Opinion ID: 761260
Heading Depth: 2
Heading Rank: 4

Heading: DSC's Cross-Appeal

Text: 86 The jury found DSC liable for interference with DGI's prospective contracts and for unfair competition. In its cross-appeal, DSC asserts that DGI failed to present evidence sufficient to support these claims, and that the district court therefore erred in denying DSC's motion for a JML. 87 To establish a claim for tortious interference with prospective contract or business relationships under Texas law, a plaintiff must show: (1) a reasonable probability that the parties would have entered into a contractual relationship, (2) an intentional and malicious act by the defendant that prevented the relationship from occurring, with the purpose of harming the plaintiff, (3) the defendant lacked privilege or justification to do the act, and (4) actual harm or damage resulted from the defendant's interference. 110 While [i]t need not be absolutely certain that the prospective contract would have been made but for the interference ..., it must reasonably appear so, in view of all the circumstances. 111 Malice, in this regard, is not to be understood in its proper sense of ill will against a person, but in its legal sense, as characterizing an unlawful act, done intentionally without just cause or excuse. 112 88 To support its claim, DGI adduced the testimony of representatives of two of its customers, Frontier Communications and Allnet Communications. Greg Wallace, director of engineering for Frontier, testified that his company had not purchased more DGI equipment because of DSC's policy of not warranting or providing technical support to DSC switch owners who used non-certified equipment. He stated that the limited amount of business we have probably done with DGI resulted from this perceived risk. When asked if Frontier bought fewer products from DGI than it would have liked to, Wallace responded, I think so, yes. Joe Buckman, a purchasing manager for Allnet, testified that DSC's policy of canceling the warranties and maintenance agreements of customers who used non-certified products made Allnet very circumspect about buying the DGI product. He further recalled that there were at least two incidents where, in trying to formulate a decision whether to buy a DSC product or a DGI product, that letter had an impact that dictated we buy the DSC product as opposed to the DGI product. 89 DSC maintains that, as a matter of law, this testimony is too vague to support a claim for interference with prospective contracts. It notes that, whereas Buckman stated that DSC's letter made Allnet circumspect about buying from DGI, there was no evidence that Allnet was actually negotiating with DGI or had received any sort of proposal from DGI; indeed, DGI produced no evidence of any specific proposed contract with Allnet that was lost or of what profits DGI would have earned under such a contract but for DSC's interference. DSC insists that Buckman's and Wallace's testimony that Allnet and Frontier would have purchased more products from DGI had DSC not refused to certify and warrant switches containing DGI cards also fails to support the tortious interference claim, as neither official could relate which products would have been purchased or for what price. Furthermore, DSC submits that DGI's proof of damages is legally insufficient, noting that (1) the proof is based on generic lost profits and not the profits lost from any specific contract, and (2) DGI provided the jury no basis to measure the profit DGI might have made from legal, as opposed to illegal, conduct. Finally, DSC urges that even if it interfered with any prospective DGI contracts, DGI should not be able to recover, as those contracts would only have been possible because of DGI's illegal development efforts: [I]nterference with an affirmatively illegal act is not a tort for which damages may be recovered because it does not impinge upon any legally protected interest. The law affords no compensation to a wrongdoer for interference with his illegal gain. 113 90 DGI, of course, takes the opposite position, i.e., that the evidence of interference was legally sufficient. It disputes DSC's contention that DGI did not prove the prospective contracts with specificity, pointing out that Texas law requires only that the contract or business relations appear reasonably probable in light of all the circumstances. 114 It posits that the testimony of Wallace and Buckman showed such a probability, and that it did not need to provide proof of particular proposals, price schedules, or the like. DGI also maintains that it was not required to prove its lost profits from DSC's interference with absolute certainty; 115 instead, evidence may be introduced to show a business' decreased profitability based upon objective facts, figures, and data.... 116 91 Our review of the record convinces us that DGI simply did not adduce sufficient evidence to support the jury's verdict on this claim. We recognize that Texas law does not require a great deal of specificity with respect to prospective business relations. The testimony of Wallace and Buckman, however, fails as a matter of law to satisfy even the reasonable probability standard. Statements that a potential customer was circumspect about buying DGI products--without any evidence of the type, amount, or price of those products--is too vague to form the basis of a successful tortious interference claim. Furthermore, DGI's proof of damages is wholly speculative. It relies entirely on testimony from Frontier and Allnet, providing absolutely no evidence of its own regarding the profits it would have earned from business relations with these companies. Rather, DGI depends solely on estimated future profits extrapolated from the growth curve of a company that, as we have already shown, was not proven to be closely comparable to DGI. DGI's unitary proof of damages made no attempt to separate the damages from its alleged antitrust and state law claims. Likewise, DGI made no effort to show the quantum of damages resulting from DSC's and DGI's lawful, as opposed to unlawful, actions. 92 We do not overturn the findings of a jury lightly. Nonetheless, based on the evidence presented at trial--or the lack thereof--we conclude that the district court erred in denying DSC's motion for a JML on DGI's claim for tortious interference with prospective business relations. As DGI's allegations of DSC's tortious interference were also the underpinnings of its unfair competition claim, that too fails as a matter of law. Consequently, we reverse those portions of the district court's order that denied DSC's motion for a JML and awarded damages in favor of DGI.
93 DSC implores us to expand the district court's injunction to cover not only DGI's microprocessor card, but every DGI card, including its DTI, BT, PCMI, and DTD cards. In support of its request, DSC emphasizes that, when a defendant unlawfully appropriates another's time, labor, skill, and money, the defendant should be denied all benefits of the misappropriation. 117 In light of our holding that DSC's state law unfair competition by misappropriation claim is preempted, we stress that any and all relief awarded by the district court in association with that claim is vacated. Consequently, we conclude, DSC's request for an expansion of the district court's injunction based on its preempted state claim has been rendered moot. III