Spitz v. Proven Winners N. Am., LLC

• Decision Date: 21 July 2014
• Docket Number: No. 13–3084.,13–3084.
• Citation: 759 F.3d 724
• Parties: Susan SPITZ, Plaintiff–Appellant, v. PROVEN WINNERS NORTH AMERICA, LLC & EuroAmerican Propagators, LLC, Defendants–Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

759 F.3d 724

Susan SPITZ, Plaintiff–Appellant,

v.PROVEN WINNERS NORTH AMERICA, LLC & EuroAmerican Propagators, LLC, Defendants–Appellees.

No. 13–3084.

United States Court of Appeals,

Seventh Circuit.

Argued May 20, 2014.

Decided July 21, 2014.

Douglas D. Churovich, Polster, Lieder, Woodruff & Lucchesi, St. Louis, MO, for Plaintiff–Appellant.

Patrick Ross Grady, Law Offices of Wolf & Wolfe, Ltd., Catherine Basque Weiler, Swanson, Martin & Bell, LLP, Chicago, IL, for Defendants–Appellees.

Before KANNE, TINDER, and HAMILTON, Circuit Judges.

KANNE, Circuit Judge.

Susan Spitz, a freelance copywriter, developed a plan to market “pet safe plants” to the burgeoning pet supplies market. She pitched this idea to Amerinova, a company that develops and licenses plant varieties. Although Amerinova expressed interest, the project eventually stalled. When Spitz discovered that Proven Winners, a company partially owned by the owners of Amerinova, had described some of its plants as “pet friendly” on its website and plant tags, she sued. Her suit seeks damages for breach of an alleged agreement with Amerinova. But Spitz did not sue Amerinova for damages; instead, she filed suit against Proven Winners and Euro. She raises a host of reasons why any contract with Amerinova also binds Proven Winners and Euro but none of them holds water. We therefore affirm the district court's entry of summary judgment in favor of Proven Winners and Euro.

I. Background

Bringing an ornamental plant to the consumer market involves a number of steps. First, a breeder develops a plant. The breeder then sells or licenses that plant (sometimes with the help of a breeder's agent) to a propagator. The propagator grows large numbers of starter plants, often by cultivating cuttings from a mother plant provided by the breeder. Once the starter plants reach a certain age, they are sold to either wholesale or retail growers, who then sell the plants to consumers.

EuroAmerican Propagators (“Euro”), as its name suggests, is a plant propagator. Proven Winners North America (“Proven Winners”) is a brand manager and marketing entity responsible for two plant brands: Proven Winners and Proven Selection plants. Proven Winners is equally owned by Euro and two other propagator corporations: Four Star Greenhouse and Pleasant View Gardens. Euro also uses a breeder's agent, Amerinova Properties (“Amerinova”). Amerinova locates new breeders and identifies new plants that can be commercialized.

Euro and Amerinova are both owned in equal parts by John Rader and Gerald Church. They are registered as separate California LLCs, and there is no formal connection between the two companies. The companies have separate bank accounts, separate budgets, and file their taxes separately. But there are many informal ties between them, in addition to their common ownership. Amerinova was initially a property holding company for Euro but transitioned into a licensing agent around 2004. Church and Rader prevented Amerinova from licensing plants to propagators that would become stiff competition for Euro. For the first few years of Amerinova's existence, it did not turn a profit and depended on investment from Euro for its operational expenses. And Josh Schneider, Amerinova's director of product development, worked about half-time at Amerinova and half-time at Euro from 2004, when Amerinova was created, until his departure in March 2006. Moreover, checks for Schneider's travel reimbursements and salary came from Euro, although his salary and travel were budgeted for by Amerinova.

The plaintiff in this case, Susan Spitz, is a retired freelance copywriter. She did some freelance work in 2001 for Euro. In 2002 or 2003, she began working with Proven Winners to develop a consumer publication called “Gardener's Idea Book.” The book included photos and suggestions for how to use Proven Winners plants in home gardening. Spitz also worked on a second edition of the Idea Book published in 2005, which included a section about “Pet-friendly plants.” That section focused primarily on plants that could withstand pet traffic, though it also mentioned that the Humane Society website maintained a list of plants that could be harmful to pets.

In July 2005, Spitz met with Marshall Dirks, a Proven Winners employee, and Ron Walder, a freelance graphic designer, to discuss additional marketing projects for Proven Winners. At the end of the meeting, Spitz approached Dirks and proposed that Proven Winners develop a set of “pet safe” plants sold under the Proven Winners label. Dirks told Spitz that Proven Winners did not develop or create lines of plants but that she should discuss the idea with someone at Euro.

Dirks passed the idea along to Schneider, who met with Spitz to discuss the idea. Schneider liked the idea, and suggested that Spitz present the idea to Church and Rader, the co-owners of both Euro and Amerinova. In November 2005, Schneider emailed Spitz a summary of “how a partnership with Amerinova could be beneficial to you on your Pet Safe Plants Line.” In that summary, Schneider explained that Amerinova represented many plant breeders, which meant it had access to a variety of plants that could be marketed as pet safe. Schneider also proposed a $.02 per plant royalty for all plants sold “under the marketing plan for Pet Safe Plants.” Spitz did not immediately accept the offer.

On February 23, 2006, Spitz met with Church, Rader, and Schneider in Bonsall, California. She drafted confidentiality and nondisclosure agreements, which she required each attendee to sign before she began her presentation. Spitz then described her marketing plan. The parties dispute whether she accepted Schneider's $.02 royalty offer at the meeting. They next corresponded in April 2006, when Rader sent Spitz a letter informing her that Schneider had left Amerinova. He added a handwritten note to the bottom of the page: “I love your pet safe plants idea and want to work with you to make it happen.” Spitz replied via email, noting that she still intended to work with “Euro/Amerinova on PetSafePlants.” The parties had no further discussions about Spitz's idea, and neither Euro nor Amerinova developed a line of pet safe plants.

At some point in 2005, Proven Winners began tagging certain plants on its website as “pet friendly.” This attribute later began appearing on plant tags as well. In 2008, it became possible to search for Proven Winners plants bearing the “pet friendly” tag. Taking offense to this labeling, Spitz filed suit against Euro and Proven Winners on October 5, 2010. She alleged violations of the Lanham Act, breach of confidentiality, breach of contract, misappropriation of a trade secret, unjust enrichment, and quantum meruit. ¹All parties eventually moved for summary judgment.

The district court granted summary judgment to Euro and Proven Winners. With regard to Spitz's breach of contract claim, the court reasoned that Spitz had made no arguments about corporate veil-piercing or alter egos, and that Euro was not liable for Amerinova's conduct. Further, Spitz's conduct after April 2006 demonstrated that she did not consider herself bound by any contract with Euro or Proven Winners. And as for Proven Winners, the court found Spitz did not present any evidence that it had used Spitz's marketing concept. At most, the court reasoned, Spitz showed that she had a contract with Amerinova; she did not show that any such contract could be attributed to Euro or Proven Winners.

The district court also granted summary judgment on Spitz's quasi-contract claims. It found the only service relating to pet friendly or pet safe plants Spitz provided to either defendant was her work on the 2005 Gardener's Idea Book for Proven Winners. Because she was adequately compensated for that work, and she did not identify other services she provided to Euro or Proven Winners for which she was not paid, she was not entitled to any equitable remedy. Spitz now appeals.

II. Analysis

Spitz makes a number of arguments explaining why, although any oral contract she had was with Amerinova, she should nevertheless recover from Euro and Proven Winners. We address each of them in turn below, after dismissing her arguments that California, rather than Illinois, law should apply to her suit. We also dismiss her arguments in quasi-contract and her contention that the district court abused its discretion by denying her motion to compel.

A. Choice of Law

Before we begin a detailed analysis of the three claims Spitz presents on appeal, we address her argument that California law, rather than Illinois law, should govern her claims. Because the district court was sitting in diversity, it was obligated to apply the substantive law of the forum state (here, Illinois) including its choice-of-law rules. Malone v. Corr. Corp. of Am., 553 F.3d 540, 542 (7th Cir.2009). Spitz argues that a properlycompleted choice-of-law analysis would require the court to apply California, rather than Illinois, law.

But Spitz has not made the threshold showing Illinois courts require before performing a choice-of-law analysis. The Illinois courts hold that “a choice-of-law determination is required only when the moving party has established an actual conflict between state laws.” Bridgeview Health Care Ctr., Ltd. v. State Farm Fire & Cas. Co., 2014 IL 116389, 381 Ill.Dec. 493, 10 N.E.3d 902, 905 (2014); see also Morisch v. United States, 653 F.3d 522, 530 (7th Cir.2011) (“since neither party pointed to a conflict between Missouri and Illinois law, the district court did not need to make a choice of law decision”). At no point, either before the district court or in her brief on appeal, has Spitz identified the purported conflict between Illinois and California law.² No choice-of-law determination was required, and the district court was correct to apply Illinois law.

B. Breach of Contract

Spitz next argues that the district court erred in granting summary judgment to Euro...