Source: https://www.floridabar.org/news/tfb-journal/?durl=%2Fdivcom%2Fjn%2Fjnjournal01.nsf%2F8c9f13012b96736985256aa900624829%2F80e6e7982218ef1285258183006ba150
Timestamp: 2018-03-24 18:02:23
Document Index: 354632623

Matched Legal Cases: ['§501', '§501', '§501', '§501', '§501', '§501', '§501', '§501', '§501', '§501', '§501']

Florida Bar Journal – Enforcement of FDUTPA by Competitors: Did the Florida Legislature Create a Right Without A Remedy? – The Florida Bar
by Tracey K. Jaensch and Viktoryia Johnson
Clearly, the 2001 amendment to §501.211 intended to reach a new class of plaintiffs, business-competitors. Indeed, shortly after the amendment took effect, the Southern District of Florida in Niles Audio Corp. v. OEM Systems Co, 174 F. Supp. 2d 1315 (S.D. Fla. 2001), denied defendants’ motion to dismiss a FDUTPA count based on the argument that Niles was the defendants’ competitor — not a consumer.9 Despite that any other interpretation left plaintiffs without a remedy, FDUTPA defendants have continued to rehash the same arguments decided in Niles Audio Corp., based on the plaintiffs’ nonconsumer status.10 Recently, in Bailey v. St. Louis, 196 So. 3d 375 (Fla. 2d DCA 2016), Florida’s Second District Court of Appeal seemingly put a stop to that argument, by criticizing the trial court for awarding only injunctive relief11 against two defendant entities based on the reasoning that the plaintiff “was a competitor and not a consumer.”12 Bailey looked to the post-2001 FDUTPA, concluding that the legislature’s decision to replace the word “person” with “consumer” signaled the intent that the remedy of damages expanded beyond consumer-plaintiffs: “When the [l]egislature makes a substantial and material change in the language of a statute, it is presumed to have intended some specific objective or alteration of law, unless a contrary indication is clear.”13 Bailey reversed the final judgment with the instruction that the trial court determine the amount of damages for the multiple FDUTPA violations proven at trial.14 Although the Second District Court of Appeal in Bailey indicated that competitors can recover damages in a FDUTPA suit, it did not go as far as expressly holding exactly what damages competitors can recover, or how they should go about recovering those damages. Bailey could have resolved, but did not, what has become a serious hurdle for FDUTPA nonconsumer plaintiffs seeking to recover their lost profits in suit.
The Northern District of Florida decision in Factory Direct Tires Inc. v. Cooper Tire & Rubber Co., No. 3:11-CV-255-RV/EMT, 2011 WL 13117118 (N.D. Fla. Oct. 24, 2011), is one of the early examples. In Factory Direct, defendant Cooper manufactured tires, and Factory Direct distributed and sold them through the U.S. military base exchanges.16 In 2001, the parties entered into an agreement, subject to an automatic renewal every five years, under which Cooper agreed to provide competitive pricing and sales support to Factory Direct in exchange for Factory Direct’s “best and sincere efforts” to accelerate the tire sales.17 Notwithstanding the venture’s success during the renewal term, Cooper demanded that Factory Direct truncate the five-year renewal term in half, and when it refused to do so, Cooper offered competitive pricing to other distributors, thereby diverting opportunities away from Factory Direct and causing its tire sales to drop.18 After the sales dropped, Cooper claimed that Factory Direct had breached the agreement.19 After Factory Direct sued, Cooper moved to dismiss the FDUTPA claim, arguing that lost profits were unrecoverable consequential damages.20 The Northern District disagreed, finding that Cooper’s reliance on the cases concerning future lost profits21 was misplaced because Factory Direct was “not seeking future lost profits, but rather the lost profits that it ha[d] already suffered.”22 Those types of damages, the court held, constituted recoverable actual damages under FDUTPA.23
In Marco Island, Marco Island Cable (MIC) sued Comcast, a competitor provider of cable services to Marco Island’s Multiple Dwelling Units (MDUs), alleging that Comcast engaged in anti-competitive behavior that harmed MIC’s business.36 At trial, the evidence focused on MIC’s allegation that Comcast violated FDUTPA by asserting ownership rights in the cable wiring within Marco Island MDUs, and the jury awarded over $3.2 million to MIC.37 After the court remitted the judgment to $800,000, Comcast appealed, arguing that the denial of its renewed motion for judgment as a matter of law was an error.38
The Southern District noted that actual damages were calculated as the difference in the market value, and lost profits were a quintessential example of consequential damages.51 The court disagreed that DMS’ lost profits constituted actual damages after 2001.52 In the court’s view, DMS overlooked post-2001 cases that found lost profits to be unrecoverable consequential damages.53 The court criticized DMS’ citation to Tracfone Wireless, Inc. v. Access Telecom, Inc., 642 F. Supp. 2d 1354 (S.D. Fla. 2009), because Tracfone allowed the FDUTPA claim for lost profits to proceed without the analysis of actual damages or a citation to relevant authority.54 The Diversified court decided that DMS’ argument “boil[ed] down to a policy argument that lost profits should be recoverable in the unfair competition context because lost profits are the only type of damages that business competitors will have when a FDUTPA violation occurs,” ultimately rejecting that argument.55 Finally, the Southern District ostensibly turned to Florida law to hold that “lost profits are consequential damages, and, thus, not recoverable under FDUTPA.”56
While Diversified dismissed DMS’ FDUTPA count for failure to plead actual damages, the court’s reasoning is subject to attack. The Southern District relied solely on the consumer-case measure of actual damages without weighing the significance of FDUTPA’s 2001 amendment. The court cited several post-2001 cases, which aligned with its ultimate conclusion (but differed from the case before it57), although did not cite a single case holding to the contrary.58 While DMS’ reliance on Tracfone was indeed miscalculated (considering it was a trademark infringement case that did not cite authority or analyze actual damages in nonconsumer cases), there existed other authorities on point that expressly held actual lost profits recoverable. Ultimately, the Southern District did not cite any Florida state court case (except the inapposite Rollins, Inc. v. Butland, 951 So. 2d 860, 869 (Fla. 2d DCA 2006)) that would have denied recovery to DMS under the circumstances. Nor could it. The Florida Supreme Court had not yet had an opportunity to decide exactly what types of actual damages are available to a nonconsumer after 2001, although Bailey had made a strong circumstantial case for a business competitor’s entitlement to money damages for the past lost profits attributable to the competitor’s unfair acts.
1	Fla. Stat. §§501.201-501.23 (2016).
2	Fla. Stat. §501.202(2). “Trade or commerce” is defined as “advertising, soliciting, providing, offering, or distributing, whether by sale, rental, or otherwise, of any good or service, or any property, whether tangible or intangible, or any other article, commodity, or thing of value, wherever situated.” Fla. Stat. §501.203(8).
3	Fla. Stat. §501.202(2) (1973).
4	Fla. Stat. §501.202(2) (1993).
5	Fla. Stat. §501.211(2). “Person” meant “any person” affected by a violation of FDUTPA. Fla. Stat. §501.203(6).
6	Rollins, Inc. v. Butland, 951 So. 2d 860, 869 (Fla. 2d DCA 2006).
8	See generally David J. Federbush, Damages Under FDUTPA, 78 Fla. B. J. 20 (May 2004) (discussing damages available under FDUTPA after the 2001 statutory amendment and stating that “the difference in market value measure cannot be the exclusive measure of damages under FDUTPA for deceptive, unfair, or unconscionable acts or practices”).
9	Niles Audio Corp., 174 F. Supp. 2d at 1319.
10	Compare, e.g., Cannova v. Breckenridge Pharm., Inc., No. 08-81145-CIV, 2009 WL 64337, at *3 (S.D. Fla. Jan. 9, 2009) (“While the statute has been amended to expand protection to corporate entities acting as consumers, Florida case law since the 1993 amendments still requires the plaintiff to act in some manner as a consumer in the conduct of trade or commerce….Plaintiff does not plead any allegations that he acted as a consumer in the conduct of trade or commerce.”), with Caribbean Cruise Line, Inc. v. Better Business Bureau of Palm Bch. Cnty., 169 So. 3d 164, 169 (Fla. 4th DCA 2015) (“[T]he legislative change regarding the claimant able to recover under FDUTPA from a ‘consumer’ to a ‘person’…indicates that the legislature no longer intended FDUTPA to apply to only consumers….”).
11	FDUTPA allows “anyone aggrieved by a violation…[to] bring an action to obtain a declaratory judgment that an act or practice violates this part and to enjoin a person who has violated, is violating, or is otherwise likely to violate this part.” Fla. Stat. §501.211(1). Failure to state or prove actual damages does not affect a plaintiff’s entitlement to equitable relief under the statute. Wyndham Vacation Resorts, Inc. v. Timeshares Direct, Inc., 123 So. 3d 1149, 1152 (Fla. 5th DCA 2012). See also XTec, Inc. v. Hembree Consulting Servs., Inc., 183 F. Supp. 3d 1265 (S.D. Fla. 2016) (appeal pending).
12	Bailey, 196 So. 3d at 382.
13	Id. at 383.
15	E.g., Britt Green Trucking, Inc. v. FedEx Nat., LTL, Inc., No. 8:09-CV-445-T-33TBM, 2014 WL 3417569, at *12 (M.D. Fla. July 14, 2014); 2P Commercial Agency S.R.O. v. SRT USA, Inc., No. 2:11-CV-652-FTM-29, 2012 WL 3264551, at *4 (M.D. Fla. Aug. 10, 2012).
16	Factory Direct, No. 3:11-CV-255-RV/EMT, 2011 WL 13117118, at *1.
20	Id. at *7.
21	Siever v. BWGaskets, Inc., 669 F. Supp. 2d 1286, 1294 (M.D. Fla. 2009); Eclipse Medical, Inc. v. American Hydro-Surgical Instruments, Inc., 262 F. Supp. 2d 1334, 1357 (S.D. Fla. 1999).
22	Factory Direct, 2011 WL 13117118 at *7.
24	ADT, No. 12-80898-CIV, 2013 WL 11276119, at *1.
25	Id. at *5 (internal quotations omitted).
27	Id. (citations omitted) (citing, e.g., Sun Protection Factory, Inc. v. Tender Corp., No. 604 CV 732 ORL 19 KRS, 2005 WL 2484710, at *14 (M.D. Fla. 2005) (commenting that “‘lost business and lost profits constitute a loss’ recoverable by competitor under FDUTPA”)).
28	Id. at *6.
29	Global Tech, No. 2:15-CV-553-FTM-29CM, 2017 WL 588669 at *1.
30	Id. at *1-2.
31	Id. at *2.
32	Id. at *8.
33	Id. at *9 (emphases in the original).
36	Marco Island, 312 F. App’x at 212.
39	Id. at 213-14.
40	Id. at 214.
41	Id. (citations omitted).
43	Dismissing a business competitor’s FDUTPA claim for lost profits.
44	Diversified, No. 15-81062-CIV, 2016 WL 4256916 at *1.
47	Id. at *2.
53	Id. at *6 (citing Five for Entertainment S.A. v. Rodriguez, 877 F. Supp. 2d 1321, 1331 (S.D. Fla. 2012); QSGI, Inc. v. IBM Global Financing, Case No. 11-80880, 2012 WL 1150402, at *5 (S.D. Fla. 2012); Rollins, 951 So. 2d at 869.
54	Diversified, 2016 WL 4256916 at *6.
55	Id. (emphasis in the original).
57	Five for Entertainment held that lost profits were unrecoverable consequential damages, but neither discussed the 2001 amendment to Fla. Stat. §501.211 nor analyzed the issue of “actual damages” for business competitors after 2001. See Five for Entertainment, 877 F. Supp. 2d at 1330-31. Five for Entertainment was not even truly a business-competitor case because the plaintiff — a concert promoter — was more akin to a consumer when it advanced additional monies to a musician’s booking agent under the threat of concert cancellations, despite an agreement to the contrary. See id. at 1323-25. QSGI, Inc. held that the plaintiff could not recover “consequential damages in the form of ‘lost profits’ and ‘lost business,’” but like Five for Entertainment, did not acknowledge the 2001 amendment or discuss actual damages after 2001, and relied entirely on the market value/consumer-case measure of actual damages. QSGI, 2012 WL 1150402 at *5. Moreover, because the QSGI court found no violation of FDUTPA, see id., any discussion of damages was merely hypothetical. Finally, in Rollins, Inc. v. Butland, which dealt with a class certification review, the court found that some putative class members had sustained an actual loss (termite damage to their homes) while others had not; thus, the individual issues on the actual damages prong of FDUTPA liability predominated over common questions, making the class certification inappropriate. Rollins, 951 So. 2d at 865, 873. Importantly, the Rollins plaintiffs (not business competitors but consumers) did not seek to recover lost profits in that class-action suit. As in Five for Entertainment and QSGI, Rollins did not discuss §501.211 2001 amendment or the actual damages in the nonconsumer context. See id. at 870-73.
58	By the time Diversified was decided, the district courts had already decided Factory Direct and ADT, and the 11th Circuit had decided Marco Island Cable (which were more akin to DMS’ dispute with CSR than any of the cases cited in Diversified).