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ARCHER DANIELS MIDLAND CO. v. WHITACRE

August 5, 1999

ARCHER DANIELS MIDLAND COMPANY, A DELAWARE CORPORATION, PLAINTIFF,
v.
MARK W. WHITACRE, DEFENDANT.



The opinion of the court was delivered by: McCUSKEY, District Judge.

  ORDER

This case is before the court for ruling on two Motions filed by Plaintiff, Archer Daniels Midland Company (ADM), a Motion for Summary Judgment (# 137) and a Motion to Stay (# 159). Following careful review, ADM's Motion for Summary Judgment (# 137) is GRANTED in part and DENIED in part. In addition, ADM's Motion to Stay proceedings regarding Count VII of its Amended Complaint (# 159) is GRANTED. ADM's request to voluntarily dismiss Count IV of its Amended Complaint is GRANTED. This court is also providing notice to ADM that it intends to dismiss Counts V and VI of ADM's Amended Complaint for the reasons stated in this Order. ADM is allowed fourteen (14) days to file any objections to the dismissal of Counts V and VI. See Stewart Title Guar. Co. v. Cadle Co., 74 F.3d 835, 836-37 (7th Cir. 1996).

FACTS

Defendant, Mark W. Whitacre, began his employment with ADM on November 13, 1989. He was originally vice-president of ADM BioChem. ADM BioChem was later named ADM BioProducts Division. In May 1990, Whitacre was promoted to president of ADM BioProducts Division, which produces lysine. In November 1992, Whitacre became a corporate vice-president of ADM. Also in November 1992, Whitacre began taping conversations at ADM. The recordings were turned over to the FBI to be used in its investigation into allegations of price-fixing of lysine. On June 27, 1995, the FBI raided ADM's corporate headquarters. On August 7, 1995, Whitacre's employment was terminated. Whitacre was informed by letter that he was being terminated "for cause, including the theft of at least $2.5 million from the Company."

ADM filed its original Complaint against Whitacre on September 19, 1996, in the circuit court of Macon County. In its 39-page complaint, ADM alleged that Whitacre unlawfully obtained over $9.5 million from ADM during his employment with ADM. In Count I, ADM claimed that Whitacre was liable for the breach of fiduciary duties. In Count II, ADM alleged that Whitacre was liable for conversion. In Count III, ADM alleged that Whitacre was liable for fraud. In Count IV, ADM sought an accounting and the imposition of a constructive trust. In Count V, ADM sought a declaratory judgment that Whitacre continues to be obligated pursuant to the Non-Disclosure Agreement signed during his employment and that Whitacre is barred from disclosing information described within the Non-Disclosure Agreement. In Count VI, ADM named various individuals allegedly involved with Whitacre in unlawfully obtaining money from ADM as Respondents in Discovery. ADM requested that they be required to participate and respond to discovery in this case.

Whitacre removed the action to this court on October 17, 1996, on the basis of diversity of citizenship (28 U.S.C. § 1332) as Whitacre was then a resident of North Carolina. On November 22, 1996, Whitacre filed an Answer to the Complaint and a Counterclaim. In his Counterclaim, Whitacre sought damages from ADM for: (1) retaliatory discharge following his cooperation with the FBI in its investigation into price-fixing (Count I); (2) breach of contract (Count II), based upon ADM's breach of three stock option agreements; (3) intentional infliction of emotional distress (Count III); and (4) five counts of defamation (Counts IV, V, VI, VII and VIII).

On January 9, 1997, ADM filed its Complaint in Case No. 97-2005 against many of the individuals named as Respondents in Discovery. This case has recently been settled by all of the parties, and an Order dismissing the case was entered by this court on July 14, 1999.

On October 10, 1997, Whitacre pleaded guilty to 37 counts of an indictment charging him with wire fraud, interstate transportation of stolen property, conspiracy to defraud the United States, money laundering and filing false Income Tax returns. On March 4, 1998, Whitacre was sentenced to 108 months' incarceration and was ordered to pay ADM $11,403,698 in restitution.

On July 21, 1998, this court granted ADM's motion to amend its Complaint and add Count VII, alleging that Whitacre violated Federal wiretapping statutes (18 U.S.C. § 2511(1), 2512(1)) and Count VIII, alleging that Whitacre violated Illinois' eavesdropping statute (720 Ill. Comp. Stat. 5/14-2 (West 1996)). Whitacre filed his Answer to these additional counts on August 14, 1998.

ADM filed a Motion for Summary Judgment (# 137) on September 10, 1998. ADM also filed a Statement of Undisputed Facts, a lengthy Memorandum in Support of the Motion and three volumes of exhibits. In its Motion, ADM sought a judgment in its favor on Counts I, II, III, V, VII and VIII of its Amended Complaint. ADM also sought a judgment in its favor and against Whitacre on all counts of Whitacre's Counterclaim.

On September 17, 1998, following a jury trial before United States District Judge Blanche M. Manning, Whitacre and ADM executives Michael D. Andreas and Terrance S. Wilson were found guilty of conspiring to fix the global price and allocate the sales volume of lysine. See United States v. Andreas, 39 F. Supp.2d 1048, 1054 (N.D.Ill. 1998). On December 16, 1998, Whitacre filed his Response to the Motion for Summary Judgment.

ADM filed a Motion to Stay (# 159) on April 7, 1999. ADM noted that United States District Judge Michael M. Mihm entered an Order in In re High Fructose Corn Syrup Antitrust Litigation, 46 F. Supp.2d 819 (C.D.Ill. 1999). According to ADM, this Order related to the same tapes at issue in Count VII of ADM's Amended Complaint. ADM stated that an appeal from Judge Mihm's Order would be filed. ADM argued that it would serve judicial economy to stay resolution of its Motion for Summary Judgment regarding Count VII pending the disposition of the forthcoming appeal. Whitacre has not responded to the Motion to Stay.

Whitacre was sentenced by Judge Manning on July 9, 1999. He was sentenced to a term of 30 months in prison, 20 months to be consecutive to the sentence previously imposed by Judge Baker. United States v. Andreas, 1999 WL 515484, at *17 (N.D.Ill. 1999).

ANALYSIS

I. SUMMARY JUDGMENT STANDARD

This court first notes that ruling on ADM's Motion for Summary Judgment has been complicated by Whitacre's failure to comply with the Central District of Illinois' Local Rules. Local Rule 7.1(D)(2) provides:

  Similar to answering a complaint, in response the
  party opposing the summary judgment, shall file a
  separate document (entitled "Response to statement
  of Undisputed Facts") which numerically responds to
  each of the movant's undisputed facts. The party will
  either admit or contest the fact. If the fact is
  contested, the party (1) shall submit a short and
  plain statement of why the fact is in dispute and (2)
  cite to discovery material or affidavits that support
  the contention that the fact is disputed. (Emphasis
  in original.)

In this case, Whitacre was allowed numerous extensions of time in which to file his Response to the Motion for Summary Judgment. In fact, the Response was filed more than three months after the Motion was filed. Nevertheless, Whitacre did not comply with the requirements of Local Rule 7.1(D). In the Response, Whitacre merely listed the numbers of Plaintiff's Undisputed Facts which he contested. He provided no statement of why any of the facts were in dispute and no citation to discovery material or affidavits. In addition, Whitacre has provided this court with little reasoned analysis explaining why summary judgment should not be granted.

The Seventh Circuit has repeatedly upheld the strict enforcement of the local rules and has sustained the entry of summary judgment when the non-movant fails to submit a factual statement in the form required by the local rules. Columbia Pictures Indus., Inc. v. Landa, 974 F. Supp. 1, 3 (C.D.Ill. 1997) (citing Waldridge v. American Hoechst Corp., 24 F.3d 918, 922 (7th Cir. 1994)). However, strict enforcement of the local rules does not mean that a party's failure to comply with the rules automatically results in summary judgment for the moving party. LaSalle Bank Lake View v. Seguban, 54 F.3d 387, 392 (7th Cir. 1995). It remains "the movant's burden to demonstrate that no genuine issue of material fact exists and that he is entitled to summary judgment as a matter of law." Doe v. Cunningham, 30 F.3d 879, 883 (7th Cir. 1994). Accordingly, the district court must make the further finding that summary judgment is proper as a matter of law. LaSalle Bank, 54 F.3d at 392. "Where the evidentiary matter in support of the motion [for summary judgment] does not establish the absence of a genuine issue, summary judgment must be denied even if no opposing evidentiary matter is presented." Adickes v. S.H. Kress & Co., 398 U.S. 144, 160, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970) (quoting the Advisory Committee Note on the 1963 Amendment to subdivision (e) of Rule 56 of the Federal Rules of Civil Procedure); see also Wienco, Inc. v. Katahn Assocs., Inc., 965 F.2d 565, 568 (7th Cir. 1992).

Summary judgment shall be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In ruling on a motion for summary judgment, a district court has one task and one task only: to decide, based upon the evidence of record, whether there is any material dispute of fact that requires a trial. Waldridge, 24 F.3d at 920. Neither the mere existence of some alleged factual dispute between the parties nor the existence of some metaphysical doubt as to the material facts is sufficient to defeat a motion for summary judgment. Hoffman v. MCA, Inc., 144 F.3d 1117, 1121 (7th Cir. 1998).

II. ADM'S CLAIMS FOR DAMAGES

In Counts I, II and III of its Amended Complaint, ADM seeks damages from Whitacre for breach of fiduciary duty, fraud and conversion. ADM has provided detailed documentation of fraudulent transactions engaged in by Whitacre during his employment with ADM. This court concludes that ADM has presented more than sufficient evidence to establish that Whitacre engaged in fraudulent transactions, beginning in 1991 and continuing into 1995, which caused ADM to pay a total of $9,538,694 for services it never received. Indeed, on October 10, 1997, Whitacre pleaded guilty to 37 counts of the indictment against him based upon the fact that he engaged in these transactions. On March 4, 1998, when he was sentenced for those crimes, he was ...


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