Competitive bidding is common for many businesses, including construction companies, supply companies, and retail providers, among others. In most cases, an entity will solicit bids from competing bidders through a request for proposal (RFP) and will award a contract to the most attractive bid, which can depend on several factors. Although competitive bidding can lead to great for results for the entity soliciting the bids and for the bidder ultimately chosen, it can also leave the unsuccessful bidders resentful. In some cases, the losing bidder may attempt to bring an action for tortious interference with a business relationship against a person or entity they believe may have interfered with their bid. Peter Mavrick is a Fort Lauderdale business litigation attorney who has extensive experience defending against claims for tortious interference, and, based on such experience, know that these claims will generally be unsuccessful.
To prevail on a tortious-interference claim, the plaintiff must prove “(1) the existence of a business relationship; (2) knowledge of the relationship on the part of the defendant; (3) an intentional and unjustified interference with the relationship by the defendant; and (4) damage to the plaintiff as a result of the breach of the relationship.” Ethan Allen, Inc. v. Georgetown Manor, Inc., 647 So.2d 812 (Fla.1994). Pursuant to the Southern District of Florida’s ruling in Duty Free Americas, Inc. v. Estee Lauder Companies, Inc., 946 F. Supp. 2d 1321 (S.D. Fla. 2013), the plaintiff is the factual scenario supra will likely be unable to demonstrate a protected business relationship sufficient to justify a claim for tortious interference.
Duty Free involves the competitive bidding process for airport duty-free stores. Duty-free operators, such as the plaintiff Duty Free Americas, Inc. (“DFA”), generally secure space to operate duty-free stores in a particular airport via competitive bidding. Defendant, Estee Lauder Companies, Inc. (“ELC”), is the largest manufacturer of beauty products sold in duty-free stores. Prior to June 2008, DFA and ELC had a healthy business relationship. However, beginning in June 2008, ELC announced it would be raising its pricing, causing DFA to object and refuse to further sell ELC products. DFA subsequently discovered that ELC ultimately did not raise its prices, and thus tried to mend its relationship with ELC, but ELC refused to continue doing business with DFA.
Thereafter, in December 2008, an RFP was issued for the operation of a duty free store at Newark Liberty International Airport (“Newark Airport”). DFA and its rival duty free stores submitted bids. However, before the identities of the bidders were made public, ELC sent an unsolicited letter to the leasing agent who managed the RFP process for Newark Airport, which highlighted and promoted ELC’s authorized duty-free retail partners, specifically excluding DFA. DFA’s bid was ultimately rejected. Approximately two and a half years later, an RFP was issued to lease and develop a duty-free store in Boston Logan International Airport, where DFA was the incumbent duty-free store, for a new seven-year term. During the bidding process, ELC communicated with decision makers for the RFP in a manner similar to the letter ELC had sent during the Newark RFP, and DFA’s bid was ultimately rejected. ELC also intervened during the bidding process for an RFP in Orlando International Airport in 2011, where the airport decision makers specifically cited DFA’s inability to sell ELC products as a central reason why DFA’s bid was ultimately rejected.
Based on the foregoing, DFA filed suit against ELC, alleging, inter alia, tortious interference with a business relationship. The Southern District of Florida dismissed DFA’s tortious interference claim because DFA failed to properly allege a protectable business relationship, holding as follows:
[A] bidder generally cannot establish a protected business relationship with an entity soliciting bids through a competitive bidding process…[T]o establish a protected business relationship within a bidding process, a plaintiff must allege additional facts indicating that the relationship went beyond the bidding process and into negotiations which in all probability would have been completed.
Pursuant to the Southern District’s holding in Duty Free, tortious interference claims in the competitive bidding context will likely fail due to lack of a protectable business relationship. Although Duty Free provides a way for plaintiffs to establish a protectable business relationship, the majority of unsuccessful bidders will be unable to allege such facts. If you have any questions or concerns regarding tortious interference or other causes of action that could arise in the competitive bidding context, Peter Mavrick is a Fort Lauderdale business litigation lawyer who can assist you.
The Fort Lauderdale business litigation attorneys at the Mavrick Law Firm have successfully represented many businesses in Florida business litigation cases throughout the Miami-Dade, Broward, and Palm Beach County areas encompassed by the Third and Fourth District Courts of Appeal, as well as Hillsborough, Sarasota, and other counties encompassed by the Second Circuit Court of Appeals. This article is not a substitute for legal advice tailored to a particular situation. Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311.