Elevacity U.S., LLC v. Schweda
4:22-cv-00042
| E.D. Tex. | Oct 12, 2022Background:
- Elevacity, a direct-sales company, requires distributors to accept electronic agreements via its Back-Office portal (click-to-accept) to sell products and recruit other distributors.
- In 2021 Elevacity posted Amended Agreements (Independent Brand Partner Agreement and Policies and Procedures) to distributors’ Back-Offices, adding non-solicitation and social-media restrictions (including a 12-month post-termination no-recruit clause).
- Brian Schweda joined as a distributor in 2018, accepted the prior agreements, and used Facebook to market Elevacity and recruit distributors; he resigned on December 17, 2021.
- After resigning, Elevacity alleges Schweda used Facebook to promote a competing product and solicited former Elevacity distributors, who then joined his new venture.
- Elevacity sued Schweda for breach of contract and tortious interference with existing contracts; Schweda moved to dismiss under Rule 12(b)(6), arguing (1) Elevacity failed to allege third-party breaches and (2) the economic loss rule bars the tort claim.
- The Court denied the motion to dismiss, finding Elevacity plausibly alleged tortious interference and that the economic loss rule did not bar the claim at this stage.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sufficiency of tortious-interference pleadings | Elevacity alleges Schweda willfully solicited Elevacity distributors to join his competing venture, causing termination of distributor contracts. | Schweda says Elevacity failed to plead that any distributor actually breached their contract, so no tortious interference was pleaded. | Court: Complaint plausibly alleges intentional interference causing other distributors to leave; claim survives Rule 12(b)(6). |
| Applicability of the economic-loss rule | Elevacity argues Schweda breached an independent common-law duty not to interfere with third-party contracts; harms extend beyond Elevacity’s contract with Schweda. | Schweda contends the claim is really a contract claim (based on non-solicit/social-media provisions), so economic-loss rule bars tort recovery. | Court: Economic-loss rule does not apply on these facts—Elevacity alleges an independent tort duty and seeks harms beyond its contract with Schweda. |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must state a claim that is plausible on its face)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (two-step plausibility/pleading framework; disregard conclusory allegations)
- Prudential Ins. Co. of Am. v. Fin. Rev. Servs., Inc., 29 S.W.3d 74 (Tex. 2000) (elements of tortious interference with existing contract)
- El Paso Healthcare Sys., Ltd. v. Murphy, 518 S.W.3d 412 (Tex. 2017) (tortious-interference requires proof that defendant caused a third-party breach)
- WickFire, L.L.C. v. Laura Woodruff; TriMax Media, L.L.C., 989 F.3d 343 (5th Cir. 2021) (discussing requirement of showing breach for interference claim)
- Chapman Custom Homes, Inc. v. Dall. Plumbing Co., 445 S.W.3d 716 (Tex. 2014) (explaining scope of economic-loss rule)
- Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d 407 (Tex. 2011) (economic-loss rule does not automatically bar tort claims between strangers to a contract)
- Exxon Mobil Corp. v. Kinder Morgan Operating L.P. "A", 192 S.W.3d 120 (Tex. App.—Houston [14th Dist.] 2006) (distinguishing contract-only duties from independent tort duties)
- Lincoln Gen. Ins. Co. v. U.S. Auto Ins. Servs., Inc., 787 F.3d 716 (5th Cir. 2015) (useful rule-of-thumb whether plaintiff could sue in tort if contract fully performed)