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MTROBALLI SHOE, INC. v. NINE WEST FOOTWEAR CORPORATION

June 7, 2004.

MTROBALLI SHOE, INC., an Illinois corporation Plaintiff,
v.
NINE WEST FOOTWEAR CORPORATION, a Delaware corporation, Defendant



The opinion of the court was delivered by: MARK FILIP, District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff Miroballi Shoe, Inc. ("Miroballi" or "Plaintiff"),*fn1 which is in the business of retail footwear sales, has brought suit against Defendant Nine West Footwear Corporation ("Nine West Footwear" or "Defendant"), which is in the business of manufacturing and selling footwear. Plaintiff alleges that Defendant breached seven substantively identical agreements relating to "Easy Spirit" brand footwear products to be provided to seven different Miroballi stores in the Chicago area. Plaintiff has moved for summary judgment as to liability, seeking to reserve only the issue of damages for trial. Defendant has cross-moved for summary judgment in full and has separately moved to bar the testimony of Plaintiff's damages expert, Cornelius Hofman. For the reasons stated below, Plaintiff's motion for partial summary judgment is granted in part and denied in part, Defendant's motion for summary judgment is denied, and Defendant's motion to bar the testimony of Comelius Hofman is denied without prejudice. Defendant may refile its motion to bar the testimony of Plaintiff's damages expert during the time period for the filing of motions in limine that will be scheduled in the final pretrial order.

RELEVANT FACTS

  A, The License Agreements

  Miroballi has been in business since 1959 and operates multi-branded shoe stores under the name "Miroballi" throughout the Chicago area. Beginning in 1959, the Miroballi family began its relationship with U.S. Shoe Corporation ("U.S. Shoe"). (D.E. 65 at 3.)

  In 1978, pursuant to an agreement with U.S. Shoe, Miroballi opened what is known as a "concept store." A "concept store" targets a particular customer demographic and sells shoes of a single brand name, providing various categories of shoes under that brand name, such as, for example, sport, athletic, dress, or tailored. The concept store Miroballi opened in 1978 was for Red Cross shoes. (Id.)

  In 1991, pursuant to an agreement with U.S. Shoe, Miroballi opened a concept store for "Easy Spirit" shoes in the Chicago Place mall in Chicago, Illinois. That same year, U.S. Shoe also opened its own Easy Spirit concept store in Texas (such stores are hereinafter referred to as "company owned"). The purpose of these two stores was to test the market for the Easy Spirit concept.

  In 1993 and 1994, Miroballi entered into seven agreements with U.S. Shoe entitled "Independent Operators Concept Shoe Store Agreement" ("the license agreements") to establish a total of seven Easy Spirit stores in the Chicago area, (Id. at 5.) Each license agreement contains a paragraph 2, which is central to the dispute before the Court, and which states that "U.S. Shoe further agrees to make available to [Miroballi] during the term of this Agreement a complete line of all products which the United States Shoe Corporation, manufactures and/or distributes, as described in Paragraph 6 below." (D.E. 37 at Ex, B, ¶ 2.) Paragraph 6 of each license agreement in turn states, in relevant part, that
[Miroballi] will maintain and offer for sale to the public at all times at the location described above only footwear products which are based on "comfort" construction and which are manufactured and/or distributed by the Easy Spirit, Cobbie, Joyce, Selby and Marx & Newman Division of The United States Shoe Corporation, The term "footwear", as used herein, shall refer to all shoes, boots and foot coverings, excluding socks and hosiery. The determination of whether a product incorporates "comfort" construction shall be at the reasonable discretion of U.S. Shoe, Such products will be stocked in both a current and comprehensive assortment of styles and sufficient quantity to meet the reasonably projected consumer market available to an actively promoted EASY SPIRIT concept shoe store.
(Id., ¶ 6.) Although the license agreements reference footwear brands other than Easy Spirit, the parties agree that the purpose of the agreements was to allow Miroballi to operate Easy Spirit concept stores, (D.E, 60 at 2.) The parties dispute how long the contracts were to be in effect but agree that many of the contracts lasted for several years and that at least one would not expire until 2004. (D.E. 65 at 5-8.)

  In 1995, Nine West Footwear's parent corporation, Nine West Group, Inc., and its wholly-owned subsidiary, Footwear Acquisition Corp., entered into an asset purchase agreement with U.S. Shoe. Pursuant to the asset purchase agreement, U.S. Shoe sold and assigned the assets and liabilities of its wholesale and retail footwear business to Footwear Acquisition Corp. (D.E. 60 at 2.) Prior to the closing of the transaction, Footwear Acquisition Corp, transferred the right to receive the wholesale footwear assets of U.S. Shoe to Nine West Footwear, and transferred the retail footwear assets of U.S. Shoe to Nine West Group, Inc.*fn2 (D.E. 60 at 2.)

  As a result of the transaction, Nine West Group, Inc. operated the Easy Spirit Retail Division.*fn3 (D.E. 64 at 3 n.3.) The Retail Division sells Easy Spirit footwear directly to the public through corporate owned Easy Spirit stores in the Chicago area and nationwide, the Easy Spirit website, and the Easy Spirit catalog. (D.E. 65 at 12.) For its part, Nine West Footwear operates the Easy Spirit Wholesale Division. The Easy Spirit Wholesale Division distributes Easy Spirit footwear to department stores and all independent Easy Spirit concept store operators, such as Miroballi. (D.E, 65 at 11-12.) Some of the Easy Spirit footwear products sold by the Retail Division are not sold by the Wholesale Division. (D.E. 64 at 2-3.)

  The crux of this lawsuit centers around the fact that, as part of the 1995 asset purchase transaction, Nine West Footwear assumed U.S. Shoe's obligations and liabilities under the license agreements. (D.E. 65 at 11.) In Miroballi's view, the most significant problem is that Nine West Footwear has admittedly not provided Miroballi with the complete line of Easy Spirit footwear sold by the Easy Spirit Retail Division. (D.E. 54 at 9-10.) Consequently, for example, approximately twice a week, a shopper at one of the Miroballi Easy Spirit stores will ask for an Easy Spirit style that Nine West Footwear has not offered to Miroballi. Similarly, shoppers at Miroballi's Easy Spirit stores have asked Miroballi's President, Daniel Miroballi, about Easy Spirit styles, sizes, and widths that Nine West Footwear has not offered to Miroballi. (D.E. 65 at 24.) Miroballi believes that Nine West Footwear breached its obligations under the license agreements by not making available the complete line of Easy Spirit footwear sold by the Easy Spirit Retail Division. (D.E. 54 at 9-10.)

  Nine West Footwear, on the other hand, admits that it did not provide Miroballi with the complete line of Easy Spirit footwear sold by the Retail Division, (D.E, 65 at 15-23), but contends that the license agreements do not obligate it to provide such Easy Spirit products. (D.E, 47 at 7-8.) Nine West Footwear's position is that the license agreements require only that Nine West Footwear, as the operator of the Wholesale Division, provide the complete line of Easy Spirit footwear it lists on "Line Sheets" as its "wholesale Easy Spirit Line," (Id. at 10.)

  As for how U.S. Shoe performed under the license agreements before its assets were split between Nine West Footwear and Nine West, Inc., the only evidence on this point is the affidavit Daniel Miroballi submitted in support of Plaintiff's summary judgment motion. This affidavit states that "[d]uring its relationship with Miroballi, U.S. Shoe complied with the Agreements and provided Miroballi with all Easy Spirit comfort footwear that U.S. Shoe manufactured and distributed, including all styles, colors, sizes and widths, and . . . sufficient quantities to allow Miroballi to meet the consumer market for the Miroballi Easy Spirit stores." (D.E. 55 at Ex, B, ¶ 15.) The affidavit further states that "[d]uring its relationship with Miroballi, U.S. Shoe did not differentiate between Easy Spirit comfort footwear distributed to independent operators (i.e., wholesale) from Easy Spirit comfort footwear sold to the public via corporate-owned Easy Spirit retail stores (i.e., retail). Miroballi was provided with the same product sold to the public via U.S. Shoe's Easy Spirit retail stores." (Id., ¶ 16.) Defendant contends that these paragraphs of Mr. Miroballi's affidavit lack foundation and should be disregarded. (D.E. 64 at 6).

  In his affidavit, Mr. Miroballi also states that "Miroballi was not aware of the split of the operations of Easy Spirit into Wholesale and Retail Divisions by Nine West Footwear and Nine West Group, Inc. until February 2003, when such information was disclosed by Nine West Footwear in this litigation." (D.E. 55 at Ex, B, ¶ 18.) Nine West Footwear has provided deposition testimony that U.S. Shoe had an Easy Spirit Wholesale Division and an Easy Spirit Retail Division before the 1995 asset purchase. (D.E. 66 at Ex. G, 17-18.)). Nine West Footwear has not provided evidence regarding whether U.S. Shoe supplied Miroballi with Easy Spirit footwear from both the Wholesale and Retail Divisions or just the Wholesale Division.

  Apart from the issue of whether Nine West Footwear was obligated to provide Easy Spirit footwear distributed by both the Wholesale Division and the Retail Division, Miroballi has asserted that Nine West Footwear did not even furnish Miroballi with all of the Easy Spirit footwear distributed by the Wholesale Division. Specifically, Plaintiff has asserted that the "Line Sheets" Nine West Footwear provided to Miroballi did not include all of the Easy Spirit footwear products listed on the "Line Sheets" given to the Nordstrom and JCPenney department stores. In its Appendix to its Local Rule 56.1(b)(3)(B) Statement of Additional Facts, Plaintiff included Nordstrom, JCPenney, and Miroballi "Line Sheets" which show that Nordstrom and JCPenney were offered ...


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