Gadsby v. Norwalk Furniture Corp.

• Decision Date: 29 January 1996
• Docket Number: No. 95-1507,95-1507
• Parties: 69 Fair Empl.Prac.Cas. (BNA) 715, 67 Empl. Prac. Dec. P 43,804, 64 USLW 2480 Michael Alan GADSBY, Plaintiff-Appellant, v. NORWALK FURNITURE CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1324

71 F.3d 1324

69 Fair Empl.Prac.Cas. (BNA) 715,

67 Empl. Prac. Dec. P 43,804, 64 USLW 2480

Michael Alan GADSBY, Plaintiff-Appellant, v. NORWALK FURNITURE CORPORATION, Defendant-Appellee.

No. 95-1507.

United States Court of Appeals, Seventh Circuit.

Argued Sept. 29, 1995.

Decided Dec. 13, 1995.

Rehearing and Suggestion for Rehearing En Banc Denied Jan. 29, 1996.

Ayesha S. Hakeem, Chicago, IL, David L. Lee (argued), Tomes, Lee & Dvorak, Chicago, IL, for Plaintiff-Appellant.

Donald C. Clark, Jr., Jennifer S. Holloway (argued), Clark & Degrand, Chicago, IL, for Defendant-Appellee.

Before CUMMINGS, FLAUM and MANION, Circuit Judges.

CUMMINGS, Circuit Judge.

Michael Alan Gadsby worked for Norwalk Furniture Corporation as a commissioned sales representative from 1984 until his termination in 1990. By 1990, Gadsby was earning approximately $235,000 annually in commissions from his sales in the Chicago market. After Gadsby's termination, Norwalk continued its sales in Chicago but discontinued its commission payments to Gadsby. Among other claims, Gadsby alleged in the district court that Norwalk breached his Sales Representative Agreement by failing to pay him commissions after termination and that Norwalk discriminated against him because of his age. The district court entered summary judgment in favor of Norwalk on these two claims and dismissed the others. For the following reasons, we affirm.

I.

Norwalk is an Ohio corporation in the business of manufacturing and selling furniture. In December 1984, Gadsby entered into a Sales Representative Agreement ("Contract") with Norwalk to sell Norwalk's furniture in exchange for sales commissions. Gadsby was Norwalk's sole representative in the Chicago metropolitan sales area, and he increased annual sales in that area from $779,000 in 1984 to $4,800,000 in 1990. There is substantial evidence that Norwalk was pleased with Gadsby's performance until his termination in 1990, including increasingly high rankings among Norwalk's salesmen and handwritten compliments from management. Nonetheless, Norwalk claims that Gadsby lacked a good working relationship with Smithe Furniture Company, a major Chicago account, and that Gadsby had a problem with disclosing confidential information. Norwalk also claims that Gadsby had an abrasive personality.

Gadsby did only "special order" selling for Norwalk, meaning that Gadsby would procure floor space at a retailer and provide samples of Norwalk's products and copies of Norwalk's catalog. When a customer ordered furniture from the retailer, an order would be sent to Norwalk and Norwalk would manufacture and ship the item within 30 days. The salesman's job was mainly complete once he had procured the floor space and placed the samples at the retail store. Gadsby received a straight five-percent commission on furniture ordered, which was paid on the 10th of the month after the order was "on the books"--meaning Norwalk had received and acknowledged it--and the merchandise was shipped.

The Contract allowed either party to terminate the relationship, without reason, by giving 30 days' notice. In September 1990, Norwalk informed Gadsby that it was giving him 30 days' notice before terminating the Contract. With regard to commissions payable after termination of the Contract, the Contract stated that, "if this agreement is terminated by the Company, the Company shall pay commissions when and as earned on all orders entered." (Contract p 3(f)). The company interprets this language to mean that it must pay the representative for all sales entered, but not necessarily shipped, that were on its books prior to the last day of the 30-day notice period. According to Norwalk, this policy allows a terminated representative 30 days to get all orders on which he has worked onto the books so that he can earn commissions on those orders. Thus Norwalk sent Gadsby a final check for commissions earned up to and including October 14, 1990.

Gadsby was 42 years old when Norwalk terminated the Contract. After the termination, Gadsby filed a Charge of Discrimination with the Equal Employment Opportunity Commission ("EEOC") stating that he had been discriminated against because, inter alia, "[y]ounger sales representatives with sales much lower than mine have been retained by [Norwalk]." Norwalk responded to the EEOC, stating that Gadsby was not an "employee," that Gadsby had a poor relationship with Smithe Furniture, that he was not a "top representative," and that the average age of its sales representatives was 41.89 years. Norwalk further claims on appeal that it has terminated sales representatives younger than 40 and that it has terminated representatives even though their sales were satisfactory.

The EEOC dismissed the Charge for lack of "jurisdiction to investigate." Gadsby then filed suit against Norwalk and Smithe Furniture in Illinois state court, stating claims for breach of contract, age discrimination, promissory estoppel, wrongful discharge, restitution, and interference with prospective advantage; Gadsby also sued Smithe Furniture alleging interference with contract. The state court dismissed all but the age discrimination and promissory estoppel claims. When Gadsby settled with Smithe Furniture, creating diversity, Norwalk removed the case to federal district court. The district court granted Gadsby's motion to reconsider the dismissal of the breach-of-contract claim and permitted him to file an amended complaint. The court ultimately dismissed the promissory estoppel claim and granted Norwalk's motions for summary judgment on the age discrimination and breach-of-contract claims. The court also denied Gadsby's cross-motion for summary judgment on the breach-of-contract claim. This appeal followed.

Gadsby first asks this Court to review the district court's grant of summary judgment in favor of Norwalk on the breach-of-contract claim as well as the denial of Gadsby's cross-motion for summary judgment. Second, Gadsby argues that the district court improperly entered summary judgment against him on the age discrimination claim. Finally, Gadsby argues that the claims for promissory estoppel, restitution, interference with prospective advantage, and wrongful discharge were improperly dismissed. We will address each of these arguments in turn.

Our jurisdiction is premised on 28 U.S.C. Sec. 1291. Summary judgment is reviewed de novo, with all evidence submitted and the legitimate inferences to be drawn therefrom viewed in the light most favorable to the non-moving party. East Food & Liquor, Inc. v. United States, 50 F.3d 1405, 1410 (7th Cir.1995). The grant of a motion to dismiss is also reviewed de novo, with all of the facts alleged in the complaint and any inferences reasonably drawn therefrom viewed in the light most favorable to the plaintiff. Caldwell v. City of Elwood, 959 F.2d 670, 671 (7th Cir.1992).

II.

A. Breach of Contract

Gadsby makes two arguments that Norwalk has wrongfully failed to pay him commissions after termination. First, he argues that he is entitled to commissions as the procuring cause of sales made from samples and catalogs that he placed at his retail accounts. Alternatively, he argues that the Contract entitles him to commissions "on all orders entered" with no cutoff date.

The procuring cause doctrine states that in the absence of a contrary agreement, an agent is entitled to compensation from his principal for a transaction of which the agent is the procuring cause. Harold Wright Co. v. E.I. Du Pont De Nemours & Co., 49 F.3d 308, 309 (7th Cir.1995). Gadsby argues that he is the procuring cause of sales for which he was not compensated, because sales made immediately prior to and after his termination were directly due to his procurement of floor space in Chicago retail stores and his placement of samples and catalogs in those stores. The district court correctly held, however, that the procuring cause doctrine is inapplicable. Under Ohio law, which governs the contract, the procuring cause doctrine does not apply if the contract between the parties expressly provides when commissions will be paid. See Ullmann v. May, 147 Ohio St. 468, 72 N.E.2d 63 (1947); Davis & Tatera, Inc. v. Gray-Syracuse, Inc., 796 F.Supp. 1078, 1084 (S.D.Ohio 1992); see also LaScola v. U.S. Sprint Communications, 946 F.2d 559, 567 (7th Cir.1991). The contract in this case expressly provided for when commissions would be paid upon termination by Norwalk: "the Company shall pay commissions when and as earned on all orders entered." (Contract p 3(f)).

Inclusion of this provision precludes application of the procuring cause doctrine. As we noted in Harold Wright, "[t]he doctrine of procuring cause creates a default term, which is to say a term that a court plugs into a contract to fill in a gap in a way the court thinks the parties would have done had they thought about it. It is not a mandatory term, and the parties can change it by implication as well as expressly." 49 F.3d at 310. Here the parties altered the procuring cause doctrine expressly. Thus Gadsby's argument is unpersuasive.

The cases Gadsby cites in support of the procuring cause doctrine are also unpersuasive in this case. Gadsby relies heavily on Harold Wright, but that case is easily distinguished because the contract at issue did not provide when commissions would be paid. Id. at 309. Further, we rejected application of the doctrine absent extrinsic evidence to determine the meaning of the contract in Harold Wright. Id. at 310. Similarly, the procuring cause doctrine was applied in Richer v. Khoury Bros., Inc., 341 F.2d 34 (7th Cir.1965), and Scheduling Corp. of Am. v. Massello, 151 Ill.App.3d 565, 104 Ill.Dec. 944, 503 N.E.2d 806 (1987), only in the absence of express contractual provisions displacing the procuring cause rule. Also, Illinois law governed both cases. In Publishers Resource, Inc. v. Walker-Davis Publications, Inc., 762 F.2d 557 (7th Cir.1985), ...