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WILLIAMS ELECTRONIC GAMES, INC. v. GARRITY

January 16, 2003

WILLIAMS ELECTRONIC GAMES, INC., A DELAWARE CORPORATION, PLAINTIFF
v.
JAMES M. GARRITY, ARROW ELECTRONICS, INC., AND MILGRAY ELECTRONICS, INC., DEFENDANTS



The opinion of the court was delivered by: Robert W. Gettleman, United States District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff Williams Electronic Games, Inc. ("plaintiff" or "Williams") sued its former employee, Gregory Barry and two of its former vendors, defendants Arrow Electronics, Inc. and Milgray Electronics, Inc., alleging that Arrow and Milgray through their respective employees James Garrity (Arrow) and Lawrence Gnat and Richard Slupik (Milgray), bribed Barry to purchase parts at inflated prices. In its final, third amended eight count complaint, plaintiff named as defendants Barry, his wife Lorna Barry, Garrity, Gnat and his wife Linda Gnat, Slupik, Arrow, Milgray and a company formed by Gnat and Slupik, Microcomp, Inc., alleging (1) violations of the Racketeer Influence and Corrupt Organization Act ("RICO"), 18 U.S.C. § 1961 et seq. (Counts I and II); (2) violations of the Sherman Act, 15 U.S.C. § 1 et seq. (Count III); (3) breach of fiduciary duty and inducement to breach fiduciary duty; (Count IV); (4) fraud and conspiracy (Count V); (5) violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 et seq. (Count VI); (6) breach of contract and restitution against Barry only (Count VII); and (7) a right to an equitable accounting and constructive trust against all defendants (Count VIII). In an unpublished opinion on September 18, 2001, the court granted summary judgment on Counts III and VI, and all claims against Linda Gnat. Plaintiff settled its claims against Gregory and Lorna Barry, Gnat, Slupik, and Microcomp, prior to trial.

The court held a jury trial on plaintiff's remaining legal claims against Garrity, Arrow and Milgray asserted in Counts I, II and V. After the close of plaintiff's case, the court granted defendants' motion for a directed verdict on plaintiff's RICO claims alleged in Counts I and [I. The jury returned a verdict in plaintiff's favor on its fraud claim against Garrity, awarding plaintiff $78,000 in damages. The jury, however, denied plaintiff's punitive damage claim. With respect to Arrow and Milgray, the jury found that plaintiff had proved all of the elements of common law fraud, but entered a verdict in favor of Arrow and Milgray, finding that both defendants had proved their affirmative defenses of ratification and in pari delicto.

Plaintiff has now moved for judgment on its remaining equitable claims asserted in Counts IV and VIII against Garrity, Arrow and Milgray. Arrow and Milgray have filed cross motions for judgment on those claims. For the reasons set forth below, based both on the jury's verdict and additional findings made by this court, plaintiff's motion for judgment is denied and judgment on the equitable claims is entered in favor of Garrity, Arrow and Milgray.

FACTS

The court adopts the following findings of facts stipulated to by the parties in the final pretrial order:

1. Williams Electronic Games, Inc. is a Delaware corporation with its principal place of business in Chicago, Illinois.
2. Milgray Electronics, Inc. distributed electronic components nationwide and maintained a branch office in northern Illinois until Bell Industries, Inc. acquired Milgray in 1997.
3. Greg Barry was employed by Williams until January 1997.

4. Lawrence Gnat was employed by Milgray until March 1997.

5. Richard Slupik was employed by Milgray until March 1997.

6. Shortly after she started at Williams, Kimberly Walman decided that she did not have time to supervise Barry, and instructed Barry to report to Ronald Sommers, Williams' purchasing manager. At that time, Barry was Williams' purchasing manager of electronics.
7. In 1996, Ronald Sommers, Williams' purchasing manager, told Barry to stop doing business with brokers, including Microcomp.
8. Barry initially disobeyed Sommers' order with respect to Microcomp.
9. Because Ronald Sommers was based in Chicago, Williams hired Roger Dee in October 1996 to work in Waukegan, and Dee became an on site supervisor for electrical purchasing. Her duties included supervising Barry.
10. From 1991 through 1997, Williams' contribution margin (gross profits) on pinball games ranged from 20 to 30 percent.
11. From 1991 through 1997, Williams' contribution margin (gross profits) on video games ranged from 30 to 45 percent.
12. Before the filing of this litigation, Garrity had no contact with former Procomponents employee Jim Ayala and was not informed that Ayala was making payments to Greg Barry.
13. After his first day working for Williams, in October 1996, purchasing manager Roger Dee received a phone call from an anonymous caller who informed Dee that "your buyer made $50,000 in kickbacks last year."
14. From 1990 until early 1994, Barry reported to Russell Landsberger, Williams' vice-president of purchasing and materials management.
15. Shortly after she started at Williams, Kimberly Walman decided that she did not have time to supervise Greg Barry, and instructed Barry to report to Ronald Sommers, Williams' purchasing manager. At the time, Barry was Williams' purchasing manager of electronics.
16. Sommers supervised Greg Barry until August 1996, when Roger Dee was hired as Williams' purchasing manager of electronics. At this point, Greg Barry was demoted to senior buyer of electronics.
DISCUSSION*fn1

Under Seventh Circuit precedent, when a judge makes equitable determinations in a case in which the plaintiff's legal claims have been tried first to a jury, the judge is "bound by any factual findings made or inescapably implied by the jury's verdict." Avitia v. Metropolitan Club of Chicago, Inc., 49 F.3d 1219, 1231 (7th Cir. 1995). Accordingly, while the court is "free to make" factual findings in addition to those made in the jury trial, the "court may not make findings `contrary to or inconsistent with the jury's resolution . . . of th[e] same issue[s] as implicitly reflected in [the jury's] general verdict . . . on the damages claim." Ohio-Sealey Mattress Manufacturjpg Co. v. Sealy, Inc., 585 F.2d 821, 844 (7th Cir. 1978) (citations omitted). The court must also consider whether "necessary inferences from the verdict indica[e] that certain views of the evidence were not taken by the jury as they could not have rationally supported the result." Ag Services of America, Inc. v. Nielsen, 231 F.3d 726, 733 (10th Cir. 2000) (emphasis in original).

Therefore, it is incumbent upon the court to outline those findings, both explicit and implicitly reflected by the jury's ...


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