Appendix — Mr. Furniture Warehouse, Inc. v. Barclays/American Commercial, Inc.

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pers } OFFICE OF THE CLERK

NO.

in the

Supreme Court

of the

United States of America

October Term, 1990

MR. FURNITURE WAREHOUSE INC., ET AL.,

Petitioners,

vs.

BARCLAYS/ AMERICAN COMMERCIAL INC., ET AL

Respondent.

APPENDIX TO PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEAL

FOR THE ELEVENTH CIRCUIT

SHELDON ROSENBERG, ESQ.

ROSENBERG & ROTHMAN, P.A.

11900 Biscayne Boulevard

Suite 740

Miami, Florida 33181

Attorneys for Petitioners

MR. FURNITURE WAREHOUSE, INC., ET AL.

TABLE OF CONTENTS

PAGE

oF Es El ac), | SCE i

MR. FURNITURE WAREHOUSE, INC v.

BARCLAYS AMERICAN/COMMERCIALIINC.......cs:::-« 1

ON PETITION FOR REHEARING. .u....:ccccccsssssssssssssssssssee 16

ORDER GRANTING DIRECTED VERDICT ON

QUESTION OF PUNITIVE DAMAGES. .....c..:scccsssssssssssssse 17

Re tse | ; ee 19

MR. FURNITURE WAREHOUSE, INC.,

Mr. Wholesale, Inc., Howard Cassett,

Plaintiffs-Appellants,

Vs

BARCLAYS AMERICAN/COMMERCIAL INC.,

Stenhouse, James a/k/a, Jim Stenhouse,

Defendants-Appellees

No. 89-5290

United States Court of Appeals,

Eleventh Circuit

Dec. 27, 1990.

Furniture buyer brought antitrust and defamation suit against

commercial factor. The United States District Court for the South-

ern District of Florida, No. 87-00620-CIV-LCN, Lenore Carrero

Nesbitt, J., 708 F.Supp. 331, entered judgment for factor, and

appeal was taken. The Court of Appeals, Anderson, Circuit Judge,

held that: (1) buyer did not have antitrust standing, and (2) factor

was not liable for punitive damages.

Affirmed.

1. Monopolies

Factors to consider in determining whether party had standing

to bring antitrust action include direction of defendant's anticom-

petitive intent, causal connection between alleged antitrust viola-

tion and injury, nature of injury, including whether injury is of

kind that antitrust laws were intended to redress, and directness

or indirectness of injury, including existence of identifiable class of

persons who are more direct victims and including problem of

duplicative recovery or complex apportionment of damages. Sher-

man Anti-Trust Act, § 4, 15 U.S.C.A. § 15.

2. Monopolies

Furniture purchaser lacked standing to bring antitrust action

against commercial factor, whose exclusive contracts with furni-

ture manufacturers allegedly had anticompetitive effect on fac-

tored credit market; factor's denial of credit to purchaser had no

relationship to factor's allegedly anticompetitive purpose of ex-

cluding competing factors. Sherman Anti-Trust Act, §§ 1, 4, 15

U.S.C.A. §§ 1, 15.

3. Monopolies

Statutory proscription on monopolization and attempts to

monopolize may embrace unilateral refusal to deal when accom-

panied by intent to monopolize and requisite degree of market

power; monopolistic or other anticompetitive intent is key factor

in determining whether statutory violation has occurred. Sher-

man Anti-Trust Act, § 2, 15 U.S.C.A. § 2.

4. Monopolies

In order to constitute violation of antitrust law, monopolist's

refusal to deal must tend to cause harm to competition; unrelated

harm to individual competitor or consumer is not sufficient.

Sherman Anti-Trust Act, § 2, 15 U.S.C.A. § 2.

5. Monopolies

Monopolist's refusal to deal becomes actionable under anti-

trust laws only where refusal is designed to have anticompetitive

effect, whether to gain greater market share, to drive up prices, or

to obtain some other illegal goal. Sherman Anti-Trust Act, § 2, 15

US.C.A. § 2.

6. Monopolies

Furniture buyer lacked standing to challenge commercial

factor's refusal, as alleged monopolist, to deal with it absent

allegation that factor's refusal to extend credit was attempt to

garner more market share or to accomplish any other anticompe-

titive end. Sherman Anti-Trust Act, §§ 2, 4, 15 U.S.C.A. §§ 2, 15.

7. Corporations

Fault for purposes of imposition of punitive damages on

corporation must be fault on part of managing agent or

primary owner of corporation.

8. Federal Courts

Directed verdict will be reversed on appeal only if there is

evidence of such quality and weight that reasonable and fai-

minded jurors in exercise of impartial judgment might reach

different conclusion, opposed to motion for directed verdict.

9. Corporations

Commercial factor was not at fault for employee's defamatory

statement, and thus could not be held liable for punitive damages;

employee's statement was not attributable to assistant vice-presi-

dent, who allegedly diskliked plaintiff and, in any event, assistant

vice-president was not managing agent of factor.

Sheldon Rosenberg, Michael Rothman, North Miami, Fia., for

plaintiffs-appellants.

Kenneth B. Robinson, Byron G. Petersen, Greenberg, Traurig,

Hoffman, Lipoff, Rosen & Quentel, P.A., Ft. Lauderdale, Fla., for

defendants-appellees.

Appeal from the United States District Court for the Southern

District of Florida.

Before HATCHETT and ANDERSON, Circuit Judges, and

GODBOLD, Senior Circuit Judge.

ANDERSON, Circuit Judge:

In February of 1986, appellants Mr. Furniture Warehouse, Inc.

and Mr. Wholesale, Inc., related companies involved respectively

in the retail and wholesale furniture business in south Florida

(collectively referred to as "Mr. Furniture"), filed a complaint, as

amended, against appellee Barclays American/Commercial, Inc.

("Barclays"). The complaint alleged defamation, violations of

Sections 1 and 2 of the Sherman Act, and other torts held to be

without merit and dismissed by the district court. Howard

Cassett, president of Mr. Furniture, and James Stenhouse, a Barclays

employee, were originally parties to the lawsuit but were dis-

missed as such by the district court. The district court entered

summary judgment in favor of Barclays on the antitrust claims on

the ground that Mr. Furniture lacked standing. 708 F.Supp. 331

(1988). R10-193. The defamation count resulted in a jury verdict

finding for Mr. Furniture but awarding only nominal damages

based on a verdict form that excluded the issue of punitive

damages from the jury's consideration. After the verdict, the

district court directed a verdict for Barclays on the punitive dam-

ages issue. R13-253. Mr. Furniture appeals, arguing that the

district court erred on the standing issue and that the jury should

have been given the opportunity to award punitive damages. We

hold that the district court properly denied Mr. Furniture antitrust

standing and correctly directed the verdict as to punitive damages.

I. FACTS

In the furniture industry, purchasers of furniture like Mr.

Furniture often buy from manufacturers on credit. Frequently,

this credit is extended not by the furniture manufacturer itself, but

rather by an institution in the business of commercial factoring.

Barlcays, as a commercial factor, purchases accounts receivable

from furniture manufacturers, usually at a discount, and assumes

the collection responsibilities. Where an account is purchased on

a non-recourse basis, the factor also assumes the risk of non-

payment. In orer to minimize this risk, Barclays and other

factoring institutions are sensitive to a furniture purchaser's credit

rating and other attributes indicating an ability to pay.

eo

a

It is undisputed that Barclays is a major, perhaps even the

dominant, factor in the south Florida market and that Barlcays has

entered into a series of exclusive factoring arrangements with

many of the manufacturers from which Mr. Furniture buys. It is

also undisputed that Barclays has refused to extend credit to Mr.

Furniture, either because of Barclays’ perception of Mr. Furniture's

credit worthiness, or, as Mr. Furniture claims, because of personal

animosity between James Stenhouse of Barclays and Howard

Cassett of Mr. Furniture. Although Mr. Furniture is free to pay

cash for furniture or to arrange for credit from other sources,

Barclays' refusal to provide credit has precluded Mr. Furniture

from purchasing furniture from manufacturers which factor ex-

clusively with Barclays on credit terms favored by Mr. Furniture.

The resulting injury to Mr. Furniture's business is the basis for the

antitrust counts.

The defamation count arose from a statement made by Linda

Strickland, a Barclays employee, to a sales representative for a

furniture manufacturer that Mr. Furniture was . "raising

inventories and credit to go out of business." SR2-9,13.

II. DISCUSSION

A. Antitrust Standing

Under Section 4 of the Clayton Act, 15 US.C.A. § 15 (Supp.1990),

"any person who shall be injured in his business or property by

reason of anything forbidden in the antitrust laws my sue ..." for

treble damages. This broad formulation has been judicially circum-

scribed, inter alia, by requiring a plaintiff to demonstrate what has

been termed "antitrust standing.” See Associated Gen. Contractors of

Cal. v. Cal. St. Council of Carpenters, 459 U.S. 519, 103 S. Ct. 897, 74

L.Ed.2d 723 (1983). Although the concept of antitrust standing has

proved to be somewhat elusive, Blue Shield of Virginia v. McCready,

457 U.S. 465, 478, 102 S. Ct. 2540, 2547, 73 L.Ed.2d 149 (1982), the

Supreme Court and this court have prescribed general principles

to guide the standing analysis.

[1] In Assoc. Contractors, the Court applied a series of

interrelated factors in addressing the issue whether the plaintiff

union had standing to bring an antitrust action against contractors

who were allegedly exerting pressure on other contractors and

subcontractors to hire only non-union labor: (1) intent; (2) the

causal connection between the alleged antitrust violation and the

injury; (3) the nature of the injury, including whether the injury is

of the kind that the antitrust laws were intended to redress; and (4)

the directness or indirectness of the injury, including the existence

of an identifiable class of persons who are more direct victims, and

including the problem of duplicative recovery or complex appor-

tionment of damages.’

We will apply these factors to Mr. Furniture's claims under

both §§ 1 and 2 of the Sherman Act. The issue of antitrust standing

must be tested by reference to the allegations of the complaint.

Amey, Inc. v. Gulf Abstract & Title, Inc., 758 F.2d 1486, 1497(11th

Cir.1984), cert.denied, 475 U.S. 1107, 106 S.Ct. 1513, 89 L.Bd.2d

912(1986); Construction Aggregate Transport, Inc. v. Florida Rock Ind.,

Inc. 710 F.2d 752, 763 (11th Cir. 1983).

1. Section 1 of the Sherman Act

Section 1 of the Sherman Act, 15 U.S. C.A. § 1 (Supp.1990)

provides, in pertinent part:

Every contract, combination in the form of a trust or otherwise,

or conspiracy, in restraint of trade or commerce among the several

states, or with foreign nations, is declared to be illegal...

1. This circuit has traditionally applied a “target area” test that embraces

substantially the same factors. In Amey, Inc. v. Gulf Abstract & Title, Inc., 758 F.2d

1486, 1496 (11th Cir. 1985), cert. denied,475 U.S. 1107, 106S.Ct., 1513, 89 L.Ed.2d

912 (1986), we held that our “target area" test does not produce materially

different results from application of the Associated Contractors guidelines. Under

either test, the key factors are “the physical and economic nexus between the

alleged violationand the harm tothe plaintiff, and ...the relationshipoftheinjury

alleged with those forms of injury about which Congress was likely to have been

concerned in making defendant's conduct unlawful and in providing a private

remedy under§4."McCready,457 U.S. at478, 102S. Ct. at 2547-48. Amey, 758 F.2d

at 1496-97.

Mr. Furniture's complaint alleges that Barclays violated § 1 by

garnering an increasing percentage of the market for factored

credit through its exclusive contracts with furniture manufactur-

ers. Thus, the complaint continues, because Barclays has refused

to extend credit to Mr. Furniture, Mr. Furniture is precluded from

purchasing furniture with advantageous factored credit from an

ever increasing number of furniture manufacturers. To supporrtits

argument that this injury is an antitrust injury directly caused by

the alleged § 1 violation, Mr. Furniture relies on Blue Shield of

Virginia v. McCready, 457 U.S. 465, 102 S.Ct. 2540, 73 L.Ed.2d 149

(1982). Thus, we must examine the facts and holdings of McCready

to gauge the strength of Mr. Furniture's argument.”

Carol McCready was the recipient of health insurance benefits

provided by her employer through Blue Shield of Virginia. Gen-

erally, the group health plan reimbursed a portion of the cost of

psychotherapy performed by psychiatrists but not if the treatment

was provided by psychologists. After McCready received such

treatment from a psychologist, she submitted a claim to Blue

Shield which was denied. McCready then filed a class action on

behalf of psychotherapy patients who had similarly been denied

reimbursement seeking treble damages under § 4 of the Clayton

Act. McCready alleged that she and others had been injured as a

result of a conspiracy between Blue Shield and a Virginia psychia-

try association designed to exclude psychologists in violation of §

1 of the Sherman Act.

The Supreme Court held that McCready had antitrust stand-

ing because she was injured as a direct result of the anticompeti-

tive scheme. Denying reimbursement to patients who were

treated by psychologists was necessary to accomplish the desired

result-the exclusion of psychologists-because beneficiaries of the

Blue Shield plan would be forced either to go to psychiatrists or to

forego reimbursement. Thus, the Court concluded that

2. For purposes of this standing analysis and to separate the standing issue from

the merits of the antitrust claims, we will assume that a violation of § 1 of the

Sherman Act has in fact occurred.

McCready's injury was "inextricably intertwined with the injury

the conspirators sought to inflict on psychologists and the psycho-

therapy market." McCready, 457 U.S. at 484, 102 S.Ct. at 2551.

[2] Mr. Furniture argues that although the primary victims of

Barclays’ activities are other factoring institutions, it is in a position

analogous to McCready. A closer examination of the facts of the

instant case, however, reveals that Mr. Furniture's injury is far

more remote than was McCready's. Assuming, arguendo, but

expressly not deciding, that Barclays’ exclusive contracts with

manufacturers are in violation of § 1 and have an anticompetitive

effect in the factored credit market, Mr. Furniture's injury does not

flow therefrom. Unlike McCready, the denial of credit to Mr.

Furniture is not a necessary component of the alleged anticompe-

titive purpose of Barclays to exclude competing factors. If Barclays’

activities are in violation of § 1, the violation is not furthered in the

least by refusing to extend credit to Mr. Furniture. In fact, there is

no suggestion that the denial of credit to Mr. Furniture had any

relationship at all to Barclays’ alleged anticompetitive purpose of

excluding competing factors. Thus, the injury suffered by Mr.

Furniture was not the kind of injury "about which Congress was

likely to have been concerned." McCready,457 U.S. at478,102S.Ct.

at 2548. The Supreme Court in McCready acknowledged the

importance of this factor, but found that the injury suffered there

"was of a type that Congress sought to redress." 457 U.S. at 483, 102

S.Ct. at 2550. Blue Shield's anticompetitive scheme directly de-

pended on refusing to reimburse recipients of pschological serv-

ices, and McCready’s injury was inextricably intertwined with the

injury which the conspirators sought to inflict on psychologists.

We conclude that the instant case is unlike McCready. Mr. Furni-

ture's injury was not caused by the alleged anticompetitive con-

duct directed against the other factors, did not further that activity,

and in fact had no relation to it. Thus, the nexus between the

assumed § 1 violation and Mr. Furniture's injury is insufficient to

confer standing in this case.

The foregoing discussion establishes that two of the Associated

General factors (i.e., the causal connection between the alleged

antitrust violation, and the nature of the injury including in

particular whether the injury is of the kind that was of concern to

Congress) point to a lack of standing.’ In addition, it is clear that

Barclays’ anticompetitive intent was directed at the competing

factors, and not at Mr. Furniture. Finally, the presence of more

direct victims, i.e., the other commercial factors, also supports our

conclusion that Mr. Furniture has no standing to assert a § 1 claim.

An examination of the real cause of Mr. Furniture's injury

reveals that any possibility of standing would have to be based on

§ 2 of the Sherman Act. This is because the complaint essentially

alleges a unilateral refusal to deal by a monopoly rather than a

concerted action refusing to deal. See national Indep. Theatre Exhib.,

Inc. v. Charter Fin. Grouup, Inc.,474 F.2d 1396, 1402 (11th Cir.1984)

(Section 1 of the Sherman Act does not proscribe independent

action refusing to deal), cert. denied sub nom., Patterson v. Charter

Fin. Group, Inc., 471 U.S. 1056, 105 S.Ct. 2120, 85 L.Ed.2d 484 (1985).

2. Section 2 of the Sherman Act

Section 2 of the Sherman Act, 15 U.S.C.A. § 2 (Supp.1990)

provides, in pertinent part:

Every person who shall monopolize, or attempt to

monopolize, or combine or conspire with any other person

or persons, to monopolize any part of the trade or commerce

among the several States, or with foreign nations, shall be

deemed guilty of a felony....

Mr. Furniture's complaint essentially alleges that Barclays’

monopoly position in the market for factored credit coupled with

Barclays’ refusal to deal constitutes a violation of § 2. For purposes

of this standing analysis, we will assume, but expressly not decide,

that Barclays does indeed have such a monopoly position. It is

undisputed that Barclays has refused to deal with Mr. Furniture.

3. We need not decide whether those two factors are dispositive, since

other Associated General factors also indicate a lack of standing.

[3] The record reveals that Barclays’ actions are the product of

unilateral decision making, motivated by animosity or bad credit

or both. "A unilateral refusal to deal is [generally] not unlawful."

Malcolm v. Marathon Oil Co.,642 F.2d 845, 860 (5th Cir.), cert.denied,

454 U.S. 1125, 102 S.Ct. 975, 71 L.Ed.2d 113 (1981).* Under certain

circumstances, however, even a unilateral refusal to deal may

constitute a violation of § 2. The proscription on monopolization

and attempts to monopolize may embrace a unilateral refusal to

deal "when accompanied by the intent to monopolize and the

requisite degree of market power...." National Indep. Theatre Exhib.,

747 F.2d at 1402 (citing Otter Tail Power Co. v United States,410 U.S.

366, 377-78, 93 S.Ct. 1022, 1029-30, 35 L.Ed.2d 359 (1973)). See also

California Steel & Tube v. Kaiser Steel Corp.,650 F.2d 1001, 1003-04

(9th Cir.1981) (citing Times-Picayune v. United States, 345 U.S. 594,

625, 73 S.Ct. 872, 889, 97 L.Ed. 1277 (1953)). It is clear that

monopolistic or other anticompetitive intent is the key factor in

determining whether a violation of §2 has occurred. See Mid-Texas

Communications Systems, Inc. v. American Tel. & Tel. Co., 615 F.2d

1372, 1388 (5th Cir.), cert, denied sub nom., Woodlands Tel. Corp. v.

Southwestern Bell Tel. Co., 449 U.S. 912, 101 S. Ct. 286, 66 L.Ed.2d 140

(1980); Poster Exchange, Inc.v. National Screen Service Corp.431 F.2d

334 (5th Cir.1970), cert. denied, 401 U.S. 912, 91 S.Ct. 880, 27 L.Ed.2d

811 (1971).

[4] In United States v. Colgate & Co., 250 U.S. 300, 307, 39 S.Ct.

465, 468, 63 L.Ed. 992 (1919), the Court stated:

In the absence of any purpose to create or maintain a

monopoly, the [Sherman] act does not restrict the long

recognized right of trader or manufacturer engaged in

an entirely private business, freely to exercise his own

independent discretion as to parties with whom he will deal....

4. This case was decided prior to the close of business on September 30, 1981, and

is binding precedent in this circuit under Bonner v. City of Prichard, 661 F.2d 1206,

1209 (11th Cir.1981).

10

This principle is also embraced in the notion that to constitute a

violation the monopolist's activities must tend to cause harm to

competition; unrelated harm to an individual competitor or con-

sumer is not sufficient. UNR Industries, Inc. v. Continental Ins. Co.,

623 F.Supp. 1319, 1328 (N.D.111.1985). For example, in Construction

Aggregate transport, Inc. v. Florida Rock Ind., Inc.,710 F.2d 752 (11th

Cir.1983), we found antitrust standing on behalf of the victim of a

refusal to deal that was designed to have an anticompetitive effect

on the relevant market.

[5] A monopolist's refusal to deal becomes actionable under

the antitrust laws only where the refusal is designed to have an

anticompetitive effect, whether to gain greater market share, to

drive up prices, or to obtain some other illegal goal. * See "Mid-

Texas Communications, 615 F.2d at 1385-86. Limiting § 2 to these

situations effectuates the legislative purpose behind the act, which

is "to assure...the benefits of price competition,” not to serve as a

"balm for all wrongdoing in the business community." Associated

Gen. Contractors of California v. Cal. St. Council of Carpenters,459 U.S.

519, 538, 103 S.Ct. 897, 908, 74 L.Ed.2d 723 (1983); Ostrofe v. H.S.

Crocker Co., 740 F.2d 739, 751 (9th Cir.1984) (Kennedy, J., dissent-

ing), cert. dismissed, 469 U.S. 1200, 105 S.Ct. 1155, 84 L.Ed.2d 309

(1985).

[6] In the instant case, appellant does not allege nor do we

construe Barclays’ refusal to extend credit to be an attempt to

garner more market share or to accomplish any other anticompe-

titive end. "It requires a long stretch to call an individual refusal

to deal '‘monopolizing’ when it does nothing to increase the

refuser's monopoly power and nothing to increase his position in

any market.” P. Areeda, Antitrust Law { 736, at 274 (1978).

Although Mr. Furniture may "feel oppressed because [it] lacks the

alternative sources [of factored credit with certain furniture manu-

factures] that competition would provideif it existed,” id., [ 736, at

5. Even where there is concerted action refusing to deal, an anticompetitive

purpose or effect would still be a necessary element of a Sherman Act violation.

See Malcolm v. Marathon Oil Co., 642 F.2d 845, 860-61 (Sth Cir.) cert. denied, 454

U.S. 1125, 102 S.Ct. 975,71 L.Ed.2d 113 (1981) (quoting Aladdin Oil Co. v. Texaco,

Inc.,603 F.2d 1107, 1115 (Sth Cir.1979)).

11

271, this is not an injury cognizable under the antitrust laws in the

absence of a purpose to affect, or an effect in, the relevant markets.

In other words, Mr. Furniture's injury is not of the kind that the

antitrust laws were intended to forestall.® It is also clear that Mr.

Furniture was not the object of any anticompetitive intent.

For the foregoing reasons, we conclude that Mr. Furniture has

not standing to assert a claim under § 2 of the Sherman Act.

B. The Punitive Damages Issue

Appellant Mr. Furniture alleges that the district court commit-

- ted error with regard to the punitive damages issue in two

respects. First, Mr. Furniture claims that the verdict form submit-

ted to the jury was flawed because it did not allow the jury to

consider an award of punitive damages. Second, appellant urges

us to reverse the district court's directed verdict on this issue,

which was entered after the jury returned with a verdict finding

defamation per se but awarding only nominal damages. It is clear

to us, however, that these two grounds for appeal merge into the

determination of the propriety of the directed verdict.’

6. Asthediscusionin the text implies, this lackofanantitrustinjury also indicates

that Barclays has not violated § 2 at all. See Brunswick Corp. v. Pueblo Bowl-O-Mat,

Inc., 429 U.S. 477, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977) (failure to prove antitrust

injury prevents recovery of damages). That failure, however, is also indicative

ofa lackof standing. In Associated Contractors,459 U.S. at 538-39, 103 S.Ct. at 908-

09, the Supreme Court cited Brunswick for the proposition that, as part of an

antitrust standing analysis, "the alleged injury must be analyzed to determine

whether it is of the type that the antitrust statute was intended to forestall." The

fact that Mr. Furniture's lack of an antitrust injury demonstrates the absence of

an antitrust violation renders problematic the application of some of the Associ-

ated General guidelines for determining standing. For example, it is difficult to

examine the causal connection between the antitrust violation and the injury (as

well as the directness of the injury) where there is no antitrust violation. Suffice

it tosay, however, that Mr. Furniture has failed todemonstrate that its injury was

caused by Barclay’s violation of § 2. Moreover, we do not interpret Associated

Contractors to require that all of its guidelines be met.

7. We find no merit in Mr. Furniture’s contention that the district court's failure

to permit deliberation on punitive damages may have affected the jury's

calculation of general damages.

12

The district court based its directed verdict on Mercury Motors

Exp., Inc. v. Smith, 393 So.2d 545 (Fla.1981). In Mercury Motors, the

Florida Supreme Court enunciated the following principles of law:

(1) An employer is vicariously liable for compensatory dam-

ages resulting from the negiligent acts of employees com-

mit ted within the scope of their employment even if the

employer is without fault. This is based upon the long-

recognized public policy that victims injured by the negli

gence of employees acting within the scope of their employ

ment should be compensated even through it means placing

vicarious liability on an innocent employer. (2) Punitive dam

ages, however, go beyond the actual damages suffered by an

injured party and are imposed only as a punishment of the

defendant and as a deterrent to others. (3) Before an employer

may be held vicariously liable for punitive damages under the

doctrine of respondeat superior, there must be some fault on

his part. (4) Although the misconduct of the employee, upon

which the vicarious liability of the employer for punitive dam

ages is based, must be willful and wanton, it is not neces

sary that the fault of the employer, independent of his em-

ployee's conduct, also be willful and wanton. It is sufficient

that the plaintiff allege and prove some fault on the part of the

employer which foreseeably contributed to the plaintiff's in

jury to make him vicariously liable for punitive damages.

Id. at 549 (emphasis in original).

[7] In the instant case, Mr. Furniture claims that the require-

ments of Mercury Motors are satisfied because it presented suffi-

cient evidence that Linda Strickland's defamatory statement was

either known to or directed by James Stenhouse, Strickland's

superior in the corporate hierarchy at Barclays. In order to prevail

on this claim, Mr. Furniture must show no only fault on the part

of Stenhouse, but also that Stenhouse was of sufficient stature at

Barclays to attribute his fault to Barclay. This latter requirement is

derived from Bankers Multiple Line Ins. Co. v. Farish, 464 Sc 7d 530,

533 (Fla.1985), where the court held that fault for purposes of

imposition of punitive damages on a corporation must be fault on

13

the part of a managing agent or primary owner of the corporation.

[8,9] We will reverse the directed verdict only if we find that

"there is substantial evidence, evidence of such quality and weight

that reasonable and fair-minded jurors in the exercise of impartial ‘

judgment might reach different conclusions, opposed to the mo-

tion for directed verdict." Worsham v. A.H. Robins Co. 734 F.2d 676,

681 (11th Cir.1984). Therefore, we will affirm the district court

unless Mr. Furniture's evidence is substantial on two issues: (1)

that Stenhouse was a managing agent or primary owner of Barclays;

and (2) that Strickland's defamatory statement is traceable to Sten-

house. Our review of the record in light of Florida precedent

convinces us that Mr. Furniture has failed to meet this burden of

proof with respect to both issues.

James Stenhouse is a unit manager in Barclays’ furniture credit

department and an assistent vice president at Barclays. R14-14 to

16. Stenhouse is one of approximately twenty assistant vice

presidents and is subordinate to thirty vice presidents and senior

vice presidents. Although Stenhouse is the director of furniture

credit at one of Barclays’ offices, Charlotte, he has no responsibility

for approving factored credit for other industries for which Barclays

is a factor. R14-56,57. In addition, Stenhouse does not participate

in the formation of company policy. R14-17. Of course, there is no

contention that Stenhouse is an owner of Barclays. An examina-

tion of Stenhouse's position in light of Florida precedent persuades

us that he is not a managing agent.

InP.V. Constr. Corp.v. Atlas Pools of Palm Beaches, Inc.,510S0.2d

318 (Fla. Dist. Ct.App.1987), the court imposed punitive damages

liability on a corporation for the intentional tort of its president and

chief operating officer. Stenhouse's position clearly does not have

the stature. We find that Stenhouse is more like the director of the ‘

Eastern Air Lines’ news bureau in Eastern Air Lines, Inc. v. Gellert,

438 So2d 923 (Fla.Dist.Ct.App.1983), where the court refused to

impose corporate punitive damages liability for the director's de-

famatory remarks. See also Pier 66 Co. v. Poulos, 542 So.2d 377

(Fla.Dist.Ct.App.) (no corporate punitive damages on defamation

claim because hotel president was not a managing agent), review

14

aati tial

denied, 551 So.2d 462 (Fla.1989).

Because we hold that Stenhouse is not a managing agent, we

conclude that the verdict on the punitive damages issue was

properly directed by the district court. However, even if we were

to assume that Stenhouse is a managing agent at Barclays, we still

would affirm the district court. The only evidence presented by

Mr. Furniture attributing fault to Stenhouse for Strickland's de-

famatory comment was that there may be a history of personal

animosity between Stenhouse and Howard Casset, Mr. Furni-

ture's president.® This evidence is insufficient to draw a reason-

able inference of fault on the part of Stenhouse which foreseeably

contributed to the alleged defamatory comment.

AFFIRMED.

8. Mr. Furniture's contention that the very fact that Stenhouse was involved with

the Mr. Furniture account raises an inference that he also knew or approved of

Strickland's statement is unsupported by the record. Testimony adduced at trial

does indicate that Stenhouse knew about Mr. Furniture's credit difficulties

despite the fact that Strickland had authority to approve credit for Mr. Furniture

without consulting Stenhouse. However, the testimony also shows that

Stenhouse did not learn of Mr. Furniture's problem until August or September

of 1986, R14-149, some months after the defamatory statement, which was made

in June or July of 1986. SR2-9.

15

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

No. 89-5290

MR. FURNITURE WAREHOUSE, INC., ET AL

MR. WHOLESALE, INC., ET AL

HOWARD CASSETT,

Plaintiffs-Appellants,

versus

BARCLAYS AMERICAN/COMMERCIAL, INC., ET AL

JAMES STENHOUSE a/k/a Jim Stenhouse,

Defendants-Appellees.

On Appeal from the United States District Court

for the Southern District of Florida

ON PETITION(S) FOR REHEARING

( February7,1991 )

BEFORE: HATCHETT and ANDERSON Circuit Judges, and

GODBOLD, Senior Circuit judge.

PER CURIAM:

The Petition(s) for rehearing filed by appellants, Mr.

Furniture and Mr. Wholesale, is Denied.

ENTERED FOR THE COURT:

S/S R.L.Anderson —s_—

United States Circuit Judge

16

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

CASE NO. 87-620-Civ-NESBITT

ORDER GRANTING DIRECTED

VERDI IN ON OF

PUNITIVE DAMAGES

MR. FURNITURE WAREHOUSE, INC., ET AL,

Plaintiffs,

vs.

BARCLAYS AMERICAN/COMMERCIAL, INC., ET AL

Defendant.

ae

At the close of Plaintiffs' case-in-chief in this two-week jury

trial, the Court deferred ruling on Defendant's motion for directed

verdict. Defendant has withdrawn its motion with respect to every

issue except the question of punitive damages. Under Fed. R. Civ.

P. 50 (a), the Court should direct a verdict if reasonable jurors could

not arrive at a contrary verdict, considering the evidence in the

light most favorable to the Plaintiff. Cora Pub., Inc. v. Continental

Cas. Co., 619 F.2d 482, 484 (Sth Cir. 1980).

As to the question of punitive damages, the Court finds that

plaintiffs have not met their burden under Mercury Motors exp., Inc.

v. Smith, 393 So.2d 545 (Fla. 1981). Specifically, the Court finds that

there is no evidence in the record from which a reasonable jury

could possibly infer that Barclays should be held vicariously liable

for defamatory statements made by its employees. Plaintiffs have

not produced any evidence even tending to show that the employ-

ees' misconduct was willful and wanton, and that Barclays was in

17

some way at fault for negligently hiring or supervising those

employees. Because Plaintiffs rely "entirely upon the master-

servant relationship to make the mployer vicariously liable for

punitive damages,” Plainfiffs are not entitled to have a jury con-

sider the question of punitive damages. Mercury Motors,393 So.2d

at 459.

For the above-stated reasons, it is hereby

ORDERED and ADJUDGED that Defendant's motion for

directed verdict on the question of punitive damages is GRANTED.

DONE and ORDERED in chambers, Miami, Florida,

this__28th_ day of February, 1989.

S/S Lenore C. Nesbitt

LENORE C. NESBITT

UNITED STATES DISTRICT JUDGE

cc: Sheldon Rosenberg, Esq.

Kenneth B. Robinson, Esq.

18

a SL ee

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

CASE NO. 87-0620-CIV-NESBITT

FINAL JUDGMENT

MR. FURNITURE WAREHOUSE,

INC., ET AL, MR. WHOLESALE,

INC., ET AL.,

Plaintiffs,

BARCLAYS AMERICAN/

COMMERICAL, INC., ET AL

)

)

)

)

)

)

v. )

)

)

)

)

Defendant. )

)

)

Count I of Plaintiffs' Verified Complaint having been tried

before a jury during the two week period comme:.cing February

14, 1989, and the jury having rendered and signed a Verdict Form

on February 27, 1989, it is hereupon,

ORDERED AND ADJUDGED as follows:

Final Judgment is hereby entered in favor of Plaintiffs, MR.

FURNITURE WAREHOUSE, INC., et al, MR. WHOLESALE,

INC., et al., and against Defendant, BARCLAYS AMERICAN/

COMMERCIAL, INC., et al., for nominal damages in the amount

of Ten Dollars ($10.00), for which let execution issue.

19

—_—

The Court retains jurisdiction of this cause to tax costs upon

appropriate motion of either of the parties or to award attorneys’

fees, if applicable, upon motion of the parties.

The Clerk of the Court is directed to close this case.

DONE AND ORDERED in Chambers at Miami, Dade County,

Florida, this _28th_ day of February, 1989

S/S Lenore C. Nesitt

United States District Court Judge

Copies To:

Byron G. Petersen, Esq.

Sheldon Rosenberg, Esq.

cris eutaniaeuiinaiedee uty.s

20