Southern District of Florida Finds Lost Profits Recoverable for Corporate-Competitor Plaintiffs Under FDUTPA
The Chief Judge of the Southern District of Florida has ruled that corporate-competitor plaintiffs may recover lost profits under the Florida Deceptive and Unfair Trade Practices Act ("FDUTPA").
In Tymar Distribution LLC v. Mitchell Group USA, LLC, Case No. 21-21976-CIV-ALTONAGA/Torres (S.D. Fla. Sept. 8, 2021), the Chief Judge of the Southern District of Florida ruled that a corporate-competitor FDUTPA plaintiff could rely on its lost profits to satisfy the amount in controversy required for diversity jurisdiction. On their motion to dismiss plaintiff's FDUTPA claim, defendants argued that plaintiff's lost profits were not recoverable under FDUTPA, which allows only for the recovery of "actual damages." Defendants maintained that lost profits are not "actual damages," but merely a type of consequential damages. Plaintiff responded that in a competitor's FDUTPA case, lost profits are the competitor's "actual damages."
The court agreed with plaintiff. The court noted that the general measure of "actual damages" for a consumer's FDUTPA claim is the difference between the market value of a product or service as represented and the market value as actually delivered. The court also explained that, although FDUTPA claims were once reserved only for consumers, a 2001 amendment allowed corporate-competitor plaintiffs to bring FDUTPA claims as well.
The court reasoned that the general measure of "actual damages" for consumers under FDUTPA is inapplicable to corporate-competitor plaintiffs, since for such plaintiffs, there is no transaction by which to measure the value of what was expected versus the value of what was actually delivered. Noting that the Florida Supreme Court has long equated actual damages with compensatory damages, the court further reasoned that lost profits "are often directly caused by a defendant's wrongful act and recoverable simply as compensatory damages." Thus, the court "join[ed] other federal district courts in holding that a corporate-competitor plaintiff may seek lost profits damages under the FDUTPA."
Despite this ruling, the court ultimately dismissed plaintiff's FDUTPA claim without prejudice for failing to allege consumer harm sufficiently. The court reasoned that, in a competition case, a FDUTPA plaintiff must allege "consumer harm" under the Sherman Act. Plaintiff alleged that defendants' actions prevented plaintiff from selling the same brands as defendants, thereby enabling defendants to raise their prices significantly. The court held that this amounted only to a reduction in intrabrand competition, which "as a general matter … is not an anticompetitive effect under the Sherman Act."
