later, Celex confirmed with SkyMall its intention to advertise in the Fall 1993 SkyMall publications. SkyMall agreed to purchase Celex products at wholesale and to advertise those products with the SUCCESSORIES mark.
On July 28, 1993, Dwayne Williams and Neil Sexton, Celex's Senior Vice President of Direct Marketing, met at Williams' cabin. During that visit, Sexton brought to Williams' attention the fact that Peter Walts and Mac Anderson were exploring the idea of advertising in SkyMall; however, Sexton also indicated that he was not involved in that process and was not sure how far Walts and Anderson would go with it.
At some time prior to August 2, 1993, Dwayne Williams conveyed to his father Marvin - Executive Gallery's chief executive officer - the substance of his conversations with Anderson and Sexton; specifically, Williams told his father of Anderson's merger proposal; Anderson's proposal to differentiate Celex and Executive Gallery's products by January 1, 1994; and that Sexton had communicated, in confidence, that Celex was considering advertising in SkyMall. On August 2, 1993, Marvin Williams sent Anderson a response to Anderson's letter of July 15, 1993, expressing his agreement that the two parties should work toward the January 1, 1994 timetable proposed by Anderson but requesting Anderson's commitment to continue furnishing Executive Gallery with product in the early part of 1994 so as to enable Executive Gallery to fill orders resulting from catalog and airline advertising already scheduled for late 1993.
Marvin Williams met with Anderson in early August of 1993, at which time they discussed the possibility of a merger and differentiation of the two companies' products. In his deposition testimony, Marvin Williams stated that although Celex's advertising in SkyMall would have a "very serious" material impact on Executive Gallery, he did not raise the issue with Anderson during the August meeting because he believed it to be a rumor passed by Sexton in confidence and he did not want to jeopardize Sexton. M. Williams Dep. at 102, 105, 107. Williams also stated that he did not raise the issue because it was a very good, open, detailed meeting in which Anderson was "sharing . . . all sorts of things that would be considered very detailed and confidential . . . and I did not feel it was appropriate, in view of the progress of the meeting, to get into that subject, because it was obviously not true, because he would have said something about it if it were." Id. at 102-03. Anderson did not raise the issue.
In mid-August 1993, Executive Gallery, through Dwayne Williams, placed a series of purchase orders with Celex for a variety of Celex products in the total amount of $ 695,706.25
at wholesale prices of 75% of the retail price and with a 120-day payment term. The order - the largest order Executive Gallery had ever placed with Celex - was made with the knowledge and consent of Marvin Williams.
In his deposition testimony, Dwayne Williams testified that Sexton's disclosure relating to Celex's exploration of advertising in SkyMall was not material to his decision to issue the order. D. Williams Dep. at 151-52. In his subsequent affidavit, Dwayne Williams explained that it was not material because his father, Marvin, had met with Anderson in early August "and was convinced that the rumor was just that, a rumor, and that Anderson did not truly intend to advertise in the airlines against us." D. Williams 7/8/93 Aff. P 30.
On September 16, 1993, Anderson informed Dwayne Williams by letter that Celex would be advertising its products in SkyMall beginning in October 1993. Marvin Williams responded to Anderson's letter on October 11, 1993, stating that he was "surprised" by the decision and that he felt "deceived" and "betrayed."
After September 1993 and through December 1993, Executive Gallery made significant payments to Celex on the August 1993 purchase orders; there remains, however, a substantial unpaid balance. In a letter dated February 3, 1994, from Executive Gallery's counsel to Celex's corporate attorney - apparently in response to a letter of January 24, 1994, sent by Celex's corporate attorney to Dwayne Williams regarding alleged infringement of some of Celex's products by some of Executive Gallery's products - Executive Gallery's counsel conceded that Executive Gallery owes Celex money but was going to withhold payment:
Despite your statement that you do not wish to institute any legal proceedings, that threat is certainly implicit in your message and your past history on the litigation front in this area gives my client good cause for concern that you may choose to use the courts to bully my client into unwarranted submission. Any such legal battle could be damaging to my client, damages for which my client will hold you responsible. Accordingly, my client wishes to resolve this matter before continuing to make payments it owes to Celex, so that if Celex chooses to pursue this matter and cause my client damages my client will have the ability to easily offset those damages without protracted litigation to recover them. We therefore must have your commitment on this before further payments are made.
Celex's Facts I P 60, Ex. 28, 2/3/94 letter to T. Dillon from D. Maher (emphasis added). Celex brings this lawsuit, among other reasons discussed later in this opinion, to recover payment on Executive Gallery's outstanding balances. See Compl., counts IX (breach of contract), X (account stated), and XI (unjust enrichment). Celex's motion for summary judgment on these counts is one of the motions presently before the court.
In response to Celex's lawsuit, Executive Gallery has counterclaimed against Celex alleging tortious interference with business opportunity (counterclaim count I) and violation of Illinois' Consumer Fraud and Deceptive Business Practices Act (counterclaim count II). The core of Executive Gallery's tortious interference count relates to Celex's entry into the airline advertisement marketing channel. In particular, Executive Gallery contends that by "invading" Executive Gallery's allegedly exclusive airline advertising province, Celex intentionally interfered with Executive Gallery's business expectancies with its past and prospective customers. Executive Gallery's deceptive business practices count also relates to Celex's decision to advertise in the airline advertising channel. Specifically, Executive Gallery accuses Celex of accepting Executive Gallery's $ 700,000.00 order under false pretenses by deliberately concealing the fact that it had arranged to advertise the same products in airline pockets thereby capturing and reducing the sales contemplated by Executive Gallery. Celex moves for summary judgment on both of these counterclaims.
The court shall address the counterclaim counts in turn.
Summary Judgment Standards
Summary judgment is proper only if the record shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c). A genuine issue for trial exists only when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). The court must view all evidence in a light most favorable to the nonmoving party, Valley Liquors, Inc. v. Renfield Importers, Ltd., 822 F.2d 656, 659 (7th Cir.), cert. denied, 484 U.S. 977, 98 L. Ed. 2d 486, 108 S. Ct. 488 (1987), and draw all inferences in the nonmovant's favor. Santiago v. Lane, 894 F.2d 218, 221 (7th Cir. 1990). However, if the evidence is merely colorable, or is not significantly probative, summary judgment may be granted. Liberty Lobby, 477 U.S. at 249-50; Flip Side Productions, Inc. v. Jam Productions, Ltd., 843 F.2d 1024, 1032 (7th Cir.), cert. denied, 488 U.S. 909, 102 L. Ed. 2d 249, 109 S. Ct. 261 (1988). In determining whether a genuine issue exists, the court "must view the evidence presented through the prism of the substantive evidentiary burden." Liberty Lobby, 477 U.S. at 254. In making its determination, the court's sole function is to determine whether sufficient evidence exists to support a verdict in the nonmovant's favor. Credibility determinations, weighing evidence, and drawing reasonable inferences are jury functions, not those of a judge when deciding a motion for summary judgment. Liberty Lobby, 477 U.S. at 255.
We begin our analysis of the merits of Celex's motions for summary judgment by considering Executive Gallery's counterclaims. Thereafter, we turn to Celex's motion for summary judgment on counts IX, X, and XI.
Tortious Interference with Business Opportunity
To prevail on its tortious interference counterclaim, Executive Gallery must prove the following: (1) Executive Gallery had a reasonable expectation of entering into a valid business relationship; (2) Celex knew of Executive Gallery's expectancy; (3) Celex purposefully interfered to defeat Executive Gallery's expectancy, preventing it from ripening into a valid business relationship; and (4) Executive Gallery suffered damages as a result of the interference. Delloma v. Consolidation Coal Co., 996 F.2d 168, 170-71 (7th Cir. 1993) (citing Fellhauer v. City of Geneva, 142 Ill. 2d 495, 568 N.E.2d 870, 878, 154 Ill. Dec. 649 (1991)). Additionally, if Celex's alleged interference is privileged, Executive Gallery must prove that Celex's conduct was malicious - which, in this context, means "intentional and without justification." Id.
Celex argues that it is entitled to summary judgment on Executive Gallery's tortious interference count on three grounds: First, Celex contends that Executive Gallery failed to adduce any evidence that it had a valid business expectancy of entering into business relationships with any specific, or identifiable, third parties. Second, Celex contends that Executive Gallery has failed to demonstrate that its alleged damages are proximately caused by Celex's conduct. Finally, Celex contends that its conduct is protected under the Illinois competitor's privilege.
The initial thrust of Celex's motion for summary judgment is that Executive Gallery has failed to prove that it had a valid expectation of entering into business with any identifiable third parties. Executive Gallery responds that it has adequately adduced evidence of an identifiable class of third-parties with whom it had a reasonable expectation of entering into business relationships - namely, corporate executives. The only evidence Executive Gallery offers in support of its claim of a reasonable expectancy of entering into a valid business relationship is the assertion in Dwayne William's affidavit that "based upon our specialized techniques and substantial airline advertising expenditures over the years, we have developed an established market with airline travelers, and particularly with business executives who are the most common airline travelers." Dwayne Williams 7/8/94 Aff. P 5. Thus, we must determine at the outset whether this statement is sufficient to raise a genuine issue of material fact as to whether Executive Gallery has a valid business expectancy.
Almost without exception, Executive Gallery has directed to the court's attention to cases holding that a plaintiff is not required to specifically identify (i.e., name) the third party with whom it has a business expectancy in order to satisfy the pleading requirements of the cause of action. Derson Group Ltd. v. Right Management Consultants, Inc., 683 F. Supp. 1224, 1229 (N.D. Ill. 1988); Knapp v. McCoy, 548 F. Supp. 1115, 1117 (N.D. Ill. 1982); Downers Grove Volkswagen, Inc. v. Wigglesworth Imports, Inc., 190 Ill. App. 3d 524, 546 N.E.2d 33, 37, 137 Ill. Dec. 409 (Ill. Ct. App. 1989); Crinkley v. Dow Jones and Co., 67 Ill. App. 3d 869, 385 N.E.2d 714, 719-22, 24 Ill. Dec. 573 (Ill. Ct. App. 1978); O'Brien v. State St. Bank & Trust Co., 82 Ill. App. 3d 83, 401 N.E.2d 1356, 1358, 37 Ill. Dec. 263 (Ill. Ct. App. 1980). All of the foregoing cases were decided in the context of a Rule 12(b) (6) motion to dismiss (or its state equivalent). Plainly, the holdings in these cases, which address the adequacy of the pleadings, are not controlling when deciding a motion for summary judgment - wherein the issue is the adequacy of the evidence. In this regard, it is noteworthy that in Crinkley, the court observed that the pleading requirement of alleging an "'identifiable' rather than 'identified'" third-party with whom the plaintiff had a business expectancy, "indicates that the third party's specific identity or name is to be revealed at a subsequent time, such as trial." Crinkley, 385 N.E.2d at 722. Or, we might add, in opposition to a motion for summary judgment. However, in response to Celex's motion for summary judgment, Executive Gallery has not even attempted to identify any specific third parties with whom it had a reasonable business expectancy. Instead, it rests its opposition to Celex's motion on the position that its past and prospective corporate executive customers "constitute an identifiable class for a tortious interference claim." Executive Gallery's Mem. Opp. Mot. Dis. Summ. J. at 9. This is insufficient. Although Executive Gallery's past and prospective corporate executive customers may constitute an identifiable class for purposes of allowing Executive Gallery to defeat a motion to dismiss, Executive Gallery must come forward with its evidence and identify particular third parties with whom it had a reasonable expectancy of entering into business to defeat a motion for summary judgment.
Executive Gallery's explanation that "the names of the entities with whom Executive Gallery has lost business opportunities has not yet been revealed in discovery simply because Celex has not sought to discover them," id. at 10, reflects a fundamental misapprehension of the nonmovant's burden in responding to a motion for summary judgment. It is well-established that a party opposing a motion for summary judgment must set forth specific facts showing that there is a genuine issue for trial; the party may not hold back evidence until trial but rather must present sufficient evidence to show that there is a triable issue. See Camelot Care Ctrs. v. Planters Lifesavers Co., 836 F. Supp. 545, 554 (N.D. Ill. 1993) ("The opponent of a Rule 56 motion cannot 'hold back' evidence - if the motion is lost there is no second chance.") (quoting Santella v. Grishaber, 654 F. Supp. 428, 436 (ND. Ill. 1987)). Because Executive Gallery has failed to identify any specific third parties who actually contemplated entering into a business relationship with Executive Gallery,
we conclude that it has failed to satisfy the first element of a claim for tortious interference with prospective business opportunity - viz., that it had a reasonable expectation of entering into a valid business relationship.
Executive Gallery's evidentiary shortcoming also spills over and ultimately undermines its showing on the fourth element of a tortious interference claim - viz., damages caused by the alleged interference. The only evidence offered by Executive Gallery on the issue of damages is Dwayne Williams' conclusory statements such as: "Celex' airline advertising . . . has caused Executive Gallery to lose the sales that it expected to result from its airline advertising" and "Executive Gallery has lost at least $ 2 million directly attributable to Celex' interference." However, in the absence of any supporting evidence showing that the behavior of present or prospective customers was actually altered as a result of Celex's allegedly interfering conduct, Executive Gallery has failed to establish that it has suffered damages as a result of that conduct. For the foregoing reasons, we find that Executive Gallery has failed to meet its burden of establishing a genuine issue of material fact as to either its reasonable expectancy of entering into prospective business relationships or as to its damages resulting from Celex's conduct. Accordingly, summary judgment must be granted against Executive Gallery on its tortious interference counterclaim.
Deceptive Business Practices
Executive Gallery contends that Celex violated the Illinois Consumer Fraud and Deceptive Business Practices Act ("the Consumer Fraud Act" or "the Act") by falsely representing that it would not advertise on the airlines and by failing to disclose - until after accepting Executive Gallery's offer to purchase approximately $ 700,000 worth of product - that it had, in fact, contracted to advertise on the airlines.
The undisputed record in this case reveals that "on numerous occasions during the period from 1991 through 1993," at least two Celex Executives (Walts and Sexton) represented to Dwayne Williams that Celex would confer exclusive airline advertising rights to Executive Gallery. Ex. Gallery's Add'l Facts I P 19; D. Williams 7/8/94 Aff. P 17; see supra note 11.
It is also uncontroverted that although Celex confirmed its commitment to SkyMall to advertise its products in the SkyMall advertising catalog on July 20, 1993, and signed a final agreement with SkyMall on August 3, 1993, it did not disclose either of these facts to Executive Gallery until after Executive Gallery had placed its purchase orders totalling approximately $ 700,000 in mid-August 1993 - notwithstanding the fact that Marvin Williams met with Mac Anderson on August 3, 1993, the very day that Celex finalized its agreement with SkyMall.
Additionally, Neil Sexton testified that he understood - based on his dealings with Dwayne Williams - that Executive Gallery was going to sell the products that were the subject of the $ 700,000 purchase order via Executive Gallery's catalogs and direct response advertising channels - most of which was airline advertising. Sexton Dep. at 140. Indeed, Sexton testified that he expected that Executive Gallery would advertise the products in its airline advertising, id. at 141, and that it was foreseeable that Executive Gallery would be injured by Celex's advertising in the airlines, id. at 148. Executive Gallery predicates its statutory fraud count on Celex's alleged misrepresentations that Executive Gallery would have exclusive airline advertising rights as well as Celex's concealment of the fact that it had entered into an agreement to advertise in SkyMall until after it had accepted Executive Gallery's $ 700,000 purchase order.
In support of its motion for summary judgment, Celex advances the following positions: (1) The alleged omission is not actionable because Celex had no duty to disclose its agreement to advertise in SkyMall; (2) Executive Gallery's charge of concealment is undermined because Executive Gallery was on notice that Celex was considering advertising in SkyMall; (3) Executive Gallery's reliance on the alleged misrepresentations or omission was not reasonable; (4) The alleged misrepresentations and omission were not material.
Section 2 of the Consumer Fraud Act provides, in pertinent part, as follows:
Unfair methods of competition and unfair or deceptive acts or practices, including but not limited to the use or employment of any deception, fraud, false pretense, false promise, misrepresentation, or the concealment, suppression or omission of such material fact, with intent that others rely upon the concealment, suppression or omission of such material fact . . . in the conduct of any trade or commerce are hereby declared unlawful whether any person has in fact been misled, deceived or damaged thereby.