Bailey v. St. Louis
196 So. 3d 375
| Fla. Dist. Ct. App. | 2016Background
- Laserscopic Spinal (Bailey and others) developed a unique minimally invasive spine‑surgery business. They disclosed a confidential business plan and financials to EFO during due diligence for financing.
- EFO offered to invest on terms giving it control; when negotiations soured EFO allegedly threatened to take the doctors and the company and thereafter recruited two physician‑owners (St. Louis and Perry) to leave and form a competing venture (Laser Spine Institute).
- The trial court found EFO and the doctors misused Laserscopic’s confidential plan, solicited employees and patients, made false statements about Bailey, and used internal documents and patient leads to launch the competitor.
- Appellants sued for breach of fiduciary duty, tortious interference, FDUTPA violations, defamation, conspiracy, and related claims; the case was tried to the court (bench trial).
- The trial court entered judgment for Appellants but awarded only $1.6 million in out‑of‑pocket damages (accepting one expert’s out‑of‑pocket calculation of about $6.8 million) and denied disgorgement, punitive damages, and FDUTPA damages against EFO; Appellants appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sufficiency and calculation of out‑of‑pocket damages | Bailey: trial court should have awarded full expert‑calculated out‑of‑pocket losses (~$6.8M). | Appellees: trial court discretely set a lower amount; no explanation required. | Reversed and remanded — trial court must explain basis for awarding $1.6M or retry damages. |
| Disgorgement of defendant profits | Bailey: equitable disgorgement appropriate; expert estimated profits ≈ $271M (or gross revenue ≈ $283M). | Appellees: profits attributable to CEO Horne’s management efforts, so not fully disgorgeable. | Reversed — trial court failed to state whether it awarded disgorgement; evidence supports potential disgorgement because management efforts were within compensated duties. Remand to specify. |
| Punitive damages for breach of fiduciary duty and related torts | Bailey: Appellees’ conduct was intentional, malicious, and wanton; punitive damages warranted. | Appellees: not supported by clear and convincing evidence; trial court found no legal basis. | Reversed — factual findings support punitive damages; remand to determine amount if any. |
| FDUTPA damages standing and remedy | Bailey: FDUTPA amended in 2001 replaces “consumer” with “person,” permitting competitors to recover damages for unfair trade practices. | EFO: competitor status precludes damages; only injunctive relief appropriate. | Reversed — court must award FDUTPA damages where violations found; 2001 amendment permits damages by a "person," not limited to consumers. |
Key Cases Cited
- Zippertubing Co. v. Teleflex Inc., 757 F.2d 1401 (3d Cir.) (discussing disgorgement of profits as a measure of damages for tortious interference)
- Pidcock v. Sunnyland Am., Inc., 854 F.2d 443 (11th Cir.) (profits realized by defrauding purchaser are proximate consequence of fraud and may be disgorged)
- Siebel v. Scott, 725 F.2d 995 (5th Cir.) (profits may be non‑disgorgeable if due to special/unique efforts not compensable to defendant)
- Wackenhut Corp. v. Canty, 359 So. 2d 430 (Fla.) (court’s and jury’s roles regarding punitive damages; court decides legal basis)
- Mortellite v. American Tower, L.P., 819 So. 2d 928 (Fla. 2d DCA) (punitive damages appropriate where majority shareholder misled minority for self‑dealing)
- Am. Cyanamid Co. v. Roy, 498 So. 2d 859 (Fla.) (extreme recklessness may equate to intentional and reprehensible conduct)