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Springhead, LLC v. Solution Publishing, LLC

United States District Court, N.D. Illinois, Eastern Division

March 18, 2015

SPRINGHEAD, LLC, Plaintiff/Counter-Defendant,
v.
SOLUTION PUBLISHING, LLC, Defendant/Counter-Plaintiff.

MEMORANDUM OPINION AND ORDER

JOHN Z. LEE, District Judge.

This diversity action arises from a contractual dispute between Plaintiff/Counter-Defendant Springhead, LLC ("Springhead") and Defendant/Counter-Plaintiff Solution Publishing, LLC ("Solution"). Springhead filed suit to recover unpaid commissions allegedly owed for services provided to Solution under the parties' contractual agreement. Solution responded by filing a counterclaim, alleging in part that Springhead breached the parties' oral modification to that contract when it failed to meet the agreed upon sales targets. Both parties move for partial summary judgment. Springhead moves for partial summary judgment as to Count I of Solution's counterclaims. Solution moves for summary judgment as to Count II of Springhead's First Amended Complaint.

Factual Background[1]

Solution is an online publisher of specialized journals. Def.'s LR 56.1(a)(3) Stmt. ¶ 5. Individuals subscribe to Solution's journals to receive publications by email and to access content via websites. Id. Subscription is free, and Solution generates the majority of its revenue through "lead generation." Id. ¶¶ 6-7. As part of this process, Solution uses software to monitor the content read by its subscribers and to determine their interests. Id. ¶ 9. Solution then delivers additional content, such as podcasts or trial software, to those subscribers who might be interested in a particular subject. Id. ¶¶ 9-10. After these subscribers register to receive the content, Solution sends the contact and registration information that it obtained from its subscribers as a "lead" to its clients in the form of a data file. Id. ¶¶ 10-11.

Solution also generates revenue by providing its clients "list rental" campaigns. Id. ¶¶ 13-15. In these campaigns, clients provide Solution with an advertisement in HTML format, which Solution sends out as an email to its subscribers that fit certain criteria. Id. ¶¶ 13-15.

In November 2010, Solution entered into a written agreement with Springhead, whereby Springhead agreed to provide business development services to Solution in exchange for commission fees. Id. ¶ 17. Up until this time, Solution had been mostly generating revenue from clients that were referred directly by media agencies (or "aggregators"). Def.'s LR 56.1(b)(3)(C) Stmt. ¶ 3. Under the contract, Springhead sent proposals to prospective clients describing Solution's business in an effort to obtain new clients for Solution. Def.'s LR 56.1(a)(3) Stmt. ¶¶ 21-22.

The parties' written agreement contained a clause stating, "No amendment, change or modification of this document shall be valid unless it is in writing and signed by all the parties hereto and expressly states that it is an amendment, change or modification of this Agreement." Pl.'s LR 56.1(a)(3) Stmt. ¶ 10. According to Solution, however, the parties subsequently agreed to an oral modification of the contract, whereby Springhead promised to reach monthly sales levels of $144, 000 by July 2012 in exchange for Solution giving Springhead's client campaigns priority over those of the other "aggregator" clients. Def.'s LR 56.1(b)(3)(C) Stmt. ¶¶ 13-16.

Legal Standard

"The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). The Court gives "the non-moving party the benefit of conflicts in the evidence and reasonable inferences that could be drawn from it." Grochocinski v. Mayer Brown Rowe & Maw, LLP, 719 F.3d 785, 794 (7th Cir. 2013). In order to survive summary judgment, the nonmoving party must "do more than simply show that there is some metaphysical doubt as to the material facts[, ]" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986), and instead "must establish some genuine issue for trial such that a reasonable jury could return a verdict in her favor." Gordon v. FedEx Freight, Inc., 674 F.3d 769, 772-73 (7th Cir. 2012). The Court will, however, "limit its analysis of the facts on summary judgment to evidence that is properly identified and supported in the parties' [Local Rule 56.1] statements." Bordelon v. Chi. Sch. Reform Bd. of Trs., 233 F.3d 524, 529 (7th Cir. 2000).

Analysis

The parties each move for partial summary judgment. Springhead seeks partial summary judgment on Count I of Solution's Counterclaim. See Pl.'s Mot. Partial Summ. J. Count I alleges that Springhead breached the parties' contract when they failed to meet the agreed upon-sales targets. Def.'s Countercl. ¶¶ 28-32. Solution seeks partial summary judgment on Count II of the First Amended Complaint. See Def.'s Mot. Partial Summ. J. Count II of the First Amended Complaint alleges violations of the Illinois Sales Representative Act, 820 Ill. Comp. Stat. 120/1 et seq. Pl.'s 1st Am. Compl. ¶¶ 60-74. For the following reasons, the Court denies Springhead's motion but grants Solution's motion.

I. Springhead's Motion as to Count I of Solution's Counterclaim

In Count I of its counterclaims, Solutions alleges that Springhead breached its oral agreement with Solution to achieve certain sales goals. Springhead sets forth two arguments in support of summary judgment as to this claim. First, Springhead asserts that, because the contract expressly forbids oral modifications, any oral agreement was invalid. In addition, Springhead claims that, in the event that oral modification of the contract were permitted, the terms of the alleged oral modification are too vague to be enforceable. Neither of these arguments is persuasive.

First, it is "well settled" in Illinois that "the terms of a written contract can be modified by a subsequent oral agreement even though, as in this case, the contract precludes oral modifications." Tadros v. Kuzmak, 660 N.E.2d 162, 170 (Ill.App.Ct. 1993) (citing cases). Springhead cites no authority to the contrary and, indeed, appears to ...


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