Higgins v. TRU Servs. Grp.
| Decision Date | 29 March 2023 |
| Docket Number | 21-CV-1021 |
| Parties | DOUGLAS W. HIGGINS, Plaintiff, v. TRU SERVICE GROUP, INC., Defendant. |
| Court | U.S. District Court — Eastern District of Wisconsin |
DECISION AND ORDER
Plaintiff Douglas Higgins filed a complaint in South Carolina state court, naming as defendants his former employer, Tru Service Group, Inc. (“Tru Service”), Catalyst Exhibits Inc. (“Catalyst”), Tru Service's and Catalyst's part-owner and President, Tim Roberts, and Tru Service's part-owner and General Manager, Dave Larsen. (ECF No. 1-1 at ¶¶ 8-11.) The complaint alleged against all four defendants claims for breach of contract, fraud in the inducement, negligent misrepresentation, and promissory estoppel. (ECF No. 1-1 at ¶¶ 57-83.)
The defendants removed the case to the United States District Court for the District of South Carolina on diversity jurisdiction grounds. (ECF No. 1 at ¶¶ 4-17.) After doing so the defendants filed a motion to dismiss Higgins's complaint for lack of jurisdiction or, alternatively, to transfer the case to the Eastern District of Wisconsin. (ECF No. 9.) The court entered an order transferring the case to this court. (ECF No. 14 at 11-12.)
Once in this court the defendants filed a motion to dismiss Higgins's complaint for failure to state a claim on which relief can be granted. (ECF No. 21.) Only Higgins's claim for breach of contract against Tru Service survived that motion-all other claims and parties were dismissed. (ECF No. 31 at 21.) Following a scheduling conference, Higgins filed an amended complaint, seeking to reintroduce Roberts as a defendant and reassert claims for fraud in the inducement, negligent misrepresentation, and promissory estoppel. (ECF No. 34.) When Roberts and Tru Service filed a motion to dismiss the amended complaint, Higgins agreed to dismiss Roberts as a defendant and all other claims apart from his breach of contract claim against Tru Service. (ECF No. 38.)
Higgins has now moved for summary judgment on his breach of contract claim against Tru Service. (ECF Nos. 73.) Tru Service also has moved for summary judgment on Higgins's breach of contract claim, as well as on certain issues relating to Higgins's potential damages recovery. (ECF No. 69.) Both motions are fully briefed and ready for resolution.
Tru Service, headquartered in Pleasant Prairie, Wisconsin, installs and dismantles trade show and convention exhibits. (ECF Nos. 37 at ¶ 6.) Tim Roberts, Paul Stahlberg, Rich Korth, and Dave Larsen are the owners of Tru Service. (ECF Nos. 78-2 at 11:16-23; 87 at ¶ 1.) Roberts is Tru Service's President and Larsen is its General Manager. (ECF No. 103 at ¶ 16.)
Higgins began working in the trade show installation and dismantling industry in 1987 when he joined a company called Nth Degree. (ECF No. 103 at ¶ 6.) Like Tru Service, Nth Degree provides exhibit installation and dismantling services for trade shows, conventions, and other events. (ECF No. 103 at ¶ 7.) While a competitor of Tru Service, Nth Degree is significantly larger and operates throughout North America and Europe. (ECF Nos. 103 at ¶ 9; 37 at ¶ 17.) As a Senior Account Executive at Nth Degree, Higgins sold installation and dismantling services to companies presenting exhibits at trade shows and private events. (ECF No. 103 at ¶ 10.) A significant part of Higgins's job at Nth Degree involved attending trade shows to generate new business and meet with current clients. (ECF No. 103 at ¶¶ 12-13.) While at Nth Degree, Higgins was responsible for servicing over 100 clients. (ECF No. 103 at ¶ 15.) Higgins was one of Nth Degree's top salespeople during his time with the company. (ECF No. 71-2 at 8:12-9:1.)
In early 2018 Roberts approached Higgins to propose that he come to work for Tru Service. (ECF Nos. 37 at ¶ 22; 78-2 at 11:16-19, 12:7-9; 67 at 12:21-24; 71-2 at 8:12-14.) Higgins told Roberts that he did not intend to leave Nth Degree. (ECF No. 37 at ¶ 23.) Nonetheless, Roberts and Larsen continued to recruit Higgins, inviting him to meals at upscale restaurants in Chicago and Atlanta. (ECF No. 78-2 at 28:15-29:4, 68 at 12:21-19:25; 37 at ¶ 25.)
Sometime during Tru Service's recruitment efforts Higgins told Larsen and Roberts that he had a “book of business” in excess of $5 million. (ECF No. 103 at ¶ 16.) According to Roberts and Larsen, Higgins also boasted that, if he did decide to leave Nth Degree, he could bring over 80 to 90 percent of his book of business “right away,” which Roberts and Higgins construed to mean within “essentially three to eight months.” (ECF Nos. 78-2 at 46:2-47:23; 78-6 at 36:19-22.) Higgins claims he never made such a representation. (ECF No. 103 at ¶ 17.)
In early January 2019 Roberts, Larsen, and Korth flew to Atlanta with plans to meet with Higgins and finalize his move to Tru Service. (ECF Nos. 67 at 17:6-19:25; 78-2 at 42:13; 37 at ¶ 28.) In Atlanta, the Tru Service owners took Higgins to dinner (ECF Nos. 71-2 at 99:20-100:4; 103 at ¶ 18), during which Higgins represented that he would need an offer north of $250,000 for “a minimum of two years” to consider leaving Nth Degree for Tru Service. (ECF No. 103 at ¶ 19.)
As Higgins describes it, Tru Service's owners initially offered him a one-year deal at $250,000, to which he responded that he would “need a little bit more than $250,000” and a minimum of two years. (ECF No. 71-2 at 100:18-101:3.) He claims that Tru Service's owners, “without batting an eye,” agreed to two years at $275,000 and said that “they would have a letter to [him] the following week with a contract.” (ECF No. 71-2 at 100:18 101:3.)
Though unsure, Larsen acknowledges that Tru Service might have started negotiations at $250,000. (ECF No. 71-4 at 100:1-9.) Larsen testified that Tru Service eventually agreed to the $275,000 figure because it is five percent (the standard rate of commission for salespeople working in the tradeshow installation and dismantling business) of $5,500,000 (what Higgins approximated as his “book of business” at Nth Degree). (ECF Nos. 103 at ¶ 20; 78-6 at 11:24-12:13, 12:2-24, 19:11-21:5.)
A few days after the Atlanta dinner, on January 7, 2019, Tru Service's Director of Human Resources, Amanda Hanna, emailed Higgins a letter offering him an Account Executive position with Tru Service (the “Offer Letter”). (ECF No. 78-3 at 1.) Hanna testified that she drafted the letter based on the job title, salary, and compensation information given to her by Larsen and Roberts. (ECF No. 80-2 at 16:1-18:5.) She also explained that she sent her draft of the letter to Larsen and Roberts for their review before sending it to Higgins and that she would not have sent the letter to Higgins without first receiving their approval. (ECF No. 80-2 at 37:17-38:11.)
Under the heading “Compensation” the Offer Letter provided:
You will be paid a non-recoverable draw in the amount of $275,000 guaranteed for 2 years. You will also be paid a 5% commission; the commission will be paid after the draw has been met. After two years you will receive (sic) be responsible for covering your draw, and it will no longer be guaranteed.
(ECF No. 78-3 at 1.) The term “non-recoverable draw” in the Offer Letter means that Tru Service could not recoup from Higgins any portion of the draw in the event Higgins's sales production did not meet the level upon which the nonrecoverable draw was calculated. (ECF No. 103 at ¶ 26.)
In his deposition testimony Larsen offered insight into why Tru Service offered Higgins a nonrecoverable draw. (ECF No. 78-6.) Larsen testified that Higgins wanted a nonrecoverable draw “north of $250,000” because, “in order to get all his business over ... it would take possibly two years.” (ECF No. 78-6 at 11:4-12:13.) Tru Service rarely, if ever, offered prospective employees nonrecoverable draws. (ECF No. 78-6 at 12:14-26.) In Higgins's case, however, “[t]he [parties'] understanding was that . it would take [Higgins] two years to bring his entire book of business over [to Tru Service],” and, therefore, he needed time “to cover his draw.” (ECF No. 78-6 at 12:14-26, 19:19-20:7.) Accordingly, Tru Service offered Higgins “a nonrecoverable draw for two years, so that he could meet that commission” without having to worry about producing less than $5.5 million in either of his first two years. (ECF No. 78-6 at 20:5-7.)
Higgins told Roberts that he would need some time to consider the offer. (ECF No. 87 at ¶ 8.) In June 2019 Roberts told Higgins that the terms of the Offer Letter would expire in July. (ECF No. 87 at ¶ 9.) In early July 2019 Higgins notified Roberts that he accepted the Offer Letter's terms, and, on July 10, 2019, Higgins began working for Tru Service. (ECF No. 103 at ¶ 22.) On July 16, 2019, upon Tru Service's request, Higgins emailed the signed Offer Letter to Human Resources Manager Megan Hindrum. (ECF No. 92 at ¶ 2.)
Higgins's Offer Letter did not set forth what his duties as a Senior Account Executive would be. (ECF No. 78-3 at 1.) However, the parties agree that Higgins's duties included: creating a book of business; managing and growing accounts, the number of accounts, and revenue; prospecting for new clients and generating new business opportunities with new clients; and developing and actively pursuing a list of targeted accounts and creating plans to get those accounts. (ECF No. 103 at ¶ 33.) Going to trade shows was also an important aspect of Higgins's job, as they presented opportunities to meet prospective clients and generate new business. (ECF No. 103 at ¶¶ 12-13, 48.) But Higgins only attended two trade shows on behalf of Tru Service during his eight months with the company. (ECF No. 103 at ¶ 62.)
The Radiological Society of North America (“RSNA”) trade show was the...
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