United States District Court, N.D. Illinois, Western Division
November 5, 2004.
B. MILBORN & ASSOCIATES, an Illinois Corporation, Plaintiff,
TRIDENT PRESS INTERNATIONAL, INC., a Florida Corporation, Defendant.
The opinion of the court was delivered by: P. MICHAEL MAHONEY, Magistrate Judge
REPORT AND RECOMMENDATION
B. Milborn & Associates ("Plaintiff") has moved for an entry of
an award of damages pursuant to the district court's Order of
Default on its claims against Trident Press International, Inc.
("Defendant") for breach of contract and for violation of the
Illinois Sales Representative Act ("Illinois Act"), 820 ILL.
COMP. STAT. 120/3.*fn1 Defendant was allowed to participate
in the October 28, 2004, hearing on damages pursuant to Federal
Rule of Civil Procedure 55. While the entry of default deprives
Defendant of the right to contest the factual allegations of the
complaint, default does not prevent Defendant from appearing to
challenge the amount of damages.
Plaintiff maintains that it is entitled to $164,900.00 in
commissions (past due since September, 2002), treble damages
pursuant to the Illinois Act totaling $494,700.00, and costs, for
a gross sum of $659,600.00 plus costs. Defendant contests the
commission payment amount owed to Plaintiff. In addition to protesting the $164,900.00
figure, Defendant argues that Plaintiff is not entitled to treble
damages under the Illinois Act because Plaintiff has not alleged
nor shown the element of willful and wanton conduct, as the Act
has been interpreted to require. See Gramercy Mills, Inc. v.
Wolens, 63 F.3d 569 (7th Cir. 1995); Hedrick-Walker Assoc.,
Inc. v. Viktron Tech., Inc., 878 F. Supp. 119 (N.D. Ill. 1995).
A. Compensatory Damages Analysis
In this case, compensatory damages are set by the parties' own
sales contract. The parties entered into a Sales Representative
Agreement dated June 1, 2001, whereby "Trident Press
International Inc." and "B. Milborn & Associates, Inc." agreed
that Plaintiff would render sales services for Defendant, and
that commission payments to Plaintiff would be "10% on `Net
Sales' to retailers." Though the parties contest the proper name
of Defendant in this case, Defendant's Rule 60(a) Motion to
Correct Name of Defendant will be decided by the district court.
However, it would be the Report and Recommendation of the
Magistrate Judge that judgment be entered against Trident Press
International Inc. as this is the named entity in the parties'
Plaintiff's Motion for Damages alleges a $164,900.00
commission, but no break-down of the figure was provided, nor
could such an amount be deduced from the documentation provided.
Defendant, though it contested the $164,900.00 figure, never
proposed an alternative figure or provided documentation
suggesting Plaintiff's figure was inaccurate.
At the October 28, 2004, hearing, however, Plaintiff alleged it
was owed commissions based on sales to Target, CVS, ShopRite, and Kroger.*fn2
Nevertheless, Plaintiff was only able to offer a solid figure for
its Target account, alleging that it was owed $123,924.66 in
commissions, based on ten percent of a net sale to Target
totaling $1,239,246.60. In addition, at the October hearing,
Plaintiff's Exhibit Four (a copy of Defendant's Answers to
Interrogatories) was introduced and taken judicial notice of by
the court. In interrogatory number four, Defendant confirmed
Plaintiff's contention that $1,239,247.00 was the net sale on the
Target account. See Def's Answer Interrogs., at 3. Per the
parties' Sales Representative Agreement, Plaintiff's commission
on the Target account is ten percent on net sales, thus
Plaintiff's commission is $123,924.70. Therefore, it is the
Magistrate Judge's Report and Recommendation that $123,924.70 be
set as the amount of Plaintiff's compensatory damages.
B. Exemplary Damages Analysis
Plaintiff seeks treble damages under the Illinois Sales
Representative Act, 820 ILL. COMP. STAT. 120/3, which provides:
A principal who fails to comply with the provisions
of Section 2 concerning timely payment or with any
contractual provision concerning timely payment of
commissions due upon the termination of the contract
with the sales representative, shall be liable in a
civil action for exemplary damages in an amount which
does not exceed 3 times the amount of the commissions
owed to the sales representative. Additionally, such
principal shall pay the sales representative's
reasonable attorney's fees and court costs.
In order for Defendant to be liable for exemplary damages under
the Act, there must be evidence to support a finding of willful and wanton conduct. The Seventh
Circuit has defined willful and wanton under this Act as
"intentional and egregious conduct." See Gramercy Mills, Inc. v.
Wolens, 63 F.3d 569 (7th Cir. 1995).
In this case, Defendant argues that there have been and can be
no findings of willful and wanton conduct by the court because
Plaintiff did not allege willful and wanton conduct in its
Complaint and because Defendant's conduct in not paying Plaintiff
its commission was undertaken in good faith. In support of this,
Defendant alleges the parties were in dispute about what
constituted "net sales" and whether Plaintiff performed under the
agreement at issue.
Defendant's contentions come too late. Default Judgment has
been entered and liability under the Act has been decided.
Plaintiff has been owed substantial commission payments since
September, 2002.*fn3 Defendant acknowledged that it did owe
Plaintiff at least some amount of commission, but made no effort
to tender any payment to Plaintiff, in violation of the parties'
Sales Representative Agreement. Defendant's retention of
Plaintiff's commission was thus intentional and done with
complete indifference to the rights of Plaintiff under the
parties' agreement. As such, it is the Magistrate Judge's Report
and Recommendation that Plaintiff's compensatory damages award be
trebled.*fn4 C. Attorney's Fees and Costs
Plaintiff is entitled to attorney's fees and costs under the
Illinois Sales Representative Act, 820 ILL. COMP. STAT. 120/3.
Plaintiff's fee arrangement with counsel was a $5,000.00 retainer
combined with a twenty-five percent contingency fee on any
recovery. Plaintiff's $5,000 retainer would be credited, should
there be recovery. No other evidence on attorney's fees was
presented to the court, and no evidence was presented that
Plaintiff did in fact pay its attorney $5,000.00. The costs of
the suit have also not yet been submitted to the court. As such,
it is the Magistrate Judge's Report and Recommendation that
Plaintiff be awarded $5,000 in attorney's fees plus reasonable
costs to be determined at a later date.
Based on the foregoing, it is the Report and Recommendation of
the Magistrate Judge that Plaintiff be awarded $123,924.70 in
compensatory damages, that the compensatory damages be trebled,
plus $5,000.00 in attorney's fees and costs to be determined at a
later date, totaling $376,774.10 plus costs.