Sears Authorized Hometown Stores, LLC v. Lynn Retail, Inc.
| Decision Date | 19 January 2023 |
| Docket Number | 4:21-cv-00091-JMS-KMB |
| Parties | SEARS AUTHORIZED HOMETOWN STORES, LLC, Plaintiff, v. LYNN RETAIL, INC., JERRY SCHNEIDER, and LAURA SCHNEIDER, Defendants. |
| Court | U.S. District Court — Southern District of Indiana |
Plaintiff Sears Authorized Hometown Stores, LLC ("Sears") brings this action against Defendants Lynn Retail, Inc. ("LRI") Jerry Schneider, and Laura Schneider (collectively "the Schneiders"), alleging unfair competition under the Lanham Act, 15 U.S.C. § 1125, as well as tortious interference with a contract and tortious interference with prospective economic advantage under Indiana law. [Filing No. 1.] The Schneiders have filed a Motion for Summary Judgment, [Filing No. 54], which is ripe for the Court's decision.
A motion for summary judgment asks the Court to find that a trial is unnecessary because there is no genuine dispute as to any material fact and, instead, the movant is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(a). On summary judgment, a party must show the Court what evidence it has that would convince a trier of fact to accept its version of the events. Johnson v. Cambridge Indus., 325 F.3d 892, 901 (7th Cir. 2003). "'Summary judgment is not a time to be coy.'" King v. Ford Motor Co., 872 F.3d 833, 840 (7th Cir. 2017) (quoting Sommerfield v. City of Chicago, 863 F.3d 645, 649 (7th Cir. 2017)). Rather, at the summary judgment stage, "[t]he parties are required to put their evidentiary cards on the table." Sommerfield, 863 F.3d at 649.
The moving party is entitled to summary judgment if no reasonable factfinder could return a verdict for the non-moving party. Nelson v. Miller, 570 F.3d 868, 875 (7th Cir. 2009). The Court views the record in the light most favorable to the non-moving party and draws all reasonable inferences in that party's favor. Darst v. Interstate Brands Corp., 512 F.3d 903, 907 (7th Cir. 2008). It cannot weigh evidence or make credibility determinations on summary judgment because those tasks are left to the factfinder. O'Leary v. Accretive Health, Inc., 657 F.3d 625, 630 (7th Cir. 2011).
Each fact asserted in support of or in opposition to a motion for summary judgment must be supported by "a citation to a discovery response, a deposition, an affidavit, or other admissible evidence." S.D. Ind. L.R. 56-1(e). And each "citation must refer to a page or paragraph number or otherwise similarly specify where the relevant information can be found in the supporting evidence." Id. The Court need only consider the cited materials and need not "scour the record" for evidence that is potentially relevant. Grant v. Trustees of Ind. Univ., 870 F.3d 562, 572-73 (7th Cir. 2017) (quotations omitted); see also Fed.R.Civ.P. 56(c)(3); S.D. Ind. L.R. 56-1(h). Where a party fails to properly support an assertion of fact or fails to properly address another party's assertion of fact, the Court may consider the fact undisputed for purposes of the summary judgment motion. Fed.R.Civ.P. 56(e)(2).
In deciding a motion for summary judgment, the Court need only consider disputed facts that are material to the decision. A disputed fact is material if it might affect the outcome of the suit under the governing law. Hampton v. Ford Motor Co., 561 F.3d 709, 713 (7th Cir. 2009). In other words, while there may be facts that are in dispute, summary judgment is appropriate if those facts are not outcome determinative. Harper v. Vigilant Ins. Co., 433 F.3d 521, 525 (7th Cir. 2005). Fact disputes that are irrelevant to the legal question will not be considered. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Statement of Facts[1]
The following factual background is set forth pursuant to the standard detailed above.
The facts stated are not necessarily objectively true, but as the summary judgment standard requires, the undisputed facts and the disputed evidence are presented in the light most favorable to "the party against whom the motion under consideration is made." Premcor USA, Inc. v. Am. Home Assurance Co., 400 F.3d 523, 526-27 (7th Cir. 2005).
Sears is a national retailer of home appliances and licenses Sears Hometown Stores to individual dealers in smaller communities throughout the country. [Filing No. 56-1 at 3.] Sears enters into a written operating agreement with each dealer, under which Sears owns the merchandise stocked in all Sears Hometown Stores and the dealers offer it for sale to the public on consignment, using Sears branding and marketing materials. [Filing No. 56-1 at 3.] Sears owns two registered trademarks-"Sears Hometown Store" and "Sears Authorized Hometown Store"-which it authorizes dealers to use while operating Sears Hometown Stores, including in advertising and marketing materials. [Filing No. 56-1 at 3; Filing No. 56-3 at 8-9.] Pursuant to the operating agreement, dealers promise to cease use of Sears' intellectual property upon termination of the agreement. [Filing No. 56-3 at 8.] Additionally, the operating agreement prohibits a dealer-and his or her affiliates and immediate family-from having any ownership interest in any competing business located within 50 miles of any Sears Hometown Store during the term of the operating agreement or for a period of two years after termination of the operating agreement. [Filing No. 56-3 at 16.]
In June 2016, Sears dealer Scott Schneider ("Scott"),[2] acting through his entity SJS Retail, Inc. ("SJS Retail"), renewed an operating agreement for an existing Sears Hometown Store in Corydon, Indiana ("the Corydon Sears Store"). [Filing No. 56-3 at 1.] Scott is the husband of Defendant Laura Schneider ("Laura"), although Scott and Laura have been separated since October of 2021, and he is the son of Defendant Jerry Schneider ("Jerry"). [Filing No. 562 at 1-2; Filing No. 56-7 at 1; Filing No. 59-1 at 32.] The renewed operating agreement for the Corydon Sears Store ("the Operating Agreement") had a term of July 3, 2016 to July 3, 2021. [Filing No. 56-3 at 1.] However, Scott had owned and operated the Corydon Sears Store since approximately 2004. [Filing No. 59-1 at 9.] Sears had been licensing a store in Corydon since 1995. [Filing No. 59-12 at 1.]
Laura began working at the Corydon Sears Store in approximately 2009. [Filing No. 596 at 4.] She was the general manager of the Corydon Sears Store from approximately 2016 or 2017 until the store closed. [Filing No. 59-2 at 5; see also Filing No. 59-1 at 23-28 ().]
Alden Shipley is the owner of the retail space in which the Corydon Sears Store operated ("the Premises"). [Filing No. 56-5 at 1.] Mr. Shipley leased the Premises to SJS retail, and Sears was not a party to the lease. [Filing No. 56-5 at 1.]
Eventually, Scott decided to close the Corydon Sears Store and end his business relationship with Sears, although the parties dispute when and why this decision was made. [See Filing No. 61 at 3-5 (highlighting factual disputes).] The Schneiders point to Scott's deposition testimony in which he states that Sears was not providing sufficient inventory to the Corydon Sears Store and he was not making enough money to keep the store going. [Filing No. 56-4 at 46.] Sears disputes these statements, pointing out that the commissions paid to SJS in 2016 through 2019 were consistent, despite Scott's testimony that his inventory problems began in 2016 and got progressively worse in the following years. [See Filing No. 59-2 at 14-15 (); Filing No. 59-7 ().]
On December 20, 2019, an email was sent from Laura's email account (Laura.Schneider@htstores.com) to Joseph Jurec, a Sears representative, requesting a mutual termination agreement ("MTA") to terminate the Operating Agreement. [Filing No. 59-8 at 2.] The email stated that it was from Scott. [Filing No. 59-8 at 2 ("This is Scott from Corydon[.]").] However, Scott testified that Laura, at Scott's direction, typed and sent the email. [Filing No. 59-1 at 39.][3] The email alleged that Sears breached the Operating Agreement by failing to provide adequate inventory, reducing commissions, and "holding funds that [were] rightfully earned for extra extended time." [Filing No. 59-8 at 2.]
On December 30, 2019, Mr. Jurec informed Scott via telephone that his request for an MTA was denied, that Sears expected him to fulfill his contract term under the Operating Agreement, and that, if he abandoned his store, Scott would be liable to Sears for "any profits lost between the time of abandonment and the end of his contract." [Filing No. 59-8 at 1; see also Filing No. 59-1 at 42.] The following day, Mr. Jurec sent Scott an "abandonment warning notice" via mail to Scott and via email to Laura's email address. [Filing No. 59-9 at 1; see also Filing No. 59-29 ().]
On January 6, 2020, Scott responded to Mr. Jurec's email (through Laura's email account), contesting the idea that he was abandoning the store and reiterating his request for an MTA based on Sears' alleged breaches of the Operating Agreement. [Filing No. 59-9 at 1.] He stated that "the last day of business at the Corydon [Sears Store] will be January 31, 2020." [Filing No. 59-9 at 1.] The email also stated that ...
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