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Talcott Communications Corp. v. Quad/Graphics Printing Corp.

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

February 15, 2018




         In 2009, Talcott Communications Corp. signed a contract with Quebecor, later acquired by Quad/Graphics Printing Corp., to print the magazines Talcott publishes. Between 2009 and 2011, Talcott accrued a balance of past-due invoices. In 2014, after repeated printing delays on Quad/Graphics' part, Talcott's frustration came to a boil as it began to lose advertisers because of the delays. The parties' relationship came to an end, and Talcott later sued Quad/Graphics for breach of contract. Quad/Graphics counterclaimed, alleging that Talcott was in breach for failing to pay its invoices in timely fashion. Quad/Graphics has moved for summary judgment on Talcott's claim and its counterclaim.


         Talcott is an Illinois corporation that publishes trade magazines, including Giftware News, Fancy Food Magazine, Baby Magazine, and Chef Educator. It publishes tens of thousands of its magazines each year. In 2009, it entered into a printing contract with Quebecor. Quebecor was reorganized as World Color Press, which Quad/Graphics subsequently acquired.

         Between 2009 and 2011, Talcott did not pay several invoices. On December 18, 2011, it entered into an amended agreement with Quad/Graphics. The agreement laid out an approach to remedy Talcott's outstanding balance. For future printings, Talcott was required to pay 130 percent of the cost before the publication went to print, and the payment would be applied to its oldest invoices first.

         In July 2014, Quad/Graphics moved Talcott's projects to a new printing plant. Problems arose almost immediately. The record contains numerous e-mails between September and November 2014 in which Talcott employees complain about delays in printing the magazines. For Talcott, the final straw was the loss of the advertisers who had grown frustrated with the late publication of the magazines in which their ads were placed. In 2017, Talcott sued Quad/Graphics for breach of contract. Quad/Graphics counterclaimed that Talcott breached by failing to pay its outstanding balance.


         Quad/Graphics has moved for summary judgment on Talcott's breach of contract claim, as well as its breach of contract counterclaim against Talcott. The contract between Quad/Graphics and Talcott requires that New York law governs their dispute. Def.'s Ex. A ¶ 29 (Printing Agreement). "The essential elements to pleading a breach of contract under New York law are the making of an agreement, performance by the plaintiff, breach by the defendant, and damages suffered by the plaintiff." Startech, Inc. v. VSA Arts, 126 F.Supp.2d 234, 236 (S.D.N.Y. 2000). To prevail on a motion for summary judgment, Quad/Graphics must establish that no reasonable jury could find in Talcott's favor, even after the Court views all evidence and takes all reasonable inferences in Talcott's favor. Blasius v. Angel Auto., Inc., 839 F.3d 639, 644 (7th Cir. 2016).

         The first element of the breach of contract analysis is common to both Talcott's claim and Quad/Graphics' counterclaim: whether an agreement existed between the parties. The answer here is clearly yes. The parties have presented a written contract, Def.'s Ex. A (Printing Agreement), and a subsequent amendment. Def.'s Ex. B (Amended Agreement). Moreover, both parties have acknowledged in their pleadings the existence of a "valid and enforceable" contract. See Answer ¶ 9 (admitting that "[t]he Contract and Amendment between TALCOTT and QUAD GRAPHICS was valid and enforceable at all times relevant to this Complaint.").

         The Court reviews the remaining questions of each claim-performance, breach, and damages-separately. Startech, 126 F.Supp.2d at 236. The Court first considers Talcott's breach of contract claim, then reviews Quad/Graphics' counterclaim.

         I. Talcott's breach of contract claim

         Talcott alleges that Quad/Graphics breached its contract by repeatedly delivering printing orders late, which caused Talcott's advertisers to flee. To prevail on its breach of contract claim, Talcott must show that (1) it performed under the contract, (2) Quad/Graphics breached, and (3) it suffered damages. Id. To obtain summary judgment, Quad/Graphics must show that no jury could reasonably find in Talcott's favor on these elements. Blasius, 839 F.3d at 644. Quad/Graphic focuses its argument on two elements. First, it argues that no reasonable jury could find that it breached the contract. Def.'s Mem. in Supp. of Summ. J. at 10. Second, Quad/Graphic contends that no reasonable jury could conclude that Talcott is entitled to damages. Id. at 8. The Court does not address Quad/Graphic's first argument, as it finds that Quad/Graphics is entitled to summary judgment on the basis of the second point.

         Quad/Graphics argues it is entitled to summary judgment because Talcott cannot recover its proposed damages-losses in advertising revenue-as it disclaimed consequential damages in the contract. Id. at 8-11. The contract states that Quad/Graphics shall not be liable for "special, incidental or consequential damages, " including "lost profits." Def.'s Ex. A ¶ 15 (Printing Agreement). Talcott, in response, argues that the damage waiver is unconscionable and, therefore, unenforceable. Pl.'s Resp. Br. at 6. Quad/Graphics responds that Talcott, through its complaint, conceded the enforceability of the waiver. Def.'s Reply Br. at 4. Quad/Graphics also argues that the contract, an agreement between two sophisticated corporations, is not unconscionable. Id. at 5. The Court need not resolve the first contention, as Quad/Graphics prevails on the second.

         Quad/Graphics argues that no reasonable jury would conclude that its contract with Talcott is unconscionable. An unconscionable contract is unenforceable. Gillman v. Chase Manhattan Bank, N.A., 73 N.Y.2d 1, 10, 534 N.E.2d 824, 828 (1988). To show the contract is unconscionable under New York law, Talcott must show the contract was procedurally unconscionable, "which requires some showing of an absence of meaningful choice on the part of one of the parties, " and that it was substantively unconscionable, which requires ...

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