Bethany Pharmacal Co. v. QVC Incorp.

• Decision Date: 23 February 2001
• Docket Number: No. 00-2468,00-2468
• Citation: 241 F.3d 854
• Parties: (7th Cir. 2001) BETHANY PHARMACAL COMPANY, INCORPORATED, Plaintiff-Appellant, v. QVC, INCORPORATED, Defendant-Appellee
• Court: U.S. Court of Appeals — Seventh Circuit

Page 854

241 F.3d 854 (7th Cir. 2001)

BETHANY PHARMACAL COMPANY, INCORPORATED, Plaintiff-Appellant, v. QVC, INCORPORATED, Defendant-Appellee.

No. 00-2468

In the United States Court of Appeals For the Seventh Circuit

Argued November 30, 2000

Decided February 23, 2001

Appeal from the United States District Court for the Central District of Illinois. No. 98 C 2058--David G. Bernthal, Magistrate Judge. [Copyrighted Material Omitted]

Before RIPPLE, MANION and KANNE, Circuit Judges.

RIPPLE, Circuit Judge.

Bethany Pharmacal Company, Inc. ("Bethany") brought this action against QVC, Inc. ("QVC"). It claimed that QVC had agreed to allow Bethany to appear on QVC's televised shopping program in order to sell its skin moisturizer. QVC moved for summary judgment. Bethany responded to QVC's motion and also sought leave to amend its complaint to add a promissory estoppel claim against QVC. The district court denied Bethany's request for leave to amend and granted QVC's motion for summary judgment. Bethany now seeks review of both rulings. For the reasons set forth in the following opinion, we affirm the judgment of the district court.

I BACKGROUND

A. Facts

QVC operates a televised home shopping network. In 1997, QVC conducted a tour that it titled "The Quest for America's Best--QVC's 50 in 50 Tour" ("the Tour"). The purpose of the Tour was to find local vendors in each of the fifty states to appear on QVC's televised broadcast in order to sell their products. QVC hired Network Trade Associates, Inc. ("NTA") to serve as its contact with economic development offices or agencies in each of the fifty states. NTA, in turn, contacted the Illinois Department of Commerce and Community Affairs ("DCCA") for assistance in conducting the Illinois leg of the Tour. Roberta Janis was the DCCA employee responsible for the QVC/NTA project. Although Janis' responsibilities dealt primarily with the logistical aspects of the Tour, she self-titled herself the "QVC Project Manager" in her correspondence concerning this project. R.31, Ex.5 at 4-5. At no time, however, did QVC enter into a contract with either DCCA or Janis.

QVC held two trade shows in Illinois in April 1997. The purpose of the trade shows was to choose twenty Illinois vendors who would sell their products on QVC's broadcast. QVC also intended to choose five additional vendors as alternates. Prior to the trade shows, NTA gave Janis the names and addresses of several Illinois vendors. Janis sent those vendors a QVC solicitation packet; the information in this packet listed her as a contact person. In order to participate in the trade shows, vendors had to complete a product information sheet included in the solicitation packet. On that sheet, the vendor described the product that the vendor proposed to sell on QVC's program. The information sheet also included the following written disclaimer:

The data provided on this sheet is for information purposes only. QVC's acceptance of your completed form does not constitute acceptance or agreement that the information you have provided is correct or complete. It is also not a waiver of any of QVC's rights, remedies or defenses with respect to you or your product. Any sales of the product to QVC shall be governed by a purchase order issued by QVC. An authorized QVC Purchase Order is the only valid contract. Verbal statements or discussions do not constitute a commitment to do business and should not be considered as such.

R.31, Ex.6 at 2.

Bethany was one of the Illinois businesses that received a QVC solicitation packet. Bethany is a pharmaceutical company that manufactures a moisturizing skin lotion called Ti-Creme. Bethany's chairman, Jack J. Scott, Sr., completed a product information sheet describing Ti-Creme on behalf of Bethany, in which he indicated that Bethany had 15,000 to 50,000 jars of Ti-Creme available on hand.¹ The product information sheet also asked Scott to indicate the "[m]anufacturer lead time required for $10,000 wholesale order"; Scott responded, "On Hand." R.31, Ex.6 at 4.

Scott represented Bethany at QVC's Springfield, Illinois, trade show in April 1997. Janis also attended the trade show and her DCCA business cards were on display at the registration desk. James Plutte and Julie Campbell, both buyers for QVC, were also at the trade show. Plutte and Campbell explained to the vendors that, if their products were selected, they would receive a purchase order from QVC and that the vendors should not do anything until they heard directly from QVC.

Following the trade show, NTA notified Janis that it would send her a list of the twenty vendors and five alternates from Illinois that QVC had selected to appear on its broadcast, but it told Janis not to contact any of the listed vendors until QVC had notified the vendors of their selection itself. Apparently, Janis did not receive this list right away. Janis may not have received the list until after QVC had contacted the selected vendors, although the record is not clear on this point. What is clear is that Janis thought QVC had already contacted the vendors by the time she received the list. She therefore prepared a letter that she sent to the twenty participants and the five alternates in which she gave them logistical information about the broadcast and alerted them to a potential shortage in hotel accommodations during the time of the broadcast ("the Janis letter").² The Janis letter was printed on DCCA stationery, was addressed to "QVC Participants," congratulated them on being selected to participate in QVC's broadcast, and concluded by stating, "See you at the Fair." R.31, Ex.6 at 6.³ Although the same letter was sent to both participants and alternates, Janis directed her subordinates to attach a "post-it note" to the letters sent to the alternates with the word "Alternate."

In selecting the program participants, QVC chose Bethany as an alternate vendor. However, although Bethany received the Janis letter, it did not receive the post-it note informing it that it was only an alternate rather than a confirmed participant. After receiving the Janis letter, Scott telephoned Janis to thank her for notifying him that QVC had selected Bethany as a participant. The parties disagree as to the content of the conversation that followed. Scott claims that, in response to his call, Janis said, "We'll be seeing you at the show." R.31, Ex.7 at 45. Janis, however, claims that she told Scott that her records indicated that he was only an alternate and that she asked him whether he had received information from QVC indicating that he was a participant. The parties agree, however, that, in the course of the conversation, Janis did not say anything definitive that clearly would have dispelled Scott's misperception.

Scott claims that, in reliance on the Janis letter, he spent $100,000 to buy 60,000 units of Ti-Creme. This amount was what he predicted he would need on hand to meet the demand for Ti- Creme when QVC's broadcast aired. His calculation was based on a QVC press release describing the financial success of the vendors who had participated in the broadcasts. No one at QVC suggested to Scott that he should purchase additional product or that he would need more than the $10,000 worth of product that he already claimed to have on hand.

B. Earlier Proceedings

QVC eventually learned that Scott's receipt of the Janis letter had led him to believe that Bethany had been selected to participate in the broadcast, but it did not change Bethany's status from an alternate to a participant. Consequently, Bethany filed this breach of contract action against QVC. In Bethany's view, the Janis letter constituted a binding contract between Bethany and QVC; the letter constituted a promise that Bethany would be allowed to sell Ti-Creme on QVC's broadcast. Bethany sought to recover the $100,000 it spent to purchase additional product in reliance on QVC's alleged promise. QVC filed a motion for summary judgment. When Bethany replied to QVC's motion, it also filed a motion seeking leave to amend its complaint to add a promissory estoppel claim.

The district court granted QVC's motion for summary judgment. The court first considered whether Janis was QVC's apparent agent, which would allow her to bind QVC to a contract. The court held that Janis was not QVC's apparent agent because QVC had done nothing to indicate to Scott that Janis had any authority to act on QVC's behalf. The court determined that, because Janis had initiated her contact with the vendors, her conduct did not constitute a manifestation by QVC to third parties that Janis had the authority to transact business on QVC's behalf.

The district court further held that, even if Janis was QVC's apparent agent, there still was no valid contract between Bethany and QVC. It concluded that Scott's belief that the Janis letter was an offer to enter into a contract was not reasonable because the Janis letter did not specify the terms of the purported offer or the identities of the offeror and offeree. The court also concluded that, even if there was a valid contract, Bethany could not establish that the contract had been breached because it could not show that it suffered damages or had a reasonable basis for computing the damages it claimed to have suffered.

Finally, the court refused to allow Bethany to amend its complaint to include a promissory estoppel claim against QVC. The court determined that Bethany would be unable to succeed on such a claim because the Janis letter did not clearly promise that QVC would allow Bethany to appear on its broadcast to promote Ti-Creme. Additionally, the court believed that Bethany's promissory estoppel claim would fail because Bethany's reliance on the Janis letter in purchasing additional product was unreasonable, given that QVC never had indicated that this purchase would be necessary.

II DISCUSSION

In appealing the district court's judgment, Bethany submits that the district...