Bell v. Bimbo Foods Bakeries Distribution, Inc.
Filing
160
MEMORANDUM Opinion and Order signed by the Honorable Edmond E. Chang. For the reasons stated in the Opinion, Bimbo's motion for summary judgment 74 is granted and Bell's motion for class certification 104 is denied. Status hearing of 12/19/2013 is vacated. Civil case terminated. Mailed notice. (slb, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
STEVEN BELL, individually and on
behalf of all similarly situated
individuals,
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Plaintiff,
v.
BIMBO FOODS BAKERIES
DISTRIBUTION, INC.,
Defendant.
Case No. 11 C 03343
Judge Edmond E. Chang
MEMORANDUM OPINION AND ORDER
Plaintiff Steven Bell has sued Bimbo Foods Bakeries Distribution, Inc. on behalf
of himself and a proposed class, alleging that Bimbo has violated the Illinois Wage
Payment and Collection Act (IWPCA), 820 ILCS 115/9 (Count Two), and breached the
terms of Bell’s distributor agreement with Bimbo (Count Six). R. 36, Am. Compl. ¶¶ 2,
48-53, 81-84.1 Bimbo has filed a motion for summary judgment on the merits [R. 74],
1
This Court has subject matter jurisdiction under the Class Action Fairness Act of 2005,
28 U.S.C. § 1332(d)(2). Bell is a citizen of Illinois, and Bimbo is incorporated under the laws
of Delaware, with its principal place of business in Pennsylvania. Am. Compl. ¶¶ 6-7. Bell
alleges that there are more than 100 members in the proposed classes, see R. 105, Pl.’s Class
Cert. Br. at 11, and that the amount in controversy, in the aggregate, exceeds $5,000,000, Am.
Compl. ¶ 10.
Citation to the docket is “R.” followed by the entry number and, when necessary, the
page or paragraph number. Citations to the parties’ Local Rule 56.1 Statements of Fact are
“DSOF” (for Defendant’s Statement of Facts) [R. 76]; PSOF (for Plaintiff’s Statement of Facts)
[R. 82].
In his original complaint, Bell claimed that Bimbo failed to pay him overtime wages in
violation of the Fair Labor Standards Act, 29 U.S.C. § 201, et seq. R. 1, Compl. ¶¶ 1, 41-49. Bell
dropped this claim in his Amended Complaint. See R. 35, 1/6/12 Minute Entry. The parties
then stipulated to dismissing with prejudice Bell’s claim under the Illinois Minimum Wage
1
and Bell has filed a motion for class certification [R. 104]. For the reasons discussed
below, the Court grants Bimbo’s summary-judgment motion. In light of this holding,
the formal ruling on the class-certification motion is that it is denied as moot. But for
the sake of completeness, the Court explains how it would have ruled on that motion.2
I. Background
In deciding Bimbo’s summary-judgment motion, the Court views the evidence
in the light most favorable to Bell, the non-moving party. Matsushita Elec. Indus. Co.,
Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). Steven Bell has worked as a
distributor for Bimbo and its predecessor since 1992, selling and delivering Bimbo’s
bakery products to local retailers in his designated sales area. R. 76, DSOF ¶ 12. The
distributor agreement that currently governs the parties’ relationship classifies Bell
as an independent contractor. Id. ¶¶ 14, 17; R. 76-2, Def.’s Exh. B, Distrib. Agreement
§ 6.2. But Bell disputes this classification and contends that he is actually a Bimbo
employee. Am. Compl. ¶¶ 2, 4, 6.
Bell’s distributor agreement with Bimbo contemplates that he will buy products
from Bimbo at one price, sell them to a customer at a higher price, and make money
Law Act (Count One), as well as his rescission and unjust enrichment claims (Counts Three
and Four). R. 73. Finally, the Court dismissed Bell’s Illinois Franchise Disclosure Act claim
(Count Five) in an earlier opinion, R. 91 at 2, 8-9, and therefore does not reconsider the
arguments that the parties raise on this issue in their summary-judgment briefs now before
the Court.
2
Rule 23(c)(1)(A) instructs courts to decide the class-certification issue at “an early
practicable time,” which suggests that, usually, the certification decision should come before
a decision on the merits. But the Court explained why in this case, under the reasoning of
Cowen v. Bank United of Tex., FSB, 70 F.3d 937, 941-42 (7th Cir. 1995), it is appropriate to
decide the merits question before the certification decision. See R. 67.
2
on the difference. R. 82, PSOF ¶ 2; R. 82-1, Pl.’s Exh. 1, Bell Dep. at 73. Under the
agreement, Bell remits the purchase price of all products that he buys from Bimbo into
a “settlement account,” less any credit for stale or damaged merchandise that he
returns under Bimbo’s return policy. Distrib. Agreement § 8.1. Bell has had customers
who then pay him directly in cash for products, but these customers are rare. R. 94-1,
Def.’s Exh. A, Bell Dep. at 352-53, 405. Instead, at Bell’s request, Bimbo can purchase
customers’ charge slips from Bell by crediting Bell’s settlement account. Distrib.
Agreement § 8.2. Every week, Bimbo then pays Bell the amount in his settlement
account, less certain deductions. PSOF ¶ 2.
Bell’s IWPCA claim focuses solely on deductions from his settlement account for
costs related to the handheld computer equipment that he purchased and maintains,
as required under his distributor agreement. Id. ¶ 1; Distrib. Agreement § 4.1. In
September 2000, Bell signed a document authorizing a weekly deduction of $56.88 for
computer-related costs, including paper and supplies, maintenance, and a home polling
charge. DSOF ¶ 45; PSOF ¶¶ 1, 3; R. 76-5, Def.’s Exh. E, Assignment of Receivables
at BFBD000065. The authorization also states that the deductions would continue
until September 13, 2003, or “until revoked in writing by [Bell].” Assignment of
Receivables at BFBD000065. Bimbo provided Bell with year-end summaries showing
that it made deductions from Bell’s settlement account for various expenses, including
for “Handheld Maintenance,” “Handheld Supplies,” “Communication Charge,” and
“Norand Paper & Ribbons.” PSOF ¶ 4; R. 82-2, Pl.’s Exh. 2.
3
Bell also asserts three different breach-of-contract theories. The first of these
theories concerns Bimbo’s pricing and promotion practices. Bell’s distributor agreement
recognizes that certain chain stores in Bell’s sales area “require that purchasing
decisions be made through a central office, and will not negotiate with individual
Distributors.” Distrib. Agreement § 7.1. As a result, Bimbo is authorized “to negotiate
and solicit business” on Bell’s behalf and must “use its best efforts” to sell products to
chain stores. Id. The agreement also specifies that Bell “may participate in and
contribute to with [sic] BFBG and individually as appropriate to maximize
opportunities for sales of the Products.” Id. § 7.2.
Bell challenges Bimbo’s practice of unilaterally negotiating with Bell’s customers
over product prices and promotions without inviting Bell to participate or seeking his
approval. See PSOF ¶¶ 7, 11-12. He also takes issue with Bimbo’s practice of requiring
him to sell products to chain stores at lower promotional prices before a promotion has
begun. Id. ¶¶ 7, 12. Along the same lines, Bell challenges Bimbo’s requirement that he
give chain stores full wholesale credit when they return stale products even when the
stores purchased the products at a lower promotional price. Id. Bell explains that these
practices significantly impact his ability to make money because approximately 95%
of his business is with chain stores. R. 79, Bell Decl. ¶ 6; see also PSOF ¶ 9.3
3
It is unclear what Bell means by this estimate. On the one hand, Bell’s distributor
agreement lists at least six chain stores that fall within his sales territory; thus, he could mean
that 95% of his customers are chain stores. See Distrib. Agreement, Exh. A at BFBD000043.
But he could also mean that 95% of his sales or profits come from chain stores. For example,
in his statement of facts, he explains that “95 percent of all agreements involving pricing . . .
are negotiated by BFBD.” PSOF ¶ 9.
4
Second, Bell argues that Bimbo also breached its contract with him by denying
him the exclusive right to sell Sara Lee bread products in his sales area. See PSOF
¶ 33. Bimbo’s parent company acquired Sara Lee Corporation’s North American bakery
business in 2011. Id. ¶¶ 24, 28; DSOF ¶ 55. After this acquisition, Bell expected that
he would acquire the rights to market and distribute Sara Lee bread products because,
in the past, Bimbo and its predecessors had always given him the right to distribute
products that would otherwise compete with the products in which he had purchased
an equity interest. PSOF ¶¶ 30, 39. In 2010, however, Bell signed an amendment to his
distributor agreement that changed the definition of the products he could distribute.
See R. 76-4, Def.’s Exh. D, Am. Distrib. Agreement at BFBD000049. Under the
amendment, “[p]roducts do not include . . . [p]roducts distributed . . . under any
trademarks other than those listed above[: Arnold, Brownberry, and Bimbo.]” Id. In
other words, the distributer agreement covers only those products trademarked as
Arnold, Brownberry, and Bimbo. But at the time he signed the document, Bell believed
that the amendment merely allowed him “to handle the Bimbo.” PSOF ¶ 37 (internal
quotation mark and citation omitted).
Bell’s final breach-of-contract claim challenges Bimbo’s stale return policy. Bell’s
distributor agreement gives him the option of returning unsold, stale, or damaged
products to Bimbo for full return credit. Distrib. Agreement § 3.4; see also DSOF ¶¶ 2021. The agreement also permits Bimbo to amend its stale return policy. Distrib.
Agreement § 3.4 (“BFBG reserves the right to make reasonable amendments to such
stale return policy from time to time as required by changing technology or competitive
5
circumstances in the industry or a market.”). In 2011, Bimbo amended the policy to
require distributors to sort and organize stale or damaged products that they are
returning for credit. R. 76-3, Def.’s Exh. C, Return Policy at BFBD000144. Bimbo’s
regional sales manager sent a letter to explain the new policy, stating that “losses that
we incur under the current system where returns are not verified are not sustainable.”
R. 94-4, Def.’s Exh. D, Hall Letter at SB000082. The letter also notes that “[t]he new
policy is in line with the policies that are currently in successful use in many other
BFBD regions and markets across the country with a proven track record.” Id. Bell
estimates that because of the amended policy he spends an extra forty minutes per day
sorting returned stale products. PSOF ¶ 21. In the end, this totals an annual value of
lost work time of roughly $5,000. Id.
II. Legal Standard
Summary judgment must be granted “if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a). A genuine issue of material fact exists if “the
evidence is such that a reasonable jury could return a verdict for the nonmoving party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In evaluating summaryjudgment motions, courts must view the facts and draw reasonable inferences in the
light most favorable to the non-moving party. Scott v. Harris, 550 U.S. 372, 378 (2007).
The Court may not weigh conflicting evidence or make credibility determinations,
Omnicare, Inc. v. UnitedHealth Grp., Inc., 629 F.3d 697, 704 (7th Cir. 2011), and must
consider only competent evidence of a type otherwise admissible at trial, Gunville v.
6
Walker, 583 F.3d 979, 985 (7th Cir. 2009). The party seeking summary judgment has
the initial burden of showing that there is no genuine dispute and that it is entitled to
judgment as a matter of law. Carmichael v. Village of Palatine, 605 F.3d 451, 460 (7th
Cir. 2010); see also Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Wheeler v.
Lawson, 539 F.3d 629, 634 (7th Cir. 2008). If this burden is met, the adverse party
must then “set forth specific facts showing that there is a genuine issue for trial.”
Anderson, 477 U.S. at 256.
III. Analysis
A. Illinois Wage Payment and Collection Act (Count Two)
Bell’s sole claim under the IWPCA is for deductions from his settlement account
related to expenses for his handheld computer equipment. PSOF ¶ 1; R. 78, Pl.’s Resp.
Br. at 2. The IWPCA states that “deductions by employers from wages or final
compensation are prohibited unless such deductions are . . . to the benefit of the
employee [or] made with the express written consent of the employee, given freely at
the time the deduction is made.” 820 ILCS 115/9. Bimbo challenges Bell’s IWPCA claim
under each of the Act’s three requirements.
First, Bimbo argues that Bell is not entitled to “wages” as defined by the Act.
The IWPCA defines “wages” as “any compensation owed an employee by an employer
pursuant to an employment contract or agreement between the 2 parties, whether the
amount is determined on a time, task, piece, or any other basis of calculation.” 820
ILCS 115/2 (emphasis added). The statute does not define “compensation,” but the
Seventh Circuit has defined the term as “‘payment for value received or service
7
rendered.’” Bock v. Computer Assocs. Int’l, Inc., 257 F.3d 700, 706 (7th Cir. 2001)
(quoting Webster’s Third New International Dictionary 463 (1981)).
Curiously, despite the statute’s plain language, Bimbo provides no analysis of
whether Bell qualifies as an “employee.” See R. 75, Def.’s Br. at 1 n.2 (reserving the
right to advance arguments about whether Bell is an “employee” for a later motion or
at trial). Instead, Bimbo argues that Bell conceded that he had no agreement with
Bimbo entitling him to wages, regardless of his employee status. R. 93, Def.’s Reply Br.
at 4 n.5, 5. First, Bimbo points to Bell’s testimony that Bimbo never promised him that
he “‘would be paid . . . salary or other wages.’” Def.’s Br. at 3 (quoting DSOF ¶ 18).
Instead, Bell agreed that he only earns a profit off his sales: Bell “buy[s] products at
one price, [he] sells them to a customer at a higher price, and [he] makes money on the
difference.” Id. at 4 (alterations in original) (quoting DSOF ¶ 18). Bimbo also
asserts—but without analysis—that Bell’s distributor agreement is not an
“employment contract or agreement,” as required under the IWPCA, because it instead
created an “independent contractor relationship.” Def.’s Br. at 4; see also Distrib.
Agreement § 6.2..
But Bell’s deposition testimony does not establish a legal conclusion that his
payments from Bimbo are not “wages.” And under Illinois law, Bell need only
demonstrate that he had an “agreement” with Bell that it would pay him
compensation. See Zabinksy v. Gelber Grp., Inc., 807 N.E.2d 666, 671 (Ill. Ct. App.
2004) (recognizing that the term “agreement” in the IWPCA is “broader than a contract
and requires only a manifestation of mutual assent on the part of two or more
8
persons”); see also Hess v. Kanoski & Assocs., 668 F.3d 446, 452 (7th Cir. 2012) (citing
Zabinsky). As Bell points out, under his distributor agreement, Bimbo has agreed to
pay Bell the amount remaining in his settlement account after Bimbo credits Bell for
the charge slips that Bimbo purchases. See Pl.’s Resp. Br. at 3; see also Distrib.
Agreement §§ 8.1-.2. But absent additional factual analysis about Bell’s employment
status, the Court is not able to conclusively determine whether these agreed payments
represent mere “profit” or instead qualify as “wages.” If Bell is an independent
contractor, these payments look like profit; but if he is an employee, they look more
like a commission, which are wages under the IWPCA. See 820 ILCS 115/2. Bell’s
concessions are certainly relevant, but there is too much factual uncertainty at this
stage of the litigation to grant summary judgment on the “wages” issue alone.
On the one hand, Bell concedes that he personally owns the products he buys
from Bimbo until he sells them to a customer. R. 94-1, Bell Dep. at 78. And Bell admits
that a few of his customers pay him directly for the products. Id. at 352-53, 405.
Moreover, Bimbo does not require Bell to return stale products to the company; Bell
could instead take these products home with him or sell them to farmers to use as
livestock feed. See DSOF ¶ 21; R. 76-1, Def.’s Exh. A, Bell Dep. at 205. On the other
hand, there are also facts that suggest that Bell is really a delivery worker for Bimbo.
For one, there is no evidence that Bell is able to negotiate the quantity of his
customers’ orders. Instead, under his distributor agreement, Bell is required to buy and
accept quantities sufficient to meet his customers’ demands. Distrib. Agreement § 3.2.
And because 95% or more of Bell’s customers are chain stores, almost all purchasing
9
decisions are made through Bimbo’s central office, without Bell’s direct input. See id.
§ 7.1; Bell Decl. ¶ 6; see also R. 82-1, Bell Dep. at 76 (“The distributor has nothing to
do with what goes on sale, when it goes on sale. . . . [Distributors] just really deliver
and stock the shelves.”). Finally, Bell’s distributor agreement does not allow him to
negotiate the price at which he purchases products from Bimbo. See Distrib. Agreement
§ 3.3 (“Products will be sold to [Bell] on reasonable terms and prices as established by
BFBG from time to time.”). In the end, the Court must view the facts and draw
reasonable inferences in the light most favorable to Bell. See Scott, 550 U.S. at 378.
Therefore, absent additional factual analysis, which Bimbo did not offer, the Court
cannot conclude that Bimbo’s payments to Bell just represent profits to an independent
contractor rather than compensation to an employee.
But even if Bell is entitled to wages, Bimbo argues that the deductions were not
only for Bell’s benefit, but also that Bell authorized the deductions. See Def.’s Br. at 57; Def.’s Reply Br. at 6-8. On these two points, the Court agrees with Bimbo. First,
these deductions benefitted Bell because they were convenient: they saved him from
having to pay Bimbo out-of-pocket for these expenses. Bell disagrees, arguing that the
expense of buying and maintaining the equipment was not for his benefit because
Bimbo required him to use this equipment. Pl.’s Resp. Br. at 6. But that argument
misses the point. It is not the expense that must be for his benefit, but the deduction
itself. See 820 ILCS 115/9 (“[D]eductions by employers from wages or final
compensation are prohibited unless such deductions are . . . to the benefit of the
employee.” (emphasis added)). And here, the settlement-account deductions are a
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convenience that benefits Bell. Cf. R. 76-1, Bell Dep. at 108 (Bell’s agreeing that having
Bimbo make loan payments to a third-party lender directly from his settlement
account is more convenient for him).
What’s more, Bell authorized these deductions. In September 2000, Bell signed
a document authorizing Bimbo’s predecessor to make weekly deductions of $56.88 for
computer-related costs, including for paper and supplies, maintenance, and a home
polling charge. Assignment of Receivables at BFBD000065. The document clearly
stated that “[t]his assignment shall continue until revoked in writing by [Bell].” Id.
And Bell admitted that he has never expressed an interest in revoking the agreement.
DSOF ¶ 47; cf. Kim v. Citigroup, Inc., 856 N.E.2d 639, 641-42, 646 (Ill. App. Ct. 2006)
(finding that deductions made in 2000 were permitted under the IWPCA based on an
agreement the plaintiff signed in 1997).
The year-end summaries that Bimbo provided Bell account for these deductions.
See Pl.’s Exh. 2 (documenting deductions for “Handheld Maintenance,” “Handheld
Supplies,” “Communication Charge,” and “Norand Paper & Ribbons”). Bell believes
that Bimbo violated the IWPCA because Bimbo deducted varying amounts and
modified or renamed the subcategories for the deductions without seeking new
authorization from Bell. Pl.’s Resp. Br. at 6. But Bell admits that the average weekly
deductions4 never exceeded the total authorized amount ($56.88). See PSOF ¶ 4.
4
The year-end summaries only include the total annual deductions for each category;
they do not provide weekly breakdowns. See Pl.’s Exh. 2. Based on the Court’s review of the
summaries, Bell seems to have calculated “averages” from this data by adding up the total
annual deductions for the three computer-related categories and then dividing by 52. See PSOF
11
Moreover, the average weekly deductions never exceeded $17.50, the total weekly
amount designated in the 2000 authorization for supplies, maintenance, and
communication fees. See id. ¶ 4. Therefore, because Bell’s 2000 authorization was still
in place and because the deductions did not exceed the authorized amount, these
deductions were permitted under the IWPCA.
Even assuming for purposes of summary judgment that Bell is an employee
entitled to wages, the deductions that Bimbo made from Bell’s settlement account were
both for his benefit and authorized by Bell. The Court therefore grants summary
judgment to Bimbo on the IWPCA claim.
B. Breach-of-Contract Claims (Count Six)
1. Pricing and Promotions
Bell’s first breach-of-contract theory challenges Bimbo’s pricing and promotions
practices. See id. ¶¶ 7-14. The Court has already explained that Bell failed to timely
put Bimbo on notice of this contract claim. See R. 101-1, 7/25/12 Minute Entry. First,
Bell’s Amended Complaint did not provide adequate notice. Although the incorporated
paragraphs under Bell’s breach-of-contract claim (Count 6) flag this theory, these
allegations are simply not specific enough to have alerted Bimbo that Bell was
pursuing damages based on those specific theories. See Am. Compl. ¶ 82 (incorporating
various subsections of ¶ 30). What’s more, Bell’s (a)(1) disclosures did not mention this
pricing and promotions theory, see R. 94-2 at 3, despite the requirement that those
¶ 4.
12
disclosures include a “computation of each category of damages,” Fed. R. Civ. P.
26(a)(1)(A)(iii). Bell’s amended interrogatory answers from March 2012 were equally
vague. See R. 94-3 at 17. Finally, in his deposition testimony, Bell only identified two
breach-of-contract theories: his right to distribute Sara Lee bread products and the
amended stale return policy. See R. 76-1, Bell Dep. at 240-41.
It was not until June 15, 2012, only one month before class discovery closed and
after Bimbo had filed its opening summary-judgment brief, that Bell alerted Bimbo
that he was claiming contract damages under this third pricing and promotions theory.
See R. 82-5, Pl.’s Exh. 4, Pl.’s Supp. & Am. Answer Interrog. No. 16 at 5-7. Because this
theory was within Bell’s personal knowledge, he should have asserted this additional
contract claim at the start of the case. But Bell failed to do so. Indeed, the Court has
already denied Bell’s motion for leave to file a Second Amended Complaint that
explicitly tries to plead a pricing and promotions claim. See R. 135, 9/27/12 Minute
Entry. So Bell may not now attempt to make a back-door amendment to his complaint
by asserting facts that support that new claim in his Rule 56.1 statement. Cf. Anderson
v. Donahoe, 699 F.3d 989, 997 (7th Cir. 2012) (“[A] plaintiff may not amend his
complaint through arguments in his brief in opposition to a motion for summary
judgment.” (internal quotation marks and citation omitted)). Because Bell did not
adequately allege this claim at the right time in the litigation, the Court will not
consider it now.5
5
Even if Bell had timely asserted this pricing and promotions theory, the summaryjudgment record suggests that it has little merit. To start, Bell explicitly designated Bimbo to
13
2. Sara Lee Distribution
Bell’s second breach-of-contract claim challenges Bimbo’s denying him the
exclusive right to sell and distribute Sara Lee bread products in his sales area. See
PSOF ¶ 33. To establish a breach of contract under Illinois law,6 a party must show:
“(1) that a valid and enforceable contract existed, (2) that the plaintiff performed on the
contract, (3) that the defendant breached it, and (4) that the plaintiff was injured.”
Wilson v. Career Educ. Corp., 729 F.3d 665, 683 (7th Cir. 2013); see also Sheth v. SAB
Tool Supply Co., 990 N.E.2d 738, 754 (Ill. App. Ct. 2013). Bell argues that he is entitled
to distribute Sara Lee bread products under the terms of his 1995 distributor
agreement, which defines “Products” as broadly including “similar third party products
negotiate with chain stores on his behalf in his distributor agreement. See Distrib. Agreement
§ 7.1(“[Bell] has requested BFBG to negotiate and solicit business for him from such Chains.”).
And contrary to Bell’s declaration that Bimbo has never allowed him to participate in any
discussions about pricing and promotions for chain stores, see Bell Decl. ¶ 7, Bell testified in
his deposition that he has attended meetings at Bimbo to discuss these policies, see R. 82-1,
Bell Dep. at 355; R. 94-1, Bell Dep. at 264-65, 273. Bell fleshes out his arguments for his
pricing and promotions claim in his class-certification brief. See Pl.’s Class Cert. Br. at 4-9. But
because those arguments came too late in the game, the Court will not more fully analyze the
merits of those arguments now for purposes of resolving the summary-judgment motion.
6
As discussed in the Court’s earlier opinion, see R. 91 at 4, Bell’s distributor agreement
specifies that New Jersey law will control contract “validity, interpretation and performance.”
Distrib. Agreement § 15.5. Yet both parties have cited only Illinois law and federal court cases
applying Illinois law. The Court will therefore continue to abide by the parties’ implicit
agreement to apply Illinois law. See Faulkenberg v. CB Tax Franchise Sys., LP, 637 F.3d 801,
809 (7th Cir. 2011) (applying Illinois law despite a contract provision specifying Texas law,
when the parties briefed and cited Illinois law and did not request that another state’s law
should apply).
14
marketed or distributed by BFBG.” See Pl.’s Resp. Br. at 11 (quoting Distrib.
Agreement § 1.2).7
But in 2010, Bell signed an amendment to his 1995 agreement that changed the
definition of “Products.” The amendment defines “Products” as “all fresh baked breads,
rolls, cakes muffins, tortillas, and similar fresh baked products intended to be sold as
fresh, and sold under the following names and trademarks: Arnold[,] Brownberry[,]
Bimbo[,] . . . and all private label products manufactured specifically for Outlets by
BFBD.” Am. Distrib. Agreement at BFBD000049. The amendment then clarifies that
“Products do not include: (a) Products distributed by BFBD or its affiliates under
any trademarks other than those listed above.” Id. In other words, under the plain
language of the 2010 amendment, Bell has no contractual right to distribute Sara Lee
products. His breach-of-contract claim therefore must fail because there is no breach.
In response to the plain language of the 2010 amendment, Bell alleges that the
amendment is voidable for fraudulent inducement. See Pl.’s Resp. Br. at 12-13. He
7
Bell also tries to draw a distinction between “products” and “brands,” arguing that Sara
Lee is only a brand and that Bell would therefore still be entitled to distribute Sara Leebranded products that fall within the “products” definition in his 1995 distributor agreement.
See Pl.’s Resp. Br. at 12. In support of this argument, Bell attaches several Internet print-outs
to his Rule 56.1 statement. See R. 82-7, Pl.’s Exh. 6. Ultimately, as will be discussed later,
these print-outs are irrelevant because the 2010 amendment that Bell signed changed the
“Products” definition governing his relationship with Bimbo. But if the Court had to parse the
“Products” definition in the 1995 agreement, the Court would not consider these print-outs
because these documents are not authenticated, as Bimbo points out. See Def.’s Reply Br. at
10 (citing Article II Gun Shop, Inc. V. Gonzales, 441 F.3d 492, 496 (7th Cir. 2006) (“To be
admissible, documents must be authenticated by and attached to an affidavit that meets the
requirements of Rule 56(e) and the affiant must be a person through whom the exhibits could
be admitted into evidence.” (internal quotation marks and citation omitted))). Moreover, as far
as the Court can tell, Bell also failed to offer these print-outs in discovery.
15
claims that at the time he signed the amendment he believed that he was splitting his
route in exchange for the right to sell Bimbo-branded baked goods. See id. at 12; PSOF
¶ 37. He also alleges that he felt pressured to sign the amendment. See PSOF ¶ 40; see
also Bell Decl. ¶ 8. But like the pricing and promotions claim, Bell did not alert Bimbo
that he would pursue an alternate theory of fraudulent inducement in either his
Amended Complaint or his sworn testimony. See Def.’s Reply Br. at 11 n.8. Because
Bell did not assert this theory of liability—essentially, a new claim—until his
opposition to summary judgment, this untimely claim cannot be raised now. See
Anderson, 699 F.3d at 997. Therefore, because the 2010 amendment clearly denies Bell
the right to distribute Sara Lee products, his second breach-of-contract claim must also
fail.
3. Amended Stale Return Policy
Bell’s final breach-of-contract claim—that Bimbo’s 2011 amendment to its stale
return policy breaches his distributor agreement—also fails. Bell’s distributor
agreement recognizes not only that Bimbo has a stale return policy, but also that
Bimbo may amend that policy so long as the amendment is reasonable. Distrib.
Agreement § 3.4 (“BFBG reserves the right to make reasonable amendments to such
stale return policy from time to time as required by changing technology or competitive
circumstances in the industry or a market.”). In line with this provision, Bimbo
amended its return policy in 2011 by requiring distributors to “organize and sort [their]
product returns to follow the specific item order listed on the returns transfer report.”
Return Policy at BFBD000144 (emphasis omitted).
16
Bell claims that this amendment is unreasonable. See Pl.’s Resp. Br. at 14; see
also R. 76-1, Bell Dep. at 242-43. Although Bell agrees that it is reasonable for Bimbo
to audit and count returned products, he believes that he should not be the one doing
the sorting. See R. 76-1, Bell Dep. at 244. Sorting returned products has added extra
work time to Bell’s day. Id. at 242. He estimates that he now spends an extra forty
minutes per day sorting returned stale products. PSOF ¶ 21. According to Bell, this
totals an annual value of lost work time of roughly $5,000. Id. But a trier of fact could
not find that the sorting requirement is unreasonable: Bell himself concedes that when
he delivers products to his customers, he sorts the products so that the customers can
readily verify how much of each product they are getting. See R. 76-1, Bell Dep. at 24344. Bimbo’s return-policy amendment requires Bell to do the same thing for the same
purpose, just on the return-side of the process. The only specific grounds that Bell
offers for labeling the sorting requirement as unreasonable are that it takes him more
time and that Bimbo has union warehouse workers who could do the sorting. Id. at
244. But nothing in the distributor agreement bars amendments to the return policy
that would require Bell to expend more time or that would require labor that Bimbo
workers could themselves do. To be sure, it is theoretically possible that an amendment
could so greatly impose costs on Bell so as to make returns infeasible. But here Bell
estimates that the amendment consumes only $5,000 in lost work time, compared to
his annual profit margin of nearly $75,000 (after all expenses are paid). DSOF ¶ 40.
And remember that Bell acknowledges the reasonableness of Bimbo wanting to audit
17
and to count the returned product. In other words, there is a legitimate reason for the
amendment, and no reasonable jury could find otherwise.
Bell also argues that Bimbo has provided no evidence that either changing
technology or competitive circumstances in the industry or a market—the two grounds
listed in the distributor agreement for amending the policy—prompted this
amendment. Pl.’s Resp. Br. at 14. That is simply not true. In a letter that Bell himself
produced in discovery, one of Bimbo’s regional sales managers explained the rationale
for the amended return policy: “Product accountability and thrift recovery are critical
to the profitability of all of our businesses and it is imperative that we work together
to control them. The losses that we incur under the current system where returns are
not verified are not sustainable.” Hall Letter at SB000082. The letter also notes that
“[t]he new policy is in line with the policies that are currently in successful use in many
other BFBD regions and markets across the country with a proven track record.” Id.
Because Bimbo adequately articulated a reason for the amendment that was in line
with the terms of Bell’s distributor agreement, summary judgment is granted on this
final contract theory as well.
In sum, the Court grants summary judgment on both of Bell’s remaining counts:
his IWCPA claim (Count Two) and the two breach-of-contract claims that Bell did not
waive (Count Six).
IV. Class Certification
Even if the Court were wrong to grant summary judgment in this case, the
Court would still deny Bell’s motion for class certification. If Bell appeals from the
18
summary-judgment ruling, explaining these alternative grounds for decision will
permit the parties to present all of the disputes on appeal and give the Seventh Circuit
the choice to decide, if it wishes, all of the issues in one appeal.
A. Rule 23 Requirements
To be entitled to class certification, a plaintiff must satisfy each requirement of
Rule 23(a)—numerosity, commonality, typicality, and adequacy of representation—as
well as one of the subsections of Rule 23(b). Messner v. Northshore Univ. HealthSystem,
669 F.3d 802, 811 (7th Cir. 2012). “Failure to meet any of the Rule’s requirements
precludes class certification.” Harper v. Sheriff of Cook Cnty., 581 F.3d 511, 513 (7th
Cir. 2009) (quoting Arreola v. Godinez, 546 F.3d 788, 794 (7th Cir. 2008)) (internal
quotation marks omitted).
“A class may be certified only if ‘the trial court is satisfied, after a rigorous
analysis, that the prerequisites of Rule 23(a) have been satisfied.’” Creative Montessori
Learning Ctrs. v. Ashford Gear LLC, 662 F.3d 913, 916 (7th Cir. 2011) (emphasis in
original) (quoting Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011)) . The
named plaintiff bears the burden of showing that each requirement is satisfied. See
Retired Chicago Police Ass’n v. City of Chicago, 7 F.3d 584, 596 (7th Cir. 1993). The
Court “must make whatever factual and legal inquiries are necessary to ensure that
requirements for class certification are satisfied before deciding whether a class should
be certified, even if those considerations overlap the merits of the case.” Am. Honda
Motor Co. v. Allen, 600 F.3d 813, 815 (7th Cir. 2010) (citing Szabo v. Bridgeport
Machs., Inc., 249 F.3d 672, 676 (7th Cir. 2001)); see also Dukes, 131 S. Ct. at 2551
19
(recognizing that class-certification analysis “[f]requently . . . will entail some overlap
with the merits of the plaintiff’s underlying claim”). In the end, the Court has “broad
discretion to determine whether certification of a class-action lawsuit is appropriate.”
Ervin v. OS Rest. Servs., Inc., 632 F.3d 971, 976 (7th Cir. 2011) (internal quotation
marks and citation omitted).
B. Class Claims
Bell moves the Court to certify two classes, as well as two additional subclasses.
For the IWPCA claim, Bell seeks to certify a class defined as:
All individuals who, through a contract or agreement with Defendant or
otherwise, sold or distributed Defendant’s bakery products within the state of
Illinois, who are or were classified by Defendant as independent
operators/independent contractors, and who had unauthorized deductions taken
from their weekly settlement for various handheld computer-related expenses
at any time from May 18, 2001 to the present.
Pl.’s Class Cert. Br. at 2. For his breach-of-contract claim, Bell proposes one class and
two subclasses. Bell defines the breach-of-contract class as:
All individuals who, through a contract or agreement with Defendant or
otherwise, sold or distributed Defendant’s bakery products within the state of
Illinois, and who are or were classified by Defendant as independent
operators/independent contractors, at any time from March 1, 2007 to the
present.
Id. at 1. Bell also requests a subclass of distributors who were subject to specific
requirements for sales to Jewel stores and a separate subclass for distributors that had
to follow Bimbo’s amended stale return policy. See id. at 2 (proposing definitions for
both subclasses).
20
The proposed class’s IWPCA claim is identical to the claim that the Court
dismissed on summary judgment. See id. at 10. The amended stale return policy claim
is also virtually the same, except that Bell now challenges the policy as it was amended
in 2009, rather than the 2011 amendment that the parties debated on summary
judgment. See id. at 9-10. The 2009 policy, which is similar to the later amendment,
requires that “[a]ll returns . . . be sorted by item for check in with the depot clerk (or
sales manager) on duty.” R. 118-11, Pl.’s Exh. N at SB000097. Likewise, the letter
explaining the policy change also connects the 2009 amendment to competition and
market pressures. See id. at SB000095.
The theories supporting the proposed class’s breach-of-contract claims, however,
are somewhat different from the pricing and promotions claim that Bell articulated
earlier in his opposition to summary judgment. In his class-certification motion, Bell
now explains that the pricing and promotions class claim is based on: (1) Bimbo’s
failure to seek meaningful input from distributors when negotiating with chain stores,
(2) Bimbo’s failure to provide adequate information to distributors so that they can
evaluate whether Bimbo is acting in their best interest, and (3) Bimbo’s failure to
provide recourse to distributors if Bimbo does not act in their best interest. Pl.’s Class
Cert. Br. at 7. Bell also now places the Sara Lee claim under this broader pricing and
promotions umbrella. See id. at 6-7. But instead of focusing on Bimbo’s refusal to allow
distributors to sell Sara Lee, Bell now focuses only on Bimbo’s practice of competing
with its distributors by promoting Sara Lee products in distributors’ sales areas. Id.
Next, Bell’s other pricing and promotion theories—that Bimbo requires distributors to
21
sell products at promotional prices before a promotion has begun and that it also
requires distributors to give wholesale credit to a store for returned stale product when
the distributor originally sold the product at a promotional price—are the bases for the
Jewell subclass’s claim. See id. at 7-9. Finally, Bell also challenges Bimbo’s “Everyday
Low Cost” policy, under which distributors are always required to sell products to
Jewel at a discounted price, regardless of whether a promotion is being offered. See id.
at 8-9.8
C. Commonality and Predominance
Regardless of how Bell frames the proposed class claims, each of these classes
and subclasses are not suitable for certification for the same reason: they fail to satisfy
the commonality and predominance requirements of Rule 23. Rule 23(a)(2) requires
that “there are questions of law or fact common to the class.” To establish commonality,
the class representative must demonstrate that members of the class “have suffered
the same injury.” Dukes, 131 S. Ct. at 2556. Commonality requires that all of the class
members’ claims “depend upon a common contention” that is “of such a nature that it
is capable of classwide resolution—which means that determination of its truth or
falsity will resolve an issue that is central to the validity of each one of the claims in
one stroke.” Id. at 2551. In Dukes, the Supreme Court concluded that what is most
8
As discussed earlier, the Court need not comment on the merits of these refined pricing
and promotions claims because Bell did not timely raise them. Bell’s failure to timely plead
these claims also provides an alternative basis for denying his certification motion. Cf.
Anderson v. U.S. Dep’t of Hous. & Urban Dev., 554 F.3d 525, 529 (5th Cir. 2008) (“The district
court’s authority to certify a class under Rule 23 does not permit it to structure a class around
claims not pled.”).
22
relevant to class certification “is not the raising of common ‘questions’—even in
droves—but, rather the capacity of a classwide proceeding to generate common answers
apt to drive the resolution of the litigation. Dissimilarities within the proposed class
are what have the potential to impede the generation of common answers.” Id.
(internal quotation marks and citation omitted).
While similar to commonality, “the predominance criterion is far more
demanding.” Messner, 669 F.3d at 814 (quoting Amchem Prods., Inc. v. Windsor, 521
U.S. 591, 623-24 (1997)). Under Rule 23(b)(3), the plaintiff must show that “questions
of law or fact common to class members predominate over any questions affecting only
individual members.” The Court thus must compare the role of common issues of law
and fact with the role of individual issues, including whether the Court must examine
individual transactions in adjudicating the claim. See Messner, 669 F.3d at 815; see
also Lady Di’s, Inc. v. Enhanced Servs. Billing, Inc., 654 F.3d 728, 738 (7th Cir. 2011).
Here, the individualized details of each distributor agreement prevent Bell from
establishing commonality and predominance. At the time Bell filed this lawsuit in May
2011, the record shows that Bimbo had agreements with 139 distributors in Illinois
that worked out of 22 different depots. See R. 118-6, Pl.’s Exh. I at 8. But Bell has
provided no evidence demonstrating how many iterations of the distributor agreement
there are out of the 139 proposed class members. Most importantly, Bell has failed to
meet his burden of showing that a substantial number of distributors have the same
agreement. This defect is fatal for all of Bell’s proposed class claims. Cf. Sacred Heart
Health Sys., Inc. v. Humana Military Healthcare Servs., Inc., 601 F.3d 1159, 1171 (11th
23
Cir. 2010) (“[C]laims for breach of contract are peculiarly driven by the terms of the
parties’ agreement, and common questions rarely will predominate if the relevant
terms vary in substance among the contracts.”); Broussard v. Meineke Discount Muffler
Shops, Inc., 155 F.3d 331, 340 (4th Cir. 1998) (finding that the commonality
requirement was not met because there was “materially different contract language”
in multiple franchise agreements).
In reply, Bell argues that the relevant provisions in the various distributor
agreements are “substantially the same.” Pl.’s Class Cert. Br. at 4. He even suggests
that Bimbo uses a form contract with its distributors. See R. 139, Pl.’s Class Cert.
Reply Br. at 1. The distributor agreements in the record, however, readily demonstrate
that these agreements are not form contracts, and they belie any argument that their
substantive differences are immaterial. See R. 105-1, Pl.’s Summ. Exh. 1 (comparing
the provisions of four different distributor agreements).
Starting first with the pricing and promotions claim, the Court would have to
analyze the precise language of each distributor agreement to determine whether there
was a breach. For example, there are materially different terms governing Bimbo’s
negotiations with chain stores. Compare Distrib. Agreement § 7.1 (“BFBG hereby
agrees to so act on [Bell’s] behalf in this regard and to use its best efforts to obtain from
such Chains authorization to sell Products to the Chains on uniform terms and prices
at which the Chains would be willing to purchase Products for its Outlets, and to
communicate the information concerning such authorization and terms to [Bell].”),
with R. 118-5, Pl.’s Exh. H § 5.2 (“GWBD shall use commercially reasonable efforts to
24
obtain from chains authorization to sell products in the chains and information
regarding the prices and terms at which the chains would be willing to purchase
products for their Outlets . . . .”). And while Bell cannot negotiate with chains stores
under his distributor agreement, other distributors’ agreements do not foreclose direct
negotiations between distributors and chain stores. Compare Distrib. Agreement § 7.1
(“[I]mportant Chains in [Bell’s] Sales Area . . . will not negotiate with individual
Distributors . . . .”), with Pl.’s Exh. H § 5.2 (“This appointment of GWBD and its
affiliates as Distributor’s agent shall not prevent Distributor from having the right to
negotiate prices and terms directly with a chain and selling products to the chain at
whatever prices and terms Distributor can negotiate.”). These are examples from just
two distributor agreements. The Court would have to similarly compare and analyze
the terms of each distributor agreement to determine whether each distributor had
established that Bimbo breached a particular agreement. Because of this
individualized analysis, Bell has failed to satisfy the commonality and predominance
requirements.
The same is true for Bell’s claim challenging the amended stale return policy.
Bell’s distributor agreement limits amendments to the stale return policy to those
“required by changing technology or competitive circumstances in the industry or a
market.” Distrib. Agreement § 3.4. Other agreements, however, give Bimbo open-ended
discretion “to make reasonable amendments . . . from time to time.” Pl.’s Exh. H § 3.2.
Determining whether there is a breach will require comparing the amended policy to
25
the varying language in each individual distributor agreement.9 This individualized
analysis again defeats commonality and predominance.
Finally, the IWPCA claim meets the same fate. The different language in each
distributor agreement would result in a highly individualized analysis of whether there
is an employee-employer relationship. What’s more, the IWCPA’s independentcontractor exemption requires an individualized analysis of three separate elements
that go beyond the scope of the agreement itself. See 820 ILCS 115/2; see also Adams
v. Catrambone, 359 F.3d 858, 865 (7th Cir. 2004). Adding individualized contract
analysis on top of a test that is already multi-factored necessarily forecloses Bell from
satisfying the commonality and predominance requirements for the IWPCA claim as
well.
All in all, the variation in contract language demonstrates that class certification
is not appropriate. Despite making a long list of common questions, Bell cannot satisfy
the commonality requirement because the dissimilarities in the proposed class’s
distributor agreements have the potential to impede the generation of common
9
On a related point, Bell challenges the admissibility of a declaration from Joseph
Schuch that contradicts Schuch’s deposition testimony. See Pl.’s Class Cert. Reply Br. at 13.
In his deposition, Schuch testified that distributors are required to sort their returns under the
amended return policy that is in place at all Chicago area depots. See R. 146-1, Def.’s Exh. 1,
Schuch Dep. at 212, 214. In his declaration, however, Schuch states that there are two
additional policies, neither of which he discussed or revealed during his deposition. See R. 13613, Pl.’s Exh. M, Schuch Decl. ¶¶ 3-4. Schuch also states that some Bimbo representatives do
not enforce the amended policy, even if it applies at that depot. Id. ¶ 5. Because the Court
agrees that Schuch’s declaration is inconsistent with his deposition testimony, it does not
consider the declaration in ruling on Bell’s certification motion. See Fisher v. Avanade, Inc., 519
F.3d 393, 406 (7th Cir. 2008). But even assuming there is only one amended return policy in
effect in the Chicago area, Bell cannot establish commonality and predominance because the
Court would still have to compare that one policy to each and every distributor agreement.
26
answers. See Dukes, 131 S. Ct. at 2551. Moreover, individualized analysis of each
contract would overwhelm any common questions of law or fact. If the summaryjudgment motion had been denied, the Court would have denied Bell’s motion for class
certification on those grounds.
V. Conclusion
For the reasons stated above, Bimbo’s summary-judgment motion [R. 74] is
granted, and Bell’s class-certification motion [R. 104] is denied. Because no other
motions or claims remain pending before this Court, judgment is entered for Bimbo
and against Bell.
ENTERED:
s/Edmond E. Chang
Honorable Edmond E. Chang
United States District Judge
DATE: December 3, 2013
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