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Wingert & Associates v. Paramount Apparel, 05-4259 (2006)

Court: Court of Appeals for the Eighth Circuit Number: 05-4259 Visitors: 38
Filed: Aug. 14, 2006
Latest Update: Mar. 02, 2020
Summary: United States Court of Appeals FOR THE EIGHTH CIRCUIT _ No. 05-4259 _ * Wingert & Associates, Inc., * * Plaintiff-Appellee, * * Appeal from the United States v. * District Court for the District * of Minnesota. Paramount Apparel International, Inc., * * Defendant - Appellant. * _ No. 05-4387 _ * Wingert & Associates, Inc., * * Appeal from the United States Plaintiff-Appellant, * District Court for the District * of Minnesota. v. * * Paramount Apparel International, Inc., * * Defendant-Appellee.
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                   United States Court of Appeals
                         FOR THE EIGHTH CIRCUIT
                                 ___________

                                 No. 05-4259
                                 ___________

                                       *
Wingert & Associates, Inc.,            *
                                       *
           Plaintiff-Appellee,         *
                                       *  Appeal from the United States
     v.                                *  District Court for the District
                                       *  of Minnesota.
Paramount Apparel International, Inc., *
                                       *
           Defendant - Appellant. *
                                  ___________

                                 No. 05-4387
                                 ___________

                                       *
Wingert & Associates, Inc.,            *
                                       * Appeal from the United States
           Plaintiff-Appellant,        * District Court for the District
                                       * of Minnesota.
     v.                                *
                                       *
Paramount Apparel International, Inc., *
                                       *
           Defendant-Appellee.         *
                                  ___________

                            Submitted: June 16, 2006
                               Filed: August 14, 2006
                                ___________

Before MURPHY, MELLOY, and COLLOTON, Circuit Judges.
                                    ___________

MURPHY, Circuit Judge.

       After Wingert & Associates, Inc. (Wingert) was terminated by Paramount
International, Inc. (Paramount), Wingert brought this action for unjust enrichment,
tortious interference with contract, and violation of the Minnesota Termination of
Sales Representatives Act. The district court1 dismissed the common law claims on
summary judgment and held a jury trial on the statutory claim. The jury returned a
verdict in favor of Wingert in the amount of $1,049,894, and the district court denied
Paramount's motion for judgment notwithstanding the verdict, to vacate and amend
the judgment, or for a new trial. Paramount appeals, and Wingert cross appeals the
dismissal of its unjust enrichment claim. We affirm.

        Wingert, a sales representative organization domiciled in Minnesota, entered
into a verbal agreement in 1995 to be a sales representative for Paramount, a Missouri
corporation which manufactures apparel and headwear. Under their agreement
Wingert solicited wholesale orders for Paramount's golf headwear line, and Paramount
payed Wingert a fifteen percent commission on the sales. The duration of the
agreement was not specified. Wingert employed its own sales force, which consisted
of at least twenty agents who received a ten percent commission on their sales, i.e. two
thirds of the contract commission.

       On December 13, 2002 Paramount sent Wingert a letter terminating the
relationship effective December 16, 2002, but indicating it would pay commissions
on sales through January 16, 2003. Paramount subsequently contacted eighteen of the
agents working for Wingert and contracted directly with them for a twelve percent
commission.

      1
        The Honorable Ann D. Montgomery, United States District Judge for the
District of Minnesota.

                                          -2-
       The Minnesota Termination of Sales Representatives Act provides that a sales
representative agreement of indefinite duration "shall be treated as if it were for a
definite duration expiring 180 days after the giving of written notice" of termination.
Minn. Stat. § 325E.37, subd. 3. When the agreement is terminated, the sales
representative is "entitled to be paid for all sales as to which [it] would have been
entitled to commissions pursuant to the provisions of the sales representative
agreement, made prior to the ... end of the notification period." Minn. Stat. § 325E.37,
subd. 4. Thus, a representative terminated without 180 days notice is entitled to
commissions earned within 180 days of the termination. The statute also separately
provides for an award of damages without a time limitation. See § 325E.37, subd. 5.

       Wingert brought this diversity action against Paramount, asserting that
Paramount's failure to give 180 days notice violated the Act and then amended its
complaint to add claims of tortious interference with contract and unjust enrichment
based on Paramount's hiring of its agents. Paramount filed an answer and an amended
answer and later moved for summary judgment on the common law claims and for
limiting Wingert's statutory claim for recovery to net commissions (five percent of
sales) for the 180 days after its written notice of termination. The district court
granted summary judgment on the non statutory claims but refused to limit the
commissions.

       One week before trial Paramount moved to amend its answer to include a
defense based on Wingert's failure to enforce noncompete clauses against its agents.
The district court denied the motion as untimely, but indicated that Paramount would
be allowed to crossexamine Wingert about its failure to mitigate. It granted Wingert's
motion in limine to exclude evidence of the noncompete agreements, including
evidence of prior litigation to enforce such an agreement. Wingert's motion to exclude
evidence of settlement negotiations was also granted. Despite Wingert's failure to
include in its cause of action a request for damages beyond the statutory period, the



                                          -3-
district court decided to allow limited testimony about lost profits beyond that six
month period.

       At trial Wingert introduced expert testimony from accountant Arthur Cobb
concerning its damages. Cobb testified that the amount of Wingert's lost commissions
during the 180 day period following Paramount's notice was approximately $228,366.
He also testified over Paramount's objection that Wingert's lost profits for the next
four and a half year period were approximately $821,000. Cobb explained that
because Wingert had not received 180 days notice, it did not have sufficient agents to
serve a new replacement line and could not arrange for replacements. During Cobb's
testimony Wingert introduced a document that contained booking information on
Paramount's headwear line. Paramount objected that it was a settlement document, but
the court admitted it after redaction of a reference to settlement. Paramount
unsuccessfully sought to introduce Cobb's expert report, but was able to question him
about it.

       Before closing arguments, Paramount requested judgment as a matter of law on
the issue of damages beyond the 180 day notice period and based on insufficiency of
the evidence of lost commissions. The motion was denied, and the jury found in favor
of Wingert and awarded damages of $228,366 for failure to provide 180 days notice
and $821,518 for damages beyond the 180 day period. Paramount filed a post trial
motion requesting judgment in its favor on damages outside the 180 day period and
asking the district court to vacate and amend the judgment on commissions during the
180 day period. In the alternative it requested a new trial. The district court denied
the motion, and Paramount appeals, challenging the damages awarded and several
evidentiary rulings. Wingert cross appealed the grant of summary judgment on its
common law claims but has since limited its focus to the dismissal of its unjust
enrichment claim.




                                         -4-
       On its appeal Paramount challenges both damage awards. It argues that the
award for lost commissions during the statutory notice period should have been
limited to Wingert's net loss of only five percent commissions (since the agents would
have received ten percent). Judgment notwithstanding the verdict should have been
granted for any damages beyond the 180 day notice period it claims because they are
not authorized by the Act. In the alternative, Paramount requests a new trial so that
it may introduce additional evidence. We review the district court's rulings under
Rule 59(e) for abuse of discretion, Mathenia v. Delo, 
99 F.3d 1476
, 1480 (8th Cir.
1996), and the denial of judgment as a matter of law de novo. Keenan v. Computer
Assocs. Int'l, Inc., 
13 F.3d 1266
, 1268 (8th Cir. 1994). We review questions of
statutory interpretation de novo. Crane v. Sullivan, 
993 F.2d 1335
, 1336 (8th Cir.
1993).

       The Act provides that the payment for sales during the 180 day notice period
shall be "in accordance with the terms of the sales representative agreement". See
Minn. Stat. § 325E.37, subd. 4. The agreement between Paramount and Wingert was
for commissions of fifteen percent; under the language of the statute, Wingert is
entitled to the full amount of those commissions. The district court did not abuse its
discretion in overruling Paramount's objection to evidence regarding the gross
commissions lost or in denying the motion to amend the judgment.

       The award of damages beyond the notice period is supported by the plain
language of the Act and Minnesota case law. The Act gives terminated sales
representatives the option of arbitration or court action and specifies the available
remedies in subdivision 5, which include "(2) reinstatement of the sales representative
agreement, or damages; (3) payment of commissions due under subdivision 4; (4)
reasonable attorneys' fees and costs to a prevailing sales representative". In this case,
the jury award included both commissions under subdivision 4 in the amount of
$228,366 and other damages in the form of lost profits for 4.5 years in the amount of
$821,518. Subdivision 5 of the Act provides for damages in addition to commission

                                          -5-
payments for the 180 day period under subdivision 4, and it does not limit the period
for which such damages may be awarded. Paramount asserts that the Act does not
permit future damages beyond the 180 day period allowed by subdivision 4. Such
an interpretation of the statute effectively excises subdivision 5 and is therefore
unreasonable. A statutory provision should not be interpreted to make other
provisions meaningless or superfluous. See Cody v. Hillard, 
304 F.3d 767
, 776 (8th
Cir. 2002).

      The interpretation advocated by Wingert is consistent with the Minnesota Court
of Appeals' decision in RIO/Bill Blass v. Bredeson Assocs., Inc., 
1998 WL 27299
(Minn. Ct. App. Jan. 27, 1998), in which the court determined that "[n]othing in the
language of the statute limits commissions due a sales representative under an
agreement to those earned within the 180-day winding-up period." It upheld a damage
award based on conduct approximately one year before termination. See id., 
1998 WL 27299
, at *1-*2. This interpretation by a Minnesota appellate court is helpful to
our understanding even though it was issued in an unpublished and unprecedential
opinion. See Minn. Stat. § 480A.08(3).

       The plain language of subdivision 5 and the award of damages outside the
notification period in RIO/Bill Blass support the district court's award of lost profits
beyond the six month period.2 We conclude that the district court's denial of judgment


      2
       The legislative history presented to us is not to the contrary. During the
process which led to revision of the statute to include damages, see 1991 Minn. Sess.
Law Serv. Ch. 190 (H.F. 786) (WEST), Senator Bill Luther sponsored a successful
amendment addressing the breadth of the damages provision. He explained that use
of the general term "damages" would provide for "unrecouped investment" for
example. Senator Frederic Knaak responded that he understood the sponsor to be
seeking to prevent limitations on "consequential damages". (Transcribed excerpts
from the floor hearing included in Wingert's Appendix, to which Paramount has not
objected.)

                                          -6-
notwithstanding the verdict on this claim was not erroneous and that Paramount is not
entitled to a new trial.

       Paramount also challenges four evidentiary rulings and asserts that the district
court should have granted its motions to amend its answer and amend the judgment
or grant a new trial. We review decisions about the admissibility of evidence and the
denial of permission to amend for abuse of discretion. See Lampkins v. Thompson,
337 F.3d 1009
, 1012 (8th Cir. 2003); Norbeck v. Davenport Community School Dist.,
545 F.2d 63
, 70 (8th Cir. 1976).

       Paramount argues that the district court erred to its prejudice by denying it leave
to amend its answer despite Wingert's delay in producing its noncompete agreements.
Where leave of court is required to amend a pleading, see Fed. R. Civ. P. 15(e), a
court may deny such leave for several reasons, including undue delay or undue
prejudice to the opposing party. See Bell v. Allstate Life Ins. Co., 
160 F.3d 452
, 453
(8th Cir. 1998). Paramount only moved to amend one week before trial, and the
district court allowed it to cross examine Wingert's witnesses about mitigation
opportunities and instructed the jury about mitigation. We conclude that the district
court did not abuse its discretion by denying the amendment given Paramount's delay
in seeking it. Even if there had been an abuse of discretion, the denial was harmless
given Paramount's opportunities to address the issue at trial.

       Paramount further alleges that the exclusion of evidence to impeach Mr.
Wingert's testimony and attack his credibility was an abuse of discretion. It wanted
to introduce Wingert's noncompete agreements with its agents and related matters as
prior inconsistent statements to impeach his testimony about his ability to acquire a
replacement line. The district court decided on the first day of trial to exclude
evidence about the noncompete agreements on relevance grounds, particularly since
it had not been established that Wingert had a duty to enforce such agreements to
mitigate losses. Paramount asserts that the district court failed to analyze the

                                           -7-
importance of the agreements for impeachment and instead relied on its ruling early
in the trial that the agreements were not relevant. Relevance analysis applies to
impeachment evidence as well, however. See Firemen's Fund Ins. Co. v. Thien, 
8 F.3d 1307
, 1312 (8th Cir. 1993) (prior inconsistent statements must "pertain to a
matter of sufficient relevancy"). The district court's determination that evidence about
the noncompete agreements should be excluded was not an abuse of discretion.

       Paramount also asserts that the district court's admission of redacted documents
violated Federal Rule of Evidence 106. Under Rule 106, a party has a right to
introduce another part of a document first introduced by his adversary if it "ought in
fairness to be considered contemporaneously". Fed. R. Evid. 106. Paramount
focuses on a settlement document generated by its lawyers which contained a brief
cover letter and calculations related to sales and commissions, invoking the settlement
protections of Rule 408. It complains that admission of the letter was contrary to the
district court's earlier decision to exclude evidence of settlement negotiations and that
the letter improperly defined an amount of damages for the jury. The district court
redacted the one reference to settlement in the cover letter, and its decision that the
remainder of the document was relevant and not unduly prejudicial was not an abuse
of discretion.

        Paramount finally argues that the district court violated Rule 106 by not
allowing it to introduce the expert report prepared by Wingert's expert, Arthur Cobb.
 In his report Cobb calculated the lost profits on a net basis rather than the gross basis
about which he testified. Since the district court permitted Paramount to question
Cobb about the report, there was no prejudice. We conclude that none of the
evidentiary decisions challenged by Paramount constituted an abuse of discretion and
the motion to amend the judgment or grant a new trial was appropriately rejected.

      Finally, we address Wingert's cross appeal challenging the grant of summary
judgment on its unjust enrichment claim. The district court granted summary

                                           -8-
judgment on this claim because Paramount's hiring of Wingert's agents did not provide
a "benefit to which it was not entitled". Neither was it illegal or a breach of contract,
and Wingert did not allege a quasi contract. Wingert asserts that Paramount
"improperly capitalized on its failure to provide notice so that it could hire away
Wingert's sales force in order to gain unfettered access to Wingert's established
customer lists", thereby not having to "ramp up its own line", receiving "the
knowledge and relationships with customers" built by Wingert, and saving three
percent on commissions.

       To assert a claim of unjust enrichment, a party must demonstrate that the other
was unjustly enriched "in the sense that the term 'unjustly' could mean illegally or
unlawfully." Ventura v. Titan Sports, Inc., 
65 F.3d 725
, 729 (8th Cir. 1995). While
Paramount may have benefitted from its failure to notify Wingert of its termination
as required by the Act, that unlawful benefit was addressed by the award of damages
under subdivisions 4 and 5 of the statute. Hiring Wingert's agents – the alleged basis
for the unjust enrichment claim – was a lawful act that was separate from the failure
to notify. The fact that the hires allegedly occurred during the statutory notification
period does not make them unlawful, and any connection between the failure to give
the statutory notice and the hiring is too tenuous to support an unjust enrichment
claim.

       Because Paramount has not shown that the damages awarded violated the
statute or that the evidentiary rulings were an abuse of discretion and Wingert has not
shown that summary judgment was inappropriately granted on its unjust enrichment
claim, we affirm the judgment of the district court.

MELLOY, Circuit Judge, concurring in part and dissenting in part.

       I concur in the majority's opinion with the exception of the affirmance of the
award of four-and-a-half years of lost profits to Wingert. I believe that such an award
is not authorized by the Minnesota Termination of Sales Representatives Act.

                                          -9-
       The Act requires companies to provide sales representatives with 180 days'
notice before terminating an agreement. If proper notice is not given, remedies are
available to the sales representatives. Subdivision 4, titled "Rights upon termination,"
requires the payment of commissions that would have been earned during the 180-day
notice period if notice had been properly given. In a different subsection, the Act lists
additional remedies that can be awarded by an arbitrator. The Minnesota Supreme
Court has adopted the principle that when a statute provides a new right and a
corresponding remedy, that remedy is generally exclusive. Davis & Michel v. Great
N. Ry. Co., 
151 N.W. 128
, 129 (Minn. 1915) ("[I]n those cases where a right, not
existing at common law, is created by statute, and a remedy for its enforcement is also
provided . . . the remedy so prescribed is generally held exclusive."); Lom v. Itasca
County, 
2002 WL 264658
, *4 (Minn. Ct. App. Feb. 26, 2002) (citing Davis for the
same proposition) (unpublished). Accordingly, we should be cautious in presuming
that additional, unspecified remedies are available.

       Although Wingert was serving as a sales representative, its role was similar to
that of a distributor in that Wingert made its money by selling goods manufactured by
another company. In Sofa Gallery, Inc. v. Stratford Co., 
872 F.2d 259
(8th Cir. 1989),
we held that a furniture distributor with an at-will contract with a manufacturer had
no legitimate expectation of lost profits after the distribution agreement was
terminated. We stated:

      We agree with the district court that Sofa Gallery is not entitled to
      recover its lost future profits even if Stratford did breach its duty to give
      reasonable notice. Sofa Gallery’s business arrangement with Stratford
      was terminable at will and thus, as the district court correctly noted, it
      "had no legitimate expectation that it should profit from the Stratford line
      after the termination."




                                          -10-

Id. at 263.
Like the plaintiff in Sofa Gallery, Wingert would be entitled to no lost
profits after termination but for the Act which provides for 180 days of commissions.
Neither the Act nor the legislative history provided to us make any mention of lost
profits after the statutory notice period.




      In the absence of any explicit reference in the statute to lost profits, the majority
supports its holding by looking to an unpublished decision of the Minnesota Court of
Appeals and to subdivision 5 of the Act. I disagree with the majority's interpretation
of both of these sources.

       As the majority notes, in RIO/Bill Blass, the Minnesota court did award
damages for a time not included in the notification period. 
1998 WL 27299
at *1.
However, that award was given in an entirely different context. The sales
representative in RIO/Bill Blass was awarded commissions that had been earned
before the statutory termination period. This award was a logical result as the
Minnesota legislature certainly did not intend the Act to preclude sales representatives
from receiving commissions to which they had a contractual right. However, an
award for commissions actually earned before termination is dramatically different
than an award for future profits after the statutory notice period. In this regard, it is
important to note that the parties did not negotiate any fixed term for their oral
contract and that the Act required Paramount to provide only 180 days’ notice of
termination. Thus, the award of four-and-a-half years of lost profits binds the interests
of the parties far longer than the time period contemplated by their contract or the Act.



      I am also not persuaded by the majority's assertion that the damages award is
"supported by the plain language of the Act." In listing the remedies that can be
awarded by an arbitrator, the Act lists "reinstatement of the sales representative

                                           -11-
agreement, or damages" on a separate line from "payment of commissions due." The
majority takes this to mean that all types of damages are appropriate, including the lost
profits awarded here. I disagree with this interpretation for several reasons.

       The majority cites Cody v. Hillard for the proposition that "[a] statutory
provision should not be interpreted to make other provisions meaningless or
superfluous." However, Cody also instructs that "[s]tatutes are to be interpreted as a
whole . . . 
." 304 F.3d at 776
. A reasonable reading of the whole Act reflects the
legislature's intent to provide a base level of protection for sales representatives.

       If the primary concern is that we not "effectively excise" any portion of the
statute, I believe the majority’s interpretation causes more harm than it prevents. The
majority has held that the word "damages" in subdivision 5(b)(2) entitles Wingert to
lost profits for a five-year period. Since "lost commissions" are certainly a subset of
"lost profits," the majority’s interpretation effectively excises subdivision 5(b)(3)
referencing "payment of commissions."

       More importantly, an interpretation that limits damages to the statutory notice
period does not render superfluous subdivision 5. If Wingert was owed commissions
earned before the statutory notice period, it would be entitled to those commissions,
as was the sales representative in RIO/Bill Blass. Additionally, if Wingert had other,
viable causes of action, such as the tortious interference and breach of contract claims
that were dismissed in this case, those could also result in additional damages.

       Companies that terminate sales agreements must provide 180 days' notice
before doing so. If they fail to provide such notice, they must provide the same level
of compensation, in the form of commissions, that they would have been obligated to
provide if notice had been properly given. I find no support in the statute for the
interpretation that the failure to provide 180 days' notice subjects the company to
potentially limitless liability in the form of future lost profits. Although four-and-a-

                                          -12-
half years of lost profits were awarded here, the majority’s interpretation of the Act
could lead to future claims of lost profits for ten years, twenty years, or for the entire
projected career of the sales representative.

       I believe such a result is unreasonable. The Minnesota legislature has cautioned
us that in "ascertaining the intention of the legislature the courts may be guided by the
. . . presumption[]" that "[t]he legislature does not intend a result that is . . .
unreasonable." Minn. Stat. § 645.17. In my opinion, a more reasonable interpretation
of the Act limits damages resulting from violations of the Act to the 180-day period
where notice was required.




      For the foregoing reasons, I respectfully concur in part and dissent in part.

                        ______________________________




                                          -13-

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