United States District Court, N.D. Illinois, Eastern Division
May 10, 2005.
DOMINION NUTRITION, INC., Plaintiff,
RAYMOND CESCA, Defendant.
The opinion of the court was delivered by: WILLIAM HART, Senior District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff Dominion Nutrition, Inc. ("DNI") alleges that
defendant Raymond Cesca is its former President and Chairman of
the Board.*fn1 Allegedly, after leaving DNI, defendant has
attempted to market plaintiff's "Unique Products" to potential
customers of DNI. The Unique Products, which are not specifically
defined in the Complaint, are indicated to be a processed milk
by-product resulting from the production of cream and skim
milk.*fn2 Cesca's initial contact with the Unique Products was as a consultant retained by Dominion Processing LLP ("DP"), a
limited liability company that was DNI's predecessor. Cesca
allegedly had a confidentiality agreement with DP which continued
to apply when DP was restructured into DNI. Plaintiff contends
defendant's post-DNI attempts to market the Unique Products
constitutes the common law violations of (I) breach of fiduciary
duty, (III) intentional interference with business expectancy,
(IV) seizure of corporate opportunity, and (V) breach of
contract.*fn3 There is complete diversity of citizenship and
the amount in controversy is in excess of $75,000.
Pending in Utah District Court is a diversity action that DNI
brought against Tom Myers.*fn4 Under the consulting
agreement, Myers allegedly had access to confidential information
about the Unique Products. Myers left the consultant to work
directly with DP. He allegedly had a tentative agreement to work
for DNI, but that arrangement was not consummated. Like Cesca,
Myers is alleged to be improperly attempting to market the Unique
Products. Allegations regarding Cesca's and Myers's conduct are
contained in both the Illinois and Utah actions. The five counts
against Myers in the Utah action have identical labels with the five original counts against Cesca in the Illinois action, except
that the trade secret misappropriation in the Utah action is
based on a California statute, not an Illinois statute. Global
Nutrifoods, LLC ("GNF") has intervened in the Utah Action. GNF
alleges that consultants retained by DP actually developed and
own the rights to the Unique Products and that the consultants
have assigned those rights to GNF. GNF alleges that DNI and its
principal, Ron Achs, are improperly marketing products for which
they do not own the rights.
Cesca contends that the central dispute is between GNF and DNI
regarding who owns the rights to the Unique Products. Presently
pending is Cesca's motion to stay the Illinois action pending
resolution of the allegedly parallel action in Utah. Also pending
is DNI's motion to enforce an alleged settlement agreement
between DNI and Cesca. One provision of the alleged settlement
agreement is that the Illinois action be dismissed. The motion to
enforce the alleged settlement agreement will be considered
On December 15, 2004, Cesca was being deposed in the Illinois
action. It is undisputed that, during the luncheon recess, the
parties engaged in settlement negotiations. Upon returning from
the break, the following was said on the record with Cesca present.
GRAHAM [attorney for DNI]: We have been talking over
the break about the possibility of a settlement, and
the proposal that we have advanced is one that would
include two principal components.
First, one in which Mr. Cesca would agree to a
noncompete, the terms of which we will work out in a
formal document in good faith as soon as we can; but,
in general terms we would understand that to mean
that he will not work with others directly or
indirectly to aid or assist in the production,
marketing or other assistance to get high-protein,
low-fat dairy-based products into the market.
And secondly, it would have a non-disparagement
component which we would understand to mean that he
will not say disparaging things about Dominion or its
personnel, or take the position publicly or privately
that Dominion does not own the unique products or
unique processes as we have talked about them.
He may, of course, respond to subpoenas or other
court invitations; and he may, of course, talk to
others who invite him to give his honest opinion and
he can answer honestly, but he wouldn't volunteer
those opinions in any setting other are [sic] than,
you know, a court invitation, hopefully.
Is that consistent with what we had in mind?
MATHEWSON [attorney for Cesca]: Yes, as a general
principle it is consistent with our discussions over
the last couple of hours, and we will work in good
faith to reach a mutually acceptable agreement in
writing on those issues.
And that we are agreeing to suspend Mr. Cesca's
deposition as of now, with the understanding that if
we are unable to come to terms in connection with a
settlement, we will resume his deposition at a time
and place convenient to everyone. GRAHAM: Right. So I guess with that we are adjourned.
MATHEWSON: I think we are.
Dec. 15, 2004 Tr. at 99-100.
It is undisputed that DNI thereafter drafted a written
settlement proposal and submitted it to Cesca. The parties,
however, could not agree as to the language of the settlement
agreement. Cesca's principal objection was that the definition of
Unique Products contained in DNI's draft was too broad and would
prevent Cesca from working in the dairy products industry. He
also objects to the time limitations contained in the draft.
Cesca suggested limiting his prohibited activities under the
settlement to being applicable to any unique processes or
products that the Utah litigation ultimately determines to be
owned by DNI.
In an affidavit provided with plaintiff's reply,*fn5
Graham states that, in July 2004, he had submitted a written
settlement proposal to Cesca. He further states that, during the
December 15, 2004 breaktime negotiations, the parties had agreed
to modify some of the language contained in the July 2004 draft.
Graham states that the December 2004 draft is in conformity with the agreement reached during the off-the-record negotiations.
Mathewson provides an affidavit stating that there was no
discussion of revising the July 2004 draft during the December
15, 2004 off-the-record negotiations. In his affidavits, he
states that the parties never agreed as to the products and
processes in which DNI has a protectible interest and that there
was never any agreement as to a settlement. Instead, Mathewson
states that the parties agreed to continue to negotiate in good
faith to reach a final settlement, including reaching an
agreement as to the interests of DNI that would be protected.
Also, the December 2004 draft of DNI contains a mutual release
which includes "Cesca releas[ing] DNI . . . from any claims or
defenses he asserted or could have asserted and that arise out of
or are related to the facts alleged in the complaint." Mathewson
states that there was never a discussion of including such a
mutual release in the settlement.
This court has authority to determine whether the parties have
settled the case and dismiss the case if the parties have so
agreed. See Carr v. Runyan, 89 F.3d 327, 331 (7th Cir. 1996),
cert. denied, 519 U.S. 1117 (1997); Denari v. Genesis
Insurance Co., 2004 WL 1375735 *2 (N.D. Ill. June 17, 2004).
That would be especially true here since, even if this were
purely a state law claim, there is diversity of citizenship and
the value of the settlement apparently would satisfy the
jurisdictional amount requirement since the underlying claims satisfy that amount.
Presently, the court need only consider whether there is a
settlement requiring that the action pending before it be
The deposition at which the purported settlement was reached
occurred in Illinois. Cesca is an Illinois resident and the
litigation that is one of the subjects of the purported
settlement is pending in Illinois. Both parties cite Illinois law
regarding whether there is an enforceable settlement agreement.
Although the December 2004 draft settlement provides that it and
any related disputes shall be interpreted, governed, and enforced
according to Idaho law, the parties make no argument based on
Idaho law. The parties have implicitly agreed either that
Illinois law applies to their present dispute or that the
pertinent Illinois law is not substantively different from Idaho
law. Illinois law will be applied to the dispute regarding
whether an enforceable settlement exists. See Massachusetts
Bay Insurance Co. v. Vic Koenig Leasing, Inc., 136 F.3d 1116,
1120 (7th Cir. 1998); Wood v. Mid-Valley, Inc., 942 F.2d 425, 426-27
(7th Cir. 1991); TBI, Inc. v. Communication Consulting Services,
Inc., 2004 WL 2609200 *1 (N.D. Ill. Nov. 15, 2004); Morris
Silverman Management Corp. v. Western Union Financial Services,
Inc., 284 F. Supp. 2d 964, 968-69 (N.D. Ill. 2003).
An enforceable oral contract to settle a case may be formed
before there is a written document memorializing that settlement.
Denari, 2004 WL 1375735 at *2; Thermos Co. v. Starbucks
Corp., 1998 WL 299469 *4 (N.D. Ill. May 29, 1998).
In order to establish the existence of an agreement,
the parties must demonstrate that there was an offer,
acceptance, and a meeting of the minds as to the
terms of the agreement. The terms of the agreement
must be sufficiently definite for the court to
enforce the settlement. Defalco v. Oak Lawn Public
Library, 2000 WL 263922, at *3-4 (Mar. 1, 2000)
(noting that courts may look to the ordinary
linguistic meaning of a term to define the terms of
the agreement.) Although an oral settlement must set
forth the terms of the agreement with sufficient
definiteness, the settlement may be contingent upon a
subsequent agreement. "[T]he fact that a settlement
agreement calls for the parties to reach another
agreement in the future in other words, an
`agreement to agree' will not prevent the
settlement from being enforced." Thermos Co. v.
Starbucks Corp., 1998 WL 299469, at *4 (N.D. Ill.
May 29, 1998) (quoting S and T Mfg. Co., Inc. v.
County of Hillsborough, 815 F.2d 676, 678-79 (Fed.
Cir. 1987)). A party cannot avoid performance under
an agreement to agree by withholding its consent, in
bad faith, to the unresolved term. See generally,
Beraha v. Baxter Health Care Corp., 956 F.2d 1436,
1443 (7th Cir. 1992). Denari, 2004 WL 1375735 at *2.
If the only evidence to consider were the attorney statements
made at Cesca's deposition, it would not be found that an
enforceable settlement existed. Graham initially refers to a
"possibility" of a settlement. Mathewson then makes clear that
the parties are still attempting to reach a settlement and that
Cesca's deposition would be completed at a later date if no
accord is reached. There would be no possibility of a continued
deposition if an accord had already been reached and all that was
left was to memorialize it. Graham then agrees with Mathewson's
statement. The on-the-record statements only support that a
settlement had not already been reached.
In an affidavit, however, Graham states that the parties had
agreed to all the terms of a settlement, that they had
specifically agreed to revise the July 2004 settlement proposal.
The on-the-record statements at the deposition, of course, are to
the contrary. Mathewson's affidavit statements are also to the
contrary. On the documents submitted, there is a factual dispute
regarding whether this case has been settled. There is no
sufficient basis for the court presently finding there is an
enforceable settlement requiring dismissal of this case. To the
extent DNI desires to further pursue this issue, it should amend
its complaint to add a claim that there is an enforceable
settlement and the issue will have to be resolved at trial. The other question to consider is whether the present case
should be stayed pending resolution of the Utah action in which
DNI, Myers, GNF, and possibly Achs are parties.*fn7
As a general rule, a federal suit may be dismissed
"for reasons of wise judicial administration . . .
whenever it is duplicative of a parallel action
already pending in another federal court." Ridge
Gold Standard Liquors v. Joseph E. Seagram,
572 F. Supp. 1210, 1213 (N.D. Ill. 1983) (citing Colorado
River Water Conservation District v. United States,
424 U.S. 800, 817 (1976); Calvert Fire Ins. Co. v.
Am. Mut. Reinsurance Co., 600 F.2d 1228, 1233 (7th
Cir. 1979)). District courts are accorded "a great
deal of latitude and discretion" in determining
whether one action is duplicative of another, but
generally, a suit is duplicative if the "claims,
parties, and available relief do not significantly
differ between the two actions." Ridge Gold,
572 F. Supp. at 1213 (citations omitted).
Serlin v. Arthur Andersen & Co., 3 F.3d 221
, 223 (7th Cir.
1993). "[B]efore dismissing a suit as duplicative, `the district
judge should consider any special factors counseling for or
against the exercise of jurisdiction in the case before him.'"
Id. at 224 (quoting Calvert, 600 F.3d at 1234). To the extent
Colorado River provides guidance in the present situation, it
is recognized that being parallel actions does not require that
the cases have precise symmetry. Cases generally are parallel if
there is a substantial likelihood that resolving one case will dispose of all claims in the other case. See Clark v. Lacy,
376 F.3d 682, 686 (7th Cir. 2004).
The Illinois action and Utah action certainly have much factual
overlap. Myers's involvement is alleged in the Complaint before
this court and Cesca's involvement is alleged in the complaint
before the Utah District Court. Whether DNI has a proprietary
interest in the Unique Products and what the Unique Products and
Processes actually may be are issues pertinent to the claims in
both suits, though a determination that DNI has no proprietary
interests probably would not conclusively resolve all claims in
both cases. Still, the cases are distinct in that the claims in
the present case must be based on any contract and relationship
Cesca had with DNI and Cesca's actual attempts to market products
to others, while the claims in the Utah case must be based on any
contract and relationship Myers had with DNI and Myers's actual
attempts to market products to others. It would not be
appropriate to simply stay the Illinois action because there is
no substantial likelihood that the Utah action will resolve all
issues for the Illinois action. Also, Cesca insists that, absent
a stay, GNF will be forced to intervene in the Illinois action as
well. The Illinois action, however, was filed four months before
the Utah action and discovery is about to close. If GNF had any
intentions of intervening, it should have so moved months ago. Certainly, it would have been more efficient to have named
Myers and Cesca as defendants in a single case. There may,
however, have been personal jurisdiction problems if Cesca had
been brought into a case in Utah or California. In his motion,
though, Cesca contends that there is a forum where all defendants
could have been sued. See Cesca Reply at 9. He does not
specifically identify that forum, but perhaps he would not object
to the claims against him being brought in Utah instead of
Assuming there would be no personal jurisdiction problem, it
could have been appropriate to dismiss one of the actions without
prejudice so that DNI could amend the Illinois or Utah action to
have Myers and Cesca as defendants in a single lawsuit. Or
another way to achieve a similar result would be to transfer this
action to Utah or transfer the Utah action to the Northern
District of Illinois and then assign the two cases to the same
judge or actually consolidate the two cases. At this point in
time, however, that would not be an appropriate action to take.
Cf. N.D. Ill. Loc. R. 40.4(b)(3) (one requirement for
reassigning a case as related is that "the earlier case has not
progressed to the point where designating a later filed case as related would
be likely to delay the proceedings in the earlier case
substantially"). In the Illinois action, discovery is to be
completed by May 15, 2005. Plaintiff has already indicated that
it is prepared to move for summary judgment. Alternatively, if
there is no summary judgment motion, then the parties will be
submitting their final pretrial order and the case will soon be
on the court's trial calendar. The latest scheduling order in the
Utah action, dated April 11, 2005, provides that the discovery
cutoff in that case is October 7, 2005, with a final pretrial
conference scheduled for March 3, 2006, and a 10-day jury trial
scheduled for March 20, 2006. Joining the Illinois action with
the Utah action would likely result in a substantial delay of the
Since the Utah action is not likely to resolve all issues in
the Illinois action and since joining the two actions at this
point would likely substantially delay the Illinois action, the
Illinois action will not be stayed nor will the Illinois action
be transferred or will DNI be required to file a single
IT IS THEREFORE ORDERED that plaintiff's motion to enforce a
settlement agreement  is denied without prejudice. Defendant's motion to stay lawsuit  is denied. A status
hearing is set for May 25, 2005 at 11:00 a.m.