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Loggerhead Tools, LLC v. Sears Holdings Corp.

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

September 20, 2016

LOGGERHEAD TOOLS, LLC, Plaintiff,
v.
SEARS HOLDINGS CORPORATION and APEX TOOL GROUP, LLC, Defendants.

          MEMORANDUM OPINION AND ORDER

          JOHN W. DARRAH United States District Court Judge

         Plaintiff, Loggerhead Tools, LLC, filed a Second Amended Complaint against Defendants, Sears Holdings Corporation and Apex Tool Group, LLC. The Second Amended Complaint alleges, among other claims, common law fraud in Count XI, fraud in the inducement in Count XII, and promissory fraud in Count XIII, against Sears. Defendant Sears filed a Motion for Summary Judgment on Loggerhead's Fraud Claims [261]. For the reasons set forth more fully below, Sears' Motion for Summary Judgment [261] is granted.

         LOCAL RULE 56.1

         Local Rule 56.1(a)(3) requires the moving party to provide “a statement of material facts as to which the party contends there is no genuine issue for trial.” Ammons v. Aramark Uniform Servs., 368 F.3d 809, 817 (7th Cir. 2004). Local Rule 56.1(b)(3) requires the nonmoving party to admit or deny every factual statement proffered by the moving party and to concisely designate any material facts that establish a genuine dispute for trial. See Schrott v. Bristol-Myers Squibb Co., 403 F.3d 940, 944 (7th Cir. 2005). A nonmovant's “mere disagreement with the movant's asserted facts is inadequate if made without reference to specific supporting material.” Smith v. Lamz, 321 F.3d 680, 683 (7th Cir. 2003). In the case of any disagreement, the nonmoving party must reference affidavits, parts of the record, and other materials that support his stance. Local Rule 56.1(b)(3)(B). To the extent that a response to a statement of material fact provides only extraneous or argumentative information, this response will not constitute a proper denial of the fact, and the fact is admitted. See Graziano v. Vill. of Oak Park, 401 F.Supp.2d 918, 936 (N.D. Ill. 2005). Similarly, to the extent that a statement of fact contains a legal conclusion or otherwise unsupported statement, including a fact that relies upon inadmissible hearsay, such a fact is disregarded. Eisenstadt v. Centel Corp., 113 F.3d 738, 742 (7th Cir. 1997). Pursuant to Local Rule 56.1(b)(3)(C), the nonmovant may submit additional statements of material facts that “require the denial of summary judgment.”

         BACKGROUND

         The following facts are taken from the parties' statements of undisputed material facts submitted in accordance with Local Rule 56.1.

         Plaintiff is an Illinois limited-liability company with its principal place of business in Illinois. (DSOF ¶ 1.) Sears is a Delaware corporation with its principal place of business in Illinois. (Id. ¶ 2.) Beginning in 2009, Sears began retailing Plaintiff's Bionic Wrench. (Id. ¶ 4.) In 2009, Plaintiff signed a Universal Terms and Conditions (“UTC”) Agreement as consideration for doing business with Sears. (Id.¶ 5.) A second UTC Agreement was signed in 2011. (PSOF ¶ 2.) The UTC contained two provisions: (1) a statement that product forecasts are for planning purposes and do not give rise to a commitment to purchase; and (2) a statement that a commitment to purchase will only arise after a Purchase Order has been placed. (DSOF ¶ 6.) Throughout 2009 and 2010, Sears retailed the Bionic Wrench. (Id. ¶ 7.)

         The parties entered into an agreement to sell the Bionic Wrench for the time period of February 1, 2011, to January 31, 2012. (Id. ¶ 8.) The agreement contained terms for the price of the Bionic Wrench and for a promotional subsidy. (Id.) Sears promoted Plaintiff's wrench during the 2011 Christmas shopping season in a direct-to-consumer television (“DRTV”) promotion. (Id. ¶ 9.)

         Beginning in late 2011, Amanda Campana, Plaintiff's main point of contact with Sears, began contract discussions in order to forecast the 2012 fiscal year. (Id. ¶ 11.) Campana asked about Plaintiff's plans to partner with other retailers.[1] (Id.) In early 2012, Campana was replaced with a new individual, Stephanie Kaleta, who continued negotiations with Plaintiff. (Id. ¶ 12.) During the course of negotiations, Plaintiff and Sears disagreed over pricing and the quantity of wrenches to be supplied. (Id. ¶ 13.) On February 15, 2012, Sears sent Plaintiff a draft Supply Agreement, which detailed, among other things, proposed pricing and subsidy terms for the 2012 DRTV promotion. (Id. ¶ 16.) On February 16, 2012, Plaintiff responded to the proposed Supply Agreement, claiming that “[u]pon reviewing the contract extension that you have sent, LoggerHead cannot move forward.” (Id. ¶ 18.)

         Plaintiff also indicated that they would “be pursuing TV promotions with all other possible outlets for 2012.” (Id.) On February 20, 2012, Plaintiff solicited Home Depot to purchase wrenches for the 2012 Christmas season; on May 8th, 2012, Home Depot responded: “. . . Have seen many times. No interest right now in this SKU.” (Id. ¶¶ 20-21.) Between March and May 2012, Plaintiff solicited several other competitors including: Wal-Mart, Walgreens, and Menards. (Id. ¶¶ 22-24.) Plaintiff did not disclose these activities with other retailers to Sears.[2] (Id. ¶ 25.)

         On March 6, 2012, Plaintiff sent Sears a draft DRTV agreement. (Id. ¶ 28.) The following day, Plaintiff sent a revised DRTV draft to Sears, which included changing a clause that referenced a “commitment” for 300, 000 units of the Bionic Wrench to “forecast.” (Id. ¶ 29.) During the next three months, Plaintiff and Sears exchanged three more drafts of a DRTV agreement, none of which were executed. (Id. ¶ 31.) A provision limiting Plaintiff from retailing the Bionic Wrench with retailers other than Ace Hardware and QVC was in the last DRTV draft on April 27, 2012 . (Id. ¶¶ 33-34.) Plaintiff stated that they were unable to sign the fourth draft agreement because they had agreed to sell limited quantities of the Bionic Wrench to Menards. (Id. ¶ 36.)

         Each DRTV agreement provided that “written forecasts [would be provided] 120 days prior to shipment” and purchase orders “90 days prior to shipment.” (Id. ¶ 37.) On May 15, 2012, Sears provided Plaintiff with the 120-day forecast and provided notice that the “forecast is subject to change pending [F]ather's [D]ay performance and finalization of Q4 marketing assets.” (Id. ¶ 38.) Two days later, on May 17, 2012, Plaintiff responded to the proposed DRTV agreement and expressed hope that Sears would assemble purchase orders soon, so that Plaintiff could finalize production. (Id. ¶ 40.) After the exchange of draft agreements, Sears received an email on May 17, 2012, that called into question Plaintiff's ability to meet production forecasts for the 2012 Father's Day DRTV promotion. (Id. ¶ 41.) Despite not having a finalized agreement, Sears engaged in a DRTV promotion for the Bionic Wrench over Father's Day 2012. (Id. ¶ 42.)

         Beginning in February 2012, Sears began negotiations with Apex Tool Group to develop a “backup plan” in response to negotiations with Plaintiff. (Id. ¶ 44.) Sears did not receive a prototype of Apex's product until April 17, 2012. (Id. ¶ 47.) By April 26, 2012, it was unclear what the business relationship between Sears and Apex would be.[3] (Id. ¶ 48.) On May 22, 2012, Kaleta sent an email to her point of contact at Apex, Jill Lowe, confirming forecasts for over 300, 000 units from Apex. (PSOF ¶ 26.) However, in mid-May 2012, Sears had still not finalized a purchase order with Apex due to continued modifications to the design of the Apex wrench. (DSOF ¶ 49.) By May 23, 2012, Sears received notice that Apex Tool Group would be able to produce enough product for Sars to run a DRTV promotion. (Id. ¶ 53.) On the same day, Kaleta called Plaintiff to inform them that Sears would no longer be pursuing a DRTV agreement with them. (Id. ¶¶ 54-55.) Following the phone call between Kaleta and Plaintiff, no DRTV agreement was signed. (Id. ¶ 56.) On June 20, 2012, Sears sent an updated forecast which lowered the forecast. (Id. ¶ 57.)

         LEGAL ...


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