreement

Acumed contended was incorporated in the Advanced-Acumed
 33Appellees argued that appellant was prohibited from using

Acumed’s confidential information for its own benefit and thus

appellant breached the non-disclosure agreement by selling

Acumed products after their contractual relationship ended. 

 34 Kelly Packard, the Vice President of Sales and Marketing

for Acumed, however, testified that the agreement between

appellant and Acumed was “the same as what our RMW did.”

App. at 1384.

63

Agreement, appellant is entitled to attorneys’ fees as the

prevailing party on that aspect of the case.33 The District Court

rejected this claim based on its conclusion that inasmuch as

throughout the trial appellant denied that the terms of the RMW

Agreement governed its relationship with Acumed, appellant

could not be entitled to attorneys’ fees because it was not a party

to the agreement. Appellant argues that the District Court

misunderstood its claim: it was not suing under the RMW

Agreement but rather was suing under an agreement between it

and Acumed that Acumed claimed at trial was identical to the

RMW Agreement.

It appears that even though Acumed predicated its breach

of contract claim on a non-disclosure agreement, it did not

introduce physical evidence of an agreement between the parties

to this case and did not allege in its pleadings that the RMW

Agreement and the Advanced-Acumed Agreement were

identical.34 The existence of an attorneys’ fees provision was

not at issue during the trial. Therefore, we cannot know from

Acumed’s allegations and evidence whether any non-disclosure

agreement it might have had with appellant contained an

attorneys’ fees provision. On the other hand, appellant
64

introduced evidence of an unsigned written contract that it

contended set out the terms of the contract between Advanced

and Acumed but did not contain a non-disclosure agreement. In

the end, the jury rejected both parties’ breach of contract claims.

We think that it is anomalous for appellant to move for the

enforcement of an attorneys’ fees provision which: (1) was

unquestionably not included in the version of the agreement that

it insisted governed its relationship with Acumed, and (2) may

or may not have been in Acumed’s version of the agreement.

Appellant predicated its second claim for attorneys’ fees

under the Lanham Act, which authorizes an award of attorneys’

fees to a prevailing party in “exceptional” cases. 15 U.S.C. §

1117(a). Exceptional cases involve culpable conduct on the part

of the losing party, “such as bad faith, fraud, malice, or knowing

infringement.” Securacomm Consulting, Inc. v. Securacom

Inc., 224 F.3d 273, 280 (3d Cir. 2000) (citation omitted). “In

cases in which the defendant is the prevailing party in a

trademark infringement case and seeks fees from the plaintiff,

the plaintiff’s culpable conduct will necessarily center on the act

of filing the lawsuit rather than on the infringement.” Id. We

think that notwithstanding the jury’s verdict, there was a

foundation for appellees’ argument that appellant was liable to

them under the Lanham Act, and we therefore decline to hold

that appellees acted in bad faith or with malice when they filed

the Lanham Act aspect of their action. Accordingly, the District

Court did not abuse its discretion in denying attorneys’ fees

under the Lanham Act.

F. Contempt Order 
 35Appellant’s argument that it made a good faith effort to

comply with the District Court’s order is not a defense to civil

65

The District Court entered an order holding appellant in

contempt of court for violating the Court’s March 21, 2007

order requiring appellant by the following day to present

documents related to its net worth. When appellant failed to

produce all of the required documents, the Court ordered it to

pay appellees’ attorneys a fee of $1350, allowed appellees

access to appellant’s hard drive, and allowed appellees to crossexamine Morris in front of the jury regarding the missing

documents. 

Appellant argues that the District Court should not have

entered the contempt of court order because the Court

previously had denied appellant’s request for access to

appellees’ financial records, stating that it would deal with the

issue after the trial was over. Appellant also contends that the

District Court set an unreasonably short time for it to produce

the documents. 

Appellant, however, was on notice when appellees served

subpoenas on Advanced and Morris on March 12, 2007, and

March 16, 2007, requiring them to produce financial records.

Moreover, as the District Court reasoned, the parties knew that

the net worth issue could be litigated and presented to the jury

at the end of the liability aspects of the trial because both sides

asked for punitive damages. In these circumstances, the District

Court did not abuse its discretion in finding appellant in

contempt of court for non-compliance with the March 21, 2007

order.35 See Armstrong v. Guccione, 470 F.3d 89, 101-02 (2d
contempt. See Robin Woods Inc. v. Woods, 28 F.3d 396, 399

(3d Cir. 1994).

66

Cir. 2006) (quoting Shillitani v. United States, 384 U.S. 364,

370, 86 S.Ct. 1531, 1535 (1966)) (“There can be no question

that courts have inherent power to enforce compliance with their

lawful order through civil contempt.”).

V. CONCLUSION

For the foregoing reasons, we conclude that the District

Court erred in denying appellant’s motion for judgment as a

matter of law on the tortious interference with contractual

relationships claim. We therefore will reverse the District

Court’s order of May 21, 2007, to the extent that it denied

appellant a judgment as a matter of law on the tortious

interference claim, and will remand the case to the District Court

for it to enter judgment as a matter of law in favor of appellant

on that claim and to set aside the prior judgment on the claim.

As a result, we also will reverse the jury’s award of

compensatory and punitive damages against appellant and the

District Court’s grant of an injunction in appellees’ favor. We

will affirm all of the District Court’s other orders from which

appellant has appealed, including the Court’s orders on

attorneys’ fees, summary judgment, judgment as a matter of law

on appellant’s counterclaims, and evidentiary issues, as well as

the order of March 22, 2007, holding appellant in contempt of

court. The parties will bear their own costs on this appeal.
67

AMBRO, Circuit Judge, concurring

I join Judge Greenberg’s well-crafted and in-depth

opinion. I mention two more matters, not necessary to the

outcome of this case, that I nonetheless deem of concern. 

The jury’s initial compensatory award to Acumed of $0

reflected the conclusion, mentioned in note 17 of Judge

Greenberg’s opinion, that Acumed cannot prove the “actual

legal damage” necessary to establish tortious interference with

contractual relationships. Brokerage Concepts, Inc. v. U.S.

Healthcare, Inc., 140 F.3d 494, 530 (3d Cir. 1998). By denying

Acumed compensatory damages, the jury indicated that Acumed

had not shown “the loss of the benefits of the contract or

prospective relation[,] or consequential, emotional or

reputational losses[,] resulting from the defendant’s conduct”

required to satisfy Pennsylvania’s description of tortious

interference with existing or prospective contractual relations.

Pawlowski v. Smorto, 588 A.2d 36, 40 (Pa. Super. Ct. 1991)

(applying and interpreting § 774A of the Restatement (Second)

of Torts); see also Birl v. Phila. Elec. Co., 167 A.2d 472, 474

(Pa. 1960). Accordingly, even if the District Court had been

correct in determining that Acumed had satisfied the other

elements of the tort, it should have granted appellant judgment

as a matter of law on the basis of Acumed’s failure to establish

actual damages. See Bruce Lincoln-Mercury, Inc. v. Universal

C.I.T. Credit Corp., 325 F.2d 2, 22 (3d Cir. 1963); 21 Stuart M.

Speiser, et al., The American Law of Torts § 31:94 (1992). 
68

In addition, assuming that Acumed had somehow proven

the necessary elements of tortious interference with contractual

relations (which, as noted, it could not if the harm to it was nil),

the District Court should not have instructed the jury to award

Acumed $1 in nominal damages. The Court justified this

instruction under Fed. R. Civ. P. 49(b) and Wilks v. Reyes, 5

F.3d 412, 415–16 (9th Cir. 1993), as a measure needed to

resolve the “apparent inconsistency” between the jury’s $0

compensatory award and $100,000 punitive award to Acumed.

Acumed LLC v. Advanced Surgical Serv., Inc., No. 05-2711,

2007 WL 1500051, at *2–3 (E.D. Pa. May 18, 2007). This does

not work.

First, I believe that Pennsylvania law does not permit

nominal damages for tortious interference violations. Section

907 of the Restatement (Second) of Torts defines nominal

damages as “a trivial sum of money awarded to a litigant who

has established a cause of action but has not established that he

is entitled to compensatory damages.” Pennsylvania courts have

interpreted this definition to permit nominal damages only in

tort cases “where harm is not a requisite to the cause of action.”

Carter v. The May Dep’t Store Co., 853 A.2d 1037, 1041 (Pa.

Super. Ct. 2004). But, as stated, harm is a required element of

tortious interference with existing or prospective contractual

relationships. See Pawlowski, 558 A.2d at 40; Pelagatti v.

Cohen, 536, A.2d 1337, 1343 (Pa. Super. Ct. 1987), appeal
 36 This conclusion comports with accepted tort analysis, see,

e.g., Action House, Inc. v. Koolik, 54 F.3d 1009, 1014 n.4 (2d

Cir. 1995) (noting with approval the holding in Kronos, Inc. v.

AVX Corp., 612 N.E.2d 289, 292–94 (N.Y. 1993), that nominal

damages are not allowed in tortious interference claims); 2 Dan

B. Dobbs, Dobbs Law of Remedies §6.6(2) (2d ed. 1993). But

see Fishkin v. Susquehanna Partners, G.P., 563 F.Supp.2d 547,

590 (E.D. Pa. 2008) (awarding nominal damages on a claim of

tortious interference with existing contractual relations).

69

denied 548 A.2d 256 (Pa. 1988).36

Second, even if an award of nominal damages were

permitted, the District Court should not have done so here. As

discussed in Judge Greenberg’s opinion, the trial court could

have taken a number of approaches once it learned that the

general verdict and jury answers were inconsistent. But

regardless of its chosen approach, it was required to apply

Pennsylvania law that holds “that no award for punitive

damages may be made where actual damage has not been

suffered.” Hilbert v. Roth, 149 A.2d 648, 652 (Pa. 1959); see

also Smith v. Grab, 705 A.2d 894, 901 (Pa. Super. Ct. 1997);

Sulecki v. Southeast Nat’l Bank, 516 A.2d 1217, 1219 (Pa.

Super. Ct. 1986). Thus, instead of resolving the inconsistent

verdict by instructing an award of nominal damages, the Court

should have entered a judgment vacating Acumed’s punitive

damages award. Cf. Cooper Distrib. Co., Inc., v. Amana

Refrigeration, Inc., 63 F.3d 262, 281–84 (3d Cir. 1995)

(vacating a punitive damages award for tortious interference
70

where the jury found actual harm but $0 in compensatory

damages). 

Third, the District Court’s instruction did nothing to

counter the quick conclusion that the compensatory/punitive

award ratio (1/100,000) here was untenable under Pennsylvania

law, see Reading Radio, Inc. v. Fink, 833 A.2d 199, 214 (Pa.

Super. Ct. 2003) (“[A] reasonable relationship must still exist

between the nature of the cause of action underlying the

compensatory award and the decision to grant punitive

damages.”), and constitutional standards, see State Farm Mut.

Auto. Ins. Co. v. Campbell, 538 U.S. 408, 425 (2003) (“[I]n

practice, few awards exceeding a single-digit ratio between

punitive and compensatory damages, to a significant degree,

will satisfy due process.”).

In sum, the jury’s initial decision not to grant Acumed a

compensatory award for actual damages ends the game for it.

Tortious interference with existing or prospective contractual

relations cannot be found, and thus punitive damages are not

available. Instructing the jury to award $1 in compensatory

damages was an unfitting effort to change these results, and the

compensatory/punitive award ratio it created was off the chart

of reasonableness.