Acumed LLC v. Advanced Surgical

Opinions of the United
2009 Decisions States Court of Appeals
for the Third Circuit

3-20-2009

Acumed LLC v. Advanced Surgical
Precedential or Non-Precedential: Precedential

Docket No. 07-1869

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 PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

Nos. 07-1869 and 07-2562

ACUMED LLC, A DELAWARE LIMITED
LIABILITY CORPORATION; SURGICAL
RESOURCES OF PENNSYLVANIA, INC.

v.

ADVANCED SURGICAL SERVICES, INC.;
ROBERT MORRIS, AN INDIVIDUAL,

Appellants

On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civ. No. 05-02711)
Honorable Juan R. Sanchez, District Judge

Argued December 2, 2008
 BEFORE: AMBRO and GREENBERG, Circuit Judges,
and RODRIGUEZ,* District Judge

Filed: March 20, 2009

Michael L. Eidel (argued)
Erin L. Ginsburg
DLA Piper
1650 Market Street
One Liberty Place, 50th Floor
Philadelphia, PA 19103-0000

Bruce W. McCullough (argued)
McCullough & McKenty
1225 North King Street
P.O. Box 397, Suited 1100
Wilmington, DE 19899-0000

Attorneys for Appelles

Gary Green (argued)
Sidkoff, Pincus & Green
1101 Market Street

*The Honorable Joseph H. Rodriguez, Judge of the United
States District Court for the District of New Jersey, sitting by
designation.

2
Suite 2700
Philadelphia, PA 19107-0000

Attorneys for Appellants

OPINION OF THE COURT

GREENBERG, Circuit Judge.

I. INTRODUCTION

This matter comes on before this Court on an appeal from
a final order entered in the District Court on May 21, 2007,
accompanying an opinion dated May 18, 2007, as well as from
a separate judgment for compensatory and punitive damages in
this case involving claims and counterclaims among parties in
the surgical implant business. See Acumed LLC v. Advanced
Surgical Servs., Inc., Civ. No. 05-2711, 2007 WL 1500051
(E.D. Pa. May 18, 2007). The District Court entered the order
and judgment from which appellants, Advanced Surgical
Services, Inc. (“Advanced”) and Robert C. Morris (“Morris”),
have taken their appeal, in favor of appellees Acumed LLC
(“Acumed”) and Surgical Resources of Pennsylvania, Inc.
(“Surgical”).1 Inasmuch as Morris is the president and sole

1
The notice of appeal as amended specifies earlier orders
included in the May 21, 2007 order, but it is unnecessary to list
them as our disposition of this appeal is clear without the

3
owner of Advanced, as a matter of convenience we usually refer
to appellants singularly as “appellant.” In addition, appellant
filed an earlier appeal from a March 22, 2007 order holding it in
contempt of court and ordering it to pay a counsel fee that
appellant characterizes as a fine. The clerk of this Court
consolidated the appeals by order of May 31, 2007, and we
address both in this opinion. The May 21, 2007 order, as well
as providing for damages, entered an injunction against
appellant and denied its post-trial motions in which it sought a
judgment as a matter of law under Fed. R. Civ. P. 50(b) or, in
the alternative, an order amending the judgment and a remittur
of damages, a new trial, and orders assessing attorneys’ fees and
sanctions against appellees.

Appellant challenges (1) the denial of its motion for
judgment as a matter of law on appellees’ claims; (2) the award
of damages, particularly punitive damages, against it; (3) the
grant of partial summary judgment in favor of appellees on
appellant’s counterclaim for abuse of process, unfair
competition, and defamation; (4) the grant of a judgment as a
matter of law in favor of appellees on appellant’s counterclaim
for tortious interference with contractual relationships; (5)
certain of the District Court’s evidentiary rulings; (6) the denial
of appellant’s application for attorneys’ fees; (7) the grant of
injunctive relief against it; and (8) the order holding appellant in
contempt of court.2 Though both appellees prevailed only in

specification.
2
In its opening brief, appellant listed an issue whether “the
District Court erred in allowing two lawyers for Surgical to

4
certain aspects of this case, neither cross-appeals from any
disposition in the District Court adverse to it.

For the reasons we discuss below, we conclude that the
application of legal principles required the District Court to have
granted appellant’s post-trial Rule 50(b) motion seeking to set
aside the jury’s verdict in favor of appellees on a tortious
interference with contractual relationship claim that appellees
pled against appellant and attempted to prove at trial.3
Therefore, we will reverse the District Court’s determination

participate in the trial as if they represented separate parties.”
Appellant’s br. at 3. Appellant, however, did not advance this
issue in the substantive portions of its briefs beyond reiterating
in the summary of its argument that the District Court
“improperly allowed two lawyers for Surgical to participate in
the trial as if they represented separate parties,” appellant’s br.
at 24, and thus it has waived the issue. See United States v.
Pelullo, 399 F.3d 197, 222 (3d Cir. 2005) (“It is well settled that
an appellant’s failure to identify or argue an issue in his opening
brief constitutes waiver of that issue on appeal.”). In any event,
the argument is not meritorious as it was well within the District
Court’s discretion in managing the trial to allow the
representation. See United States v. Wecht, 484 F.3d 194, 217
(3d Cir. 2007) (“[D]istrict courts have wide discretion in the
management of their cases.”).
3
As a matter of convenience we usually will refer to the
tortious interference with existing or prospective contractual
relationships claim as the tortious interference with contractual
relationships claim or the tortious interference claim.

5
that appellant was not entitled to judgment as a matter of law on
that claim and reverse, as well, the judgment for compensatory
and punitive damages, as the jury predicated the damages
verdict solely on the tortious interference claim. Furthermore,
we will reverse the order for the injunction against appellant
inasmuch as the District Court predicated the injunction on the
jury’s liability finding on the tortious inference claim, but we
will affirm all of the District Court’s remaining orders.
Inasmuch as we are not remanding the case for a new trial or
other proceedings, our disposition on this appeal will bring this
litigation to a close.

II. BACKGROUND

A. Facts

To the extent that appellant challenges the order granting
partial summary judgment against it, we state the facts most
favorably to it, but to the extent that the appeal challenges the
jury’s verdict, we state the facts on any disputed issue most
consistently with the verdict. See Johnson v. Campbell, 332
F.3d 199, 204 (3d Cir. 2003).

Acumed is a manufacturer of surgical implants and
related devices, and appellant and Surgical are in the business of
distributing surgical implants and other medical devices for
various manufacturers, including Acumed, to hospitals and
surgeons. Acumed and Morris began a relationship in 1996
when Joe Richioni, then Acumed’s authorized sales

6
representative for eastern Pennsylvania, retained Morris as an
independent contractor to sell Acumed’s products. In 1998, due
to Acumed’s dissatisfaction with Richioni’s performance,
Morris and two other individuals formed a “loose partnership”
called RMW Orthopedics (“RMW”) that contracted with
Acumed to take over Richioni’s territory.4 App. at 2955. At
that time Acumed and RMW signed a Manufacturer’s
Representative Agreement (“RMW Agreement”) designating
RMW as Acumed’s exclusive representative for its products in
eastern Pennsylvania. Morris became Acumed’s authorized
representative for the greater Philadelphia area. The RMW
Agreement contained a provision that prevented RMW from
making unauthorized disclosure of Acumed’s confidential
information. The non-disclosure provision provided for the
award of attorney’s fees to the prevailing party in the event of
litigation related to the provision.

In late 1999, its “loose partners” dissolved RMW,
following which Acumed contracted with Morris’s company,
Advanced, for it to become Acumed’s exclusive sales
representative in southeastern Pennsylvania. Appellant and
Acumed differ, however, on the nature of their sales
representative agreement. Ordinarily the written terms of an
agreement should be clear, though their meaning may be in
dispute, but the situation here varies from the ordinary because
Acumed presented evidence explaining the terms of its
agreement with Advanced, but did not produce a written
contract between Advanced and Acumed. For its part, appellant
produced a contract purportedly evidencing the agreement

4
The “M” in RMW is Morris.

7
Advanced and Acumed reached, but neither party had signed
that version of the contract, and the parties’ versions of the
agreement significantly varied. Nevertheless, we will refer to
the agreement, as uncertain as its terms may be, between
Advanced and Acumed as the “Advanced-Acumed Agreement.”

Throughout the trial and this appeal, Acumed has
maintained that Advanced was its commissioned sales
representative under an agreement identical to the earlier RMW
Agreement, and, in that capacity, placed orders from surgeons
and hospitals with Acumed, who then shipped the product
directly to its purchaser. Nevertheless, even as a sales
representative appellant may have had Acumed’s products on
hand as consignment inventory for direct delivery to an ordering
surgeon or hospital. In any event, regardless of how appellant
or Acumed filled the order, when a purchaser paid Acumed on
an invoice for a sale that appellant had obtained, Acumed paid
appellant a commission.

In contrast to Acumed’s version of their contractual
relationship, appellant argued and still argues that its contract
with Acumed was a “hybrid” agreement under which it acted
both as a sales representative and a stocking distributor.
Appellant contended that in its role as a stocking distributor, it
purchased products directly from Acumed for resale to hospitals
or surgeons. Appellant further alleged that under the terms of
the Advanced-Acumed Agreement, if Acumed terminated the
agreement, Acumed would pay a “buy-out” fee to appellant.
Appellant explains that it sought “buy-out” fees from the
manufacturers it represented to compensate it for its expenses in

8
promoting a manufacturer’s product if the manufacturer
terminated appellant as a representative and thereby deprived
appellant of the opportunity to earn further commissions on the
sales of the manufacturer’s products. Appellant believed that
when a manufacturer terminated its distributorship it should pay
appellant such a fee, inasmuch as appellant would have
promoted the manufacturer’s products while representing the
manufacturer and there could be further sales of a
manufacturer’s products attributable to appellant’s efforts after
a manufacturer terminated appellant as a sales representative.
It appears that sometimes a buy-out fee became payable when
another company acquired the manufacturer that appellant had
represented and appellant then lost the account. Indeed,
appellant sets forth in its brief that Acumed “was bought out by
a conglomerate in around 2000.” Appellant’s br. at 11 n.4.5

In January 2000, during the time of the Advanced-
Acumed relationship, appellant sometimes bought Acumed
products under the name Allied Surgical (“Allied”), an
unincorporated entity not to be confused with appellee Surgical
Resources of Pennsylvania or appellant Advanced Surgical
Services. Appellant contended that it formed Allied so that it

5
On the other hand, at oral argument appellant’s attorney told
us that “[Morris] was terminated in this case because he refused
to accept Acumed’s sales representative agreement after he had
already been operating under his hybrid agreement for about 18
months. He was not terminated. It was not renewed . . . . [H]e
was told that we are not renewing your contract because the new
owners only want to have sales rep contracts.” Transcript of
oral argument at 8, 11.

9
could sell products in hospitals that had not approved Acumed
as a vendor. On the other hand, Acumed contended that it
believed during the Advanced-Acumed relationship that Allied
was an entity separate from and independent of appellant.
Moreover, it contended that Morris formed Allied in order to
purchase Acumed products secretly for resale on his own
account to hospitals and surgeons.

In January 2001, Acumed, citing what it believed was
appellant’s poor sales performance, terminated the Advanced-
Acumed Agreement. Morris testified that after the termination
of the contract he returned the inventory that appellant had
acquired in its sales representative role from Acumed and
attempted to sell back to Acumed inventory it had acquired as
a stocking distributor, but Acumed refused to buy back the
inventory. Morris also testified that after Acumed terminated
Advanced’s contract, appellant continued to sell Acumed
products from 2001 to 2004 in eastern Pennsylvania and New
Jersey as well as in areas beyond its former exclusive territory
under the Advanced-Acumed Agreement. According to
appellant, the sales, however, were sporadic, and appellant only
sold Acumed products when customers specifically requested
them. Morris estimated that appellant made approximately 25
sales of Acumed products to ten different customers during the
three-year period.

In September 2002, Surgical and Acumed entered into an
agreement designating Surgical as Acumed’s exclusive sales
agent in eastern Pennsylvania and southern New Jersey;
Surgical thus took over what had been Advanced’s territory. It
is, of course, evident that there was a hiatus between the periods

10
in which appellant and Surgical served as sales representatives
for Acumed.

Sometime after Surgical became an Acumed sales
representative, an employee at Bloomsburg Hospital in
Pennsylvania advised Fred Zullo, then the Vice President of
Surgical, that a representative from another company had
indicated to the hospital staff that he could provide Acumed
products. This information led Acumed to send a memorandum
dated October 9, 2003, to its customers in eastern Pennsylvania
and New Jersey informing them that Surgical was its only
authorized representative in that territory and Acumed would
not extend its warranty to its products sold by anyone other than
its authorized sales representative.

In December 2004, Chad Casey, a Surgical sales
representative, brought Acumed implants and instruments to
Nazareth Hospital for use in a surgical procedure. When Casey
arrived at Nazareth, he discovered that another person already
had delivered a set of Acumed implants to Nazareth for the
procedure.

At the trial, Ryan Crognale, a sales representative for
appellant, explained his view of the events that Casey described
at Nazareth Hospital. Crognale testified that Morris directed
him to deliver the implants to Nazareth and to attend the
surgery. He then stated that after his earlier delivery of Acumed
implants, he returned to the hospital and saw Casey in the
operating room and observed that the physician doing the
procedure was “not using my stuff anyway.” App. at 2158.
Consequently, Crognale took the tray of instruments he

11
previously had delivered and left the operating room. Thus, it
appears that the physician performing the procedure used
materials Acumed supplied through Surgical, its authorized
representative.

As Crognale was leaving the surgery center, he
encountered Casey, and an argument between the two
representatives ensued. Appellant contends that during the
argument Casey loudly accused Crognale of illegally selling
Acumed inventory, an incident that appellant contends led Dr.
Robert Frederick, a doctor at Nazareth, to stop doing business
with it. Moreover, appellant contends that because of Dr.
Frederick’s connection with a large group of physicians in
Philadelphia, the confrontation was a factor in a decision by
Jefferson Hospital in Philadelphia to exclude Morris from its
operating theater for one year. As a result of the incident at
Nazareth Hospital, Acumed sent another notice to its customers
stating that Surgical was its only authorized representative in
eastern Pennsylvania and southern New Jersey.

B. Procedural History

Appellees filed the complaint in this action against
appellant in the District Court charging it with violation of the
Lanham Act, 15 U.S.C. § 1125, violation of Pennsylvania’s
Anti-Dilution statute, 54 Pa. Cons. Stat. Ann. § 1124 (West
1996), unfair competition, breach of a non-disclosure provision
in the Advanced-Acumed Agreement, conversion, unjust
enrichment, and tortious interference with existing or
prospective contractual relationships. Appellees sought
compensatory and punitive damages and an injunction

12
precluding appellant from making what Acumed regarded as
unauthorized sales of its products. Later, when appellees claim
they just had become aware that Morris had formed Allied,
appellees amended their complaint to include a charge of
intentional misrepresentation. The amendment to the complaint
asserted that Acumed had made sales to Allied believing, on the
basis of Morris’s representations, that Allied was an entity
separate from and independent of Advanced and was “wholly
distinct from” appellant whereas, in fact, “Allied was the alter
ego of Advanced.” App. at 346. Acumed alleged that but for
Morris’s misrepresentations it would not have sold its products
to Allied. Appellees brought all of their claims under state law
except for the Lanham Act claim which, of course, was a federal
law claim.

Appellees asserted their claims for tortious interference
with contractual relationships on two theories. First, appellees
alleged that appellant tortiously interfered with Acumed’s and
Surgical’s contractual relationship providing for Surgical within
its territory to be Acumed’s sole authorized dealer by making
false and misleading statements regarding Advanced’s status.
Second, Acumed alleged that appellant’s sale of Acumed
products and false and misleading statements tortiously
interfered with Surgical’s and Acumed’s relationships with
existing and prospective customers. Appellees charged in their
Lanham Act claim that appellant made false and misleading
statements to hold itself out as an authorized representative of
Acumed in southeastern Pennsylvania and New Jersey.

Appellant filed a four-count counterclaim against
appellees. In counts I, II, and III appellant charged that Acumed

13
breached its contract with appellant by not providing timely
notice of termination of their relationship and by failing to pay
the contractually required buy-out fee that became due to
appellant when Acumed terminated their relationship. In
addition, appellant charged that Acumed’s failure to pay the
buy-out fee violated the Pennsylvania Commissioned Sales
Representatives statute, 43 Pa. Cons. Stat. Ann. §§ 1471 et seq.
(West 1991). In count IV (“counterclaim IV”) appellant alleged
that Acumed and Surgical “. . .converted property belonging to
Advanced, defamed and disparaged Advanced maliciously and
falsely, intentionally interfered with Advanced’s contractual and
business relationships and competed unfairly against
Advanced.” App. at 103.

After completion of discovery, appellant filed a motion
to dismiss or, in the alternative, for summary judgment, and the
parties submitted letter briefs addressing summary judgment
issues.6 After hearing oral arguments on the letter briefs on

6
In their brief on this appeal, appellees state that the District
Court “gave the parties two weeks notice that it would hear
arguments on summary judgment issues and directed the parties
to brief those issues.” Appellees’ br. at 87. However, the order
which appellees cite as supporting this statement was dated
December 4, 2006, and did not refer to briefs, though it did
provide that “[d]ispositive motions shall be filed on or before
February 9, 2007.” App. at 3. In an order dated February 6,
2007, the Court ordered that “a pre-motion argument is
scheduled for February 23, 2007.” App. at 3D. The record,
however, makes clear that appellant filed a letter brief dated
February 22, 2007, and appellees filed two letter briefs also

14
February 23, 2007, the District Court signed an order on March
6, 2007, entered on March 7, 2007, which dismissed
counterclaim IV insofar as it alleged that appellees were liable
to appellant for instituting groundless litigation, defamation, and
unlawful restraint of trade. But the District Court allowed
appellant to proceed with counterclaim IV to the extent that it
alleged that appellees were liable for tortious interference with
one of its contracts, and it also permitted appellant to proceed on
its conversion claims. The trial commenced on March 12, 2007,
and on the same day, the Court granted a motion appellees made
in limine to preclude appellant from introducing evidence of
defamation.

On March 19, 2007, at the conclusion of appellant’s
testimony, Surgical moved for a judgment as a matter of law
with respect to the remaining claims in counterclaim IV, and
both appellees moved for judgment as a matter of law on other
portions of the case. The following day the District Court
entered an order granting Surgical’s motion against appellant
with respect to counterclaim IV but reserving judgment on the
other aspects of appellees’ motions for judgment, including the
tortious interference with contractual relationships, conversion,
and unfair competition claims. Ultimately, however, the Court
granted judgment as a matter of law dismissing certain of
appellant’s claims that had survived the earlier dismissal of
portions of counterclaim IV.

The jury returned a verdict on March 21, 2007, finding

dated February 22, 2007, on the merits of certain summary
judgment issues.

15
for appellees on their count against appellant for tortious
interference with existing or prospective contractual
relationships with appellees’ customers. The jury, however,
rejected appellees’ claim that appellant had tortiously interfered
with Acumed’s and Surgical’s contractual relationship between
themselves and also rejected appellees’ other claims, including
appellees’ Lanham Act claims. The jury also found against
appellant on the portions of its counterclaims that had survived
the District Court’s dismissals, i.e., the claims predicated on
breach of contract and violation of the Pennsylvania
Commissioned Sales Representatives statute. The jury awarded
$20,000 in compensatory damages to Surgical and $0 in
compensatory damages to Acumed on the tortious interference
claim but found that both Acumed and Surgical were entitled to
punitive damages. Thus, by the time the jury returned its
verdict, either the Court or the jury had rejected all the parties’
claims, except that appellees had obtained a verdict in their
favor on the count for tortious interference with existing or
prospective contractual relationships, though not on interference
with their own relationship. Nevertheless, the Court did not
discharge the jury on March 21, 2007, when it returned its initial
verdict, inasmuch as the jury had not determined the quantum of
punitive damages.

In anticipation of proceedings to determine the quantum
of punitive damages, the Court required appellant to produce
financial documents relating to its net worth.7 On March 22,

7
There seems to be a discrepancy as to when the Court
ordered appellant to produce the documents, as the order
requiring their production is dated March 20, 2007, but the jury

16
2007, when appellant failed to produce some of the documents,
the District Court entered an order holding it in civil contempt
of court and ordering it to pay appellees’ attorneys a fee of
$1350. The Court also granted appellees access to appellant’s
computer hard drive, and allowed appellees to cross-examine
Morris about the missing documents. On March 27, 2007,
appellant filed a notice of appeal from the District Court’s
contempt order.

On March 23, 2007, the District Court, two days after the
jury returned its original verdict, allowed the parties to make
arguments to the jury on the question of punitive damages. At
that time the Court instructed the jury that to award punitive
damages it “must return a verdict for [Acumed] in a nominal
sum, such as one dollar.” App. at 3494. The jury then returned
a verdict awarding $1 in nominal damages to Acumed and
punitive damages to both Acumed and Surgical Resources in the
amount of $100,000 each.

Appellant filed post-verdict motions requesting entry of
a judgment as a matter of law in its favor under Rule 50(b), or,
in the alternative, entry of an amended judgment, a remittur of
damages, and/or a new trial. In addition, appellant sought
attorneys’ fees under the Lanham Act and the Advanced-
Acumed Agreement even though Acumed, but not appellant,
contended that the Advanced-Acumed Agreement followed the
earlier RMW Agreement and consequently contained a non-
disclosure provision providing for a counsel fee in the event of
litigation regarding it. Moreover, appellant requested that the

returned the liability verdict on March 21, 2007.

17
District Court impose sanctions against appellees. On the other
hand, appellees filed a post-trial motion seeking an order for an
injunction barring appellant from selling Acumed products. The
District Court denied appellant’s motions but granted appellees’
request for an injunction against appellant. Accordingly, the
District Court proceedings resulted in appellees recovering a
judgment against appellant for compensatory and punitive
damages for tortious interference with existing or prospective
contractual relationships, and with the Court entering an
injunction barring appellant from selling Acumed’s products.
No party, however, obtained any other substantive relief,
though, as we have indicated, the Court made an award of
attorneys’ fees to appellees on the contempt of court order.
Appellant then filed its second notice of appeal, which it later
amended. Thus, appellant has appealed twice, but appellees,
though only partially successful, have not cross-appealed.

III. JURISDICTION AND STANDARDS OF REVIEW

The District Court had jurisdiction over the Lanham Act
claims pursuant to 28 U.S.C. §§ 1331 and 1338(a) and
supplemental jurisdiction over all the remaining claims under 28
U.S.C. § 1367, as they were under state law and the Court did
not have diversity of citizenship jurisdiction.

Courts of appeals have jurisdiction under 28 U.S.C. §
1291 over “appeals from all final decisions of the district
courts.” As we have indicated, appellant filed two distinct
notices of appeal, the first after the District Court entered its

18
contempt order and the second, subsequently amended, after the
District Court ruled on the parties’ post-trial motions.

When appellant filed its first notice of appeal, the case
still was pending in the District Court, a procedural posture that
regularly presents a question whether a court of appeals has
jurisdiction over an appeal. We need not determine, however,
whether the contempt of court order was final and appealable
under section 1291, or on another basis, when appellant filed its
appeal from that order, because the District Court subsequently
resolved all the outstanding issues and, on any theory, the case
in all of its aspects then became final in the District Court and
thus became appealable. Therefore, the contempt of court order,
if not appealable earlier, became appealable at that time. See
Aluminum Co. of Am. v. Beazer East, Inc., 124 F.3d 551, 557
(3d Cir. 1997) (“Even if the appeals court would have lacked
jurisdiction at the time an appeal was filed, the court has
jurisdiction if, as a result of subsequent events, there are no
longer any claims left to be resolved by the district court.”).

Various standards of review are applicable on this appeal.
First, “[w]e review a denial of judgment as a matter of law de
novo, viewing the evidence in the light most favorable to the
prevailing party.” Monteiro v. City of Elizabeth, 436 F.3d 397,
404 (3d Cir. 2006). On this appeal the parties have treated the
applicable state law as that of Pennsylvania, and therefore so do
we.8 Ordinarily, a court may grant a judgment as a matter of law

8
The parties brief certain aspects of the counsel fee issue
under Oregon law, apparently because Acumed contended in its
complaint that its contract with appellant followed the earlier

19
contrary to the verdict only if “the record is critically deficient
of the minimum quantum of evidence” to sustain the verdict.
Gomez v. Allegheny Health Servs., Inc., 71 F.3d 1079, 1083 (3d
Cir. 1995). Thus, the usual formulation of the standard of
review on an appeal from the denial of a defendant’s motion for
judgment as a matter of law requires an appellate court to
determine “whether the evidence is sufficient to sustain
liability,” and in considering that issue the court “may not weigh
the evidence, determine the credibility of witnesses, or substitute
its version of the facts for the jury’s version.” Lightning Lube,
Inc. v. Witco Corp., 4 F.3d 1153, 1166 (3d Cir. 1993). Here,
however, though we apply the well-established standard of
review to our recitation of the facts, the traditional standard of
review will become insufficient because we will be constrained
to reverse the judgment on the appellees’ tortious interference
claim on a purely legal basis that does not depend on rejecting
the jury’s findings on the evidence at the trial. Rather, we
accept those findings but conclude that the verdict itself requires
that we reverse the tortious interference claim judgment against
appellant by granting its motion for judgment as a matter of law.

Second, our review of a grant of summary judgment is
plenary, and in making that review we use the same standard as
a district court: whether there are genuine issues of material fact

RMW Agreement that specified disputes under it would be
governed by Oregon law, probably because Acumed is an
Oregon corporation. We, however, decide the counsel fee
dispute without reference to Oregon law, as we hold that the
provisions of the RMW Agreement are not relevant to resolution
of any issue on this appeal.

20
precluding entry of summary judgment. E.T. Browne Drug Co.
v. Cococare Prods., Inc., 538 F.3d 185, 191 (3d Cir. 2008).
Third, we review a district court’s evidentiary rulings for abuse
of discretion. See Moyer v. United Dominion Indus., 473 F.3d
532, 542 (3d Cir. 2007). To demonstrate that a district court
abused its discretion, an appellant must show that the court’s
decision was “arbitrary, fanciful or clearly unreasonable.” Id.
(citation omitted).

To the extent that a district court as a matter of law is
empowered to award attorneys’ fees, we review its disposition
of a request for attorneys’ fees on an abuse of discretion basis.
Pardini v. Allegheny Intermediate Unit, 524 F.3d 419, 422 (3d
Cir. 2008). There is “[a]n abuse of discretion . . . when a district
court’s decision rests upon a clearly erroneous finding of fact,
an errant conclusion of law or an improper application of law to
fact. However, if the District Court denied the fees based on its
conclusion on questions of law, our review is plenary.” Id.
(citation and quotation omitted). We review a contempt order
on an abuse of discretion basis as well. Harris v. City of
Philadelphia, 47 F.3d 1311, 1321 (3d Cir. 1995).

IV. DISCUSSION

A. Tortious Interference

We begin our analysis by addressing appellant’s
contention that appellees failed to establish sufficiently their
claim for tortious interference with existing or prospective

21
contractual relationships. Under Pennsylvania law, to prevail on
a claim for tortious interference with existing or prospective
contractual relationships, a party must prove: (1) the existence
of a contractual or prospective contractual or economic
relationship between the plaintiff and a third party; (2)
purposeful action by the defendant, specifically intended to
harm an existing relationship or intended to prevent a
prospective relation from occurring; (3) the absence of privilege
or justification on the part of the defendant; (4) legal damage to
the plaintiff as a result of the defendant’s conduct; and (5) for
prospective contracts, a reasonable likelihood that the
relationship would have occurred but for the defendant’s
interference. Brokerage Concepts, Inc. v. U.S. Healthcare, Inc.,
140 F.3d 494, 530 (3d Cir. 1998).

As the foregoing formulation of the components of a
tortious interference claim makes clear, Pennsylvania
distinguishes between claims for interference with existing
contractual relations and claims for interference with
prospective contractual relations. See Thompson Coal Co. v.
Pike Coal Co., 412 A.2d 466, 470-71 (Pa. 1979). In this case,
though the jury found that appellant interfered with appellees’
existing and prospective relationships with purchasing surgeons
and hospitals, appellees do not direct our attention to evidence
setting forth the existing contracts with which they believed
appellant interfered. In fact, the only evidence appellees
presented of a material existing contract was the contract
between themselves. The jury, however, found that appellant’s
sales of Acumed products after 2001 did not interfere with the
contract between Surgical and Acumed, and appellees do not
challenge that outcome on this appeal. We therefore conclude

22
that the jury must have based its verdict on appellant’s
interference with prospective sales of Acumed products that
Surgical would have made to customers in the territory in which
Acumed had granted an exclusive relationship to Surgical.
Indeed, the jury’s award of compensatory damages only to
Surgical and not to Acumed suggests that it probably reached
this conclusion because, though appellees complained of
appellant’s sales, those sales, after all, were of Acumed
products.9

9
The possibly confused nature of the jury’s findings is
unsurprising given the instructions and verdict slip here. The
instructions specifically did not (1) distinguish between tortious
interference with existing contractual relations and tortious
interference with prospective business relations, (2) review the
relevant factors for the jury to consider beyond those pertinent
once an existing contract is established, (3) mention that
Acumed and Surgical needed to demonstrate that appellant
specifically intended to interfere with their contracts or
prospective business relations, or (4) properly state the law by
noting that, in Pennsylvania, a party is not liable for tortious
interference with prospective business relations for “merely
making a third party’s performance of his contract with another
party more expensive or burdensome.” Gemini Physical
Therapy & Rehab., Inc. v. State Farm Mut. Auto. Ins. Co., 40
F.3d 63, 66 (3d Cir. 1994). Similarly, the verdict sheet required
the jury to answer “yes” or “no” to the following questions:

15. Do you find by a preponderance of the
evidence that Advanced and/or Morris
intentionally interfered with the plaintiff’s

23
 In determining whether there is a prospective contractual
relationship in a tortious interference case, Pennsylvania courts
have considered whether the evidence supports a finding that
there was an objectively “reasonable likelihood or probability”

existing or prospective contractual and
business relationships with plaintiff’s
customers?
. . . .
17. Do you find that the plaintiffs are entitled
to an award of punitive damages as a result
of defendants’ interference with plaintiffs’
contractual relations?

App. at 4121.

These questions merged interference with existing contractual
relationships and interference with prospective contractual
relationships into one tort, seemingly violating the general rule
that verdict slips should “avoid questions that combine two
issues disjunctively because a ‘yes’ or ‘no’ answer may refer to
either issue.” 9A Wright & Miller, Fed. Practice & Procedure
§ 2508, at 189 (1995). They also grouped Acumed and Surgical
together even though their contractual interests and claimed
damages were different. Nevertheless, considering our overall
conclusion in this case, the possible errors in the charge that we
identify were harmless to appellees against whom we are
holding on this appeal from their favorable tortious interference
judgment, and even if they objected at trial on the basis of these
errors, we would not order a new trial by reason of the form of
the verdict.

24
that the contemplated contract would have materialized absent
the defendant’s interference. See Glenn v. Point Park Coll., 272
A.2d 895, 898-99 (Pa. 1971); Kachmar v. SunGard Data Sys.,
Inc., 109 F.3d 173, 184 (3d Cir. 1997). A “reasonable
likelihood” of occurrence is something less than a contractual
right but more than a mere hope that there will be a future
contract. Phillips v. Selig, 959 A.2d 420, 428 (Pa. Super. Ct.
2008). Furthermore, a plaintiff must base its claim that there
was a prospective contractual relationship on something other
than an existing or current relationship. Id. at 429.

Morris, in uncontradicted testimony, explained that
appellant only sold Acumed products after the termination of the
Advanced-Acumed Agreement when customers specifically
requested that appellant supply the Acumed brand.
Furthermore, it is undisputed that at the times material to this
case appellant and Surgical were the only distributors of
Acumed products in the eastern Pennsylvania and southern New
Jersey region. Therefore, inasmuch as it appears that Surgical
was the only distributor of Acumed products in its territory other
than appellant, and the customers stated their preference
specifically for Acumed products, the customers may have
entered into contractual relationships with Acumed or its
authorized representative, Surgical, for the purchase of Acumed
products but for appellant’s sales of those products.10 On the

10
Acumed terminated its contract with Advanced in January
2001, but Acumed and Surgical did not initiate their contractual
relationship until September 2002. Therefore, inasmuch as the
parties did not pinpoint the dates of appellant’s 25 sales after
January 2001, it is possible that Advanced made some of the

25
other hand, there was evidence at the trial that there was a
secondary market for Acumed products in which suppliers other
than the parties to this litigation supplied those products and, in
addition, there was evidence that former stocking distributors of

sales before Surgical became the exclusive dealer for Acumed
products in eastern Pennsylvania and New Jersey. When
questioned on this matter at oral argument, Acumed’s counsel
conceded that any sales which were proven to be between
January 2001 and September 2002 could not constitute tortious
interference, but also asserted that any Acumed sales appellant
made during that time outside of the Pennsylvania and New
Jersey territory constituted interference in some sales
representative’s exclusive territory. These circumstances
undermine the basis for the jury’s calculation of compensatory
damages in favor of Surgical because the jury may have based
its award of those damages on all 25 sales, and there could be a
question of the relevancy of a portion of the evidence supporting
the verdict. This problem would cast doubt on the validity of
the damages verdict even though the law does not require exact
precision in the calculation of damages. See Rochez Bros., Inc
v. Rhoades, 527 F.2d 891, 895 (3d Cir. 1975). However, we
need not linger on the question whether the evidence supporting
the jury’s award of compensatory damages to Surgical has been
undermined inasmuch as we find that appellees did not establish
that appellant’s sales of Acumed products were wrongful.
Accordingly, the sales, whenever appellant made them, could
not be the predicate for a finding that appellant tortiously
interfered with the relationship between Surgical and Acumed
or between appellees and third-party purchasers of Acumed
products.

26
Acumed products sold their inventory in an unrestricted manner
after the termination of their authorized distributorships.
Accordingly, we cannot be confident that appellees have
satisfied their burden to prove that if appellant had not sold
Acumed products there is a reasonable likelihood that appellees
would have made those sales.

Moreover, even if we concluded that appellees
established that but for appellant’s sales of Acumed products
there is a reasonable likelihood that the customers to whom
appellant made sales would have entered into contractual
relationships with appellees, and appellees therefore satisfied a
necessary part of their case, we still would have to consider
whether appellees were able to establish the second and third
elements of the tortious interference with contractual
relationships formulation, i.e., whether appellees demonstrated
that there was a sufficient showing of appellant’s intent to
interfere with appellees’ prospective relationships and whether
appellant was privileged or justified in its actions. We prefer to
pass directly to a consideration of those elements, particularly
the third element, of appellees’ case. The second and third
elements are related closely because in most cases a defendant’s
intentional conduct is done “at least in part for the purpose of
protecting some legitimate interest which conflicts with that of
the plaintiff . . . .” Id. at 430 (quoting Glenn, 272 A.2d at 899).
We will discuss only the third element of a tortious interference
claim inasmuch as we find that regardless of whether appellant
intended to interfere with appellees’ prospective contractual
relationships, even viewing the evidence in a way so that it is
most consistent with the verdict, as a matter of law appellant
was privileged to interfere with those prospective

27
relationships.11

As we indicated above, to recover on a tortious
intentional interference with existing or prospective contractual
relationships claim in Pennsylvania, a plaintiff must prove that
the defendant was not privileged or justified in interfering with
its contracts: “While some jurisdictions consider a justification
for a defendant’s interference to be an affirmative defense,
Pennsylvania courts require the plaintiff, as part of his prima
facie case, to show that the defendant’s conduct was not
justified.” Triffin v. Janssen, 626 A.2d 571, 574 n.3 (Pa. Super.
Ct. 1993) (citing Thompson Coal 412 A.2d at 471 n.7); Silver v.
Mendel, 894 F.2d 598, 602 n.6 (3d Cir. 1990). We hasten to
add, however, that our conclusion does not depend on the
allocation of the burden of proof on the privilege issue, as we
would reach our result even if appellant had the burden of proof
to establish the privilege as a defense, because the evidence
established conclusively that appellant did so.

Pennsylvania has adopted section 768 of the Restatement
(Second) of Torts, which recognizes that competitors, in certain
circumstances, are privileged in the course of competition to
interfere with others’ prospective contractual relationships. See
Gilbert v. Otterson, 550 A.2d 550, 554 (Pa. Super. Ct. 1988).

11
Though we discuss the privilege issue in terms of
prospective relationships because the 25 sales after termination
of the Advanced-Acumed Agreement constitute the alleged
interfering conduct, our analysis would not change if we
characterized the question of privilege in terms of existing
relationships.

28
The law necessarily recognizes this privilege because if more
than one party seeks to sell similar products to prospective
purchasers, both necessarily are interfering with the other’s
attempt to do the same thing. Moreover, even if an entity has an
existing contractual relationship with another entity, a stranger
to the relationship must be privileged to seek to replace one of
the entities lest competition be stifled. Thus, under section 768:
“[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 if: (a)
the relation concerns a matter involved in the competition
between the actor and the other; (b) the actor does not employ
wrongful means; (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.”

Clearly, the record requires a conclusion that appellant’s
sales met the four components of a section 768 justification
defense with the possible exception of the second element, the
use of wrongful means in the interference. Thus, we confine our
discussion to that element, which is the only one that we regard
as being in real issue on this appeal. With respect to this
element, appellant argues that it was not precluded from
competing with Surgical within Surgical’s exclusive territory
and it did not employ wrongful means in selling its inventory of
Acumed products after Acumed terminated its relationship with
it. Appellees counter this argument by pointing to evidence that
they believe shows that appellant illegitimately acquired
Acumed products. Moreover, appellees contend that even if
appellant acquired the Acumed products legitimately, appellant

29
is not entitled to the shield of the competition privilege because
it used wrongful means to make the sales after the termination
of the Advanced-Acumed Agreement by selling Acumed
products in Surgical’s exclusive territory.

Comment e to section 768 elaborates on the type of
conduct that constitutes wrongful means: “If the actor employs
wrongful means, he is not justified under the rule stated in this
Section. The predatory means discussed in § 767, Comment c,
physical violence, fraud, civil suits and criminal prosecutions,
are all wrongful in the situation covered by this Section.”
Courts relying on comment e have interpreted the wrongful
means element to require that a plaintiff, to be successful in a
tortious interference action, demonstrate that a defendant
engaged in conduct that was actionable on a basis independent
of the interference claim. See Brokerage Concepts, 140 F.3d at
531 (citing DP-Tek, Inc. v. A T & T Global Info. Solutions Co.,
100 F.3d 828, 833-35 (10th Cir. 1996)). Moreover, we noted in
2000 that even though the Pennsylvania courts have not
interpreted the “wrongful means” element of section 768, it is
likely that the Pennsylvania Supreme Court would adopt this
meaning, that is, for conduct to be wrongful it must be
actionable for a reason independent from the claim of tortious
interference itself. See Nat’l Data Payment Sys., Inc. v.
Meridian Bank, 212 F.3d 849, 858 (3d Cir. 2000); see also CGB
Occupational Therapy, Inc. v. RHA Health Servs. Inc., 357 F.3d
375, 389 (3d Cir. 2004). Nothing in later Pennsylvania Supreme
Court decisions to which the parties have directed our attention
or of which we are aware leads us to change our view of this
issue.

30
 We addressed the wrongful means element of section 768
in National Data, a case in which the plaintiff, National Data
Payment Systems (“NDPS”), sued Meridian Bank and
Corestates Financial Group (“Corestates”) under Pennsylvania
law for tortious interference with, and breach of, a contract for
NDPS to purchase Meridian’s merchant credit card business.
212 F.3d at 851. NDPS alleged that Corestates made fraudulent
statements to induce Meridian not to sell its credit card business
to NDPS, the interest of Corestates in blocking that potential
sale being that it had announced its intent to acquire Meridian,
an acquisition that Corestates wanted to include Meridian’s
credit card business. Id. at 858. We found that statements made
by a Corestates senior executive did not meet the Pennsylvania
requirements for fraud and therefore Corestates was privileged
to compete with NDPS under section 768. Accordingly,
Corestates was “protected for liability for tortious interference
with contractual relations” because NDPS did not demonstrate
that Corestate’s interference gave rise to an independent cause
of action. Id.

In our case, the jury, in an unappealed determination,
found that appellees did not prove their cause of action
predicated on appellant’s allegedly fraudulent conduct.
Appellees thus did not establish that appellant was
independently liable to them for that conduct. In this regard,
we note that although appellees submitted documentary and
testimonial evidence of a dispute between appellant and
Acumed over inventory after the Advanced-Acumed contractual
relationship ended in 2001, the jury rejected appellees’
allegations that appellant was liable to Acumed on theories of
conversion, breach of contract, and unjust enrichment based on

31
appellant’s retention of Acumed products after termination of its
relationship with Acumed.

In view of the jury’s determination that the evidence did
not support a verdict that appellant’s conduct was independently
actionable, we conclude as a matter of law that the tortious
interference verdict cannot stand against appellant, even if
without the adverse verdict appellees’ case would have survived
appellant’s Rule 50(b) motion. In reaching that conclusion, we
have not overlooked appellees’ allegation set forth in an
amendment to its complaint that during the time appellant was
Acumed’s exclusive sales representative, Morris secretly formed
Allied to buy products directly from Acumed and resell them to
their users. Rather, we conclude that the allegation cannot save
appellees’ verdict on the tortious interference with contractual
relationships claim because the jury did not find that appellant’s
conduct through Allied constituted fraudulent misrepresentation.
Finally, appellees’ Lanham Act charge against appellant cannot
save their tortious inference claim because the jury did not find
that appellant violated federal trademark laws through its sales
of Acumed products. In short, appellees do not direct our
attention to any claim that appellant engaged in legally
actionable conduct which the jury did not reject at the trial. It
therefore follows that appellees did not establish that appellant’s
actions in interfering with their contracts were not justified.

In reaching our conclusion that appellant is entitled to a
judgment as a matter of law on the tortious interference claim
because the jury found that appellant’s conduct was not
independently actionable, we have considered Mosley v.
Wilson, 102 F.3d 85 (3d Cir. 1996), and Boyanowski v. Capital

32
Area Intermediate Unit, 215 F.3d 396 (3d Cir. 2000). In
Mosley, we held that the district court erroneously granted
judgment as a matter of law to resolve a jury’s legally
inconsistent verdicts. The plaintiff in Mosley sued the
defendant, a police officer, under 42 U.S.C. § 1983 alleging that
the defendant arrested him without probable cause. The plaintiff
also brought, inter alia, a supplemental state law tort action for
malicious prosecution. Mosley, 102 F.3d at 88. The jury
returned a verdict in favor of the plaintiff on the state law claim
of malicious prosecution but found for the defendant on the
section 1983 arrest without probable cause count. Id. The
defendant then moved for judgment as a matter of law pursuant
to Fed. R. Civ. P. 50, arguing that the verdict on the malicious
prosecution charge was inconsistent with the verdict in his favor
on the civil rights claim. The district court granted the motion,
reasoning that “because the jury must have found probable cause
existed to find for [the defendant] on the unlawful arrest claim,
and because probable cause for arrest is a necessary element in
the malicious prosecution claim, the verdicts were legally
inconsistent.” Mosley, 102 F.3d at 88-89 (internal quotation
marks omitted).

On the plaintiff’s appeal, we found that the district court
erred as a matter of law in reversing the jury’s verdict on the
malicious prosecution claim merely because the verdict was
inconsistent with the jury’s verdict on the civil rights claim. Id.
at 91. First, we noted that the Federal Rules of Civil Procedure
suggested the inappropriateness of entering judgment as a matter
of law solely on the basis of inconsistent verdicts. Id. at 90.
Specifically, we pointed out that a Rule 50 post-trial motion
must be made on grounds that the movant raised previously in

33
a motion for a directed verdict before the submission of the case
to the jury, an obvious impossibility when the claim is that a
verdict is inconsistent. Id.

Next, looking to Justice Stevens’ dissent in City of Los
Angeles v. Heller, 475 U.S. 796, 106 S.Ct. 1571 (1986) (per
curiam),12 we outlined four approaches that a district court may
take when facing an inconsistent verdict: a court may (1) allow
an apparently inconsistent verdict to stand;13 (2) read the verdict

12
In Heller, the plaintiff sued two police officers and the City
of Los Angeles and its police department alleging unlawful
arrest and excessive force under 42 U.S.C. § 1983. The district
court granted summary judgment in favor of one of the officers
and held a bifurcated trial allowing the plaintiff to present his
claims against the remaining officer. After the jury found in
favor of the police officer, the court dismissed all charges
against the City of Los Angeles and its police department.
Heller, 475 U.S. at 798, 106 S.Ct. at 1572. The Supreme Court
agreed with the district court, reasoning that the city and the
police department could not be held liable if the jury exonerated
the individual police officers: “if the [police officer] inflicted no
constitutional injury on the respondent, it is inconceivable that
petitioners could be held liable.” Heller, 475 U.S. at 799, 106
S.Ct. at 1573.
13
“Those circumstances are where the verdict appears to be
the result of compromise as opposed to jury confusion.”
Montgomery County v. Microvote Corp., 320 F.3d 440, 451 n.5
(3d Cir. 2003) (citing Heller, 475 U.S. at 805 n.12, 806 n.13,
106 S.Ct. at 1576 n.12, n.13) (Stevens, J., dissenting)).

34
in a manner that will resolve the inconsistencies; (3) resubmit
the question to the jury; and finally, (4) “if verdicts are
genuinely inconsistent and if the evidence might support either
of the ‘inconsistent’ verdicts, the appropriate remedy is
ordinarily . . . not simply to accept one verdict and dismiss the
other, but to order an entirely new trial.” Mosley, 102 F.3d at
90-91 (quoting Heller, 475 U.S. at 806, 106 S.Ct. at 1577).14
We pointed out “none of the approaches referred to by Justice
Stevens supports the action of the district court in [Mosley], i.e.,
directing a judgment notwithstanding the jury’s verdict on one
claim on the sole ground that it was inconsistent with the jury’s
verdict on another claim.” Id. at 91.

Notwithstanding Mosley, four years later we held that a
judgment as a matter of law was the proper remedy where a jury
reached an internally incompatible verdict in a civil conspiracy
case, though we did not cite Rule 50(b). Boyanowski, 215 F.3d
at 407. Boyanowski involved two separate jury verdicts in favor
of a husband and wife in their respective suits against a local
government and its officials. Dorothy Boyanowski alleged that
the defendant, CAIU, conspired to tortiously interfere with her
contractual rights. Id. at 398. The jury found in her favor on her
civil conspiracy complaint while rejecting her claim for tortious
interference. The district court entered judgment for Dorothy
Boyanowski on the conspiracy claim and for the CAIU on the
tortious interference claim. On appeal, we reversed and

14
Justice Stevens noted that the Court’s rule in criminal cases,
which allows inconsistent verdicts to stand, is less clear than the
rule in civil cases. Heller, 475 U.S. at 804-05, 106 S.Ct. at
1576.

35
ordered the district court to enter judgment in favor of the
defendants on all counts. Id. at 407. As germane to Dorothy
Boyanowski’s claim, under Pennsylvania law a claim for civil
conspiracy cannot be pled without also alleging an underlying
tort. See, e.g., Pelagatti v. Cohen, 536 A.2d 1337, 1342 (Pa.
Super. Ct. 1987). We predicted that the Pennsylvania Supreme
Court would extend that rule to overturn a jury verdict for civil
conspiracy if the jury did not find liability on the underlying
tort. Boyanowski, 215 F.3d at 407. In reaching our conclusion,
we cited to a Pennsylvania Superior Court decision in a
conspiracy to commit fraud action in which the court found that
the “failure of the underlying fraud claim sufficed as a matter of
law to vitiate the finding of civil conspiracy notwithstanding the
fact that it had been successfully pled as an independent cause
of action.” Id. (emphasis in original). While acknowledging
Mosley, and citing to the practice of other jurisdictions, we
found that “[a] verdict on civil conspiracy should yield to a
finding for the defendant on the underlying tort because the
cause of action is wholly subordinate to the underlying tort’s
existence.” Id. at 407.

Clearly, Boyanowski is more analogous than Mosley to
the present case. Appellant in this case was entitled to a
judgment as a matter of law not solely, if at all, because the
verdict was internally inconsistent, as in Mosley, but rather
because the verdict for tortious interference against the appellant
cannot stand without appellees showing that appellant had
committed a particular underlying tort, precisely what we held
that Boyanowski required. That is, it is not that some element
of the jury’s fraud finding is legally irreconcilable with an
element of the tortious interference with contractual

36
relationships verdict, but rather that the jury rejected any
underlying tort claims that could have served as the basis for a
subordinate tortious interference claim verdict. Thus, the
verdict in this case is better characterized as reflecting
conclusions that are internally incompatible rather than
conclusions that are inconsistent.

Moreover, it is important to recognize that in one respect
this case presents even more compelling circumstances for
granting appellant a judgment as a matter of law than the
circumstances did in Boyanowski, because in Boyanowski we
did not suggest, as we will here, that strange as it may seem, an
improper jury instruction could have cured any inconsistency
problem. Here, the Court did not instruct the jury, as it should
have done, that if the parties are competitors, it must find that
appellant engaged in independently actionable conduct for it to
find in favor of appellees on the tortious interference claim.
Thus, the Court’s charge allowed the jury to return a verdict for
appellees on the tortious interference claim without making a
finding that appellant engaged in independently actionable
conduct, a conclusion that the jury rejected.15 Therefore,

15
The error in the charge does not require a remand, because
it would be pointless; inasmuch as the jury already has
determined that there was not an independently actionable tort
and appellees do not challenge that verdict, that verdict must
stand. We certainly are not going to remand the case for a new
trial to give the appellees a chance to prove in the context of and
as an element of a tortious interference claim that appellant
engaged in independently actionable tortious conduct after
appellees were unable to prove that claim on a free standing

37
regardless of the Pennsylvania rule on justification in tortious
interference claim cases, under the law as the District Court
explained it to the jury, there was no inconsistency in the jury’s
verdict.16

We have not overlooked appellees’ attempt to support the
verdict on the tortious interference claim by relying on the jury’s
rejection of appellant’s counterclaim for breach of contract. In
this regard, appellees contend that the verdict establishes that
appellant did not lawfully possess Acumed’s inventory. We
recognize that it certainly is true that if the jury had accepted as
accurate appellant’s version of the contract between Acumed
and Advanced, then appellant would have had a valid reason to
retain the Acumed inventory. However, the jury’s verdict
against appellant on its breach of contract counterclaim does not
prove the contrapositive: that appellant did not legitimately
possess Acumed inventory after the termination of the
Advanced-Acumed Agreement. Indeed, as noted above, the jury
specifically rejected appellees’ conversion claim based on
appellant’s failure to return its Acumed inventory. Thus, though

basis.
16
We find it ironic that, with the benefit of hindsight, we can
see how appellees might have pleaded themselves out of the
tortious interference claim verdict. They may have done so
because while appellees were required to establish that appellant
was not privileged or justified in making its sales by showing
that appellant employed wrongful means in doing so through
actionable conduct, we do not see why appellees had to plead a
separate cause of action requiring its own verdict to establish
that aspect of the tortious interference claim count.

38
they make the conclusory assertion that appellants acquired their
Acumed products through “illegitimate means,” appellees’ br.
at 18, appellees do not demonstrate that appellant engaged in
independently actionable conduct in its acquisition or retention
of Acumed products. Accordingly, appellees’ reliance on the
jury’s rejection of appellant’s breach of contract counterclaim as
a basis to uphold their tortious interference claim verdict is
unavailing.17

Appellees assert that even if appellant acquired the
products legitimately, appellant was aware of the customs and
practices of the surgical supplies industry, which include an
expectation that hospitals and surgeons will purchase surgical
products and tools from authorized dealers. Consequently,
appellees contend that appellant should not have made the 25
Acumed sales from its inventory after it no longer was an
Acumed authorized representative. While appellant may not
have honored the “customs and practices” of the industry, that
conduct, in and of itself, does not violate any principle of

17
Though our determination that appellant’s actions were
within the bounds of competitive privilege eliminates the need
to examine any damages element of that claim, we note that
appellant’s legitimate acquisition of the Acumed goods it sold
after 2001 further undermines the claim that appellant interfered
with Acumed’s prospective sales. Under Pennsylvania law,
proof of “actual legal damages” is necessary to establish tortious
interference with prospective contractual relationships.
Brokerage Concepts, 140 F.3d at 530. If appellant purchased its
Acumed goods in a fair and lawful fashion, Acumed cannot
establish that it suffered such damages on account of lost profits.

39
statutory or common law of which we are aware that imposes
liability on it for its actions.

Likewise, appellees’ argument that appellant knew it
would be displacing Surgical in making potential sales is not
independently actionable. To the contrary, the Restatement
encourages a stranger to a relationship to engage in such
conduct:

One’s privilege to engage in business and to
compete with others implies a privilege to induce
third persons to do their business with him rather
than with his competitors. In order not to hamper
competition unduly, the rule stated in this Section
entitles one not only to seek to divert business
from his competitors generally but also from a
particular competitor.

Restatement (Second) of Torts § 768 cmt. b (1979).

In the absence of some evidence that appellant engaged
in independently actionable conduct, it is shielded from liability
by the competition privilege, and thus the verdict on the tortious
interference claim against it cannot stand. Therefore, viewing
the evidence in the light most favorable to appellees, and even
acknowledging that the evidence could support the verdict, we
find that the District Court erred in not granting appellant’s
motion for judgment as a matter of law on appellees’ tortious
interference with existing or prospective contractual
relationships claim. Our disposition of this claim requires that
we reverse the judgment for both the compensatory and punitive

40
damages predicated on it as well.18

18
We realize that even though appellant filed its motion for a
judgment as a matter of law under Fed. R. Civ. P. 50(b), it did
not move for a judgment as a matter of law or a directed verdict
in its favor on the tortious interference with contractual
relationships claim against it on the basis on which we are
reversing prior to the end of the trial and the discharge of the
jury. It therefore might be thought that under our jurisprudence
we “cannot reverse the district court’s decision denying
[appellant’s] Rule 50(b) motion.” Simmons v. City of
Philadelphia, 947 F.2d 1042, 1077 (3d Cir. 1991). See also
Abraham v. Pekarski, 728 F.2d 167 172 (3d Cir. 1984) (“[A]
Rule 50(b) motion for judgment notwithstanding the verdict may
not be made on grounds that were not asserted in a motion for
directed verdict.”). Moreover, in Mosley we commented that

the inappropriateness of entering judgment as a
matter of law solely on the basis of inconsistent
verdicts is evident [because a] motion for
judgment as a matter of law rendered after trial
must be made on grounds that were previously
asserted in a motion for directed verdict prior to
submission of the case to the jury [and o]bviously
the inconsistency of the verdicts could not have
been raised in a motion for directed verdict prior
to jury deliberations.

102 F.3d at 90 (internal citations omitted).

Nevertheless there are several reasons why the foregoing

41
jurisprudence does not preclude us from reversing the judgment
predicated on the jury verdict against appellant on the tortious
interference claim. First, appellees do not make the possible
procedural argument we mention now. Second, as we explained
in Greenleaf v. Garlock, Inc., 174 F.3d 352, 364 (3d Cir. 1999),
the Rule 50(b) requirement for an underlying motion for a
judgment as a matter of law or a directed verdict is applicable
when the post-trial Rule 50(b) movant asserts “that there is
insufficient evidence to support the verdict.” Here, there was
ample evidence to support the tortious interference claim
verdict. Appellees’ problem is that the jury rejected the
evidence, so that while appellees obtained a partially favorable
verdict, it was as a matter of law internally incompatible. Third,
in Boyanowski, though not citing Rule 50(b), we effectively
granted a Rule 50(b) judgment when we held that the failure of
the underlying tort claim “sufficed as a matter of law to vitiate
the finding of civil conspiracy . . . .” Boyanowski, 215 F.3d at
406. Accordingly, we reversed the judgment and set aside the
verdict on the basis of the internal incompatibility of the verdict
even though the appellants did not and could not raise the
incompatibility point prior to the verdict. Fourth, the law must
afford appellant some means to challenge the verdict after its
return when an earlier challenge would have been impossible.
Cf. Surrick v. Killon, 449 F.3d 520, 531 (3d Cir. 2006) (federal
courts have “inherent authority” to manage and conduct cases
before them). Thus, regardless of how we characterize
appellant’s Rule 50(b) motion, substantively we must consider
it, for we will not hold that a party aggrieved by an outcome of
a trial cannot challenge an order where the rules of court at no
time provided a procedure for the challenge. The situation here

42
 Finally, on this competition point we observe that our
opinion does not preclude Acumed from protecting the market
for its products. Quite the contrary is true, for Acumed was free
to notify Pennsylvania and New Jersey hospitals and surgeons
that Surgical was its exclusive representative and urge potential
customers not to buy any Acumed products from unauthorized
dealers. In fact, it took that step when it sent letter notifications
to its customers advising them to deal with its authorized
representative.19

In a manner in harmony with the verdict, the District
Court in its May 21, 2007 order, at appellees’ request enjoined
appellant from selling its remaining inventory of Acumed
products. Of course, for a court to grant an injunction, it is
“essential that the activity sought to be restrained is actionable.”
Maritrans GP Inc. v. Pepper, Hamilton & Scheetz, 602 A.2d

is completely different than one in which a litigant lost its right
to raise an issue by not doing so at the appropriate time or does
not have the right to raise an issue because an attempt to do so
would be premature.
19
Appellant raises contentions about the form of the verdict on
the tortious interference claim, challenges the District Court’s
action in instructing the jury to deliberate further on the tortious
interference claim after it returned its initial verdict, and raises
various theories for seeking a reversal of the judgment for
punitive damages. We, however, do not address these
contentions, as they are moot.

43
1277, 1283 (Pa. 1992) (quotations and citation omitted). In
view of our result, it necessarily follows that because appellant’s
sale of Acumed products was not actionable, the injunction
against it cannot stand. Accordingly, we will reverse the
District Court’s order granting the injunction prohibiting
appellant from selling Acumed products.20

B. The Best Evidence Rule

Appellant challenges several of the District Court’s
evidentiary rulings.21 First, appellant argues that the District

20
In our disposition of appellees’ claim of tortious interference
with their existing or prospective contractual relationships, we
have referred to Advanced and Morris singularly as appellant
even though appellant in its brief contends that the District
Court erred in joining them on the verdict slip on this tort and
that the Court should not have joined them with respect to
punitive damages, “since punitive damages should be assessed
against each defendant individually.” Appellant’s br. at 41.
Though appellant probably is correct in this contention, see
supra note 9, so that it might follow from the foregoing
argument that we should not have joined Advanced and Morris
as a single appellant on the appeal with respect to the tortious
interference claim, obviously we have not prejudiced either
Advanced or Morris by our joinder of them, as both have been
completely successful on this appeal with respect to the tortious
interference claim and punitive damages.
21
These contentions are not rendered moot by reason of our
reversal of the judgment against appellant because we are
affirming the negative disposition on appellant’s counterclaims

44
Court erred in excluding certain evidence on the basis of Fed. R.
Evid. 1001-1002, the best evidence rule. Rule 1002 requires
that “[t]o prove the content of a writing, recording, or
photograph, the original writing, recording, or photograph is
required, except as otherwise provided in these rules or by Act
of Congress.” The District Court applied Rule 1002 to bar
Morris’s testimony regarding “buy-out” clauses in contracts
appellant had with other medical devices manufacturers and
suppliers because Morris did not produce the contracts at trial.
Morris sought to testify to the contents of the contracts to prove
that he requested and secured a buy-out clause from Acumed, a
contention which appellees disputed. Obviously, this point is
important to appellant because one aspect of its counterclaim
was that Acumed failed to pay appellant a sum due to it as a
buy-out payment.

Appellant argues that because the contracts with other
suppliers were not at issue in this litigation, the District Court
erred in barring Morris’s testimony under Rule 1002. Though
appellant certainly did not seek to recover on contracts it had
with manufacturers other than Acumed, we nevertheless
disagree with appellant’s contention that the contracts with those
manufacturers were not at issue in this litigation. It has been
explained that:

[E]ven where the substantive law does not make
the contents of a writing, recording, or photograph
a primary issue, evidence of those contents may
still be relevant. This is true where pertinent

and the evidence excluded could have affected that outcome.

45
 events occurred independent of a writing,
recording, or photograph but are nonetheless
evidenced by the contents of such an item. Rule
1002 applies if evidence of those contents is
offered.

31 Charles Alan Wright & Victor James Gold, Federal Practice
and Procedure § 7184, at 388 (2008).

The best evidence rule clearly applied to Morris’s
testimony regarding buy-out clauses contained in appellant’s
contracts with other manufacturers and suppliers, as the clauses
would have been relevant in this litigation only if they tended to
support Morris’s testimony that appellant insisted on a buy-out
clause in all of its representation contracts and thus did so in its
contract with Acumed. Therefore, inasmuch as the best
evidence rule applied, the District Court did not abuse its
discretion in barring Morris’s testimony regarding the contents
of contracts not submitted into evidence or even produced for
review at the trial.22

Similarly, appellant’s argument that the District Court
erroneously allowed appellees to introduce speculative

22
In fact, we question whether evidence of appellant’s buy-out
clauses in other contracts could be relevant evidence of the
contents of the Advanced-Acumed Agreement, but in view of
the jury verdict and rejection of the buy-out clause evidence on
the basis of the best evidence rule, we will assume without
deciding that the evidence if satisfying the best evidence rule
would have been admissible.

46
testimony regarding appellant’s contracts is meritless.
Appellant asserts that the testimony of several witnesses was
“ill-founded,” based on “hunches,” and “hearsay.” Appellant’s
br. at 57. Appellant, however, does not point to any part of the
record where a witness for appellees improperly testified to the
contents of appellant’s contracts with its manufacturers and
suppliers. After a review of the very extensive record, we find
that the testimony of witnesses to which appellant objects was
both competent and relevant. Therefore, the District Court did
not abuse its discretion in allowing the testimony of appellees’
witnesses with respect to these contracts.

C. Summary Judgment Procedure

Appellant challenges the District Court’s March 6, 2007
summary judgment order dismissing the institution of
groundless litigation, defamation, and unlawful restraint of trade
portions of counterclaim IV. It argues that the District Court did
not follow the procedural requirements required for the granting
of summary judgment inasmuch as it directed the parties to
submit letter briefs in lieu of formal summary judgment
motions, which it did not permit. In appellant’s view, the letter
briefs, even when combined with subsequent oral argument, did
not provide it with a full and fair opportunity to support its
claims before the District Court granted summary judgment
rejecting its claims.

Appellant asserts that the District Court, during a
telephone conference on February 6, 2007, requested that the
parties file letter briefs on any issue they wished to raise in
dispositive motions. According to appellant, the District Court

47
stated in the telephone conference that “if a party wanted to file
a dispositive motion, it could file a five page letter brief . . .
outlining what the motion would cover.”23 Appellant’s br. at 59.
The parties served their briefs on February 22, 2007, and the
Court held oral arguments on the briefs the next day. Appellant
contends that because the Court held the oral arguments on the
day after parties served their letter briefs, it did not have an
opportunity to respond to appellees’ arguments. Moreover,
appellant, believing that the letter briefs were only “pre-
motions,” a term that the Court itself used and seemingly
created, asserts that it was taken by surprise when the Court
granted summary judgment for appellees dismissing portions of
counterclaim IV.

In reviewing appellant’s summary judgment procedure
contentions, we start with the principle that “[i]t has long been
established that, under the right circumstances, district courts are
entitled to enter summary judgment sua sponte.” Gibson v.
Mayor & Council of Wilmington, 355 F.3d 215, 222 (3d Cir.
2004). A court, however, must provide the parties with notice
of its intention to consider granting summary judgment so that
they have an opportunity to marshal evidence on the motion for
submission to the court. See Bradley v. Pittsburgh Bd. of Educ.,
913 F.2d 1064, 1069-70 (3d Cir. 1990). Our review of the
parties’ letter briefs leads us to conclude that the parties treated

23
The transcript, if there is one, of the telephone conference is
not included in the record on appeal. The Court, however, on
February 6, 2007, signed an order memoralizing certain of the
determinations it made during the telephone conference call,
though the order did not mention filing briefs.

48
the “pre-motions” as an opportunity to marshal evidence and
make arguments with respect to granting or denying summary
judgment. In fact, contrary to what appellant argues now, while
the case was pending in the District Court it surely had that
view, for it used the last paragraph of its February 22, 2007
letter brief to request summary judgment in its favor on its
counterclaim for conversion. We have held that a party has
sufficient notice before a summary judgment is entered against
it if it had reason to believe that the court might reach the matter
at issue on the pending summary judgment application and the
party had an opportunity to support its position fully. See
Gibson, 355 F.3d at 223-24. Inasmuch as appellant requested
partial summary judgment in its letter brief, arguably it should
have recognized that appellees in their letter brief could request
summary judgment dismissing the counterclaims.

It is entirely appropriate for courts to recognize a
procedure allowing them to grant summary judgment on their
own initiative, for courts’ resources are limited and they should
not be required to use those resources to conduct an unnecessary
trial merely because a party entitled to a summary judgment in
whole or in part does not seek that outcome to litigation. Yet we
have been clear that “the sua sponte grant of summary judgment,
without giving notice to the parties, is not the preferred method
by which to dispose of claims.” Gibson, 355 F.3d at 224.
Moreover, as we emphasized in Bradley, it is important that
before a court grants summary judgment on its own initiative it
give notice to the parties that it is considering doing so and that
it give the parties the opportunity to marshal evidence and make
arguments on whether the court should grant summary
judgment. We think that in this case it is doubtful that the

49
District Court gave the parties adequate opportunity to present
evidence or make arguments with respect to granting summary
judgment, though, as we now will explain, it is clear that even
if the Court made an error in the summary judgment procedure,
the error was harmless.

In making a harmless error analysis we point out that
appellant filed its brief on this appeal using materials bearing on
the issues raised on this appeal that were not part of the record,
but has sought to expand the record to include these materials.
Nevertheless, as we further explain below, even if we
considered for use on the merits the materials appellant seeks to
add to the record, we would affirm the District Court’s order to
the extent that it granted summary judgment against appellant on
portions of its counterclaim. Appellant’s brief makes clear that
it predicates its objection to the grant of summary judgment on
“Advanced [being] denied a full and fair opportunity to defend
its claims, in violation of its rights to due process.” Appellant’s
br. at 61 (emphasis in original). It thus follows that if upon
exercising plenary review, as we are on appellant’s appeal from
the granting of summary judgment against it, we would affirm
the District Court’s order to the extent that it granted summary
judgment against appellant on its counterclaim even considering
all of the materials with which appellant seeks to supplement the
record and has placed in the appendix, then the procedure in the
District Court could not have been prejudicial to appellant.

Furthermore, there is an even more fundamental reason
why the error, if there was one in the summary judgment
procedure, was harmless, namely that for the reasons we set
forth with respect to summary judgment, appellant’s

50
counterclaim to the extent that the Court granted summary
judgment dismissing it, did not state a claim upon which relief
could be granted and thus was subject to dismissal under Fed. R.
Civ. P. 12(b)(6). In this regard we point out that in appellees’
reply to appellant’s answer and counterclaim they asserted a
Rule 12(b)(6) defense and this defense remained open during the
disposition of the case in the District Court. The unmistakeable
conclusion that must be drawn from the facts as appellant
alleges them in its counterclaim and the applicable law is that
appellant could not recover on the counterclaim to the extent
that the Court granted summary judgment against it. Thus, the
Court’s possible procedural error in granting summary judgment
was harmless. See Bradley, 913 F.2d at 1069-70.

D. The Merits of Counterclaim IV

Appellant asserts that the District Court erred in granting
summary judgment and dismissing counterclaim IV to the extent
that it did. We reject this contention as we agree with appellees
that counterclaim IV is a “mish-mash of multiple claims,”
appellees’ br. at 57, some of which appellant did not present
properly to the District Court and none of which is meritorious.

Appellant makes the following arguments under the
rubric of counterclaim IV: (1) appellees instituted the Lanham
Act claim in order to “manufacture federal jurisdiction” as well
as to tortiously interfere with appellant’s contracts with other
medical suppliers; (2) during the litigation, appellees used
depositions to impugn appellant’s reputation and to injure
appellant’s relations with other medical products suppliers,

51
actions constituting abuse of process, defamation, tortious
interference with contract, and unfair competition; (3) the
District Court erred in denying appellant’s request to enter
certain witnesses’ statements into evidence, thus crippling
appellant’s tortious interference with contract claim; and (4)
appellees’ conduct during the Nazareth Hospital incident led to
Morris’s banishment from the Jefferson Hospital surgery
operating theater and Acumed’s action in sending the letters to
customers with respect to its representative constituted tortious
interference with appellant’s contractual relationships and unfair
competition. The District Court dismissed all of these claims,
either on summary judgment or by granting judgment as a
matter of law at the conclusion of the trial.

As we indicated above, in considering appellant’s
arguments on this appeal, we have taken into account
appellant’s motion to supplement the record with various
documents not in the District Court record but in the appendix
and, even though we have not granted that motion, we
nevertheless have considered that evidence.24 We have taken

24
Appellant’s motion to supplement the appendix explains that
it wants to add “additional documents relevant and material to
the issues on appeal” from various orders, including the “order
granting partial summary judgment.” It attempted to justify the
motion with the contention that the “additional documents were
not already part of the record because they were not necessary
on the trial level but rather are relevant and material to issues
raised on appeal.” We reject that flawed approach, as an
appellant should raise its issues in the district court in the first
instance.

52
that step notwithstanding our practice of generally not reviewing
evidence or issues that a party did not present to the District
Court. See Appalachian States Low-Level Radioactive Waste
Comm’n v. Pena, 126 F.3d 193, 196 (3d Cir. 1997); see also
Arnold M. Diamond, Inc. v. Gulf Coast Trailing Co., 180 F.3d
518, 524 n.6 (3d Cir. 1999) (holding that the appellant waived
an equitable subrogation argument on appeal because,
“[a]lthough [appellant] claims that it made this argument in its
brief opposing Gulf Coast’s motion for summary judgment . .
.[,] our review of that brief convinces us that this argument was
not fairly raised”); United States v. Genser, 582 F.2d 292, 311
(3d Cir. 1978) (evidence not presented to district court may not
be considered by court of appeals). Thus, even though we
recognize that as a practical matter our disposition of the motion
to expand the record cannot matter, we will consider that motion
as well as an earlier motion appellees filed to strike all material
outside of the District Court record.

1. The record on appeal

The first indication to us that there was a problem with
the record on the appeal came when, after appellant filed its
brief and appendix, appellees filed a motion requesting that we
strike all material outside of the District Court record from the
appendix. Only then, in response, did appellant file a motion to
include in the record on appeal additional documents that it
considered to be relevant and material to the issues on appeal
that were not part of the District Court record. We grant
appellees’ motion and deny appellant’s motion.

Fed. R. App. P. 30(a)(1) provides that the contents of the

53
appendix include: (1) the relevant docket entries in the district
court proceeding; (2) the relevant portions of the pleadings,
charge, findings, or opinion; (3) the judgment, order, or decision
in question; and (4) other parts of the record to which the parties
wish to direct the court’s attention. The record, in turn, consists
of: (1) the original papers and exhibits filed in the district court;
(2) the transcript of proceedings; and (3) a certified copy of the
docket entries prepared by the district clerk. Fed. R. App. P.
10(a).

It is established that although “[t]he only proper function
of a court of appeals is to review the decision below on the basis
of the record that was before the district court,” Fassett v. Delta
Kappa Epsilon, 807 F.2d 1150, 1165 (3d Cir. 1986), in
exceptional circumstances a court of appeals may allow a party
to supplement the record on appeal. We listed what these
circumstances might be in In re Capital Cities/ABC Inc.’s
Application for Access to Sealed Transcripts, 913 F.2d 89, 97
(3d Cir. 1990) (citing Ross v. Kemp, 785 F.2d 1467, 1475 (11th
Cir. 1986)), as follows:

(1) whether the proffered addition would establish
beyond any doubt the proper resolution of the
pending issue; (2) whether remanding the case to
the district court for consideration of the
additional material would be contrary to the
interests of justice and the efficient use of judicial
resources; and (3) whether the appeal arose in the

54
 context of a habeas corpus action.[25]

None of the circumstances we listed in Capital Cities is
present in this case. Here, the documents that appellant wishes
to submit for our consideration do not establish beyond doubt,
or indeed even under the less demanding showing that a party
must make in opposing summary judgment, that the District
Court’s rulings on its summary judgment disposition were
incorrect. Thus, taking into account the record as appellant
wishes it to be, we would affirm the order for summary
judgment.26 Therefore, in considering the appeal from the

25
Of course, sometimes a case becomes moot on appeal by
reason of circumstances arising after the completion of a case in
a district court. Such circumstances can and should be brought
to the attention of the court of appeals.
26
In this regard, we point out that our review on an appeal
from the granting of a summary judgment is plenary and that a
court should not grant a summary judgment if there is a genuine
issue as to a material fact. It therefore follows that, if the
materials with which an appellant against whom a district court
has granted summary judgment seeks to expand the record on
appeal would have precluded the court from granting the
summary judgment had they been presented to it, the appellant
necessarily has satisfied the beyond doubt standard for
expanding the record on appeal. Nevertheless, we do not intend
by this opinion to set a precedent that a litigant can withhold
materials from a district court or not obtain all materials that it
could obtain on a summary judgment motion and then submit
them on appeal. Quite to the contrary, a party should present

55
summary judgment on the merits, we deny appellant’s motion
to expand the record and grant appellees’ motion to strike
material outside the record. Accordingly, though perhaps our
limitation of the record may be regarded as a legal fiction
inasmuch as we have considered the record as though it has been
expanded, we only will consider materials that were part of the
record before the District Court.27

everything it needs for a complete presentation on the motion
and, if necessary, seek additional time under Fed. R. Civ. P.
56(f) to marshal its evidence. We, however, are considering the
materials on the appeal beyond the record in part because the
procedure in the District Court in this case though, as we have
explained, ultimately permitting appellant to present all of its
material nevertheless was irregular.
27
We believe that the parties should be able to agree on the
documents to be stricken, as there seems to be little dispute as
to what the record was before the District Court. But it does not
matter if they cannot do so, for, as we have indicated, even
considering the totality of appellant’s submissions with respect
to the summary judgment, we would uphold it. Thus, the
inclusion of the documents that appellant seeks to add would not
change our result. We do note that to the extent that it appears
that the parties presented the deposition of Dr. Robert Frederick
to the District Court during the summary judgment proceedings,
that deposition properly is included in the appendix. In any
event, regardless of what happened in the District Court, we
think that it is particularly appropriate that we consider Dr.
Frederick’s deposition because notwithstanding appellees’
contention that his deposition, along with numerous other items,

56
2. Instituting Groundless Litigation, Defamation and Unfair
Competition28

Under Pennsylvania law, a plaintiff bringing a
defamation action must prove: (1) the defamatory character of
the communication; (2) its publication by the defendant; (3) its
application to the plaintiff; (4) the understanding by the recipient
of its defamatory meaning; (5) the understanding by the
recipient of it as intended to be applied to the plaintiff; (6)
special harm resulting to the plaintiff from its publication; and
(7) abuse of a conditionally privileged occasion. 42 Pa. Cons.
Stat. Ann. § 8343 (West 1998).

Appellant relies on Restatement (Third) of Unfair
Competition § 1 to support its unfair competition allegation but
does not cite any state-court appellate decision that has adopted
section 1 in Pennsylvania. Nevertheless, inasmuch as we reject
appellant’s section 1 contentions, we will assume without
deciding that Pennsylvania courts would follow that section.29

was not “part of the district court record” and was “improperly
included in the Appellants’ Appendix,” in appellees’ brief they
cite and rely on that deposition. We do not think that the
appellees can have Dr. Frederick’s deposition treated in opposite
ways.
28
In its March 6, 2007 summary judgment order, the District
Court referred to “unfair competition” as “unlawful restraint of
trade.”
29
Several district courts and Pennsylvania state trial courts
have recognized a cause of action for unfair competition under

57
Section 1 states, in relevant part, that:

One who causes harm to the commercial relations
of another by engaging in a business or trade is
not subject to liability to the other for such harm
unless:

(a) the harm results from . . . acts or practices of
the actor determined to be actionable as an unfair
method of competition, taking into account the
nature of the conduct and its likely effect on both
the person seeking relief and the public; or

(b) the acts or practices of the actor are actionable
by the other under federal or state statutes . . . or
general principles of common law apart from
those considered in this Restatement.

Appellant maintains that in the incident in December
2004 that we already have described, a Surgical sales
representative “loudly accused” Advanced’s sales representative
of illegally selling Acumed products at Nazareth Hospital.
According to appellant, the Nazareth Hospital incident led Dr.
Robert Frederick, a Nazareth doctor, to stop doing business with
appellant and also resulted in Morris’s exclusion from the

certain circumstances. See ID Sec. Sys. Canada, Inc. v.
Checkpoint Sys., Inc., 249 F. Supp. 2d 622, 687 (E.D. Pa. 2003)
(listing cases).

58
operating theater at Jefferson Hospital. Dr. Frederick, however,
at a deposition on January 31, 2007, denied overhearing the
argument between the two sales representatives and had no
recollection of refusing to do business with appellant.
Moreover, appellant did not present evidence that a Surgical
sales representative made defamatory statements about
appellant’s Acumed inventory and does not point to evidence
connecting Morris’s exclusion from the Jefferson Hospital
operating theater to the Nazareth Hospital incident. Therefore,
the District Court properly dismissed this claim on summary
judgment. See Lexington Ins. Co. v. W. Pa. Hosp., 423 F.3d
318, 332-33 (3d Cir. 2005) (speculation and conjecture may not
defeat a motion for summary judgment).

Further, the letters Acumed sent to appellant’s customers,
despite appellant’s view that they “disparage[d] the inventory
Advanced was selling,” appellant’s br. at 18, do not qualify as
defamation or unfair competition. The letters informed
Acumed’s customers—without mentioning appellant by
name—that Acumed only would insure and warrant products its
authorized dealers sold and further informed its customers that
Surgical was its authorized representative in eastern
Pennsylvania and southern New Jersey. Thus, inasmuch as the
letters did not specifically name appellant and were not
defamatory under Pennsylvania law, the District Court
appropriately granted appellees summary judgment on this
claim. Likewise, because Acumed’s conduct in sending the
letters was not actionable but rather was justified, the letters did
not constitute unfair competition.

Appellant argues that certain questions that appellees’

59
counsel asked witnesses during depositions constituted an abuse
of process. To the extent that appellant did not raise these
claims in the District Court, it waived them. Arnold M.
Diamond, 180 F.3d at 524 n.6. In any event, appellees in asking
the questions did not engage in conduct constituting an abuse of
process.30

Finally, appellant contends that Acumed pleaded a
Lanham Act claim in order to “manufacture federal
jurisdiction.”31 Appellees’ Lanham Act claim survived
appellant’s pretrial motion seeking an order dismissing the case
for want of federal jurisdiction, but the jury rejected the Lanham
Act claim at trial. We believe that in alleging that appellees
instituted groundless litigation, appellant was attempting to
bring a malicious prosecution claim under Pennsylvania law
and, in any event, we see no other way to treat the claim. In
Pennsylvania, a party engages in malicious prosecution when it
institutes a lawsuit with a malicious motive and without
probable cause. Werner v. Plater-Zyberk, 799 A.2d 776, 785

30
Our disposition of this issue makes it unnecessary to
examine the litigation privilege on the point.
31
We note, however, that appellant does not appear to have
pleaded properly in a counterclaim that appellees instituted
groundless litigation. Inasmuch as the District Court did not
issue an opinion on its summary judgment disposition, we are
not certain whether it dismissed this portion of the counterclaim
because appellant improperly pleaded it or because of its lack
of merit. We, however, are upholding the dismissal of the claim
on the merits.

60
(Pa. Super. Ct. 2002). Based on the Nazareth Hospital incident
and other reports that unauthorized sales representatives were
selling its products, Acumed had cause to believe, even though
the jury’s verdict did not support that belief, that appellant was
causing confusion in the marketplace with regard to appellant’s
relationship with Acumed. Therefore, the District Court did not
err in granting summary judgment on appellant’s claim that
appellees instituted groundless litigation against it.32

3. Tortious Interference with Contractual Relationships

We already have discussed Pennsylvania’s requirements
for a tortious interference with contractual relationships claim
when considering appellant’s appeal from the judgment in favor
of appellees on their similar claim, and thus we do not repeat
them here. We find that the District Court did not err in granting
appellees a judgment as a matter of law on this portion of
counterclaim IV, inasmuch as appellant did not present any
evidence of conduct that could have led a reasonable jury to
conclude that appellees interfered with appellant’s contracts.

Appellant based its tortious interference counterclaim on
the same incidents that it alleges constituted defamation: the
Nazareth Hospital incident and Acumed’s letters to its
customers. To the extent that appellant claims that Acumed’s

32
Appellees contend that appellant could not bring its
malicious prosecution counterclaim in the very action appellant
claimed was being maliciously prosecuted. See T.C.R. Realty,
Inc. v. Cox, 372 A.2d 721, 728 (Pa. 1977). We need not address
this point.

61
letters constituted tortious interference, these claims are
meritless as a matter of law. As we discussed above, the letters
do not even mention appellant, and Acumed certainly had a
right, if not an obligation, to notify the purchasers of its products
of its warranty policies. Further, there was no evidence at the
trial that Casey or anyone else representing appellees made false
statements or misrepresentations to third parties during the
Nazareth hospital incident. Finally, appellant challenges the
exclusion of the testimony of Jeanne Mikalauskas, one of its
sales representatives, arguing that her testimony would have
supported appellant’s version of the Nazareth incident. The
District Court, however, properly excluded Mikalauskas’
testimony, as she was not present during the incident and
attempted to testify to out-of-court statements of Dr. Frederick
precluded by the hearsay rule. See Fed. R. Evid. 802.

E. Attorneys’ Fees

After the jury’s verdict, appellant filed two motions for
attorneys’ fees. First, appellant sought to recover attorneys’ fees
from appellees based on the non-disclosure provision of the
RMW Agreement, as appellant believed that appellees
contended that the non-disclosure provision had been included
in the Advanced-Acumed Agreement. The RMW Agreement
non-disclosure provision recited that “[i]f any action at law or
inequity [sic] is brought to enforce or interpret the provisions of
this Agreement, the prevailing party in such action shall be
entitled to reasonable attorney’s fees.” App. at 3534. Appellant
reasons that because appellees unsuccessfully sued it for breach
of the non-disclosure agreement from the RMW Agreement
Acumed contended was incorporated in the Advanced-Acumed

62
Agreement, appellant is entitled to attorneys’ fees as the
prevailing party on that aspect of the case.33 The District Court
rejected this claim based on its conclusion that inasmuch as
throughout the trial appellant denied that the terms of the RMW
Agreement governed its relationship with Acumed, appellant
could not be entitled to attorneys’ fees because it was not a party
to the agreement. Appellant argues that the District Court
misunderstood its claim: it was not suing under the RMW
Agreement but rather was suing under an agreement between it
and Acumed that Acumed claimed at trial was identical to the
RMW Agreement.

It appears that even though Acumed predicated its breach
of contract claim on a non-disclosure agreement, it did not
introduce physical evidence of an agreement between the parties
to this case and did not allege in its pleadings that the RMW
Agreement and the Advanced-Acumed Agreement were
identical.34 The existence of an attorneys’ fees provision was
not at issue during the trial. Therefore, we cannot know from
Acumed’s allegations and evidence whether any non-disclosure
agreement it might have had with appellant contained an
attorneys’ fees provision. On the other hand, appellant

33
Appellees argued that appellant was prohibited from using
Acumed’s confidential information for its own benefit and thus
appellant breached the non-disclosure agreement by selling
Acumed products after their contractual relationship ended.
34
Kelly Packard, the Vice President of Sales and Marketing
for Acumed, however, testified that the agreement between
appellant and Acumed was “the same as what our RMW did.”
App. at 1384.

63
introduced evidence of an unsigned written contract that it
contended set out the terms of the contract between Advanced
and Acumed but did not contain a non-disclosure agreement. In
the end, the jury rejected both parties’ breach of contract claims.
We think that it is anomalous for appellant to move for the
enforcement of an attorneys’ fees provision which: (1) was
unquestionably not included in the version of the agreement that
it insisted governed its relationship with Acumed, and (2) may
or may not have been in Acumed’s version of the agreement.

Appellant predicated its second claim for attorneys’ fees
under the Lanham Act, which authorizes an award of attorneys’
fees to a prevailing party in “exceptional” cases. 15 U.S.C. §
1117(a). Exceptional cases involve culpable conduct on the part
of the losing party, “such as bad faith, fraud, malice, or knowing
infringement.” Securacomm Consulting, Inc. v. Securacom
Inc., 224 F.3d 273, 280 (3d Cir. 2000) (citation omitted). “In
cases in which the defendant is the prevailing party in a
trademark infringement case and seeks fees from the plaintiff,
the plaintiff’s culpable conduct will necessarily center on the act
of filing the lawsuit rather than on the infringement.” Id. We
think that notwithstanding the jury’s verdict, there was a
foundation for appellees’ argument that appellant was liable to
them under the Lanham Act, and we therefore decline to hold
that appellees acted in bad faith or with malice when they filed
the Lanham Act aspect of their action. Accordingly, the District
Court did not abuse its discretion in denying attorneys’ fees
under the Lanham Act.

F. Contempt Order

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 The District Court entered an order holding appellant in
contempt of court for violating the Court’s March 21, 2007
order requiring appellant by the following day to present
documents related to its net worth. When appellant failed to
produce all of the required documents, the Court ordered it to
pay appellees’ attorneys a fee of $1350, allowed appellees
access to appellant’s hard drive, and allowed appellees to cross-
examine Morris in front of the jury regarding the missing
documents.

Appellant argues that the District Court should not have
entered the contempt of court order because the Court
previously had denied appellant’s request for access to
appellees’ financial records, stating that it would deal with the
issue after the trial was over. Appellant also contends that the
District Court set an unreasonably short time for it to produce
the documents.

Appellant, however, was on notice when appellees served
subpoenas on Advanced and Morris on March 12, 2007, and
March 16, 2007, requiring them to produce financial records.
Moreover, as the District Court reasoned, the parties knew that
the net worth issue could be litigated and presented to the jury
at the end of the liability aspects of the trial because both sides
asked for punitive damages. In these circumstances, the District
Court did not abuse its discretion in finding appellant in
contempt of court for non-compliance with the March 21, 2007
order.35 See Armstrong v. Guccione, 470 F.3d 89, 101-02 (2d

35
Appellant’s argument that it made a good faith effort to
comply with the District Court’s order is not a defense to civil

65
Cir. 2006) (quoting Shillitani v. United States, 384 U.S. 364,
370, 86 S.Ct. 1531, 1535 (1966)) (“There can be no question
that courts have inherent power to enforce compliance with their
lawful order through civil contempt.”).

V. CONCLUSION

For the foregoing reasons, we conclude that the District
Court erred in denying appellant’s motion for judgment as a
matter of law on the tortious interference with contractual
relationships claim. We therefore will reverse the District
Court’s order of May 21, 2007, to the extent that it denied
appellant a judgment as a matter of law on the tortious
interference claim, and will remand the case to the District Court
for it to enter judgment as a matter of law in favor of appellant
on that claim and to set aside the prior judgment on the claim.
As a result, we also will reverse the jury’s award of
compensatory and punitive damages against appellant and the
District Court’s grant of an injunction in appellees’ favor. We
will affirm all of the District Court’s other orders from which
appellant has appealed, including the Court’s orders on
attorneys’ fees, summary judgment, judgment as a matter of law
on appellant’s counterclaims, and evidentiary issues, as well as
the order of March 22, 2007, holding appellant in contempt of
court. The parties will bear their own costs on this appeal.

contempt. See Robin Woods Inc. v. Woods, 28 F.3d 396, 399
(3d Cir. 1994).

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AMBRO, Circuit Judge, concurring

I join Judge Greenberg’s well-crafted and in-depth
opinion. I mention two more matters, not necessary to the
outcome of this case, that I nonetheless deem of concern.

The jury’s initial compensatory award to Acumed of $0
reflected the conclusion, mentioned in note 17 of Judge
Greenberg’s opinion, that Acumed cannot prove the “actual
legal damage” necessary to establish tortious interference with
contractual relationships. Brokerage Concepts, Inc. v. U.S.
Healthcare, Inc., 140 F.3d 494, 530 (3d Cir. 1998). By denying
Acumed compensatory damages, the jury indicated that Acumed
had not shown “the loss of the benefits of the contract or
prospective relation[,] or consequential, emotional or
reputational losses[,] resulting from the defendant’s conduct”
required to satisfy Pennsylvania’s description of tortious
interference with existing or prospective contractual relations.
Pawlowski v. Smorto, 588 A.2d 36, 40 (Pa. Super. Ct. 1991)
(applying and interpreting § 774A of the Restatement (Second)
of Torts); see also Birl v. Phila. Elec. Co., 167 A.2d 472, 474
(Pa. 1960). Accordingly, even if the District Court had been
correct in determining that Acumed had satisfied the other
elements of the tort, it should have granted appellant judgment
as a matter of law on the basis of Acumed’s failure to establish
actual damages. See Bruce Lincoln-Mercury, Inc. v. Universal
C.I.T. Credit Corp., 325 F.2d 2, 22 (3d Cir. 1963); 21 Stuart M.
Speiser, et al., The American Law of Torts § 31:94 (1992).

67
 In addition, assuming that Acumed had somehow proven
the necessary elements of tortious interference with contractual
relations (which, as noted, it could not if the harm to it was nil),
the District Court should not have instructed the jury to award
Acumed $1 in nominal damages. The Court justified this
instruction under Fed. R. Civ. P. 49(b) and Wilks v. Reyes, 5
F.3d 412, 415–16 (9th Cir. 1993), as a measure needed to
resolve the “apparent inconsistency” between the jury’s $0
compensatory award and $100,000 punitive award to Acumed.
Acumed LLC v. Advanced Surgical Serv., Inc., No. 05-2711,
2007 WL 1500051, at *2–3 (E.D. Pa. May 18, 2007). This does
not work.

First, I believe that Pennsylvania law does not permit
nominal damages for tortious interference violations. Section
907 of the Restatement (Second) of Torts defines nominal
damages as “a trivial sum of money awarded to a litigant who
has established a cause of action but has not established that he
is entitled to compensatory damages.” Pennsylvania courts have
interpreted this definition to permit nominal damages only in
tort cases “where harm is not a requisite to the cause of action.”
Carter v. The May Dep’t Store Co., 853 A.2d 1037, 1041 (Pa.
Super. Ct. 2004). But, as stated, harm is a required element of
tortious interference with existing or prospective contractual
relationships. See Pawlowski, 558 A.2d at 40; Pelagatti v.
Cohen, 536, A.2d 1337, 1343 (Pa. Super. Ct. 1987), appeal

68
denied 548 A.2d 256 (Pa. 1988).36

Second, even if an award of nominal damages were
permitted, the District Court should not have done so here. As
discussed in Judge Greenberg’s opinion, the trial court could
have taken a number of approaches once it learned that the
general verdict and jury answers were inconsistent. But
regardless of its chosen approach, it was required to apply
Pennsylvania law that holds “that no award for punitive
damages may be made where actual damage has not been
suffered.” Hilbert v. Roth, 149 A.2d 648, 652 (Pa. 1959); see
also Smith v. Grab, 705 A.2d 894, 901 (Pa. Super. Ct. 1997);
Sulecki v. Southeast Nat’l Bank, 516 A.2d 1217, 1219 (Pa.
Super. Ct. 1986). Thus, instead of resolving the inconsistent
verdict by instructing an award of nominal damages, the Court
should have entered a judgment vacating Acumed’s punitive
damages award. Cf. Cooper Distrib. Co., Inc., v. Amana
Refrigeration, Inc., 63 F.3d 262, 281–84 (3d Cir. 1995)
(vacating a punitive damages award for tortious interference

36
This conclusion comports with accepted tort analysis, see,
e.g., Action House, Inc. v. Koolik, 54 F.3d 1009, 1014 n.4 (2d
Cir. 1995) (noting with approval the holding in Kronos, Inc. v.
AVX Corp., 612 N.E.2d 289, 292–94 (N.Y. 1993), that nominal
damages are not allowed in tortious interference claims); 2 Dan
B. Dobbs, Dobbs Law of Remedies §6.6(2) (2d ed. 1993). But
see Fishkin v. Susquehanna Partners, G.P., 563 F.Supp.2d 547,
590 (E.D. Pa. 2008) (awarding nominal damages on a claim of
tortious interference with existing contractual relations).

69
where the jury found actual harm but $0 in compensatory
damages).

Third, the District Court’s instruction did nothing to
counter the quick conclusion that the compensatory/punitive
award ratio (1/100,000) here was untenable under Pennsylvania
law, see Reading Radio, Inc. v. Fink, 833 A.2d 199, 214 (Pa.
Super. Ct. 2003) (“[A] reasonable relationship must still exist
between the nature of the cause of action underlying the
compensatory award and the decision to grant punitive
damages.”), and constitutional standards, see State Farm Mut.
Auto. Ins. Co. v. Campbell, 538 U.S. 408, 425 (2003) (“[I]n
practice, few awards exceeding a single-digit ratio between
punitive and compensatory damages, to a significant degree,
will satisfy due process.”).

In sum, the jury’s initial decision not to grant Acumed a
compensatory award for actual damages ends the game for it.
Tortious interference with existing or prospective contractual
relations cannot be found, and thus punitive damages are not
available. Instructing the jury to award $1 in compensatory
damages was an unfitting effort to change these results, and the
compensatory/punitive award ratio it created was off the chart
of reasonableness.

70