## Facts

- Zippertubing designed and supplied closeable insulation for wires and cables, subcontracting fabrication to extrusion houses rather than manufacturing in-house.
- The New York City Transit Authority initiated a project to reinsulate R-46 subway cars; Nab Construction won the general contract.
- Nab approached Zippertubing to furnish insulation; Zippertubing engaged Surf Chemical to fabricate the product.
- Surf lacked sufficient capacity and sought additional supply; Teleflex was contacted for a quotation and potential participation as a supplier.
- In arranging a quotation, Zippertubing disclosed to Teleflex that Nab was the general contractor and provided job details and specifications.
- Teleflex bypassed Zippertubing and Surf and contracted directly with Nab to supply insulation and related products, displacing Zippertubing and Surf from the opportunity.
- At trial, plaintiffs did not attempt to prove traditional lost profits; they presented evidence that Teleflex’s net profit would have been about $715,000 as a subcontractor but was about $2,000,000 by contracting directly with Nab.
- A jury awarded $2,000,000 compensatory damages and $750,000 punitive damages; the district court added $345,862.96 prejudgment interest on compensatory damages.

## Issues

1. Whether, under New Jersey law governing tortious interference with prospective economic advantage, compensatory damages may be measured by the defendant’s profits (including “enhanced” profits from bypassing the plaintiff) rather than by the plaintiff’s proved lost profits.
2. Whether damages could include profits Teleflex earned on additional products supplied as part of the overall Nab relationship, not limited to the specific closeable insulation initially discussed.
3. Whether the evidence supported punitive damages for tortious interference and whether the punitive award improperly duplicated compensatory damages.
4. Whether prejudgment interest on the compensatory award was permissible and within the district court’s discretion under New Jersey law.

## Decision

- The Third Circuit affirmed the judgment for plaintiffs.
- The court held that New Jersey law permits a flexible damages measure in interference cases and allowed the jury to use Teleflex’s profits as a reasonable proxy for plaintiffs’ loss when direct proof of plaintiffs’ lost profits would be speculative.
- The court upheld inclusion of Teleflex’s profits from additional products supplied to Nab as part of the same wrongfully usurped business opportunity.
- The court affirmed the $750,000 punitive damages award, finding sufficient evidence of intentional, egregious interference and no impermissible duplication.
- The court affirmed prejudgment interest on compensatory damages as consistent with New Jersey practice and within the trial court’s discretion.

## Legal Principles

- Tortious interference with prospective economic advantage under New Jersey law requires a reasonable expectancy of economic benefit, the defendant’s knowledge, intentional and unjustified interference, and resulting loss.
- Damages for interference are not confined to the plaintiff’s proved lost profits; when direct proof is uncertain or speculative, the fact-finder may measure loss by the wrongdoer’s profits as a reasonable substitute.
- Where the defendant’s interference captures an overall business opportunity, damages may reflect the defendant’s profits from the full scope of that opportunity, including related products supplied through the wrongfully obtained relationship.
- Punitive damages may be awarded for tortious interference when conduct is malicious, wanton, or in willful disregard of the plaintiff’s rights; punitive damages serve punishment and deterrence distinct from compensation.
- Prejudgment interest in New Jersey tort actions may be awarded in the trial court’s discretion to compensate for the loss of use of money owed.

## Conclusion

The court sustained substantial compensatory damages for tortious interference based on the defendant’s profits from a diverted business opportunity, and it also upheld punitive damages and prejudgment interest where evidence supported deliberate, unjustified interference and the interest award served to compensate for delay in payment.


Zippertubing Co. v. Teleflex Inc., 757 F.2d 1401 (3d Cir. 1985)