Randle v. LaSalle Telecommunications, Inc.

• Decision Date: 10 July 1989
• Docket Number: No. 88-3221,88-3221
• Parties: 50 Empl. Prac. Dec. P 39,074 Casell RANDLE, George Austin and Holmes Communications, Plaintiffs-Appellants, v. LaSALLE TELECOMMUNICATIONS, INC., d/b/a Chicago Cable TV, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 563

876 F.2d 563

50 Empl. Prac. Dec. P 39,074

Casell RANDLE, George Austin and Holmes Communications Plaintiffs-Appellants, v. LaSALLE TELECOMMUNICATIONS, INC., d/b/a Chicago Cable TV Defendants-Appellees.

No. 88-3221.

United States Court of Appeals Seventh Circuit.

Argued April 3, 1989.

Decided May 30, 1989.

As Corrected June 2, and July 10, 1989.

Anthony S. DiVincenzo, Chicago, Ill., for plaintiffs-appellants.

Julie Badel, McDermott Will & Emery, Chicago, Ill., for defendants-appellees.

Before BAUER, Chief Judge, and CUMMINGS and EASTERBROOK, Circuit Judges.

BAUER, Chief Judge.

As a condition for obtaining a cable television franchise with the City of Chicago, a prospective grantee must agree to use its best efforts to award at least twenty five percent (25%) of the dollar value of its contracts to entities qualifying as a Minority Business Enterprise ("MBE"), and at least five percent (5%) to entities constituting a Women's Business Enterprise ("WBE"). Robin Holmes, a black woman who worked as a cable service sales supervisor for Group W, borrowed money and established Holmes Communications ("Holmes"). Holmes, which qualified as both a MBE and WBE, then contracted to provide cable marketing services to LaSalle Telecommunications ("LaSalle"), a cable franchise grantee doing business with the City as Chicago Cable TV. Less than nine months later, Holmes was in dire straits. When Holmes defaulted on its contractual obligations, LaSalle terminated the contract after giving Holmes notice. LaSalle's termination letter was largely moot; Holmes had already gone out of business. After that, Holmes and two of its employees brought suit against LaSalle, alleging that the defendant discriminated against them because of their race in violation of 42 U.S.C. Sec. 1981. This appeal is from the district court's grant of summary judgment on behalf of the defendants, 697 F.Supp. 1474 (1988). We affirm.

I. Background

In her deposition testimony, Robin Holmes stated that during her last year as a sales supervisor for Group W, she focused on the preliminary research, leg work, and preparation for establishing her own cable television marketing business. Some of her initial steps included interviewing with LaSalle and meeting with its representatives on a number of occasions. Ms. Holmes also conducted discussions with George Austin, a black sales associate at Group W, about working for her new company. Group W became aware of these developments and responded by instituting a policy prohibiting any of its sales associates from working for another cable company while still in its employ.

Robin Holmes, George Austin, and Casell Randle, another one of Group W's black sales associates who attempted to work for Holmes, were aware of this policy. All three were also aware of a policy agreement between Group W and LaSalle whereby LaSalle would not hire any employees leaving Group W for at least sixty days from the date of their departure. Ms. Holmes believes that this agreement was made in response to Group W's fear that there might be a "mass exodus" of its salespeople to her company. She also believes that Group W wanted to make it as difficult as possible for her to succeed in starting her own business. Finally, all of the plaintiffs have concluded that Austin and Randle were the primary targets of the sixty-day limitation because they were the top sales associates at Group W.

In spite of their knowledge of Group W's prohibition against working for another cable company, Austin and Randle started to work for Holmes on a part-time basis when she struck out on her own in January of 1986. Group W got wind of this development and confronted Austin and Randle, who lied about their divided loyalties. Group W then conducted an investigation into the matter and terminated the two after confirming their employment with Holmes. Before Austin and Randle could begin working for Holmes full-time, representatives from LaSalle reminded Robin Holmes about the sixty-day agreement between the two companies. They suggested to her that "it would be a good idea if you let these guys go" for the sixty-day period. Ms. Holmes stated that this conversation left her with the impression that if she would do this "favor" for LaSalle, it would respond by continuing to pay her sales invoices as expeditiously as it had been doing. Ms. Holmes concluded that it would be "in the best interests of Holmes Communication" to lay-off Austin and Randle for sixty days since her company was running on a "shoestring" and LaSalle's prompt payment on her invoices, sometimes in less than twenty-four hours, was vital to its survival. In fact, as further assurance that she would receive prompt payment from LaSalle, Ms. Holmes later agreed to and signed an amendment to her contract: she accepted five dollars less in commission on the sale of each "tarket package" in return for payment on her invoices within ten days rather than the sixty-day period originally contained in the contract.

Sometime after Holmes contracted to provide sales services to LaSalle, ¹ the latter began to develop its own in-house sales force. Ms. Holmes stated that LaSalle had initially provided her company with productive territories, which included lower income and predominately black areas. However, once LaSalle got its own sales force up and running, it began assigning less desirable sales territories to Holmes. Ms. Holmes came to this conclusion after driving through the assigned territories in a car and comparing the areas "where they [LaSalle's in-house sales force] were working versus where we were working." Ms. Holmes also talked to sales associates from LaSalle about their assignments. She surmised that her company was being assigned the dregs: whatever was "left over," "whatever they didn't want." For example, she stated that her company received assignments in the more affluent white neighborhoods, and that these were unproductive territories because they either had a background of racial tension, or the residents typically did not subscribe to cable television. Her opinion of how the sales territories should have been allocated is reflected in the following deposition testimony:

I had perhaps seven maybe ten reps. I would say a third of them were white, I would say a third of them were Hispanic and a third were black so that I could have a fair representation of the people that we were selling to so that I could place--to be most effective--I could place Hispanic reps in Hispanic areas, black reps in black areas and white reps in white areas.

What happened was we were given the area that was predominately white with a history of racial tension, and with that problem that is an area that should be sold by white reps. If it is a white area and there is racial tension, that should be white reps. If it is a black area with racial tension, it should be black reps.

When asked to explain why she thought LaSalle had assigned less desirable territory to her company, however, Ms. Holmes stated that she thought Bill Gerski, LaSalle's Subscription Sales Manager, wanted to rely upon his in-house sales force to make himself look good. She also recognized that LaSalle could sell subscriptions "cheaper [in-house] because of the cost per sale that they were giving me versus what they were paying their in-house sales representatives." She testified that under her contract, she received fifty percent more per sale because of her expenses. Finally, when asked whether she had any reason to believe that her race had anything to do with the way LaSalle allocated territory to her company, Ms. Holmes could only highlight "intangibles," such as the way LaSalle representatives spoke to her and the tone in their voices. She stated, for example, that when Gerski talked to her, it was "not so much what he said, but the way he said things, his condescending nature." She also stated that this treatment might well have been attributable to the fact that she was a woman rather than the fact that she was black.

By the end of the summer of 1986, LaSalle received indications that Holmes was struggling as a viable subcontractor. For example, a number of Holmes' employees had sought employment at LaSalle because they had not been paid in as many as four weeks. On August 5, 1986, Peter Jenkins, the sales manager for LaSalle, sent a letter to Robin Holmes, noting that he had been unable to reach her by phone over the preceding two days. Jenkins went on to state that LaSalle was concerned about the numerous inquiries by Holmes' employees as well as

the out come [sic] of the forty or so leads that you picked up on Friday August 1, 1986. As of this writing, we have only one sale.

If I do not hear from you by thursday [sic] morning, August 7, 1986, I will have no choice but to re-issue the sales routes given to you on July 25, 1986 and request you return all unworked leads immediately.

Robin Holmes did not receive Jenkins' phone calls or letter because she had been locked out of her office by her landlord for failing to pay rent. She did not attempt to pick up Holmes' mail or otherwise reach LaSalle because, in her words, she gave up on the company and went into seclusion. Ms. Holmes stated that once her sales associates had all left and she found out about being locked out, her attitude was "to hell with it." When Ms. Holmes failed to respond to the August 5 letter, LaSalle wrote to her on August 8, 1986, to inform her that it was terminating its contract with Holmes because her company was in default.

Randle, Austin and Holmes Communication filed suit against Group W and LaSalle, originally alleging violations of Section 1 of the Sherman Act and the Illinois Consumer Fraud and Deceptive Business Practices Act. These claims were ultimately dismissed after Group W settled with the plaintiffs. In their fourth amended complaint, the plaintiffs pressed three remaining breach of contract claims pendent to their...