Auburn Sales, Inc. v. Cypros Trading & Shipping, Inc.
898 F.3d 710
6th Cir.2018Background
- Auburn Sales acted as a middleman: it arranged drop-shipped Chrysler parts (paid a ~3% fee) sold to Cypros, which resold to Middle East customers; the arrangement was entirely oral and Auburn had no written contract with Cypros or Chrysler.
- From 2010–2013 Cypros was Auburn’s sole client and represented essentially all of Auburn’s business; Auburn’s sales rose markedly before 2013.
- In Feb. 2013 the FBI raided Cypros for trafficking in counterfeit Chrysler parts; Cypros’ president pled guilty to conspiracy and trafficking in counterfeit goods.
- After the raid Chrysler terminated the supply chain (AAR → Auburn → Cypros), and Auburn Sales went out of business.
- Auburn sued Cypros in Michigan state law (diversity) for tortious interference (business relationship and prospective advantage), breach of contract, and negligence; summary judgment granted for Cypros on the tortious interference and breach claims (negligence was previously dismissed and is not appealed).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether tortious interference requires proof that defendant specifically intended to interfere with plaintiff’s business relationship | Auburn: proof of a wrongful act per se (counterfeiting) suffices; no separate intent to interfere required | Cypros: Michigan requires specific intent to interfere (purpose or knowledge that interference is substantially certain) in addition to impropriety | Held: Michigan law requires both intentional and improper interference; intentional means purpose to cause interference (or knowledge that interference is substantially certain); mere commission of a wrongful act alone is insufficient |
| Whether counterfeiting alone can satisfy "improper" element and obviate intent requirement | Auburn: counterfeiting is wrongful per se so that element is satisfied and intent need not be separately shown | Cypros: wrongful act satisfies the "improper" prong but plaintiff still must show intent to interfere | Held: Counterfeiting is wrongful per se (satisfies impropriety) but plaintiff still must prove intent to induce breach; Auburn did not prove intent |
| Whether a requirements (output) contract need be in writing under Michigan’s UCC statute of frauds | Auburn: the agreement was a requirements contract (no fixed quantity), so statute of frauds doesn’t bar enforcement | Cypros: even requirements/output contracts must be evidenced by a sufficient writing to satisfy the statute of frauds for goods ≥ $1,000 | Held: Michigan requires a writing even for requirements contracts; parties admitted no writing existed, so breach claim barred by Mich. Comp. Laws § 440.2201 |
| Whether partial performance or other exceptions take the oral sales agreement out of the statute of frauds | Auburn: partial performance or other equitable principles should validate the oral agreement | Cypros: no statutory partial-performance facts (payment or accepted goods) exist to invoke exception | Held: No applicable partial-performance exception; Auburn conceded no writing and no statutory exception facts, so the statute of frauds bars the claim |
Key Cases Cited
- United Rentals (N. Am.), Inc. v. Keizer, 355 F.3d 399 (6th Cir. 2004) (standard of review for summary judgment in diversity actions)
- Wausau Underwriters Ins. Co. v. Vulcan Dev., Inc., 323 F.3d 396 (6th Cir. 2003) (intent requirement for tortious interference is more than purposeful conduct)
- Warrior Sports, Inc. v. Nat’l Collegiate Athletic Ass’n, 623 F.3d 281 (6th Cir. 2010) (elements of Michigan tortious interference claim)
- Badiee v. Brighton Area Sch., 695 N.W.2d 521 (Mich. Ct. App. 2005) (wrongful act per se does not eliminate need to show intent to induce breach)
- Knight Enters. v. RPF Oil Co., 829 N.W.2d 345 (Mich. Ct. App. 2013) (intent defined as desire or substantial certainty to cause interference)
- Lorenz Supply Co. v. Am. Standard, Inc., 358 N.W.2d 845 (Mich. 1984) (requirements/output terms in writing satisfy statute of frauds; writing required)