Carlwood Safety, Inc. v. Wesco Distribution, Inc.

446 F.Supp.3d 970

CARLWOOD SAFETY, INC., Plaintiff,

v.WESCO DISTRIBUTION, INC., Defendant.

Case No: 8:17-cv-1260-T-27AAS

United States District Court, M.D. Florida, Tampa Division.

Signed March 4, 2020

Charles W. Gerdes, Keane, Rease, Vesely & Gerdes, PA, St. Petersburg, FL, for Plaintiff.

Jeffrey T. Gorcyca, Pro Hac Vice, Justin E. Zayid, Pro Hac Vice, Bowman and Brooke, LLP, Bloomfield Hills, MI, Justin D. Niznik, Bowman and Brooke, LLP, Lake Mary, FL, for Defendant.

ORDER

JAMES D. WHITTEMORE, United States District Judge

BEFORE THE COURT is Defendant Wesco Distribution, Inc.'s Motion for Summary Judgment (Dkt. 77), Plaintiff Carlwood Safety, Inc.'s Response (Dkt. 87), and Wesco's Reply (Dkt. 90). Upon consideration, Wesco's motion is GRANTED .

Carlwood's Claims

Carlwood brought three claims against Wesco in state court: tortious interference with a business relationship (Count I); violation of the Florida Deceptive and Unfair Trade Practices Act (Count II); and fraud (Count III). (Dkt. 2). The case was removed to federal court based on diversity jurisdiction, and the parties stipulated to the dismissal of Count II. (Dkts. 1, 74). Wesco moves for summary judgment on the remaining counts, arguing they are preempted by the Florida Uniform Trade Secrets Act (FUTSA) and alternatively, the undisputed evidence cannot establish a prima facie case on either count. (Dkt. 77).

I. BACKGROUND AND UNDISPUTED FACTS

Carlwood Safety, Inc. is a supplier of safety, industrial, and janitorial supplies and tools. (Dkt. 2 ¶ 7). Carlwood supplied products to Progress Energy, Inc. and its predecessor entities since at least 1989, which constituted the majority of Carlwood's business. (Dkt. 87-1, Larry Wilson Dep. at pp. 14-16). As a preferred vendor for Progress Energy, Carlwood was party to a series of blanket purchase orders through which Progress Energy ordered products as necessary. (Dkt. 2 ¶ 8; Dkt. 87-3, Jerome Boies Dep. at pp. 104-05; Dkt. 87-2 at 2). One such blanket purchase order was in effect from September 2010 to September 2013. (Dkt. 87-3, Boies Dep. at p. 105).

In 2011, Duke Energy Corporation announced its planned acquisition of Progress Energy, effective July 3, 2012. (Dkt. 2 ¶ 11; Dkt. 2-1). In a letter to its suppliers and service providers, Duke stated:

All existing purchase orders and contracts...will be unaffected by the merger. The great majority of purchase orders and contracts issued previously by Duke Energy, Progress Energy, and their respective subsidiaries do not require an amendment or re-assignment....You should continue to work with your current point of contact on contractual agreements, outstanding purchase orders, invoice payments or other procurement activities you are conducting with Duke Energy or Progress Energy until you are notified otherwise.

(Dkt. 2-1).

Also in 2012, Duke sent an open bid to "everybody that was already a supplier and could be a supplier" to determine which entity would be responsible for integrating and managing Duke's company-wide supply chain as its supply "integrator." (Dkt. 77-1, Scott Dowell Dep. at pp. 21, 38). Wesco Distribution, Inc. bid on and won the contract. (Id. at 37-38). As a result, Wesco became Duke's supply integrator and sold products to Duke as a distributor. (Id. at 50).

After Wesco became Duke's supply integrator, Duke approved the suppliers from whom WESCO was authorized to purchase products. (Dkt. 77-1, Patrick Penuel Dep. at pp. 30-31). Wesco could purchase items from suppliers if Duke authorized the supplier and issued a blanket purchase order identifying the acceptable scope and price of supplies. (Dkt. 77-1, Dowell Dep. at pp. 59-60, 88).¹

During the negotiations between Duke and Wesco, Duke advised Wesco that it wanted to maintain relationships with several diversity suppliers, including Carlwood, with which it had "been in the public eye" the past year "at events or with some sort of recognition." (Id. at 47). Wesco's Scott Dowell recommended that Duke and Wesco "put in the contract, that commitment....Let's say as part of this diversity commitment, it will be these four suppliers, and we will identify...how much revenue you want us to carve off..." (Id. at 47-48). Duke rejected this proposal, however, as Duke's representative "didn't want to call [the suppliers] out in the contract." (Id. at 48).²

A meeting was scheduled on April 25, 2013 to introduce Wesco to Carlwood as Duke's supply integrator. (Dkt. 2 ¶ 13; Dkt. 87-3 at 24). The meeting was designed to, among other things, "develop a relationship so that [Wesco] could do what Duke asked [it] to, which was...find a way to keep [Carlwood] engaged doing business with Duke Energy." (Dkt. 77-1, Dowell Dep. at p. 71). According to Wilson, Dowell told him during the meeting that "we want to partner with you, your business will not change, and you have the opportunity to grow." (Dkt. 87-1, Wilson Dep. at pp. 64, 72-73). Wilson believed this statement constituted a binding oral agreement to partner indefinitely into the future. (Id. at 67). Dowell does not remember making the statement, although he acknowledges that the meeting was positive and that there was a "clear way" for Wesco to proceed. (Dkt. 77-1, Dowell Dep. at pp. 103-04).³

In June 2013, Carlwood was informed by Estex, one of its supply sources, that Wesco had instructed it not to quote items for Carlwood. (Dkt. 87-5 at 2). In response to Carlwood's inquiry into this, Dowell told Wilson he was unaware of the matter, asked for details, and said he would look into it. (Id. at 3). The next month, Wesco informed Carlwood that items it had supplied to Progress Energy's power generation sites would be "pulled from [Carlwood's] blanket purchase order," including items that Duke instructed Wesco to remove. (Dkt. 87-6). In response to Carlwood confronting Wesco about this decision, a Wesco representative said, "Then I lied to [Boies] and Larry [Wilson] in that meeting." (Id. at 2).

In February 2014, Wesco sent Carlwood a request for quotation (RFQ) for items identified by Duke and Wesco for Carlwood to supply. (Dkt. 87-3, Boies Dep. at p. 137). Duke had to approve the item and its manufacturer, and the pricing and profit margins had to reach the level dictated by Duke as conveyed to Carlwood by Wesco. (Id. at pp. 138-39; Dkt. 77-1, Penuel Dep. at 79). Boies explained: "[Wesco] told us specifically the number. Basically, they could have filled out the RFQ for us, because they were telling us ‘Here's what the price has to be.’ And so we filled it out exactly how they said, yes." (Dkt. 87-3, Boies Dep. at p. 139). Prior to this, Carlwood had never responded to an RFQ that required it to release its cost, profitability, and vendor information, and was not "concerned about the confidentiality [it] assumed was going to transpire and take place based on the agreement [it] had made." (Dkt. 87-1, Wilson Dep. at p. 67). Significantly, the RFQ expressly provided that inclusion of the quantities of certain items were not guarantees of future business. (Dkt. 87-3 at 20).

Penuel testified that when Carlwood asked whether Wesco would order supplies based on the RFQ, Wesco "would tell them that [it was] in the process of getting approvals from Duke, because that's what [it] believed to be true." (Dkt. 77-1, Penuel Dep. at p. 120). He also directed Carlwood to contact Ric Skinner, a Duke representative who "would do the phone calls, and then he would take the scenario to a team or to the Supplier Relations people, and they would decide if they're willing to do that." (Id. at 108, 119-20).⁴

In April 2014, Wesco provided Duke hard hat liners that were not ordered through Carlwood. (Dkt. 87-7).⁵ In the same month, one of Wesco's employees and points of contact for Carlwood, Patrick Penuel, told Carlwood that Wesco was "trying to find additional dollars for [Carlwood's] contract and work out details on the minimums with Duke." (Dkt. 87-4 at 2). In August 2014, a Wesco employee directed other employees not to purchase items from Carlwood. (Dkts. 87-8, 87-9). And at least one Wesco employee ordered products from Carlwood to obtain the product's manufacturer and part number, so Wesco could purchase the product directly from the manufacturer. (Dkt. 87-10).

In September 2014, Duke's managing director of its supply chain strategy team told Carlwood that Duke is "unable to make a specific volume commitment[ ] due to the variability of demand for [Carlwood's] products. These projections should serve only for planning purposes and not be considered promised or committed revenues." (Dkt. 90-1 at 4). Duke's spending on products supplied by Carlwood declined each year from 2012 to 2015. See (Dkt. 87-2 at 3).

In November 2014, Penuel told his team by email:

Duke is asking a ton of questions about Carlwood as Carlwood is in financial straits and may have to shut down business....When I checked the list I noticed there were 74 items with Carlwood as the supplier. The other attachment has the 200 items that Carlwood is authorized to supply. I am thinking that many of the items haven't been "converted" to Carlwood since we have old stock on hand or buyback stock. If there is another reason then I think we are going to have to answer for it. I wanted you to be able to review your information prior to be put on the spot if we get called into Executive session next week.

(Dkt. 87-11).

Duke ultimately informed Wesco that it would not "be part of this process anymore, so it's up to Wesco to do whatever you want to do. If you want to continue to work with Carlwood or try to work with Carlwood, that is up to you, but Duke is out of the process." (Dkt. 77-1, Dowell Dep. at p. 97).

II. STANDARD

Summary judgment is appropriate where "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "A genuine factual dispute exists only if a reasonable fact-finder ‘could find by a preponderance of the evidence that the [non-movant] is...