Guyana Telephone and Telegraph Co., LTD. v. Melbourne International Communications Ltd., Wayjay Investments Inc., NACS Communications, Inc., Chilesat, S.A.

                                                             [PUBLISH]

             IN THE UNITED STATES COURT OF APPEALS

                     FOR THE ELEVENTH CIRCUIT                  FILED
                      ________________________
                                                       U.S. COURT OF APPEALS
                                                         ELEVENTH CIRCUIT
                             No. 02-13676                     MAY 07, 2003
                         Non-Argument Calendar            THOMAS K. KAHN
                       ________________________                CLERK

                   D.C. Docket No. 00-03359-CV-DMM

GUYANA TELEPHONE & TELEGRAPH CO., LTD.,
a Guyanese Corporation,

                                                      Plaintiff-Appellant,

    versus

MELBOURNE INTERNATIONAL COMMUNICATIONS, LTD.,
a Florida Limited Partnership,
WAJAY INVESTMENTS, INC.,
a Florida Corporation,
NACS COMMUNICATIONS, INC.,
a Florida Corporation,
CHILESAT, S.A.,
a Chilean Corporation

                                                      Defendants-Appellees,

                      __________________________

             Appeal from the United States District Court for the
                        Southern District of Florida
                       _________________________
                              (May 7, 2003)
Before BLACK, MARCUS and KRAVITCH, Circuit Judges.

KRAVITCH, Circuit Judge:

       Plaintiff-appellant Guyana Telephone and Telegraph Company (“GT&T”)

appeals the district court’s dismissal of its claims under the Florida Deceptive and

Unfair Trade Practices Act. It also appeals the district court’s denial of its Rule 50(b)

motion for judgment as a matter of law on the amounts of (1) compensatory damages

and (2) its restitution claim.



I.     BACKGROUND

       GT&T is a Guyanese corporation with a monopoly over the local phone

network in the Republic of Guyana. In 1993, GT&T entered into agreements with

AT&T and MCI to provide international-long-distance service between the United

States and Guyana. At all relevant times, AT&T and MCI were the only two

companies that could transfer U.S. calls to Guyana. Under separate agreements to

provide long-distance service from the United States to Guyana, MCI and AT&T

agreed to pay GT&T $0.85 per minute for calls to Guyana that had originated in the

United States.1 These $0.85-per-minute charges are called “termination payments.”


       1
          As described below, this case deals specifically with GT&T’s contract with MCI. The
contract between GT&T and AT&T is only relevant in helping to establish the market price for calls
from the United States to Guyana.

                                                2
      Sometime before 1996, the year when the causative events occurred, GT&T

began encouraging “audiotext” providers to route their phone traffic though Guyana.

Audiotext providers are generally telephone companies that handle phone traffic with

content “of an adult nature.” Often these audiotext calls would originate in the

United States, be sent to Guyana, and then be sent back to U.S. consumers. This

practice allowed GT&T to collect the $0.85-per-minute termination payment from

MCI. The benefit for the audiotext companies was that, in exchange for routing

phone traffic through Guyana, GT&T would pay them a percentage of the MCI

termination payment. Depending on the contract terms with each audiotext company,

GT&T would kick back between $0.40 and $0.525 per minute for audiotext calls. In

1996, audiotext calls produced approximately seventy-five percent of GT&T’s

revenue from U.S. termination payments.

      GT&T’s claims arose from a scheme that deprived GT&T of termination fees

that it would have received from MCI. GT&T alleged that the scheme involved four

defendants: (1) Melbourne, a Florida communications company that obtained calls

from various U.S. carriers for delivery to a number of places in the Western

hemisphere; (2) Wajay, Melbourne’s general partner; (3) NACS, Melbourne’s limited

partner; and (4) Chilesat, a provider of international-long-distance service for calls

originating in Chile.

                                          3
       Under the defendants’ plan, Melbourne solicited other U.S. communications

carriers by offering low rates for calls to Guyana and then entered into agreements

with these companies. In August and September of 1996, Melbourne received and

aggregated these Guyana-bound calls at its facility in Florida and then used telephone

circuits owned by Chilesat to transfer the calls from Florida to MCI’s international

switching center in New Jersey. This scheme made it appear as if the calls had

originated in Chile rather than in the U.S.; thus, the contract between MCI and GT&T

did not seem to apply.

       MCI normally would have refused to send Chilesat’s calls to Guyana unless

Chilesat had paid termination payments to MCI for the benefit of GT&T. Chilesat

circumvented this problem by misrepresenting to MCI that it had a “direct

accounting” relationship with GT&T. As a result, MCI did not collect termination

charges from Chilesat because it believed that Chilesat was paying termination

charges directly to GT&T. Therefore, because MCI believed these calls originated

in Chile and because Chilesat dishonestly convinced MCI that it was paying GT&T’s

termination charges, MCI sent over one million minutes of U.S.-originated calls to

Guyana without obtaining payment for GT&T.2 If GT&T had received $0.85 per



       2
       There was evidence supporting three possible calculations of the number of minutes that
MCI routed to Guyana without paying termination charges: 1,169,166; 1,238,377; and 1,298,000.

                                              4
minute for all of these calls, it would have received almost $1 million in termination

charges from MCI.

        GT&T brought its claims under civil RICO, unjust enrichment,3 tortious

interference with contract, civil conspiracy, and the Florida Deceptive and Unfair

Trade Practices Act (“FDUTPA” or the “Act”). It also sought punitive damages. The

court entered a default judgment on liability as to all claims against Chilesat, except

for the FDUTPA claim. The court dismissed the FDUTPA claims as to all defendants

when it granted the defendants’ Rule 50 motion at the close of evidence, reasoning

that the FDUTPA claims were improper because GT&T was not a “consumer” under

the meaning of the Act. On the claims that were permitted to proceed, the jury found

Melbourne and Wajay liable for unjust enrichment and civil conspiracy.




       3
          GT&T asserts that its right to restitution arises from an unjust enrichment. This is not quite
accurate. The fact that it would be “unjust” (as in “unfair”) for a defendant to retain a benefit
obtained through the commission of wrong does not mean that the basis of the restitutionary
obligation arises from an unjust enrichment. “Liability in unjust enrichment has in principle nothing
to do with fault. It has to do with wealth being in one person’s hands when it should be in another
person’s.” Peter Birks, Unjust Enrichment and Wrongful Enrichment, 79 Texas L. Rev. 1767, 1789
(2001). The paradigm examples of unjust enrichment are mistaken transfers. “As soon as [a]
claimant relies on a wrong [to supply the unjust factor], the right on which he relies arises from that
wrong, not from unjust enrichment.” Id. at 1783. Here, because GT&T’s right to restitution arises
from the wrong of the tort committed by the conspiracy, this is a case of wrongful enrichment rather
than unjust enrichment: the breach of a primary tort duty gave rise to a secondary right to restitution
for the benefit obtained through commission of the wrong. We treat GT&T’s references to “unjust
enrichment” as requests for restitution, understanding that the defendants’ wrong is the basis for the
obligation.

                                                   5
      As for damages, the jury found Melbourne liable for $263,155 plus

prejudgment interest on the unjust-enrichment claim. Notably, it used compensatory

damages (rather than restitution) as the measure of recovery. On the civil-conspiracy

claims, the jury awarded (1) compensatory damages of $263,155 plus prejudgment

interest and (2) $100,000 in punitive damages against both Melbourne and Wajay.

The court used the jury’s compensatory-damages calculation when it assessed the

default judgments against Chilesat. Pursuant to 28 U.S.C. § 1964(c), the court trebled

the compensatory damages against Chilesat on the civil RICO claim, for a total award

on this claim of $789,465 plus prejudgment interest. It also entered default judgment

against Chilesat in the amount of $263,155 plus prejudgment interest on the tortious-

interference claim. In addition, the jury leveled punitive damages of $726,310 against

Chilesat on the civil-conspiracy claim.

      GT&T appeals three issues. First, GT&T contends that the district court erred

in granting the defendants’ Rule 50 motion to dismiss GT&T’s FDUTPA claims.

GT&T argues that it was a “consumer” under the meaning of FDUTPA as it stood in

1996 and, alternatively, that the district court should have applied the statute’s 2001

amendments retroactively. Second, GT&T maintains that the district court erred in

refusing to grant its Rule 50(b) motion for judgment as a matter of law on the amount

of its compensatory damages. GT&T contends that because the defendants deprived

                                          6
it of at least 1,169,166 minutes of calls at $0.85 per minute, the evidence would have

compelled a reasonable jury to find damages of at least $993,791. Third, GT&T

argues that the district court erred when it refused to grant GT&T’s Rule 50 motion

challenging the jury’s calculation of the unjust-enrichment claim. GT&T argues that

the appropriate measure of recovery is the benefit conferred upon the defendants,

which was $993,791.



II.    STANDARD OF REVIEW

       An appellate court reviews de novo a district court’s ruling on a Rule 50

motion for judgment as a matter of law. Combs v. Plantation Patterns, 106 F.3d 1519,

1526 (11th Cir. 1997). GT&T seeks review of the district court’s decisions on two

Rule 50 motions. Accordingly, we review the entire appeal de novo.



III.   ANALYSIS

       A.    Whether the District Court Erred in Dismissing GT&T’s Claim under
             the FDUTPA

       The district court dismissed GT&T’s FDUTPA claims, concluding that GT&T

could not avail itself of the statute because it was a supplier—rather than a

“consumer”—for the transactions in question. It also held that the FDUTPA’s 2001



                                          7
amendments should not apply retroactively to this case. We agree with the district

court’s reasoning on both issues.

      The transactions in question all occurred in 1996, so the 1993 amendments to

the FDUTPA apply to this case. The definition of “consumer” in the 1993 version

of the FDUTPA included not only individuals but also various business

organizations, including “corporations.” Fla. Stat. Ann. § 501.203(7) (West 1997).

In 1993, the Florida legislature amended the stated purposes and rules of construction

for the FDUTPA to provide as its central aim the protection of “the consuming public

at large and legitimate business enterprises from those who engage in unfair methods

of competition, or unconscionable, deceptive, or unfair acts or practices in the

conduct of any trade or commerce.” Id. § 501.22. Before 1993, the same provision

stated, “To protect consumers from suppliers who commit deceptive and unfair trade

practices.” Id. historical & statutory notes.

      GT&T argues that the 1993 amendments demonstrated a shift in the FDUTPA

to afford protection not just to consumers but also to any legitimate business

enterprise that had been injured by an unfair or deceptive business practice.

Accordingly, GT&T argues that the fact that it was the supplier in this transaction

should not prevent its FDUTPA claims. At least one court has agreed with this




                                          8
general argument. See Tampa Bay Storm, Inc. v. Arena Football League, Inc., 1998

WL 182418 (M.D. Fla. Mar. 19, 1998).

      Here, in dismissing GT&T’s FDUTPA claims, the district court cited §

501.211(2) of the Act, which states, “In any individual action brought by a consumer

who has suffered a loss as a result of a violation of this part, such consumer may

recover actual damages.”         The court reasoned that although the definition of

“consumer” may include corporations and other business associations, Florida courts

have “focused on the capacity in which a given entity was acting in determining

whether the entity qualified as a ‘consumer’ and as such could seek monetary

damages under the FDUTPA.” 4 The district court relied on Warren Technology, Inc.

v. Hines Interests Limited Partnership, 733 So. 2d 1146 (Fla. 3d Dist. Ct. App. 1999),

and N.G.L. Travel Associates v. Celebrity Cruises, Inc., 764 So. 2d 672 (Fla. 3d Dist.

Ct. App. 2000). Both of these cases instructed that corporations could not bring suit

under the 1993 version of the FDUTPA when they had acted as suppliers or

producers rather than as “consumers” for the transactions in question.

      The district court was correct to dismiss the FDUTPA claims. As described

above, two decisions by Florida courts have addressed the FDUTPA’s application to

this very issue, and these decisions support the district court’s dismissal of the


      4
          Order on Defs.’ Rule 50 Mot. Concerning Pl.’s FDUTPA Claim, at 2.

                                              9
FDUTPA claims. Furthermore, even though the 1993 amendments expanded the

law’s protection to both “the consuming public at large” and “legitimate business

enterprises,” the language of the statute still only permitted “consumers” to bring

actions seeking monetary relief.5 Fla. Stat. § 501.211(2) (West 1997).

       According to GT&T’s alternative argument, the FDUTPA’s 2001 amendments

expanded the pool of possible plaintiffs to include nonconsumers. Even if this were

so, we cannot agree with GT&T’s contention that the 2001 amendments should apply

retroactively. “[I]n the absence of clear legislative intent to the contrary, a law

affecting substantive rights is presumed to apply prospectively.” Arrow Air, Inc. v.

Walsh, 645 So. 2d 422, 424 (Fla. 1992). Here, retroactive application would affect

substantive rights by creating rights where none existed before. Therefore, for GT&T

to prevail on its argument, the Florida legislature must have clearly intended

retroactive application. The Act’s text and the legislative history do not provide

evidence of clear legislative intent to apply the 2001 amendments retroactively.

Therefore, the district court did not err in dismissing GT&T’s claims under the

FDUTPA.




       5
         Unlike § 501.211(1), which permitted “anyone aggrieved by a violation” of the Act to bring
an action for a declaratory judgment that an act or practice violates the Act, claimants seeking actual
damages had to be “consumers.” See Fla. Stat. § 501.211(2) (West 1997).

                                                  10
      B.     Whether the District Court Erred in Upholding the Jury’s Calculation
             of GT&T’s Compensatory Damages

      In reviewing GT&T’s renewed motion for judgment as a matter of law on the

amount of compensatory damages, we must decide whether there was a “legally

sufficient evidentiary basis for a reasonable jury” to find that GT&T’s compensatory

damages were $263,155. Fed. R. Civ. P. 50(a). In reviewing the denial of the Rule

50 motion, “we consider all the evidence, and the inferences drawn therefrom, in the

light most favorable to the nonmoving party.” Carter v. City of Miami, 870 F.2d 578,

581 (11th Cir. 1989).

      In reviewing the jury’s verdict, it is not our province to substitute our judgment

as to the correct measure of damages; instead, we must determine whether the jury’s

calculation was reasonable in light of the trial evidence. Evidence in the record

supports three possible calculations for the number of minutes that MCI routed to

Guyana without paying termination charges. One witness stated that the number of

minutes was 1,238,377. This calculation of minutes multiplied by the contract rate

of $0.85 per minute would have produced $1,052,620 in termination payments. The

jury, however, did not believe that GT&T carried its burden to prove all of its alleged

compensatory damages, as it awarded only $263,155.




                                          11
      If the jury assumed that the set of “stolen” minutes and the set of all 1996

minutes had roughly the same breakdown of audiotext versus non-audiotext minutes,

it reasonably could have concluded that GT&T proved its damages with respect to all

of the minutes for non-audiotext calls. Thus, because non-audiotext calls constituted

twenty-five percent of the minutes, there would have been approximately 309,594.25

non-audiotext minutes. When multiplied by the contract rate of $0.85 per minute,

there would be damages of $263,155 for the non-audiotext minutes. This number is,

probably not coincidentally, the exact amount of compensatory damages that the jury

awarded.

      The next inquiry is whether a reasonable jury could have completely denied

recovery for the other seventy-five percent of the minutes. GT&T asserts that the

evidence would have compelled a reasonable jury to award it $0.85 for every minute

that the appellees “stole.” We disagree. The evidence shows that GT&T, following

industry custom, usually gave audiotext companies a large percentage of the

termination payments generated from audiotext calls. Failing to discount the likely

amount of the kickbacks to audiotext companies would ignore industry custom and

would place GT&T in a better position than it would have occupied but for the

defendants’ wrong. Accordingly, it was reasonable for the jury to reduce GT&T’s




                                         12
damages award by the amount of money that GT&T would have “kicked back” to

audiotext companies.

       Nevertheless, it was not reasonable for the jury to find that GT&T suffered zero

damages with respect to the audiotext calls. Even though determining the amount

paid in kickbacks is difficult, the trial evidence gives varying rates for the amount of

the kickbacks, ranging from $0.40 per minute to $0.525 per minute. Unfortunately,

neither side provided the jury with a weighted average for the discount rate.

Therefore, because tort law requires an aggrieved plaintiff to prove its damages with

a reasonable degree of certainty, see Central State Transit & Leasing Corp. v. Jones

Boat Yard, Inc., 206 F.3d 1373, 1376S77 (11th Cir. 2000), we will assume the highest

discount rate, $0.525 per minute. Using this figure, the minimum amount of damages

that a reasonable jury could have found was $533,462. We arrive at this figure by

adding the amount that GT&T would have earned from non-audiotext calls

($248,447.786) and the amount that it would have earned from audiotext calls

($284,984.227). Accordingly, even though GT&T forwarded an incorrect calculation


       6
         This amount is the product of 1,169,166 minutes (the minimum number of “stolen”
minutes) times 0.25 (the percent of “stolen” minutes attributed to non-audiotext calls) times $0.85
per minute (the per-minute rate under the MCI contract with GT&T).
       7
         This amount is the product of 1,169,166 minutes (the minimum number of “stolen”
minutes) times 0.75 (the percent of “stolen” minutes attributed to audiotext calls) times $0.325 per
minute (the discounted per-minute rate, which is the difference between the contract rate of $0.85
per minute and the kickback rate of $0.525 per minute).

                                                13
of its losses, the district court erred in denying GT&T’s Rule 50 motion as to the

measure of its damages because the jury’s calculation of damages was unreasonable.

      C.     Whether the District Court Erred in Upholding the Jury’s Calculation
             of GT&T’s Right to Restitution

      In most cases there would be no need to assess the availability and the measure

of a restitutionary remedy, as the amount of the plaintiff’s loss usually equals the

measure of the defendant’s gain. But, here, GT&T paid kickbacks to audiotext

companies, which practice would have reduced the amount that the defendants would

need to pay in compensation to return GT&T to its rightful position. Accordingly,

we must address GT&T’s restitution claim because GT&T’s loss was less than the

defendants’ gain.

      Restitution is a remedy that is often available to victims of a wrong.

Restitution measures a plaintiff’s recovery according to the defendant’s, rather than

the plaintiff’s, rightful position. Because the jury measured GT&T’s right to

restitution in terms of GT&T’s loss rather than by the benefit conferred on the

defendants, the district court erred when it failed to grant GT&T’s Rule 50 motion.

In cases of wrongful enrichment, a plaintiff whose goods or services were obtained

by a conscious wrongdoer generally has two available remedies: compensatory

damages or restitution. When the plaintiff elects restitution, the plaintiff can either



                                          14
recover the goods themselves or the fair market value of the transferred goods and

services. See Barbouti v. Lysandrou, 559 So. 2d 648, 650S51 (Fla. Dist. Ct. App.

1990) (noting that a defendant’s tortiously taking of money or goods belonging to

another gives rise to an implied obligation to return that property and that a plaintiff

may “‘waive’ the tort action, and sue instead on a theoretical and fictitious contract

of restitution of the benefits which the defendant has so received”) (citing W. Prosser

& W. Keeton, The Law of Torts § 94, at 672S73). Furthermore, if the goods have

been sold by the tortfeasor, the plaintiff may recover either the fair market value of

the goods and services (restitutionary remedy) or the proceeds of the sale

(disgorgement remedy), and the plaintiff is entitled to the higher.8 1 George E.

Palmer, The Law of Restitution § 2.12, at 157S58 (1978).

       Applying these principles to the present case, the defendants were conscious

wrongdoers who conspired to use GT&T’s phone networks for calls from the United

States to Guyana. The fair market value of these goods and services, as measured by

GT&T’s contracts with MCI, was $0.85 per minute. The evidence shows that the

defendants wrongfully appropriated (and GT&T unknowingly conferred on the

       8
         As just stated, the law appears to allow the plaintiff in cases such as this to choose not only
between loss-based and gain-based awards but also, within the gain-based category, between the
higher of the restitutionary award and the disgorgement award. In our analysis, we have not used
the language of legal fictions—such as “contracts implied in law” and “waiving the tort”—that
sometimes appears in judicial opinions. Instead, we have focused on determining what remedies are
available to plaintiffs whose entitlements have been taken by conscious wrongdoers.

                                                  15
defendants) at least 1,169,166 minutes. Therefore, a reasonable jury would have

measured GT&T’s right to restitution as at least $993,791.

      On remand, GT&T may seek restitution from Melbourne, Wajay, and Chilesat,

as these three parties obtained a benefit from GT&T through wrongful conduct.

Nevertheless, GT&T cannot seek both damages and restitution from the defendants,

as doing so would violate the prohibition against receiving double recovery for the

same wrong. See Thornber v. City of Fort Walton Beach, 568 So. 2d 914, 919 n.8

(Fla. 1990); Barbe v. Villeneuve, 505 So. 2d 1331, 1332 (Fla. 1987).



IV.   CONCLUSION

      For the reasons stated, we AFFIRM the district court’s dismissal of GT&T’s

FDUTPA claims, but we REVERSE the denial of GT&T’s Rule 50(b) motion

concerning the measure of recovery. We REMAND this case to the district court for

further proceedings consistent with this opinion.

      Affirmed in part, reversed in part, and remanded.




                                        16