L.G. Motorsports, Inc. v. NGMCO, Inc. et al

Filing 38

REPORT AND RECOMMENDATIONS re 6 MOTION to Dismiss filed by NGMCO, Inc should be granted in part and denied in part, Plaintiff should be required to file an amended complaint accordingly and a scheduling order should be entered to govern the remaining claims in this case. Signed by Magistrate Judge Don D. Bush on 3/6/12. (ttm, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION
L.G. MOTORSPORTS, INC.

§
§
Plaintiff,
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§
VS.
§
§
NGMCO, INC.,
§
CORVETTE RACING, INC.,
§
MICHELIN NORTH AMERICA, INC., §
and DOUG FEHAN
§
§
Defendants.
§

CASE NO. 4:11CV112

REPORT AND RECOMMENDATIONS OF UNITED STATES MAGISTRATE JUDGE
Now before the Court is Defendant General Motors, LLC f/k/a NGMCO, Inc.’s Motion to
Dismiss (Dkt. 6). As set forth below, the Court finds that the motion should be GRANTED in part
and DENIED in part.
FACTUAL BACKGROUND
This is a removed action. Plaintiff L.G. Motorsports, Inc. (LG) claims that its efforts to race
the number 28 Corvette C6 in the GT2 Class of the American Le Mans Series has been stymied by
the anti-competitive acts of GM, LLC (New GM), Corvette Racing, Michelin and Doug Fehan.
LG contends that its efforts to continue its World Challenge record in racing was
compromised when the Old GM (the GM that went into bankruptcy) lobbied to have the sanctioning
body add 190 pounds to its Corvette which “effectively neutered the vehicle.” LG decided to race
its car in the American Le Mans Series, but only after it secured promises from Old GM that GM

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would not race a GT2 series car.
LG is in the business of not only racing but also building race cars and selling automobile
parts. LG contends that its success is tied to its performance on the track. LG contends that, to race
in various series, there must be a completed homologation process. One series, the Automobile Club
de L’Ouest (ACO) requires that factory specifications be provided for the road car and that any
deviations be approved by the governing body. A competitor of ACO, Federation Internationale de
L’ Automobile (FIA) requires authorization and cooperation of the manufacturer to complete
homologation.
LG purchased a homologated race car from Riley Technologies (Riley). This car was
approved by GM and sold as a GT2 Corvette to LG. LG claims that it purchased the car based on
the promise by GM that it would complete all necessary approvals for homologation according to
the FIA and that GM was not planning to race a vehicle in the GT2 class. This all took place in the
spring of 2008.
LG raced the car in the ACO series in 2008, and in the fall of 2008, alleges that GM suddenly
changed course and decided to race a GT2 class car in the FIA series and refused to work with Riley
and complete the homologation process required by the FIA. All these actions occurred prior to
GM’s bankruptcy. As a result, LG could not compete in the FIA sanctioned events, resulting in a
reversal of its racing fortunes. LG alleges that the new GM has continued to take actions to exclude
LG from sanctioned FIA events.
In a statement that would make any advertising agency proud, LG contends that Michelin
tires are the best in the sport. And second best is not even close.

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LG contends that the new GM, Corvette Racing (the in-house marketing organization of new
GM) and Doug Fehan, the head of Corvette Racing, have all entered into an express agreement with
Michelin whereby Michelin will not provide or sell Michelin racing tires to LG. Because Michelin
would not provide tires, LG alleges that its driver quit the team resulting in a substantial loss of time
and money to LG.1 LG alleges in its petition a number of instances where it tried to secure Michelin
tires but to no avail.
In August of 2009, LG alleges, Michelin told it that the new GM did not want LG to have
Michelin tires. LG states that this is the type of anti-competitive activity practiced by the new GM
to secure its place in the winner’s circle to the exclusion of a smaller competitor, LG.
LG brings its suit for violations of the Sherman Antitrust Act and Texas Free Enterprise and
Antitrust Act of 1983, unlawful monopolization (and attempted monopolization) in violation of
Section 2 of the Sherman Act and Texas Free Enterprise and Antitrust Act of 1983, tortious
interference with prospective contractual relations, tortious interference with existing contract,
business disparagement and civil conspiracy.
STANDARD
General Motors, LLC has filed a Motion under Federal Rule of Civil Procedure 12(b)(6)
(Dkt. 6). Defendant Michelin North America, Inc. has filed an unopposed notice of joinder in the
motion (Dkt. 9). In the Fifth Circuit “(A) motion to dismiss under rule 12(b)(6) ‘is viewed with
disfavor and is rarely granted.’” Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir.

1

The Court has recommended that Plaintiff’s claims against Fehan should be dismissed
for lack of personal jurisdiction.

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2000) (quoting Kaiser Aluminum & Chem. Sales v. Avondale Shipyards, 677 F.2d 1045, 1050 (5th
Cir. 1982)). The court is required to construe the complaint liberally in favor of the plaintiff, and
takes all facts pleaded in the complaint as true. See Campbell v. Wells Fargo Bank, 781 F.2d 440,
442 (5th Cir. 1986). “To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must plead ‘enough
facts to state a claim to relief that is plausible on its face.’” Severance v. Patterson, 566 F.3d 490,
501 (5th Cir. 2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1974, 167
L.Ed.2d 929 (2007)).
ANALYSIS
Disparagement
General Motors, LLC claims that LG’s disparagement claim fails. The general elements of
a claim for business disparagement are publication by the defendant of the disparaging words, falsity,
malice, lack of privilege and special damages. See Hurlbut v. Gulf Atlantic Life Ins. Co., 749 SW
2d 762 (Tex. 1987). In the petition, LG only alleges that the Defendants published disparaging
words about LG Motorsports’ economic interests - not that the Defendants disparaged LG
Motorsports. The petition is silent as to what disparaging words were stated.
LG has submitted a declaration of Lou Gigliotti, President of LG. He states that, in
September of 2009, Fehan disparaged LG by asserting that LG failed to comply with the applicable
rules - effectively, that LG had cheated or had achieved a higher qualifying position than GM’s
Corvette Racing team by other than skilled technical prowess. See Dkt. 22 at Exhibit A.
However, in ruling on a Rule 12(b)(6) motion to dismiss, the district court cannot look
beyond the pleadings, Cinel v. Connick, 15 F.3d 1338, 1341 (5th Cir.1994). Thus, the Court will not

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look beyond the pleadings here. Under Federal Rule of Civil Procedure 8(a)(2), a pleading must
contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” See
Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949, 173 L. Ed.2d 868 (2009). Rule 8 does not
require “detailed factual allegations but it demands more than an unadorned, the-defendantunlawfully-harmed-me accusation.” Id. Thus, a complaint will survive a motion to dismiss if it
contains “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed.2d 929 (2007) (internal quotation omitted).
A plaintiff meets this standard when it “pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 129 S.Ct. at
1949. Nevertheless, specific words or statements must be identified in order to determine whether
the statements are in fact disparaging or false. Granada Biosciences, Inc. v. Barrett, 958 S.W.2d
215, 222 (Tex.App.-Amarillo 1997, pet. denied).
The Court can find no statements in the petition which disparage LG or its economic
interests. Nor is there any pleading of facts in support of the publication element of its claims. See
WFAA -TV, Inc. McLemore, 978 S.W.2d 568, 571 (Tex. 1998). It is just the type of conclusory
pleading that Iqbal disfavors. After thoroughly reviewing the petition, LG’s complaint for business
disparagement does not pass “Iqbal muster.”

Restraint of Trade and Monopoly
General Motors, LLC purchased the assets of old GM on July 10, 2009. Thus, the Court will
first look to the petition to determine the complaints raised against GM, LLC on or after July 10,

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2009.
Plaintiff alleges that GM, LLC has entered into an agreement precluding LG from purchasing
or otherwise obtaining Michelin racing tires. However, other teams racing different cars are not
affected. Michelin goes along with this conduct because it wants to sell tires to GM, LLC. See Dkt.
1-1 at ¶ 36. LG also alleges that GM, LLC continues to refuse to complete the homologation with
Riley. See Dkt. 1-1 at ¶ 38. A driver for LG also tried to obtain Michelin tires for the Corvette. He
was not able to do so but was able to obtain tires for a Ford that he drove later on. See Dkt. 1-1 at
¶ 41. In or about August 2009, Michelin confirmed that GM, LLC did not want LG to have Michelin
tires. Other teams were not so precluded. See Dkt. 1-1 at ¶ 42.
Thus, viewing the petition in the light most favorable to the Plaintiff, it appears that a jealous
racing sports competitor has entered into an agreement to keep a smaller racing competitor from
competing against it by preventing a manufacturer from selling tires to the smaller racing competitor.
In addition, the larger racing competitor refuses to complete the homologation process with Riley
so the smaller racing competitor can participate in one of the valued sanctioned car events.

Section I of the Sherman Act and Texas Free Enterprise and Antitrust Act
The federal antitrust laws protect competition, not competitors. Brunswick, 429 U.S. at 488,
97 S.Ct. at 697. Section 1 of the Sherman Act states that “[e]very contract, combination in the form
of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or
with foreign nations, is declared to be illegal.” 15 U.S.C. § 1.
The first question to be addressed is whether LG has sufficiently stated a claim for per se

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violation of Section 1 of the Act. If the application of the per se rule is appropriate, competitive
harm is presumed and further analysis is unnecessary. See Viazis v. American Ass’n of Orthodonists,
314 F.3d 758, 765 (5th Cir. 2002). The Supreme Court has held that a vertical restraint is not illegal
per se unless it includes some agreement on price or price levels. See Business Electronics Corp.
v. Sharp Electronics Corp., 485 U.S. 717, 735 (1988). Here, there is no allegation as to price. GM,
LLC and Michelin are not direct competitors. Therefore, this is not a horizontal restraint case but
rather a vertical restraint case, if at all.
In order to demonstrate a violation of Section 1 of the Sherman Antitrust Act, Plaintiff must
allege a conspiracy; that the conspiracy had the effect of restraining trade, and that trade was
restrained in the relevant market. Wampler v. Southwestern Bell Telephone Co., 597 F.3d 741 (5th
Cir. 2010). Under Section 1 of the Sherman Act, a business “generally has a right to deal, or refuse
to deal, with whomever it likes, as long as it does it independently.” Monsanto Co. v Spray -Rite
Service Corp., 465 U.S. 752 , 761 , 104 S. Ct. 1464 , 1469 79 L. Ed 2d 775 (1984) (emphasis added).
The Court must first determine the relevant market.
Here, the only product referenced is Michelin tires. In rare circumstances, a single brand of
a product can constitute a relevant market for antitrust purposes. Eastman Kodak v. Image Tech.
Servs., 504 U.S. 451, 481–82, 112 S. Ct. 2072, 119 L. Ed.2d 265 (1992). But that possibility is
limited to situations in which consumers are “locked in” to a specific brand by the nature of the
product. Id. There is no structural barrier to the interchangeability of Michelin tires with tires
produced by competing manufacturers, nor has LG alleged any such structural barriers. PSKS, Inc.
v. Leegin Creative Leather Prods., Inc., 615 F.3d 412 (5th Cir. 2010). The Fifth Circuit has held that

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“absent exceptional market conditions, one brand in a market of competing brands cannot constitute
a relevant product market.” Domed Stadium Hotel, Inc. v. Holiday Inns, Inc., 732 F.2d 480, 488 (5th
Cir. 1984). Courts have regularly held that a single brand, no matter how distinctive or unique,
cannot be its own market. Little Ceasar Enterprises, Inc. v. Smith, 34 F.Supp.2d 459, 477 n. 30
(E.D. Mich. 1998) (collecting cases).
Although Plaintiff alleges that there is no racing tire comparable to a Michelin, “even where
brand loyalty is intense, courts reject the argument that a single-branded product constitutes a
relevant market.” Green Country Food Market, Inc. v. Bottling Group, LLC, 371 F.3d 1275, 1282
(10th Cir. 2004). Michelin’s refusal to sell does not prevent LG from obtaining other tires or racing
different vehicles. In any event, the Court finds that harm to overall competition is not alleged.
There is no allegation that Michelin, GM, LLC and Corvette Racing compete against each other.
Vertical restraints are to be judged according to the rule of reason. See Carlson Mach. Tools, Inc.
v. Am. Tool, Inc. 678 F.2d 1253,1259 (5th Cir. 1982). The effect of a challenged practice under the
rule of reason must be sufficient so that it “may suppress or even destroy competition” in the relevant
market. Chicago Bd. Of Trade v. United States, 246 U.S. 231, 238 (1918). The focus is on the
impact to competition as a whole within the relevant market, and not just on the impact to a
competitor. R.D. Imports Ryno Indus. Inc. v Mazda dist. (Gulf) Inc., 807 F.2d 1222, 1225 (5th Cir.
1987). Only when the restraining force of an agreement or other arrangement affecting trade
becomes unreasonably disruptive of market functions such as price setting, resource allocation,
market entry or output designation is a violation of the Sherman Act threatened. See NCAA v. Board
of Regents, 468 U.S. 85, 98, 104 S. Ct. 2948, 82 L. Ed.2d 70 (1984). Section 1 claimants must show

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more than mere injury to their own positions as competitors in the market. Les Shockley Racing, Inc.
v. National Hot Rod Ass’n, 884 F. 2d 504 (9th Cir. 1989). Under the rule of reason, an agreement
will be found unlawful only if the plaintiff shows that it actually had an adverse effect on
competition. See Consol. Metal Prods. v. Am. Petroleum Inst., 846 F.2d 284, 292-93 (5th Cir. 1988).
Plaintiff has alleged that the agreement is a per se violation of the Sherman Act, and in the
alternative, guided by the rule of reason. In NYNEX, the Supreme Court clarified that a necessary
precondition for a per se unlawful group boycott is that it must be “horizontal,” i.e., it must involve
an agreement among firms that ordinarily compete with one another at the same level of the market.
See NYNEX, 525 U.S. at 135, 119 S. Ct. 493 (“[P]recedent limits the per se rule in the boycott
context to cases involving horizontal agreements among direct competitors.”); see also Bus. Elecs.
Corp., 485 U.S. at 730, 108 S. Ct. 1515 (“Restraints imposed by agreement between competitors
have traditionally been denominated as horizontal restraints, and those imposed by agreement
between firms at different levels of distribution as vertical restraints.”). To make a per se case, the
horizontal agreement need not be between competitors of the victim.
In Klor’s, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 79 S. Ct. 705, 3 L. Ed.2d 741
(1959), a boycott arranged by a single competitor of the victim retailer, but carried out by a “wide
combination” consisting of manufacturers and distributors, as well as the competing retailer, led to
per se liability. Id. at 212-13, 79 S.Ct. 705. NYNEX harmonized Klor’s with its rule limiting per
se analysis to horizontal boycotts: “Although Klor’s involved a threat made by a single powerful
firm, it also involved a horizontal agreement among those threatened, namely, the appliance
suppliers, to hurt a competitor of the retailer who made the threat.” 525 U.S. at 135, 119 S.Ct. 493.

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Cf. Northwest Stationers, 472 U.S. at 294, 105 S.Ct. 2613 (per se liability applied to “efforts by a
firm or firms to disadvantage competitors by either directly denying or persuading or coercing
suppliers or customers to deny relationships the competitors need in the competitive struggle.”)
(internal quotations omitted and emphasis added). The Supreme Court warned that decisions to put
a victim out of business are not always the stuff of antitrust liability: “To apply the per se rule here where the buyer's decision, though not made for competitive reasons, composes part of a regulatory
fraud - would transform cases involving business behavior that is improper for various reasons, say,
cases involving nepotism or personal pique, into treble-damages antitrust cases.” Id. at 136-37, 119
S. Ct. at 493 (emphasis supplied).
The petition here is quite clear that there has been no harm to any other competitors who
drive cars other than a Corvette. In fact, the petition does not allege with any specificity whether
other Corvette teams have experienced the same cold shoulder treatment experienced by LG. At
best, there is only a cursory comment that other Corvette teams are also affected. The Court has
reviewed the petition and can find no affirmative allegations that any Corvette team was subject to
the same treatment as LG. At best, Plaintiff only alleges that the agreement precludes other Corvette
teams but does not affirmatively state that such happened.
The Court agrees with GM, LLC that Plaintiff has simply failed (and cannot do so in any
event) to show that harm to competition in the market place has occurred. For example, there is no
allegation about a reduction in competition among tire manufacturers. No tire manufacturers were
excluded from the market place because of this agreement. No tire manufacturers have been kept
out of the market because of the agreement not to sell to LG. Even if racing teams were a designated

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subset of the relevant market, there is no allegation that there has been a substantial reduction in
racing competition. The petition is quite clear that racing goes on with a number of different cars
represented. Moreover, a point well established in this Circuit is that a corporation cannot conspire
or combine with its own officers, employees, or wholly owned sales divisions and outlets in violation
of section one. H & B Equipment Company, Inc. v. International Harvester Company, 577 F.2d 239,
244 (5th Cir.1978) (citing cases). See also Cliff Food Stores, Inc. v. Kroger, Inc., 417 F.2d 203,
205–06 (5th Cir.1969).2
The Texas Free Enterprise and Antitrust Act states that its purpose is to maintain and
promote economic competition in trade and commerce and to provide the benefits of that
competition to Texas consumers. See TEX . BUS. & COM . CODE ANN . § 15.04 (Vernon 2002).
Antitrust laws protect competition, not competitors, and ultimately, the consumer is the beneficiary.
See Atlantic Richfield Co. v. USA Petrol. Co., 495 U.S. 328, 338, 110 S. Ct. 1884, 109 L. Ed.2d 333
(1990); Roy B. Taylor Sales, Inc. v. Hollymatic Corp., 28 F.3d 1379, 1382 (5th Cir.1994). The
provisions of the Texas Free Enterprise and Antitrust Act are construed in harmony with federal
judicial interpretations of comparable federal antitrust statutes to the extent they are consistent with
the purpose of the Act. See TEX . BUS. & COM . CODE ANN . § 15.04. For the reasons noted above, the
Court also dismisses Plaintiff’s claim under the state act.

2

The Court notes that the Corvette Racing Team has fared rather poorly over the last two
years. In 2010, it won one of ten entered races. In the 2011 ALMS season finale, it finished
fourth behind Ferrari, Porshe, and BMW.

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Attempted Unlawful Monopolization and Monopolization
Section 2 of the Sherman Act makes it unlawful for any person or firm to “monopolize, or
attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any
part of the trade or commerce among the several States.” 15 U.S.C. § 2. The offense of attempted
monopolization in violation of section 2 of the Sherman Act has three elements, namely: (1) that the
defendant engaged in predatory or exclusionary conduct, (2) that the defendant possessed the specific
intent to monopolize, and (3) that there was a dangerous probability that the defendant would
succeed in his attempt. Taylor Pub. Co. v. Jostens, Inc., 216 F.3d 465, 474 (5th Cir. 2000).
A plaintiff must also indicate that the defendant’s act caused damage and provide some indication
of the amount of damage. State of Alabama v. Blue Bird Body Co., Inc., 573 F.2d 309, 317 n. 8 (5th
Cir. 1978).
In order to state a claim for actual monopolization, the plaintiff needs to allege that the
violator: (1) possesses monopoly power in the relevant market; and (2) acquired or maintained that
power willfully, as distinguished from the power having arisen and continued by growth produced
by the development of a superior product, business acumen or historic accident. See U.S. v. Grinnell,
384 U.S. 563, 86 S. Ct. 1698, 16 L. Ed.2d 778 (1966); Stearns Airport Equip. Co., Inc. v. FMC
Corp., 170 F.3d 518, 522 (5th Cir.1999). Monopoly power is the power of a seller “to control prices
or exclude competition.” United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 391, 76
S. Ct. 994, 100 L. Ed. 1264 (1956). Moreover, the Fifth Circuit holds that, as a matter of law, a
market share of less than 50 percent is insufficient for a monopolization claim, but is not insufficient
for an attempted monopolization claim. See Domed Stadium Hotel, Inc. v. Holiday Inns, Inc., 732

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F.2d 480, 489 (5th Cir. 1984); Dimmitt Agri Indus., Inc. v. CPC Intern. Inc., 679 F.2d 516, 530–31,
533–34 (5th Cir. 1982), cert. denied 460 U.S. 1082, 103 S. Ct. 1770, 76 L. Ed.2d 344; Rockbit
Industries U.S.A., Inc. v. Baker Hughes, Inc., 802 F.Supp. 1544, 1549–50 (S.D. Tex. 1991). Market
power is the ability to “control prices or exclude competition.” Spirit Airlines, Inc. v. Northwest
Airlines, Inc., 431 F.3d 917, 935 (6th Cir. 2005). Section 2 is violated only when there is “conduct
which unfairly tends to destroy competition itself.” Spectrum Sports, Inc. v. McQuillan, 506 U.S.
447, 458, 113 S. Ct. 884, 122 L. Ed.2d 247 (1993). “[A] practice is not ‘anticompetitive’ simply
because it harms competitors .... Rather, a practice is ‘anticompetitive’ only if it harms the
competitive process.” Mumford v. GNC Franchising LLC, 437 F.Supp. 2d 344, 354 (W.D. Pa. 2006)
(citations omitted).
LG must allege a specific product and geographic market in which the Court can determine
whether GM possesses monopoly power. Because the relevant market provides the framework
against which economic power can be measured, defining the product and geographic markets is a
threshold requirement under Section 2. Spectrofuge Corp. v. Beckman Instruments, Inc., 575 F.2d
256, 276 (5th Cir.1978), cert. denied, 440 U.S. 939, 99 S. Ct. 1289, 59 L. Ed.2d 499 (1979). LG
defines the relevant geographic market as locations in the US and Canada in which ALMS has held
races since its inception in 1999, as well as all locations in which Corvette Racing participates in FIA
sanctioned events. Several states are identified. The products identified are homologated Corvettes
capable of racing in FIA events; racing tires that can be effectively used by a racing team to win an
ALMS racing event; and/or racing tires that can be used by a race team to consistently place in the
top three positions over the course of a racing season. There is, however, no allegation as to the

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market share controlled by GM, LLC. LG’s allegations, without more, are insufficient as a matter
of law. See Domed Stadium Hotel, Inc., 732 F.2d at 489.
As to attempted monopolization, the numbers game of market percentage is not as stringent.
See Cliff Food Stores, Inc. v. Kroger, Inc. 417 F.2d 203, 207 n.2 (5th Cir. 1969). However, a
defendant must have some legally significant share of the market before it approaches the level of
dangerous probability of success condemned by the attempt provision of section two. See H&B
Equipment Co., Inc. 577 F.2d 239, 242 (5th Cir. 1978).
As to Plaintiff’s homologation claims, the Court knows of no rule or law where a corporation
cannot deal with someone of its choosing to the exclusion of another in a pure economic context or
for that matter, as here, in a pure sporting context. Generally, the Sherman Act does not restrict the
long recognized right of a trader or manufacturer engaged in an entirely private business, freely to
exercise his own independent discretion as to parties with whom he will deal. Verizon Commc’ns
Inc. v. Law Offices of Curtis V. Trinko, 540 U.S. 398, 408, 124 S. Ct. 872, 157 L. Ed. 2d 823 (2004).
There is simply no showing that GM, LLC monopolizes the Michelin tire market. A score of other
racing teams use Michelin tires, some more successfully than GM, LLC. Likewise, there is no
showing that Michelin’s actions in refusing to sell harms the competitive process as opposed to LG,
the competitor.
The Court notes that antitrust laws are not designed to protect sporting events but rather to
guarantee economic competition. LG’s pleadings do not demonstrate that any action of Michelin
or GM, LLC have prevented it from racing in the ALMS. It merely states that, because it does not
have Michelin tires, it cannot be competitive. Nor does LG state that all cars in the ALMS use

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Michelin. It may well be that GM, LLC is engaged in unsportsmanlike conduct and that its actions
are wholly petty and self-centered. But such actions do not rise to antitrust claims under either
Section 1 or 2 of the Sherman Act.
As to the homologation allegations, even if such could be said to state some kind of antitrust
claim, GM, LLC cannot enter into a conspiracy with itself. As alleged, Corvette Racing is part of
GM, LLC and Fehan is the program manager. Plaintiff’s claims under Sections 1 and 2 of the
Sherman Act should therefore be dismissed as well as under the state statute.

Tortious Interference with Prospective Contractual Relations and Contract
The elements of tortious interference with an existing contract are: (1) an existing contract
subject to interference; (2) a willful and intentional act of interference with the contract; (3) that
proximately caused the plaintiff's injury; and (4) caused actual damages or loss. Prudential Ins. Co.
of Am. v. Fin. Review Servs., Inc., 29 S.W.3d 74, 77 (Tex. 2000). To prove a cause of action for
tortious interference with a prospective contract, a plaintiff must establish the following elements:
(1) a reasonable probability that the parties would have entered into a business relationship; (2) an
intentional, malicious intervention or an independently tortious or unlawful act performed by the
defendant with a conscious desire to prevent the relationship from occurring or with knowledge that
the interference was certain or substantially likely to occur as a result of its conduct; (3) a lack of
privilege or justification for the defendant's actions; and (4) actual harm or damages suffered by the
plaintiff as a result of the defendant’s interference, i.e., the defendant’s actions prevented the
relationship from occurring. See Tex. Disposal Sys. Landfill, Inc. v. Waste Mgmt. Holdings, Inc.,

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219 S.W.3d 563, 590 (Tex.App. - Austin 2007, pet. denied) (citing Bradford v. Vento, 48 S.W.3d
749, 757 (Tex. 2001) (agreeing with appellate court’s analysis of issue)). To establish liability for
interference with a prospective contractual relationship, the plaintiff must prove that it was harmed
by the defendant’s conduct that was either independently tortious or unlawful, i.e. conduct that would
violate some other recognized tort duty. See Wal-Mart Stores, Inc., v. Sturges, 52 S.W. 3d 711 (Tex.
2001).
Based on the allegations in the petition, the Court finds that LG has stated a claim for
interference with existing contract. LG alleges that the conduct of GM, LLC prevented it from
obtaining tires and this resulted in its driver quitting, resulting in a loss of revenue. Moreover, LG’s
petition also fairly sets out that GM, LLC’s actions prevented it from acquiring tires as it had in the
past and was accustomed to doing so. As to the prospective contract relations, the Court finds that
there is an independent tort alleged. This tort is that of interference with contractual relations.
Further, any intentional invasion of, or interference with, property rights, personal rights, or personal
liberty, causing some injury without just cause or excuse is an actionable tort. See Cooper v. Steen,
318 S.W.3d 750 (Tex.Civ. App. - Dallas 1958, no writ). The Court declines to dismiss these
particular claims.

Civil Conspiracy
An actionable civil conspiracy is a combination by two or more persons to accomplish an
unlawful purpose or to accomplish a lawful purpose by unlawful means. Massey v. Armco Steel Co.,
652 S.W.2d 932, 934 (Tex. 1983). The essential elements of a civil conspiracy are: (1) two or more

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persons; (2) an object to be accomplished; (3) a meeting of the minds on the object or course of
action; (4) one or more unlawful, overt acts; and (5) damages as the proximate result. Juhl v.
Airington, 936 S.W.2d 640, 644 (Tex. 1996); Triplex Commc’ns, Inc. v. Riley, 900 S.W.2d 716, 719
(Tex.1995). It is not the agreement itself but an injury to the plaintiff resulting from an act done
pursuant to the common purpose that gives rise to a cause of action for civil conspiracy. Carroll v.
Timmers Chevrolet, Inc., 592 S.W.2d 922, 925 (Tex. 1979). In other words, recovery is not based
on the conspiracy but on an underlying tort. Tilton v. Marshall, 925 S.W.2d 672, 681 (Tex. 1996).
Thus, a conspiracy claim is a derivative tort. Id. An interference with contract claim is such an
independent tort which would support a conspiracy claim. LG has pled such with specificity in its
petition, therefore the motion to dismiss that claim should be denied.

Texas Unfair Competition
“Unfair competition” is not, in and of itself, a separate tort. Rather, it is an “umbrella for all
statutory and nonstatutory causes of action arising out of business conduct which is contrary to
honest practice in industrial or commercial matters.” United States Sporting Prods., Inc. v. Johnny
Stewart Game Calls, Inc., 865 S.W.2d 214, 217 (Tex.App .- Waco 1993, writ denied) (quoting
American Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3, 14 (5th Cir. 1974)). Within
the broad scope of “unfair competition,” as a general area of the law, Texas recognizes a number of
independent causes of action. Id.; see, e.g., Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711 (Tex.
2001) (interference with prospective business relations); Browning Ferris, Inc. v. Reyna, 865 S.W.2d
925, 926 (Tex. 1993) (tortious interference with an existing contract); Hurlbut v. Gulf Atl. Life Ins.

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Co., 749 S.W.2d 762, 766 (Tex. 1987) (business disparagement); All Am. Builders, Inc. v. All Am.
Siding of Dallas, Inc., 991 S.W.2d 484, 488 (Tex.App. - Fort Worth 1999, no pet.) (trade name
infringement); United States Sporting Prods., 865 S.W.2d at 217 (misappropriation). And the Texas
Legislature has created private causes of action to redress harm caused by some types of unfair
competition. See, e.g., TEX . BUS . & COM . CODE ANN . § 15.21 (Vernon 2002) (providing private
cause of action for person whose business or property is injured by unlawful restraint-of-trade,
monopolization, or price-fixing); TEX . INS . CODE ANN . art. 21.21 § 16 (Vernon Supp. 2002)
(providing private cause of action for person damaged by unfair method of competition or unfair or
deceptive act or practice in the business of insurance). Liability for unfair competition requires a
“finding of some independent substantive tort or other illegal conduct.” Schoellkopf v. Pledger, 778
S.W.2d 897, 904 (Tex.App. - Dallas 1989, no writ). Because the Court has found that LG stated a
claim for interference with contract as well as prospective relations, the Court declines to dismiss
LG’s unfair competition claim.
Because Plaintiff has not opposed Defendant Michelin’s joinder in GM’s motion, all findings
as to the claims asserted against GM shall be equally applicable to Michelin.

RECOMMENDATION
Defendant General Motors, LLC f/k/a NGMCO, Inc.’s Motion to Dismiss (Dkt. 6) should
be GRANTED in part and DENIED in part, Plaintiff should be required to file an amended
complaint accordingly, and a scheduling order should be entered to govern the remaining claims in
this case.

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Within fourteen (14) days after service of the magistrate judge’s report, any party may serve
and file written objections to the findings and recommendations of the magistrate judge. 28
U.S.C.A. § 636(b)(1)(C).
Failure to file written objections to the proposed findings and recommendations contained
in this report fourteen days after service shall bar an aggrieved party from de novo review by the
.

district court of the proposed findings and recommendations and from appellate review of factual
findings accepted or adopted by the district court except on grounds of plain error or manifest
injustice. Thomas v. Arn, 474 U.S. 140, 148 (1985); Rodriguez v. Bowen, 857 F.2d 274, 276–77 (5th
Cir. 1988).
SIGNED this 6th day of March, 2012.
.

____________________________________
DON D. BUSH
UNITED STATES MAGISTRATE JUDGE

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