Douglas Asphalt Co. v. Qore, Inc.
657 F.3d 1146
| 11th Cir. | 2011Background
- Douglas Asphalt Co. and Joel and Kyle Spivey sued GDOT, QORE, ATS, and others over GDOT’s default of two paving contracts after noticing excessive wear due to alleged lime deficiency in asphalt.
- GDOT hired QORE to test lime content using fizz, color, and tensile tests; ATS conducted an atomic absorption test under GDOT direction; data were provided to GDOT for decision making.
- Douglas alleged the tests were fraudulent and that QORE/ATS and certain GDOT officials knowingly relied on faulty data to justify default, constituting RICO violations and related torts.
- District court dismissed RICO and negligent misrepresentation/fraud claims; later granted summary judgment to QORE on defamation and allowed ATS defenses to proceed, with a trial resulting in a large jury verdict for Douglas against ATS.
- On appeal, the Eleventh Circuit affirmed dismissal of RICO claims, affirmed summary judgment for QORE on defamation and negligence, but vacated ATS verdicts and remanded for entry of judgment in ATS’s favor.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| RICO §1962(c) viability | Douglas relied on misrepresentations for injury. | No reliance pleaded or established. | RICO claims dismissed; no direct/causative reliance shown. |
| RICO §1962(d) conspiracy claim | Conspiracy to violate RICO existed. | No substantive RICO violation to conspiracy claim. | Conspiracy claim dismissed. |
| Defamation statute of limitations | Injurious falsehood theory saves timely filing. | Libel defamation by QORE/ATS timely only if within one year. | Statute of limitations bars defamation claim against QORE; time-barred. |
| Negligence claim against QORE | GDOT reliance reflected independent duty. | No duty owed to Douglas; no independent privity. | QORE owed no duty; district court affirmed summary judgment for QORE. |
| Negligence/defendant ATS liability | ATS liable for negligent testing and misrepresentation. | No duty to Douglas; reports truthful and not libelous. | ATS judgment reversed; remanded for entry of judgment in ATS's favor; district court’s denial of JMOL reversed as to ATS. |
Key Cases Cited
- Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (U.S. 2008) (change in RICO reliance standard allowing plaintiffs to claim reliance even without pleading direct reliance)
- Pelletier v. Zweifel, 921 F.2d 1465 (11th Cir. 1991) (standing requires direct injury flowing from RICO violation)
- Byrne v. Nezhat, 261 F.3d 1075 (11th Cir. 2001) (reliance requirement for RICO mail/wire fraud claims)
- Andrews v. American Tel. & Tel. Co., 95 F.3d 1014 (11th Cir. 1996) (RICO pleading standards with mail/wire fraud)
- Badische Corp. v. Caylor, 257 Ga. 131 (Ga. 1987) (professional liability limits; foreseeability does not create duty to third parties)
- Robert & Co. v. Rhodes-Haverty P'ship, 250 Ga. 680 (Ga. 1983) ( Restatement-based professional duty extending to those who rely on information)
- Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (U.S. 1983) (final judgments; standard for reconsideration and reopening orders)
- Rentrop v. Spectranetics Corp., 550 F.3d 1112 (Fed. Cir. 2008) (waiver when change in controlling law is not raised to district court)