Source: https://m.openjurist.org/660/f2d/594
Timestamp: 2020-03-30 13:37:24
Document Index: 720078442

Matched Legal Cases: ['§ 2381', '§ 1476', '§ 130', '§ 766', '§ 130', '§ 766', '§ 51', '§ 51', '§ 114', '§ 1985', '§ 1985', '§ 1985', '§ 1985', '§ 1985', '§ 4884', '§ 51', '§ 51', '§ 51', '§ 1489', '§ 66', '§ 766', '§ 51', '§ 123', '§ 137']

660 F. 2d 594 - Dussouy v. Gulf Coast Investment Corporation
660 F2d 594 Dussouy v. Gulf Coast Investment Corporation
660 F.2d 594
John W. DUSSOUY, Jr., Plaintiff-Appellant,
GULF COAST INVESTMENT CORPORATION, Defendant-Appellee.
Dussouy moved to amend within a reasonable time 41 days after entry of the dismissal of Allstate necessitated amendment and promptly upon the decision of the trial court that held the pleadings defective. Thus delay alone cannot justify the decision of the trial court. Nor is this a case of bad faith on the part of the moving party. On the contrary, the entire pleading problem arose from Dussouy's voluntary dismissal of Allstate once discovery revealed that the allegation of conspiracy against Allstate was unfounded. If anything, that tends to establish Dussouy's good faith. It is true that Dussouy was aware of the facts alleged in the proposed amendment from the beginning. In other circumstances, that awareness of facts and failure to include them in the complaint might give rise to the inference that the plaintiff was engaging in tactical maneuvers to force the court to consider various theories seriatim. In such a case, where the movant first presents a theory difficult to establish but favorable and, only after that fails, a less favorable theory, denial of leave to amend on the grounds of bad faith may be appropriate. See Zenith Radio v. Hazeltine Research, 401 U.S. 321, 332-33, 91 S.Ct. 795, 803, 28 L.Ed.2d 77, 88-89 (1971) (alternative holding); Gregory v. Mitchell, 5 Cir. 1981, 634 F.2d 199, 203; Freeman v. Continental Gin, 5 Cir. 1967, 381 F.2d 459. But in this case, Dussouy was not aware that those facts were necessary to his claim, and indeed, as our disposition of the Louisiana law questions will show, was justified in thinking them unnecessary. In Lone Star Motor Import v. Citroen Cars, 5 Cir. 1961, 288 F.2d 69, we held that the failure to allege known facts in support of an allegation of jurisdiction did not preclude amendment where counsel reasonably relied on a state long-arm statute that, though of questionable constitutionality, had never been overruled. Similarly, we think that where the failure to include in the complaint a known theory of the case arises not from an attempt to gain tactical advantages but from a reasonable belief that the theory is unnecessary to the case, denial of leave to amend is inappropriate.
In addition to the movant's conduct, we must consider the possible prejudice to Gulf Coast. We foresee no substantial prejudice arising from granting the motion to amend. The pleadings as they stand have given Gulf Coast adequate notice of the transactions at issue; although the other parties to the alleged conspiracy have changed, the challenged conduct of Gulf Coast is essentially the same as that challenged in the initial pleadings. Of course, should the new theory necessitate reiteration of discovery proceedings, Gulf Coast would be prejudiced. But the trial court can avoid any prejudice from that source, for it has discretion to tax the costs of the repeated discovery proceedings against Dussouy. See Bamm v. GAF, 5 Cir. 1981, 651 F.2d 389, 392 n.5.
Finally, we look at the question from the perspective of the court. The overriding consideration appears in rule 1, which directs that "(t)hese rules .... shall be construed to secure the just, speedy and inexpensive determination of every action". Fed.R.Civ.Pro. 1. Denial of the motion for leave to amend violates that directive. If the plaintiff cannot amend, his proper recourse is to file a new action alleging a conspiracy between Gulf Coast and its lawyers. Assuming, as counsel at oral argument conceded, that there is no res judicata bar,3 the action would proceed on the basis of the new complaint the functional equivalent of granting the motion to amend. All that is accomplished is that the case is set back on the docket, and disposition of the merits delayed, a result that rule 1 directs us to avoid and that undercuts the policy of the federal rules in favor of consolidating litigation to facilitate an efficient and expeditious resolution of disputes. See Fed.R.Civ.Pro. 42(a); 9 C. Wright & A. Miller, Federal Practice and Procedure § 2381 (1971). Full consideration of the interests of the litigants and of the goal of efficient resolution of disputes, then, requires that Dussouy be granted an opportunity to have his claim heard on the merits without filing a new action. The discretion of the trial court simply was not broad enough to allow denial of the motion to amend in the circumstances this case presents.4
That, furthermore, defendants tortiously interferred (sic) in plaintiff's business and caused him to suffer the following damages:
(Itemization of damages omitted).
The defendant, Allstate Insurance Company, participated in this tortious interference by agreeing with Gulf Coast Investment Corporation to have Gulf Coast refuse to make loans on homes insured by companies other than Allstate Insurance Company and alternatively to refuse the (sic) accept certain policies without rational basis or reason.
In its brief, Gulf Coast contends that the amended complaint supersedes the original complaint, so that tortious interference with business is no longer an issue in the case. We think that that argument has no merit. Of course, the proposition that the amended complaint may supersede the original is valid. Wilson v. First Houston Investment Corp., 5 Cir. 1978, 566 F.2d 1235, 1237-38, vacated on other grounds, 444 U.S. 959, 100 S.Ct. 442, 62 L.Ed.2d 371 (1979); 6 C. Wright & A. Miller, Federal Practice and Procedure § 1476 (1971). In this case, though, the amended complaint5 continues to state a claim based on tortious interference. The amendment only added allegations to Paragraph X; it did not eliminate the original Paragraph, so the opening allegation that both defendants interfered survived the amendment. Furthermore, the second subparagraph of the amendment clearly refers to the first subparagraph as a tortious interference, and the first subparagraph refers to actions by both defendants. The dismissal of Allstate, therefore, does not eliminate the allegation of tortious interference by Gulf Coast. Finally, the liberal approach of the federal rules to pleading requires no recitation of formulas. Even if the complaint did not explicitly identify "tortious interference with business" as the legal basis for recovery, if the facts alleged state a claim upon which relief can be granted for tortious interference, we would be compelled to reverse. Robertson v. Johnston, 5 Cir. 1967, 376 F.2d 43, 44. See also Hildebrand v. Honeywell, 5 Cir. 1980, 622 F.2d 179, 181.
Contrary to the suggestion in Gulf Coast's brief, we conclude that conspiracy is not an element of the cause of action under article 2315 for tortious interference with business. In Graham itself, there was no allegation of conspiracy. There, the foreman of a railroad threatened to discharge all employees who dealt with the plaintiff. Noting the malicious motivation, the court held that the plaintiff could recover damages from the foreman even though ordinarily an employer is free to select his employees as he pleases. See also Deon v. Kirby Lumber, 162 La. 671, 111 So. 55 (1926); W. Prosser, Handbook of the Law of Torts § 130 (4th ed. 1971). An individual, regardless of his motive, has an absolute right to refuse to deal with another. See, e. g., McGee v. Collins, 156 La. 291, 100 So. 430, 435 (1924); Joslyn v. Manship, 238 So.2d 20 (La.App.1970), writ refused, 256 La. 883, 239 So.2d 541 (1970). The right to influence others not to deal, however, is not as broad. See Graham v. St. Charles St. Railroad, 47 La.Ann. 1656, 18 So. 707 (1895); Lewis v. Huie-Hodge Lumber, 121 La. 658, 46 So. 685, 687 (1908) (dictum); Joslyn v. Manship, 238 So.2d 20, 24 (La.App.1970), writ refused, 256 La. 883, 239 So.2d 541 (1970); Restatement (Second) of Torts §§ 766B, 767 (1979); see generally Developments in the Law Competitive Torts, 77 Harv.L.Rev. 888, 926-27 (1964). In that situation, Louisiana law protects the businessman from "malicious and wanton interference", permitting only interferences designed to protect a legitimate interest of the actor.6 See Lewis v. Huie-Hodge, 121 La. 658, 46 So. 685, 687 (1908); McGee v. Collins, 156 La. 291, 100 So. 430, 435 (1924); W. Prosser, Handbook of the Law of Torts § 130 (4th ed. 1971).
Gulf Coast's argument that, to take the case outside the area of absolute right, Dussouy must show a conspiracy, misreads the cases.7 Dussouy need show only that Gulf Coast improperly influenced others and not that others agreed with Gulf Coast. Dussouy has already alleged that as a result of Gulf Coast's actions, others did not deal with him. But he must also establish that the interference was improper. See, e. g., Deon v. Kirby Lumber, 162 La. 671, 111 So. 55 (1926); Restatement (Second) of Torts § 766B (1979). Gulf Coast is correct in its contentions that the plaintiff has not alleged malice and that malice is a necessary element of the cause of action. Nonetheless, we do not view that failure as grounds for dismissal. As our reasoning in Part I of this opinion shows, the appropriate course is to allow the plaintiff to amend his complaint to make the necessary allegations.
To establish a conspiracy in restraint of trade in violation of La.Rev.Stat.Ann. § 51:121 et seq. (West 1965), the plaintiff must, of course, establish a conspiracy. The second amended complaint concededly alleges no conspiracy between Gulf Coast and any third party. Nevertheless, we hold the complaint sufficient to state a claim under La.Rev.Stat.Ann. § 51:121 et seq.; in certain circumstances a corporation can conspire with its employees.8
The concept of intracorporate conspiracy raises difficult conceptual problems, and the courts have reached varying results on whether such a conspiracy is possible. For purposes of federal antitrust law, a corporation cannot conspire with its officers or employees. Nelson Radio & Supply v. Motorola, 5 Cir. 1952, 200 F.2d 911, cert. denied, 345 U.S. 925, 73 S.Ct. 783, 97 L.Ed. 1356 (1953); accord, Hatley v. American Quarter Horse Association, 5 Cir. 1977, 552 F.2d 646. That rule is not unquestioned. See Novotny v. Great American Savings & Loan Association, 3 Cir. 1978, 584 F.2d 1235, 1257 n.117 (en banc), vacated on other grounds, 442 U.S. 336, 99 S.Ct. 2345, 60 L.Ed.2d 957 (1979); see generally L. Sullivan, Handbook of the Law of Antitrust § 114 (1977). The rationale for that rule is two-fold: first, agency principles attribute the acts of agents of a corporation to the corporation, so that all of their acts are considered to be those of a single legal actor, negating the multiplicity of actors necessary to conspiracy, and, second, applying the prohibition of combinations in restraint of trade contained in section 1 of the Sherman Act to activities by a single firm renders meaningless section 2, which prohibits monopolization and attempt to monopolize. See Nelson Radio & Supply v. Motorola, 5 Cir. 1952, 200 F.2d 911, 913-14, cert. denied, 345 U.S. 925, 73 S.Ct. 783, 97 L.Ed. 1356 (1953); Note, Intracorporate Conspiracies under 42 U.S.C. § 1985(c), 92 Harv.L.Rev. 470, 477-78, 481 (1978).
There are, however, strong arguments against the Nelson Radio rule. The original purposes of the rule attributing agents' acts to a corporation were to enable corporations to act, permitting the pooling of resources to achieve social benefits and, in the case of tortious acts, to require a corporation to bear the costs of its business enterprise. But extension of the rule to preclude the possibility of intracorporate conspiracy does not serve either of these goals. See Note, Intracorporate Conspiracies under 42 U.S.C. § 1985(c), 92 Harv.L.Rev. 470, 477-78 (1978); see generally Note, Intracorporate Conspiracies under 42 U.S.C. § 1985(c): The Impact of Novotny v. Great American Savings & Loan Association, 13 Ga.L.Rev. 591, 602-03 (1979). Some courts have found this reasoning persuasive when dealing with problems outside the federal antitrust area. For instance, in Novotny v. Great American Savings & Loan Association, 3 Cir. 1978, 584 F.2d 1235 (en banc), vacated on other grounds, 442 U.S. 366, 99 S.Ct. 2345, 60 L.Ed.2d 957 (1979), the Third Circuit, although it did not consider whether the corporation could be a party to the conspiracy, held that the officers and directors of a single corporation could be liable for conspiracy under 42 U.S.C. § 1985(c). Similarly, a corporation can be convicted of criminal charges of conspiracy based solely on conspiracy with its own employees. United States v. Consolidated Coal Co., 424 F.Supp. 577 (S.D.Ohio 1976); see Novotny v. Great American Savings & Loan Association, 3 Cir. 1978, 584 F.2d 1235, 1258 (en banc) (dictum), vacated on other grounds, 442 U.S. 366, 99 S.Ct. 2345, 60 L.Ed.2d 957 (1979). In these situations, the action by an incorporated collection of individuals creates the "group danger" at which conspiracy liability is aimed, and the view of the corporation as a single legal actor becomes a fiction without a purpose. See id.; Note, Intracorporate Conspiracies under 42 U.S.C. § 1985(c), 92 Harv.L.Rev. 470, 478-80 (1978). Also, courts have fashioned an exception to the rule that a corporation cannot conspire with its employees: when the officers of a corporation act for their own personal purposes, they become independent actors, who can conspire with the corporation. See Johnston v. Baker, 3 Cir. 1971, 445 F.2d 424; R. Eickhoff, Fletcher Cyclopedia of the Law of Private Corporations §§ 4884, 5032.1 (1978).
Apparently Louisiana has found the arguments against the Nelson Radio rule persuasive even in the antitrust area, or, at the very least, it recognizes exceptions to the rule. Thus, in Tooke & Reynolds v. Bastrop Ice & Storage, 171 La. 781, 135 So. 239 (1931), the Louisiana Supreme Court held that a corporation "with its individual members, shareholders, and managers formed a combination" that could violate the prohibition of combinations in restraint of trade. Id., 135 So. at 242. More recently, the Louisiana appellate courts have held it error, although harmless error, to refuse a requested jury instruction that a corporation could conspire with its own employees. Economy Carpets Manufacturers & Distributors v. Better Business Bureau, 361 So.2d 234 (La.App.1978), writ denied, 362 So.2d 1387 (La.1978), cert. denied, 440 U.S. 915, 99 S.Ct. 1231, 59 L.Ed.2d 464 (1979). The Economy Carpets court held that the error was harmless because there was no evidence that the employees conspired, indicating that not every action by a corporation will be a conspiracy. Louisiana courts, then, may accept the view that a conspiracy in restraint of trade between a corporation and its employees is possible only when the employees act for personal purposes. Fortunately, we need not decide that point. Although it is unclear whether the court meant that there was no evidence of any agreement (which would suggest that employees are actors independent of the corporation only when they act for their own purposes), or that there was no evidence of the malicious agreement in restraint of trade requisite under Louisiana law, it is clear that the court thought that a corporation could in some circumstances conspire with its employees in violation of La.Rev.Stat.Ann. § 51:121 et seq. We must accept the early holding of the Louisiana Supreme Court in Tooke & Reynolds and the more recent statement of the Louisiana appellate court, allowed to stand by the Louisiana Supreme Court, as authoritative statements of Louisiana law. And, although Louisiana law differs from the federal antitrust rule, Erie Railroad v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), mandates application of the Louisiana rule. As a consequence, we cannot say that the plaintiff can establish no set of facts upon which he might prevail, so the action should not be dismissed.
Nor is our conclusion changed by the plaintiff's failure to state specifically in the complaint that Gulf Coast conspired with its own employees. The form of the complaint is not significant if it alleges facts upon which relief can be granted, even if it fails to categorize correctly the legal theory giving rise to the claim. See Robertson v. Johnston, 5 Cir. 1967, 376 F.2d 43, 44; see also Hildebrand v. Honeywell, 5 Cir. 1980, 622 F.2d 179, 181. Examining the allegations of the complaint, we find actions by Gulf Coast that would support recovery under La.Rev.Stat. § 51:121 et seq. if performed by a conspiracy; an allegation of a conspiracy is implicit because Gulf Coast necessarily acts with its employees. The entire complaint, then, states an actionable claim under La.Rev.Stat. § 51:121 et seq. The trial court may require the plaintiff to state that claim with greater particularity, but we reiterate: where the plaintiff may assert a valid claim, even if inartfully stated, the liberal approach of the federal rules requires that the plaintiff be given the opportunity to state his claim and to have it considered on the merits at trial or on motion for summary judgment.
In this case, a judgment of dismissal had been entered at the time of the offered amendment. Granting the plaintiff's motion, therefore, would require the trial court to vacate the judgment. On the day of the judgment, the plaintiff properly moved the court to do so. See Fed.R.Civ.Pro. 59(e). Where judgment has been entered on the pleadings, a holding that the trial court should have permitted amendment necessarily implies that judgment on the pleadings was inappropriate and that therefore the motion to vacate should have been granted. Thus the disposition of the plaintiff's motion to vacate under rule 59(e) should be governed by the same considerations controlling the exercise of discretion under rule 15(a). Consequently, our discussion of the motion under rule 15(a) applies equally to the motion under rule 59(e). See generally Foman v. Davis, 371 U.S. 178, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962); 6 C. Wright & A. Miller, Federal Practice and Procedure § 1489 (1971)
At some point, of course, the delay may be so long that the burden of persuasion shifts to the movant. See Gregory v. Mitchell, 5 Cir. 1981, 634 F.2d 199, 203. Such a shift becomes appropriate, though, only if the delay imposes on the court, requiring it, for instance, to try the case on various theories seriatim, or if the delay presents the possibility of serious prejudice to the opponent. That is not the case here, as our discussion of prejudice and litigation considerations will show
If there is a res judicata bar, then denial of the motion would result in substantial prejudice to Dussouy. That prejudice would provide a strong basis for granting the motion even if there were countervailing considerations. When, as here, there are no strong countervailing considerations, the potential prejudice would compel us to grant leave to amend. Bamm v. GAF, 5 Cir. 1981, 651 F.2d 389, 392; Lone Star Motor Import v. Citroen Cars, 5 Cir. 1961, 288 F.2d 69, 76
We do not understand the plaintiff to request leave to amend his complaint to add Gulf Coast's lawyers as parties. Instead, he alleges a conspiracy but sues only one conspirator, which he is free to do. See 16 Am.Jur.2d, Conspiracy § 66 (1979). The addition of parties would raise questions under rule 15(c), Fed.R.Civ.Pro., as to whether the amendment related back in time to the date of the original complaint for purposes of the application of the prescription provisions to the new parties. We need not, nor do we, express any opinion on those questions
The trial judge considered and granted the motion to dismiss on the day of the pretrial conference. As a result, no pre-trial order was entered in this case, and we need not consider whether, had the trial judge adopted the proposed pre-trial order, tortious interference would have remained an issue
The only case, a very old one, that appeared to recognize a right to interfere maliciously, Orr v. Home Mutual Insurance Company, 12 La.Ann. 255 (La. 1857), actually involved the protection of a legitimate interest of the actors, and the opinion has been criticized by the Louisiana Supreme Court as "too broad". McGee v. Collins, 156 La. 291, 100 So. 430, 435 (1924)
Joslyn v. Manship, 238 So.2d 20 (La.App.1970), writ refused, 256 La. 883, 239 So.2d 541 (1970), does not change our conclusions. There, the plaintiffs alleged that the defendants capriciously refused either to recognize them as advertising agents or to deal with them. As a result, a client, who had purchased television time from the defendants through the plaintiffs, ceased dealing with the plaintiffs and dealt directly with the defendants. The court refused to allow recovery on a theory of tortious interference with business, stating that there is an absolute right to refuse to deal, even if the motivation is malicious. For several reasons, though, we do not think that this case supports Gulf Coast's position. First, the court in Joslyn proceeded to allow recovery on an unjust enrichment theory. Had it been faced with the prospect of no recovery at all for the plaintiffs, it might have held differently on the claim of tortious interference. Second, the court apparently agreed with the principle that there can be liability for maliciously influencing third parties but did not perceive the situation as one implicating the problem of influencing third parties, for, after recognizing that there is an absolute right maliciously to refuse to deal, the court stated "one can not always, from such motives, influence another person to do the same without incurring legal liability". Id. at 24. Finally, even if Joslyn did recognize an absolute right maliciously to influence third parties not to deal with another, we would be hesitant to recognize the decision of a lower court that the Louisiana Supreme Court refused to consider and that did not explicitly reject past Louisiana Supreme Court decisions as superseding those earlier decisions, particularly when those earlier decisions are in accord with the majority view, see Restatement (Second) of Torts §§ 766B, 767 (1979).
Although Lewis did distinguish the earlier case of Webb v. Drake, 52 La.Ann. 290, 26 So. 791 (1899), because of the absence of a conspiracy in Lewis, 46 So. at 686, we do not perceive a requirement of a conspiracy. Lewis also distinguished Webb on the ground that the defendant in Webb was not in legitimate competition with the plaintiff, unlike the Lewis situation. Id. at 687. Also, Lewis recognized the Graham case as good authority, see id. at 686-87, and the court there allowed recovery without any allegation of conspiracy
The relevant statutory language is provided by La.Rev.Stat.Ann. §§ 51:122, 123, and 137:
§ 123. Monopolizing trade or commerce prohibited; penalty
§ 137. Damages recoverable for violation of law