Modis, Inc. v. Infotran Systems, Inc.

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
______________________________
)
MODIS, INC., )
)
Plaintiff, )
)
v. ) Civil Action No. 09-1051 (RWR)
)
INFOTRAN SYSTEMS, INC., )
et al., )
)
Defendants. )
______________________________)

MEMORANDUM OPINION AND ORDER

Plaintiff Modis, Inc. brings this diversity action for

damages and injunctive relief against defendants Infotran

Systems, Inc. and Tien H. Tran, alleging breach of contract. The

defendants have filed a counterclaim alleging two counts of

tortious interference with contractual or business relations.

The parties have filed cross-motions for summary judgment on the

defendants’ counterclaim. The defendants have also moved to

strike two of Modis’s proposed expert witnesses offered to

provide evidence solely regarding the counterclaim. Because the

defendants’ counterclaim pertains to mere competitive

communications, the plaintiff’s motion for summary judgment on

the defendants’ counterclaim will be granted, and the defendants’

motion to strike will be denied as moot.

BACKGROUND

Modis is an information technology (“IT”) service provider

that provides staffing for “complex IT challenges,” staffing for
 -2-

work on various computer systems and databases, and technical

expertise. (Compl. ¶¶ 6, 10; Pl.’s Stmt. of Mat. Facts in Supp.

of Mot. for Summ. J. on Defs.’ Counterclaim (“Pl.’s Stmt.”) ¶ 1.)

Modis contracted with Computer Science Corporation (“CSC”) to

provide information technology support to CSC in connection with

CSC’s contract to perform work for the United States Citizenship1

and Immigration Services (“USCIS”). (Compl. ¶ 6; Pl.’s Stmt.

¶ 3.) In 2006, Modis enlisted Tran as an independent contractor

at CSC to support the information technology work that CSC was

performing for the USCIS. Modis required Tran on behalf of his

company, Infotran, to sign an Independent Contractor Agreement

(“the Agreement”) that restricted the use of confidential

information and that contained a non-compete provision. Tran

agreed to not solicit business or employment from any client of

Modis, including CSC, or from any entity or person with whom Tran

had personal contact or whom he met while providing services for

CSC without the written consent of Modis “during the term of

[the] Agreement and for a period of one (1) year thereafter[.]”

(Compl. ¶¶ 12-13, 28-30.) The Agreement provided that if Tran or

Infotran breached the restrictive covenants, Modis would be

entitled to seek injunctive relief as well as a fee equal to

1
The parties appear to have mistakenly used the word
“Customs” rather than “Citizenship” in referring to this agency.
 -3-

125 percent of the fee that Modis would have earned if it had

provided the services. (Id. ¶ 31.)

In 2008, Timothy Martin, the sales director for Modis’

Government Services Group, talked to the defendants about

structuring their relationship in a way that allowed the CSC to

claim that it was increasing its spending on small business

subcontractors. Martin purportedly said the defendants could

enter a direct contractual relationship with CSC for the limited

purpose of allowing Modis to provide IT personnel resource

services to the defendants to place at CSC. (Pl.’s Stmt. ¶ 9.)

The defendants claim that Martin, on behalf of Modis, waived the

contractual provisions containing the bar on the defendants

directly contracting with CSC and the non-compete restrictions;

the plaintiffs dispute that contention. (Pl.’s Stmt. ¶ 8, 12.)

In the fall of 2008, Martin discovered from a CSC project

manager that the defendants were going to place two employees

directly with CSC, without Modis’ participation, in positions for

which Modis was actively submitting candidates for placement.

Martin chose to talk to Tran about the placements instead of

initiate litigation to enforce the Agreement. (Pl.’s Stmt.

¶¶ 14, 16.) However, in March of 2009, Martin discovered that

Tran had contacted a prospective contractor whose resumé Martin

had obtained and submitted to CSC to try to place him there.

Tran tried to determine the prospective contractor’s interest in
 -4-

being placed with CSC by the defendants, rather than by Modis.

(Pl.’s Stmt. ¶ 19.) The plaintiffs sent a letter to Tran

reminding him of the non-compete restrictions in the Agreement.

(Pl.’s Stmt. ¶ 21.) In May of 2009, the defendants gave Modis a

letter stating that they were terminating their relationship with

Modis. (Compl. ¶ 34.)

Martin told CSC’s program manager that the defendants had

violated the Agreement with Modis and that Modis would

potentially initiate litigation against the defendants. Martin

asserts that he also asked the program managers to advise him how

the dispute regarding CSC staffing could be resolved without

resorting to litigation. (Pl.’s Stmt. ¶¶ 22-23.) Martin

allegedly also tried to convince CSC to use a contractor provided

by Modis instead of Tran. Martin informed CSC employees that

Modis was about to take legal action against Infotran, that

Infotran lacked the capacity to complete the project for CSC, and

that Modis’s resources were superior to Infotran’s resources.

Thus, he asked CSC to remove Infotran from the project.

(Counterclaim and Third Party Compl. (“Counterclaim”) ¶¶ 69-81.)

In June 2009, Modis filed the one-count breach of contract

complaint in this matter against both defendants, alleging that

the defendants breached the contract and violated the non-compete

restrictions by competing with Modis for placement opportunities

with CSC. (Compl. ¶ 35.) After the lawsuit was filed, CSC
 -5-

refrained from using the defendants to staff projects, both to

mitigate risk and because CSC did not need the defendants’

services. (Pl.’s Stmt. ¶¶ 25-27.) CSC fully removed Infotran

from the project in November 2010. (Pl.’s Stmt. ¶ 30.) The

defendants were granted leave to file a counterclaim and third

party complaint alleging one claim of tortious interference with

business or contractual relations against Modis (Count I), and

one third-party claim of tortious interference with business or

contractual relations against Martin (Count II). (Counterclaim

¶¶ 90-122.)

The parties have filed cross-motions for summary judgment on

the defendants’ counterclaim.2 In addition, the defendants have

2
The defendants have also moved for reconsideration of an
oral order denying their motion for summary judgment on Modis’
complaint. The reconsideration and amendment of a previous order
is an unusual measure. Berg v. Obama, 656 F. Supp. 2d 107, 108
(D.D.C. 2009) (citing City of Moundridge v. Exxon Mobil Corp.,
244 F.R.D. 10, 11-12 (D.D.C. 2007)). “[I]n order to promote
finality, predictability and economy of judicial resources, as a
rule a court should be loathe to revisit its own prior decisions
in the absence of extraordinary circumstances[.]” Marshall, 598
F. Supp. 2d at 59. The defendants argue that the plaintiffs are
estopped from raising their breach of contract claim because
Modis consented to the defendants directly contracting with CSC.
However, the defendants made this argument two times previously
- - in their motion for summary judgment on the complaint, and
orally at the hearing where their motion was denied - - and it
was rejected, because there is a factual dispute as to whether
Modis waived, or consented to the breach of, contractual
provisions prohibiting the defendants from contracting with CSC.
(See Defs.’ Mem. in Supp. of Mot. for Summ. J. on the Compl. at
11-13.) “‘[W]here litigants have once battled for the court’s
decision, they should [not be] . . . permitted[] to battle for it
again.’” Hoffman v. Dist. of Columbia, 681 F. Supp. 2d 86, 90
(D.D.C. 2010) (quoting Singh v. George Washington Univ., 383 F.
Supp. 2d 99, 101-102 (D.D.C. 2005) (denying motion for
 -6-

moved to strike Modis’s designation two witnesses to offer expert

testimony solely regarding the counterclaim.

DISCUSSION

“‘Summary judgment may be appropriately granted when the

moving party demonstrates that there is no genuine issue as to

any material fact and that moving party is entitled to judgment

as a matter of law.’” Pueschel v. Nat’l Air Traffic Controllers

Ass’n, 772 F. Supp. 2d 181, 183 (D.D.C. 2011) (quoting Bonaccorsy

v. Dist. of Columbia, 685 F. Supp. 2d 18, 22 (D.D.C. 2010)

(citing Fed. R. Civ. P. 56(c))). “‘In considering a motion for

summary judgment, [a court is to draw] all ‘justifiable

inferences’ from the evidence . . . in favor of the nonmovant.’”

Pueschel, 772 F. Supp. 2d at 183 (quoting Cruz-Packer v. Dist. of

Columbia, 539 F. Supp. 2d 181, 189 (D.D.C. 2008) (quoting

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986));

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,

587 (1986)). “The relevant inquiry ‘is the threshold inquiry of

determining whether there is a need for a trial - - whether, in

other words, there are any genuine factual issues that properly

can be resolved only by a finder of fact because they may

reasonably be resolved in favor of either party.’” Single Stick,

Inc. v. Johanns, 601 F. Supp. 2d 307, 312 (D.D.C. 2009) (quoting

reconsideration, and stating that “the Court considered the cases
that the [defendant] now cites” and the “attempt to re-litigate
this issue will not be countenanced”)). The defendants’ motion
will be denied.
 -7-

Anderson, 477 U.S. at 250) (rev’d on other grounds by Prime Time

Int’l Co. v. Vilsack, 599 F.3d 678 (D.C. Cir. 2010)). A genuine

issue is present in a case where the “evidence is such that a

reasonable jury could return a verdict for the non-moving party,”

a situation wholly distinct from a case where the evidence is “so

one-sided that one party must prevail as a matter of law.”

Anderson, 477 U.S. at 248, 252.

The defendants’ counterclaim alleges two counts of tortious

interference with contractual or business relations under

District of Columbia law, based on Martin and Modis contacting

CSC to inform CSC that Modis was taking legal action against the

defendants for violating the Agreement. (Counterclaim ¶¶ 69-71,

82.) The torts of intentional interference with a contract, or

intentional interference with business relations, have the

following elements: (1) the existence of a valid contract,

business relationship or expectancy; (2) knowledge of the

contract, relationship or expectancy on the part of the

interferer; (3) intentional interference inducing or causing a

breach or termination of the relationship or expectancy; and (4)

damage caused by the interference. Onyeoziri v. Spivok, 44 A.3d

279, 286 (D.C. 2012) (citing Restatement (Second) of Torts,

§ 766, and NCRIC Inc. v. Columbia Hosp. for Women, 957 A.2d 890,

900 (D.C. 2008)); see also Brown v. Carr, 503 A.2d 1241, 1247

(D.C. 1986) (stating that “[t]he tort of intentional interference
 -8-

with a prospective business advantage runs parallel to that for

interference with existing contracts”). To establish a claim of

improper interference with contract or business relations, the

plaintiff must demonstrate that the defendant engaged in conduct

that is “egregious; for example, it must involve libel, slander,

physical coercion, fraud, misrepresentation, or disparagement.”

Sheppard v. Dickstein, Shapiro, Morin & Oshinsky, 59 F. Supp. 2d

27, 34 (D.D.C. 1999) (dismissing plaintiff’s tortious

interference claim where the plaintiff’s complaint was “silent”

as to any statements made by the defendants that constituted

slander, libel, or knowing misrepresentations) (internal

quotation omitted). The competitive activity that forms the

basis of an improper interference claim must be accomplished “by

wrongful or improper means, such as fraud.” Mercer Mgmt.

Consulting v. Wilde, 920 F. Supp. 219, 239 (D.D.C. 1996).

An interfering defendant may avoid liability by showing that

its interference was not improper – - in other words, not

something beyond mere competitive activity. See Int’l City Mgmt.

Ass’n Ret. Corp. v. Watkins, 726 F. Supp. 1, 6 (D.D.C. 1998); see

also Murray v. Wells Fargo Home Mortg., 953 A.2d 308, 326 (D.C.

2008) (stating that a defendant may avoid liability if it can

establish that it engaged in the interfering conduct in order to

protect an existing economic interest). “Lawful competition does

not constitute unjustifiable interference.” Pampered Chef v.
 -9-

Alexanian, 804 F. Supp. 2d 765, 807-808 (N.D. Ill. 2011). “[T]he

process known as competition, which though painful, fierce,

frequently ruthless, sometimes Darwinian in its pitilessness, is

the cornerstone of our highly successful economic system.

Competition is not a tort.” Speakers of Sport, Inc. v. ProServ,

Inc., 178 F.3d 862, 865 (7th Cir. 1999). As is stated in the

Second Restatement of Torts,

(1) One 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 and
(b) the actor does not employ wrongful means and
(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.

Restatement (Second) of Torts, § 768; see also Mardirosian v.

American Institute of Architects, 474 F. Supp. 628, 650-51

(D.D.C. 1979) (citing Restatement (Second) of Torts § 768 to

demonstrate the existence of the competitor’s privilege, stating

that “the policy of the common law has always been in favor of

free competition”); Mun. Revenue Serv., Inc. v. Xspand, Inc., 700

F. Supp. 2d 692, 709 (M.D. Pa. 2010) (stating that “[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”);
 -10-

Compak Cos., LLC v. Johnson, Civil Action No. 03-C-7427, 2011 WL

1654269, at *11-13 (N.D. Ill. Apr. 28, 2011) (entering judgment

for the defendant on the plaintiff’s tortious interference claim,

where the defendant’s actions, such as contacting the plaintiff’s

customers and persuading them to do business with the defendant’s

company instead of the plaintiff’s by stating that the plaintiff

would soon lack the ability to complete the customers’ work, were

shielded from liability by the competitor’s privilege).

Here, the defendants have not shown that the communications

complained of were anything more than competitive activity that

cannot form the basis of a tortious interference claim. In

addition to providing indirect, speculative evidence of the

impressions that CSC employees had regarding Modis’s reaction to

Infotran’s behavior, the defendants provide four discrete

statements relevant to their counterclaim that purportedly

constituted the interference: two statements by Martin to CSC’s

Application Portfolio Manager - - one, that Modis had character

witnesses that would testify against defendant Tran, and another,

that InfoTran had so severely violated the terms of the Agreement

that Modis was going to try to remove InfoTran from the project;

an angry telephone call from Martin to a CSC project manager to

report that Martin and the defendants had reached an arrangement

for the defendants to use Modis’ resources for placement in CSC’s

Eagle program; and Martin’s statement in an e-mail to a CSC
 -11-

operations director that defendant Tran had not lived up to his

expectations or commitments. (Defs.’ Opp’n, at 22-23, 28, Ex. P

at 17; Defs.’ Supp. Mem. at 3-9.)

The defendants have not shown that anything in Martin’s

communications was slander, libel, knowingly false, or even

untrue. What Martin is free to allege in this breach of

agreement lawsuit does not become defamation when repeated over

the phone or in a message. Nor does a CSC project manager’s

perception that Martin was angry convert truth to falsehood or

protected competition to unlawful behavior. While the defendants

argue that stating that a competitor failed to live up to its

expectations or commitments is not competitive communication,

statements differentiating a competitor’s prospective ability to

complete a job by discussing that competitor’s previous

performance can be the very essence of protected competitive

communication. Therefore, Modis’s motion for summary judgment on

the counterclaim will be granted.3

CONCLUSION AND ORDER

No genuine factual issues exist for a jury’s resolution,

assuming the truth of the defendants’ factual allegations. The

communications that form the basis of the defendants’

counterclaims for tortious interference do not rise above the

3
Because judgment will be entered against the defendants’
counterclaim, the defendants’ motions to strike the plaintiff’s
expert witnesses whose testimony would have pertained to the
counterclaim will be denied as moot.
 -12-

level of protective competitive communication. Therefore, it is

hereby

ORDERED that the defendants’ motions [54, 87] for partial

summary judgment on their counterclaim be, and hereby are,

DENIED, and the plaintiff’s motion [58] for judgment on the

defendants’ counterclaim be, and hereby is, GRANTED. Judgment is

entered against the defendants on their counterclaim. It is

further

ORDERED that the defendants’ motions [47, 77] to strike the

plaintiff’s expert witnesses and motion [84] to strike the

plaintiff’s reply brief, and the plaintiff’s motion [79] to file

a surreply and motion [94] to strike the defendants’ supplemental

brief be, and hereby are, DENIED as moot. It is further

ORDERED that the defendants’ motion [91] for reconsideration

be, and hereby is, DENIED.

SIGNED this 28th day of September, 2012

/s/
RICHARD W. ROBERTS
United States District Judge