Creative Demos, Inc. v. Wal-Mart Stores, Inc., IP 91-1256C B/F.

• Court: United States District Courts. 7th Circuit. United States District Court (Southern District of Indiana)
• Citation: 955 F.Supp. 1032
• Docket Number: No. IP 91-1256C B/F.,IP 91-1256C B/F.
• Parties: CREATIVE DEMOS, INC., Plaintiff, v. WAL-MART STORES, INC., a Delaware Corporation, d/b/a Sam's Club, Defendant.
• Decision Date: 07 February 1997

955 F.Supp. 1032 CREATIVE DEMOS, INC., Plaintiff,
v.
WAL-MART STORES, INC., a Delaware Corporation, d/b/a Sam's Club, Defendant. No. IP 91-1256C B/F. United States District Court, S.D. Indiana, Indianapolis Division. February 7, 1997.

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J. Lee McNeely, Shelbyville, IN, George W. Hopper Bank, Indianapolis, IN, for plaintiff.

Thomas L. Davis, Robert Wright, Indianapolis, IN, for defendant.

ENTRY

BARKER, Chief Judge.

A trial was conducted in this case from August 29 — September 1, 1994,¹ and the case was submitted to the jury on two counts: promissory estoppel and fraud. The jury returned a verdict in favor of plaintiff Creative Demos, Inc. ("Creative Demos") on the promissory estoppel count, awarding $681,126 in compensatory damages. The jury also found in favor of Creative Demos on the fraud count, awarding $137 in compensatory damages and $6,500,000 in punitive damages. Now before the court is Defendant Wal-Mart Stores, Inc., d/b/a Sam's Club's, ("Sam's Club") Motion for Judgment as a Matter or Law or, in the Alternative, for a New Trial. For the reasons discussed below, Defendant's

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motion is granted in part and denied in part.

I. Background

We assume familiarity with the facts underlying this case, which are discussed in detail in our entry on summary judgment dated March 7, 1994. Therefore, we only recite here those additional background facts developed at trial and necessary to an understanding of the issues raised in the motion currently before the court.

Creative Demos is a small business, owned and operated by plaintiffs Rita DeVaney and Linda Brackin, which provides food demonstration services for customers visiting wholesale grocery stores. Prior to January, 1991, Creative Demos conducted its business activities in twenty-eight stores, each operating under the name of "Wholesale Club," located throughout the Midwest. Around February 1, 1991, Sam's Club merged with and took over the management and operations of the twenty-eight Wholesale Club stores. Creative Demos' promissory estoppel claim was based upon an alleged promise made by Sam's Club on January 21, 1991, that Creative Demos would continue to be the exclusive provider of food demonstration services in the all twenty-eight former Wholesale Club stores until September 1, 1991, when Sam's Club planned to start doing the food demonstrations in-house.

On March 1, 1991, and again on March 5, 1991, Denise Baustert n/k/a Hudson ("Baustert"), Sales Enhancement Manager at Sam's Club, asked Creative Demos to send Sam's Club complete copies of Creative Demos' 1991 demonstration schedules. When asked why Sam's Club wanted these documents, Baustert represented that the documents were needed so that Sam's Club could compare them against its own documents to confirm that various food vendors had fulfilled their commitment to participate in food demonstrations and to coordinate dates and locations of scheduled demonstrations with local store managers. Creative Demos shipped the requested documents by overnight delivery on March 6, 1991. On March 7, 1991, Sam's Club notified Creative Demos by fax that their demonstration services were being terminated at nineteen of the Sam's Club stores as of March 15, 1991, and that their services at the remaining nine stores would be terminated shortly thereafter. In fact, according to testimony developed at trial, by March 1, Baustert had decided to terminate Creative Demos, and had contacted another demonstration company, Sales Talk, to ask if it would be willing and able to take over the food demonstrations for the twenty-eight former Wholesale Clubs as of March 15. (Trial Transcript ["Tr."] II-148-49; III-47, 91).

Creative Demos' fraud claim is based upon allegations that Sam's Club's representation regarding its reason for requesting copies of Creative Demos' scheduling documents was fraudulent and that the real reason for the request was that Sam's Club wanted to give the documents to Creative Demos' replacement, Sales Talk, to enable Sales Talk to perform the demonstrations which had been scheduled by Creative Demos so there would be minimal disruption to Sam's Club's business. Creative Demos also based its fraud claim on Baustert's failure to inform them that Sam's Club had already decided to terminate its services when she requested the scheduling documents.

II. Standards of Review

A. Motion for Judgment as a Matter of Law

"A motion for judgment as a matter of law should be granted only when there can be but one conclusion from the evidence." Emmel v. Coca-Cola Bottling Co. of Chicago, 95 F.3d 627, 636 (7th Cir., 1996), quoting McNabola v. Chicago Transit Authority, 10 F.3d 501, 515 (7th Cir.1993). In ruling on a motion for judgment as a matter of law (formerly known as a "JNOV"), a district court must determine "whether the evidence presented, combined with all reasonable inferences permissibly drawn therefrom, is sufficient to support the verdict when viewed in a light most favorable to the party to whom the motion is directed." Sanders v. City of Indianapolis, 837 F.Supp. 959, 961 (S.D.Ind. 1992), quoting Cygnar v. Chicago, 865 F.2d 827, 834 (7th Cir.1989); see also Medcom Holding Co. v. Baxter Travenol Laboratories, Inc., 100 F.3d 1241, 1254-55 (7th Cir.,

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1996). In applying this standard, we are not free to weigh the evidence, to pass on the credibility of witnesses, or to substitute our judgment of the facts. Rakovich v. Wade, 850 F.2d 1180, 1188 (7th Cir.) (en banc), cert. denied, 488 U.S. 968, 109 S.Ct. 497, 102 L.Ed.2d 534 (1988). "If the evidence, taken as a whole, provides a sufficient probative basis upon which a jury could reasonably reach a verdict, without speculation over legally unfounded claims, the motion should be denied." Cygnar, 865 F.2d at 835, citing Anderson v. Gutschenritter, 836 F.2d 346, 348 (7th Cir.1988).

B. Motion for a New Trial

The test to be applied in determining whether a motion for a new trial should be granted is whether (1) the verdict is against the weight of the evidence, (2) the damages are excessive, or (3) for some other reasons, the trial was not fair to the moving party. Emmel, 95 F.3d at 636, citing McNabola at 516.

III. Analysis

A. Motion for Judgment as a Matter of Law on the Promissory Estoppel Claim

To prevail on a promissory estoppel claim, a plaintiff must show "(1) there is a promise by the promisor, (2) which the promisor should reasonably expect to induce action or forbearance of a definite and substantial nature on the part of the promisee, (3) which the promisee reasonably relies on and which does induce such action or forbearance, and (4) injustice can be avoided only by the enforcement of the promise." Jarboe v. Landmark Community Newspapers of Indiana, Inc., 625 N.E.2d 1291, 1295 (Ind. App. 1 Dist.1993) aff'd in part, rev'd on different grounds in part, 644 N.E.2d 118 (Ind.1995). The reason for the doctrine is to avoid an unjust result in that justice and fair dealing require that one who acts to his detriment on the faith of a promise should be protected by estopping denial of that promise. First Nat. Bank of Logansport v. Logan Mfg. Co., 577 N.E.2d 949, 954 (Ind.1991).

Sam's Club argues that it is entitled to judgment as a matter of law on Creative Demos' promissory estoppel claim because Creative Demos failed to establish any detrimental reliance on any promise by Sam's Club. Before addressing the merits of Sam's Club's motion, we must clear up a procedural matter. Creative Demos contends that Sam's Club has waived its right to seek judgment as a matter of law as to its liability under promissory estoppel and fraud, claiming that Sam's Club failed to raise these contentions when it first made its motion for judgment as a matter of law.

A party who has moved for judgment as a matter of law prior to the verdict may move again for judgment as a matter of law after the verdict, but only as to claims raised in its prior motion. McCarty v. Pheasant Run, Inc., 826 F.2d 1554, 1555 (7th Cir.1987); Morales v. Cadena, 825 F.2d 1095, 1099 (7th Cir.1987). In its initial motion for judgment as a matter of law, first raised at the close of plaintiff's case and renewed at the close of the evidence, Sam's Club did, in fact, contend that "there has been no showing of reasonable reliance." (Tr. II-187). When Sam's Club renewed its motion at the close of the evidence, it moved "for a judgment on evidence as to the fraud count in its entirety." (Tr. III-244-45). Therefore, Sam's Club has properly preserved its motion as to liability on both claims.

Sam's Club claims that the work done by Creative Demos after January 21, 1991, to arrange and perform demonstrations did not constitute "detrimental reliance" on any promise made by Sam's Club, because Creative Demos would have done the same things had they known their employment would only last until March 15th.² Sam's Club characterizes Creative Demos' actions as merely continuing to do the work they normally

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did to arrange and perform demonstrations. If this were the case, it might not constitute reliance; however, evidence was introduced at trial that Creative Demos actually stepped up their efforts in reliance on Sam's Club's promise. Evidence was introduced that DeVaney and Brackin spent more time contacting vendors and recruiting and training new demonstrators (Tr. I-40-43; Exh. 74, at 19); paid for advertisements to recruit new demonstrators (Tr. I-38, 122); and spent more time meeting with supervisors and doing paperwork (Tr. I-38-39). DeVaney testified that they would not have taken on this work had they known it would only last until March 15. (Tr. I-117; Exh. 34).³ This evidence, viewed as it must be in a light most favorable to Creative Demos, is sufficient to support the jury's determination that Creative Demos acted in reliance on Sam's Club's promise.

Simple reliance,...