Ringier America, Inc. v. Land O'Lakes, Inc.

• Citation: 106 F.3d 825
• Decision Date: 07 February 1997
• Docket Number: No. 96-1787,96-1787
• Parties: RINGIER AMERICA, INC., Plaintiff-Appellant, v. LAND O'LAKES, INC., Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 825

106 F.3d 825

RINGIER AMERICA, INC., Plaintiff-Appellant, v. LAND O'LAKES, INC., Defendant-Appellee.

No. 96-1787.

United States Court of Appeals Eighth Circuit.

Submitted Nov. 21, 1996.

Decided Feb. 7, 1997.

Joseph Arthur Nilan, Minneapolis, MN, argued (Todd A. Sattler, on the brief), for appellant.

Peter W. Carter, Minneapolis, MN (Craig D. Diviney, on the brief), argued, for appellee.

Before BEAM and LOKEN, Circuit Judges, and MOODY, ^* District Judge.

LOKEN, Circuit Judge.

Ringier America, Inc., printed a series of cookbooks under printing services contracts with publisher Russ Moore & Associates ("RMA") for the benefit of RMA's customer, Land O'Lakes, Inc. ("LOL"). RMA failed to pay Ringier some $155,000 invoiced under those contracts. Ringier commenced this diversity action, asserting joint venture, unjust enrichment, and quantum meruit claims against LOL. The district court ¹ granted summary judgment in favor of LOL, and Ringier appeals. Having reviewed the grant of summary judgment de novo, we affirm.

I.

Ringier claims that a December 5, 1991, agreement between RMA and LOL created a joint venture, permitting Ringier to sue LOL, a principal, for unpaid services performed for the joint venture. In the December 1991 agreement, RMA and LOL undertook "to develop, publish, promote and market" a series of magazine-style cookbooks referred to as "Classic Cookbooks," using LOL trademarks and tradenames. Under the agreement, LOL determined when to produce each cookbook, provided the recipes, and retained approval rights over the final product. RMA agreed to provide the essential publishing services--writing, editing, layout, illustrations, printing, binding, packaging, shipping, "and all other services necessary to make the Classic Cookbook project a 'turn key' operation for LOL." For these services, LOL agreed to pay RMA a specified price per unit, one-half payable during the production process and the remainder "within thirty (30) days of LOL's review and approval" of each completed cookbook. RMA agreed to reduce the agreed per unit prices by twenty percent in return for twenty percent of LOL's cookbook profits. Paragraph eighteen of the agreement defined the parties' relationship:

This Agreement is not intended and shall not be construed to constitute either party as the employee, joint venture or franchising partner, agent or legal representative of the other. Neither party shall have any authority, express, implied or apparent, to assume or create any obligations on behalf of or in the name of the other party.

Printing was the biggest expense in publishing the cookbooks, and RMA chose Ringier for this task. In March 1992, and again in September 1993, RMA and Ringier entered into written agreements providing that RMA would pay Ringier for printing services which satisfied RMA's "requirements for production" of the Classic Cookbooks. LOL was not a party to either agreement. Ringier reviewed the RMA-LOL contract before contracting with RMA.

Under RMA's arrangement with LOL, RMA also marketed the Classic Cookbooks. In performing that function, RMA collected payments from distributor Kable News Company for cookbooks sold through grocery store magazine racks. ² After the initial cookbooks were distributed, RMA began using revenues from cookbook sales--which it had agreed to remit to LOL--to pay Ringier's invoices for cookbooks still in production, despite the fact that LOL's payments to RMA under the December 1991 agreement were timed to permit RMA to stay current with vendors such as Ringier.

The Classic Cookbooks were not a financial success, which exacerbated RMA's cash flow problems. By the summer of 1993, RMA was seriously delinquent in remitting sales revenues. LOL demanded a change--immediate remittance of advances on sales--rejecting RMA's request for a "float" so that RMA could promptly pay Ringier invoices. After this change was implemented, RMA failed to pay Ringier for the October 1993 cookbook. LOL then paid Ringier directly for at least one more cookbook before retaining another commercial printer to continue the project. Ringier commenced this lawsuit when neither RMA nor LOL would pay its additional $155,000 claim for unpaid printing invoices to RMA.

Applying Minnesota law, the district court granted summary judgment in favor of LOL. It rejected Ringier's joint venture claim because the December 1991 agreement expressly disclaimed a joint venture relationship, and because the essential element of joint control was missing. It rejected Ringier's claims for unjust enrichment and quantum meruit because such relief is not available when the rights of the parties are governed by contract.

II.

On appeal, Ringier first argues that summary judgment is improper on its joint venture claim because the substance of the RMA-LOL relationship, not the contract disclaimer, controls whether a joint venture was created, and because the issue of joint control is also a fact question for the jury. A joint venture is a species of partnership. See generally REUSCHLEIN & GREGORY, HANDBOOK ON THE LAW OF AGENCY AND PARTNERSHIP § 266 (1979). Under Minnesota law, "the rules and principles applicable to a partnership relation, with few if any material exceptions, govern and control the rights, duties, and obligations of the parties [to a joint venture]." Rehnberg v. Minnesota Homes, Inc., 236 Minn. 230, 52 N.W.2d 454, 457 (1952).

The general rule is that parties who are "partners as between themselves [are] partners as to third persons." Moore v. Thorpe, 133 Minn. 244, 158 N.W. 235, 238 (1916). Thus, Ringier properly focuses on whether the December 1991 agreement created a joint venture between RMA and LOL. However, that is not the end of the inquiry. To bind the partnership, a partner must act within the scope of his actual authority, or within the scope of apparent authority with a party unaware that actual authority is more limited. See Minn.Stat. § 323.08 (partner carrying on partnership business binds the partnership "unless the partner so acting has in fact no authority to act for the partnership in the particular matter, and...