Appeal from the United States District Court for the Eastern District of Wisconsin.
No. 93-C-0080 Rudolph T. Randa, Judge.
Before Cummings, Flaum, and Kanne, Circuit Judges.
Argued September 18, 1997
Bruner Corporation designs and manufactures water treatment systems. In the mid-1980s, a trusted Bruner Corporation employee named John Balogh began selling the Corporation's products to various retailers on his own and pocketing the profits. One of the purchasers of this stolen property was R.A. Bruner, a sole proprietorship run by the son of Bruner Corporation's founder. Bruner Corporation eventually discovered the scheme and sued R.A. Bruner, among others, *fn1 for violations of the Racketeer-Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. sec. 1962(c), the Wisconsin Organized Crime Control Act (WOCCA), Wis. Stat. sec. 946.783(3), and Wisconsin's civil conspiracy law, Wis. Stat. sec. 134.01. The complaint also contained a claim for conversion.
Both parties moved for summary judgment. The district court rejected Bruner Corporation's RICO, WOCCA, and civil conspiracy claims. However, the court entered judgment in favor of Bruner Corporation on the conversion charge and, finding that no genuine issue of material fact existed regarding the damages for conversion, the court calculated damages in the amount of $220,498.70. Both parties appeal the district court's decision.
In R.A. Bruner's appeal of the amount of conversion damages, we vacate the district court's award and remand for further proceedings to recalculate conversion damages. In Bruner Corporation's appeal of the dismissal of its RICO, WOCCA, and civil conspiracy claims, we reverse and remand for further proceedings, because genuine issues of material fact exist regarding R.A. Bruner's knowledge that the goods it purchased from John Balogh were stolen.
A. Relationship Between Bruner Corporation and R.A. Bruner.
Until the late 1960s, Appellant Robert A. Bruner, Sr. worked for Bruner Corporation, which was founded in the 1940s by Ted Bruner, the appellant's father. In 1974, Robert Bruner formed a sole proprietorship, operating under the name "R.A. Bruner," to sell and service the products of Bruner Corporation and other manufacturers. Bruner Corporation is no longer owned by the Bruner family. The Corporation has changed hands several times over the years; the current management took control of the company in April 1990.
Starting in the mid-1980s, R.A. Bruner purchased Bruner Corporation products both directly from the Corporation's customer service department and indirectly through John Balogh, a long-time Corporation employee who served as a liaison to the retailers of Corporation products. At that time, Bruner Corporation sold its products to consumers through official manufacturer's representatives as well as through independent retailers. Although R.A. Bruner was an independent retailer, it bought Bruner Corporation products at the same discounted rate--40% below the list price--as the official manufacturer's representatives.
This arrangement changed when new management took over Bruner Corporation in 1990. The new management decided to make direct sales only to official manufacturer's representatives, who would continue to receive a 40% discount. Accordingly, management told R.A. Bruner and other independent retailers that they would no longer be able to buy directly from Bruner Corporation.
Despite this change in official policy, John Balogh continued to sell the Corporation's products to R.A. Bruner after 1990. At some point during this period, R.A. Bruner began to receive an even greater discount (46% off list price) from Balogh, purportedly to allow it to remain competitive with the local official manufacturer's representative, Stickler & Associates. Many, if not all, of the Balogh sales were unauthorized; John Balogh was stealing ...