192 F.3d 724 (7th Cir. 1999), 98-3461, Int'l Mktg. Ltd. v. Archer-Daniels-Midland Co

Docket Nº:98-3461
Citation:192 F.3d 724
Party Name:International Marketing, Limited, Plaintiff-Appellant, v. Archer-Daniels-Midland Company, Inc., and Swift-Eckrich, Inc., Defendants-Appellees.
Case Date:September 23, 1999
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

Page 724

192 F.3d 724 (7th Cir. 1999)

International Marketing, Limited, Plaintiff-Appellant,


Archer-Daniels-Midland Company, Inc., and Swift-Eckrich, Inc., Defendants-Appellees.

No. 98-3461

United States Court of Appeals, Seventh Circuit

September 23, 1999

Argued May 11, 1999

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:98-cv-02373--George M. Marovich, Judge.

Page 725

[Copyrighted Material Omitted]

Page 726

[Copyrighted Material Omitted]

Page 727

Before Coffey, Ripple, and Diane P. Wood, Circuit Judges.

Diane P. Wood, Circuit Judge.

On August 7, 1997, International Marketing, Limited ("IML") filed a complaint in Oregon state court seeking over $30 million in damages from Archer-Daniels-Midland Company ("ADM") and Swift-Eckrich ("Swift"). Preferring a federal forum and taking advantage of the diversity of citizenship between the parties, ADM and Swift removed the case to federal court. There, on April 10, 1998, a magistrate judge sitting for the District Court for the District of Oregon dismissed the complaint in its entirety for failure to state a claim. In the same order, the court granted IML leave to amend some of the allegations. Last, at the defendants' request, the court transferred venue to the Northern District of Illinois under the authority of 28 U.S.C. sec. 1404(a).

When the case arrived in Illinois, IML decided to forgo its opportunity to amend the complaint and instead to pursue an immediate appeal, because the claims that were most important to it had been dismissed with prejudice. In order to do so, it had to secure a final judgment, since interlocutory appeals are normally forbidden. IML therefore asked the district court to dismiss all of its claims with prejudice. (Our recent decision in JTC Petroleum Co. v. Piasa Motor Fuels, 190 F.3d 775 (7th Cir. Aug. 17, 1999), makes it clear that this step was necessary to secure appellate jurisdiction under 28 U.S.C. sec. 1291. See id. at *1.) The district judge obliged and entered its final judgment in the defendants' favor on September 3, 1998.

Of course, a final judgment is just that. IML's strategic decision meant that its case can be resuscitated only if it is able to convince this court that it had in fact properly stated one or more of its claims, in the form they took before the district court in the unamended complaint. Taking an immediate appeal was thus a calculated risk, at least if IML thought that some of the less favored claims were nonetheless salvageable by amendment. But this is the way it chose to litigate, and its decision has helped to bring a potentially sprawling casee to a speedy conclusion. We affirm.


Because this appeal tests the sufficiency of a complaint, we relate the facts as we find them there. Kaplan v. Shure Bros., 153 F.3d 413, 418 (7th Cir. 1998). IML is an international commodities broker. In 1995 and 1996, it entered into a series of agreements with overseas and domestic buyers to supply them with Butterplus, a butter substitute, and other commodities such as corn oil and canned meats. After making the first such commitment in March 1995, IML contracted with Swift to supply the goods. Swift, in turn, arranged for ADM actually to produce the commodities. In July 1995, IML realized that ADM was the producer and began dealing with it directly. Swift remained in the

Page 728

picture because, according to IML, Swift and ADM acted as partners in all of their dealings with IML.

The heart of IML's complaint is its allegation that Swift and ADM breached a series of oral supply agreements. IML recounts seven transactions between itself and buyers who wanted to purchase the commodities that it had planned on procuring from ADM and Swift. In any event, ADM and Swift did not deliver the goods. That would have been bad enough for IML, because in theory this nondelivery would have required it to line up alternate suppliers on the open market. But ADM and Swift took matters a step further. In some cases, they initiated direct contact with IML's customers, negotiated their own deals, and circumvented IML's brokering function altogether.

From this set of basic facts, IML has distilled a number of different legal theories under which it claims a right to recover. Its complaint alleges breach of oral contract and fraud for each transaction, insofar as the defendants failed to deliver the goods while assuring IML that they would. It pleads quantum meruit and detrimental reliance as alternative, quasi- contractual theories of recovery. Where ADM and Swift entered into their own independent relationships with IML customers, IML alleges the economic torts of interference with contract and interference with business relations. Finally, IML points to written non-circumvention contracts it had entered with ADM and Swift in regard to some of its clients and accuses the defendants of breaching those contracts as well.

Although the supply agreements IML hopes to enforce were wholly oral, IML attached a number of documents to its complaint, among which are two written supply contracts between itself and Swift, together covering the period from May 31, 1995 through December 31, 1996, and a third written supply contract between itself and ADM for the period from August 19, 1995 through September 30, 1996. These contracts contain some boilerplate terms that are virtually identical. For example, they each require that payment must be made through a letter of credit, drawn in U.S. dollars through an approved bank and confirmed by Bank of America's Chicago office. Likewise, they each contain the following integration clause: "Entire Agreement: This Contract supercedes any prior agreement, negotiations and discussion between Buyer and Seller and cannot be altered or amended except by agreement in writing signed by the duly authorized representatives of the parties hereto."

These documents pose an obvious problem for IML. They look and sound like contracts between the parties on the precise subject matter of the alleged oral agreements. It is clear, however, that IML did not hold up its end of the bargain as outlined in the written agreements. For example, even according to its own rendition of events, IML never satisfied the payment terms regarding some of the transactions. Perhaps for that reason IML tried to rely in its complaint on its allegations of oral agreements. Realizing that it must somehow explain away the written agreements, IML added the following allegation to its complaint: "[the written contract with ADM] was signed solely in order to satisfy the legal and credit department of ADM, but the parties agreed that it (the written contract) would have no force and effect." IML does not make similar allegations regarding the written Swift contracts.

ADM and Swift moved to dismiss the complaint for failure to state a claim. After a thorough analysis of the many claims, the Oregon district court dismissed the complaint in its entirety, specifying that the dismissal of the breach of oral contract claims was to be with prejudice. IML is now appealing that order, so far as it applies to the oral contract and economic tort claims. It has also asked us to direct the district court to allow it to amend its remaining claims on remand.

Page 729


At this early stage in the proceedings, the only question is whether the complaint raised allegations that, if proven, would entitle the plaintiff to relief. Fed. R. Civ. P. 12(b)(6); Conley v. Gibson, 355 U.S. 41, 45-46 (1957). This is a question of law, and as such we review it de novo. Ogden Martin Sys. of Indianapolis, Inc. v. Whiting Corp., 179 F.3d 523, 526 (7th Cir. 1999). Documents attached to the complaint are incorporated into it and become part of the pleading itself. Fed. R. Civ. P. 10(c); Levenstein v. Salafsky, 164 F.3d 345, 347 (7th Cir. 1998).

The district court rejected IML's breach of oral contract claims on several grounds. The alleged oral agreements, it held, were unenforceable in light of the superseding written contracts. Any prior oral agreements with either defendant would be inadmissible under the parol evidence rule, while subsequent oral agreements would be barred by the contracts' requirement that modifications be made in writing. The court also rejected as a matter of law IML's effort to portray the written agreements as mere window- dressing, without legal effect. Finally, the written contracts aside, the court noted that each of the alleged oral agreements failed to satisfy the statute of frauds. We agree that the written contracts bar IML from recovering on the basis of oral agreements, and so we do not reach the statute of frauds question.

As an initial matter, we face a choice-of-law question. A federal trial court exercising its diversity jurisdiction over state law claims must generally apply the choice-of-law rules of the state in which it sits. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941). The situation is slightly more complicated when a case has been transferred from one federal district to another under sec. 1404(a). In that circumstance, we have held that the transfer leaves the law, including choice-of-law rules, unaffected. See Eckstein v. Balcor Film Investors, 8 F.3d 1121, 1126 (7th Cir. 1993), citing Van Dusen v. Barrack, 376 U.S. 612 (1964), and Ferens v. John Deere Co., 494 U.S. 516 (1990). In this case, that means that the governing choice-of-law rules are those that the Oregon district court would have applied--which in turn are the choice-of-law rules of the state of Oregon.

Oregon instructs its courts to refrain from choosing one state's laws over another unless there is a conflict among the laws of the competing...

To continue reading