Bethany Pharmacal Co v. QVC, Incorporated

In the
United States Court of Appeals
For the Seventh Circuit
No. 00-2468
BETHANY PHARMACAL COMPANY,
INCORPORATED,
Plaintiff-Appellant,
v.
QVC, INCORPORATED,
Defendant-Appellee.
Appeal from the United States District Court
for the Central District of Illinois.
No. 98 C 2058--David G. Bernthal, Magistrate Judge.
Argued November 30, 2000--Decided February 23, 2001
Before RIPPLE, MANION and KANNE, Circuit Judges.
RIPPLE, Circuit Judge. Bethany Pharmacal
Company, Inc. ("Bethany") brought this action
against QVC, Inc. ("QVC"). It claimed that QVC
had agreed to allow Bethany to appear on QVC’s
televised shopping program in order to sell its
skin moisturizer. QVC moved for summary judgment.
Bethany responded to QVC’s motion and also sought
leave to amend its complaint to add a promissory
estoppel claim against QVC. The district court
denied Bethany’s request for leave to amend and
granted QVC’s motion for summary judgment.
Bethany now seeks review of both rulings. For the
reasons set forth in the following opinion, we
affirm the judgment of the district court.
I
BACKGROUND
A. Facts
QVC operates a televised home shopping network.
In 1997, QVC conducted a tour that it titled "The
Quest for America’s Best--QVC’s 50 in 50 Tour"
("the Tour"). The purpose of the Tour was to find
local vendors in each of the fifty states to
appear on QVC’s televised broadcast in order to
sell their products. QVC hired Network Trade
Associates, Inc. ("NTA") to serve as its contact
with economic development offices or agencies in
each of the fifty states. NTA, in turn, contacted
the Illinois Department of Commerce and Community
Affairs ("DCCA") for assistance in conducting the
Illinois leg of the Tour. Roberta Janis was the
DCCA employee responsible for the QVC/NTA
project. Although Janis’ responsibilities dealt
primarily with the logistical aspects of the
Tour, she self-titled herself the "QVC Project
Manager" in her correspondence concerning this
project. R.31, Ex.5 at 4-5. At no time, however,
did QVC enter into a contract with either DCCA or
Janis.
QVC held two trade shows in Illinois in April
1997. The purpose of the trade shows was to
choose twenty Illinois vendors who would sell
their products on QVC’s broadcast. QVC also
intended to choose five additional vendors as
alternates. Prior to the trade shows, NTA gave
Janis the names and addresses of several Illinois
vendors. Janis sent those vendors a QVC
solicitation packet; the information in this
packet listed her as a contact person. In order
to participate in the trade shows, vendors had to
complete a product information sheet included in
the solicitation packet. On that sheet, the
vendor described the product that the vendor
proposed to sell on QVC’s program. The
information sheet also included the following
written disclaimer:
The data provided on this sheet is for
information purposes only. QVC’s acceptance of
your completed form does not constitute
acceptance or agreement that the information you
have provided is correct or complete. It is also
not a waiver of any of QVC’s rights, remedies or
defenses with respect to you or your product. Any
sales of the product to QVC shall be governed by
a purchase order issued by QVC. An authorized QVC
Purchase Order is the only valid contract. Verbal
statements or discussions do not constitute a
commitment to do business and should not be
considered as such.
R.31, Ex.6 at 2.
Bethany was one of the Illinois businesses that
received a QVC solicitation packet. Bethany is a
pharmaceutical company that manufactures a
moisturizing skin lotion called Ti-Creme.
Bethany’s chairman, Jack J. Scott, Sr., completed
a product information sheet describing Ti-Creme
on behalf of Bethany, in which he indicated that
Bethany had 15,000 to 50,000 jars of Ti-Creme
available on hand./1 The product information
sheet also asked Scott to indicate the
"[m]anufacturer lead time required for $10,000
wholesale order"; Scott responded, "On Hand."
R.31, Ex.6 at 4.
Scott represented Bethany at QVC’s Springfield,
Illinois, trade show in April 1997. Janis also
attended the trade show and her DCCA business
cards were on display at the registration desk.
James Plutte and Julie Campbell, both buyers for
QVC, were also at the trade show. Plutte and
Campbell explained to the vendors that, if their
products were selected, they would receive a
purchase order from QVC and that the vendors
should not do anything until they heard directly
from QVC.
Following the trade show, NTA notified Janis
that it would send her a list of the twenty
vendors and five alternates from Illinois that
QVC had selected to appear on its broadcast, but
it told Janis not to contact any of the listed
vendors until QVC had notified the vendors of
their selection itself. Apparently, Janis did not
receive this list right away. Janis may not have
received the list until after QVC had contacted
the selected vendors, although the record is not
clear on this point. What is clear is that Janis
thought QVC had already contacted the vendors by
the time she received the list. She therefore
prepared a letter that she sent to the twenty
participants and the five alternates in which she
gave them logistical information about the
broadcast and alerted them to a potential
shortage in hotel accommodations during the time
of the broadcast ("the Janis letter")./2 The
Janis letter was printed on DCCA stationery, was
addressed to "QVC Participants," congratulated
them on being selected to participate in QVC’s
broadcast, and concluded by stating, "See you at
the Fair." R.31, Ex.6 at 6./3 Although the same
letter was sent to both participants and
alternates, Janis directed her subordinates to
attach a "post-it note" to the letters sent to
the alternates with the word "Alternate."
In selecting the program participants, QVC chose
Bethany as an alternate vendor. However, although
Bethany received the Janis letter, it did not
receive the post-it note informing it that it was
only an alternate rather than a confirmed
participant. After receiving the Janis letter,
Scott telephoned Janis to thank her for notifying
him that QVC had selected Bethany as a
participant. The parties disagree as to the
content of the conversation that followed. Scott
claims that, in response to his call, Janis said,
"We’ll be seeing you at the show." R.31, Ex.7 at
45. Janis, however, claims that she told Scott
that her records indicated that he was only an
alternate and that she asked him whether he had
received information from QVC indicating that he
was a participant. The parties agree, however,
that, in the course of the conversation, Janis
did not say anything definitive that clearly
would have dispelled Scott’s misperception.
Scott claims that, in reliance on the Janis
letter, he spent $100,000 to buy 60,000 units of
Ti-Creme. This amount was what he predicted he
would need on hand to meet the demand for Ti-
Creme when QVC’s broadcast aired. His calculation
was based on a QVC press release describing the
financial success of the vendors who had
participated in the broadcasts. No one at QVC
suggested to Scott that he should purchase
additional product or that he would need more
than the $10,000 worth of product that he already
claimed to have on hand.
B. Earlier Proceedings
QVC eventually learned that Scott’s receipt of
the Janis letter had led him to believe that
Bethany had been selected to participate in the
broadcast, but it did not change Bethany’s status
from an alternate to a participant. Consequently,
Bethany filed this breach of contract action
against QVC. In Bethany’s view, the Janis letter
constituted a binding contract between Bethany
and QVC; the letter constituted a promise that
Bethany would be allowed to sell Ti-Creme on
QVC’s broadcast. Bethany sought to recover the
$100,000 it spent to purchase additional product
in reliance on QVC’s alleged promise. QVC filed a
motion for summary judgment. When Bethany replied
to QVC’s motion, it also filed a motion seeking
leave to amend its complaint to add a promissory
estoppel claim.
The district court granted QVC’s motion for
summary judgment. The court first considered
whether Janis was QVC’s apparent agent, which
would allow her to bind QVC to a contract. The
court held that Janis was not QVC’s apparent
agent because QVC had done nothing to indicate to
Scott that Janis had any authority to act on
QVC’s behalf. The court determined that, because
Janis had initiated her contact with the vendors,
her conduct did not constitute a manifestation by
QVC to third parties that Janis had the authority
to transact business on QVC’s behalf.
The district court further held that, even if
Janis was QVC’s apparent agent, there still was
no valid contract between Bethany and QVC. It
concluded that Scott’s belief that the Janis
letter was an offer to enter into a contract was
not reasonable because the Janis letter did not
specify the terms of the purported offer or the
identities of the offeror and offeree. The court
also concluded that, even if there was a valid
contract, Bethany could not establish that the
contract had been breached because it could not
show that it suffered damages or had a reasonable
basis for computing the damages it claimed to
have suffered.
Finally, the court refused to allow Bethany to
amend its complaint to include a promissory
estoppel claim against QVC. The court determined
that Bethany would be unable to succeed on such a
claim because the Janis letter did not clearly
promise that QVC would allow Bethany to appear on
its broadcast to promote Ti-Creme. Additionally,
the court believed that Bethany’s promissory
estoppel claim would fail because Bethany’s
reliance on the Janis letter in purchasing
additional product was unreasonable, given that
QVC never had indicated that this purchase would
be necessary.
II
DISCUSSION
In appealing the district court’s judgment,
Bethany submits that the district court erred in
concluding that Janis was not QVC’s apparent
agent and that the Janis letter could not form
the basis of a binding contract. Bethany also
argues that the district court abused its
discretion in refusing to allow it to amend its
complaint in order to add a promissory estoppel
claim. We shall examine each of these
contentions.
A. Breach of Contract
We review de novo the district court’s grant of
summary judgment in favor of QVC, viewing all
facts in a light most favorable to Bethany. See
Opp v. Wheaton Van Lines, Inc., 231 F.3d 1060,
1063 (7th Cir. 2000). Summary judgment is proper
when the "pleadings, depositions, answers to
interrogatories, and admissions on file, together
with the affidavits, if any, show that there is
no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a
matter of law." Fed. R. Civ. P. 56(c). The
nonmovant--in this case, Bethany--must show that
there is a genuine issue for trial. See Fed. R.
Civ. P. 56(e).
Under Illinois’ law of agency, an apparent
agency exists if (1) the principal consents to or
knowingly acquiesces in the agent’s conduct, (2)
the third party has a reasonable belief that the
agent possesses authority to act on the
principal’s behalf, and (3) the third party
relied to his detriment on the agent’s apparent
authority. See Stathis v. Geldermann, Inc., 692
N.E.2d 798, 807 (Ill. App. Ct. 1998). An agent’s
apparent authority can only be determined by
evaluating the principal’s conduct toward the
third party. Specifically, the principal must do
something to lead the third party to believe that
the agent is authorized to act on its behalf. See
Yugoslav-American Cultural Ctr., Inc. v. Parkway
Bank & Trust Co., 682 N.E.2d 401, 406 (Ill. App.
Ct. 1997). The agent cannot unilaterally create
an apparent agency through her own words or
conduct. See id.; see also Opp, 231 F.3d at 1065.
An apparent agency may arise, however, "from
silence of the alleged principals when they
knowingly allow another to act for them as their
agent." Mateyka v. Schroeder, 504 N.E.2d 1289,
1295 (Ill. App. Ct. 1987). In such a situation,
the scope of the apparent agent’s authority is
determined by the authority that a reasonably
prudent person might believe the agent to possess
based on the actions of the principal. See id.
Bethany maintains that QVC created the
appearance that Janis was its agent by allowing
her to correspond with vendors and to act as an
intermediary between QVC and the vendors. Bethany
further maintains that QVC should be responsible
for the consequences of the Janis letter because
it knew about the letter but never told Janis not
to send it. QVC responds that Janis herself
initiated the conduct to which Bethany points,
and, therefore, the conduct cannot be attributed
to any manifestation or authorization on QVC’s
part. Additionally, QVC maintains that Bethany’s
perception of Janis as a QVC agent with the
authority to bind QVC to a contract was
unreasonable, given QVC’s statement on the
product information sheet that the only valid
contract with QVC was a purchase order.
We cannot accept Bethany’s argument. Bethany has
not established that QVC took any steps that
would make a reasonable person believe that Janis
had the authority to contract on its behalf. QVC
consistently maintained that the only way in
which it would enter a binding contract was
through a purchase order issued by QVC. QVC
clearly stated this principle in the product
information sheet that it distributed to all
interested vendors, including Bethany. QVC
representatives again stated this principle to
the vendors attending the trade show when they
verbally reminded the vendors of the importance
of a purchase order. Bethany has produced no
evidence to demonstrate that QVC ever indicated
that Janis or DCCA could contract on its behalf
through some means other than a purchase order.
Indeed, we can find no evidence in the appellate
record that QVC ever indicated to any vendor that
someone other than a QVC buyer had the authority
to contract on QVC’s behalf.
Bethany’s argument that QVC created an apparent
agency in Janis by allowing her to interact with
the vendors on its behalf misses the mark. QVC
did allow Janis to work with the vendors by
providing logistical information about the trade
shows and the broadcast; however, given QVC’s
repeated disclaimers regarding the need for a
purchase order, that relationship cannot
reasonably be interpreted as including the
authority to contract on QVC’s behalf. Moreover,
QVC did not stand idly by and accept the benefits
of contracts Janis allegedly had procured on its
behalf. Instead, upon realizing that Bethany had
misinterpreted the Janis letter, QVC notified
Bethany of Janis’ error and made clear that
Bethany would not be allowed to appear on its
broadcast. In short, QVC consistently stated to
Bethany that a valid contract could be created
only by a purchase order. Furthermore, after
learning of Bethany’s misperception because of
Janis’ mistake, QVC consistently maintained that
Bethany was only an alternate. Under these
circumstances, it was unreasonable for Bethany to
believe that Janis had any authority to bind QVC
to a contract with a vendor./4
B. Bethany’s Motion to Amend its
Complaint
Although leave to amend a complaint should be
freely granted when justice so requires, see Fed.
R. Civ. P. 15(a), the district court need not
allow an amendment when there is undue delay, bad
faith, dilatory motive, undue prejudice to the
opposing party, or when the amendment would be
futile. See Foman v. Davis, 371 U.S. 178, 182
(1962); see also Perrian v. O’Grady, 958 F.2d
192, 194 (7th Cir. 1992) (quoting Villa v. City
of Chicago, 924 F.2d 629, 632 (7th Cir. 1991)).
An amendment is futile if the added claim would
not survive a motion for summary judgment. See
Estate of Porter v. Illinois, 36 F.3d 684, 690
(7th Cir. 1994). We review a district court’s
decision to deny leave to amend for an abuse of
discretion. See Sanders v. Venture Stores, Inc.,
56 F.3d 771, 773 (7th Cir. 1995).
The district court determined that allowing
Bethany to amend its complaint to add a
promissory estoppel claim would be futile because
Bethany would be unable to succeed on that claim.
Bethany takes issue with this conclusion. It
argues that the Janis letter constitutes an
unambiguous promise by QVC to allow Bethany to
appear on its broadcast and that Scott relied on
this promise to Bethany’s detriment by purchasing
$100,000 worth of product in order to meet the
anticipated demand for Ti-Creme following the
broadcast. QVC responds that the Janis letter was
not an unambiguous promise, that Bethany’s
reliance on the Janis letter was unreasonable,
that Bethany delayed unduly in seeking the
amendment, and that allowing the amendment in the
face of Bethany’s undue delay would prejudice
QVC.
In order to succeed on its promissory estoppel
claim, Bethany would have to prove that QVC made
an unambiguous promise, that Bethany relied on
that promise to its detriment, and that its
reliance was reasonable and foreseeable by QVC.
See Quake Constr., Inc. v. American Airlines,
Inc., 565 N.E.2d 990, 1004 (Ill. 1990). Bethany
has failed to establish that the Janis letter was
an unambiguous promise or that its reliance on
that letter was reasonable. The Janis letter
contains no words of promise or obligation;
instead, it merely states that QVC notified DCCA
of the vendors it had chosen to participate in
the broadcast. Such a statement does not amount
to an unambiguous promise on QVC’s part to have
Bethany promote Ti-Creme on its broadcast. More
fundamentally, as we have discussed in the
previous section, it was unreasonable for Scott
to rely on the Janis letter in purchasing
$100,000 worth of Ti-Creme after QVC had stated
expressly to Scott and the other vendors that the
sale of any product to QVC would be governed by a
purchase order. The district court did not abuse
its discretion in refusing to allow the amendment
on the grounds that it would be futile.
Although the district court based its decision
to deny Bethany’s request for leave to amend on
the ground of futility, we believe the court also
could have denied Bethany’s request on the ground
of undue delay. See Sanders, 56 F.3d at 773-74
(upholding the district court’s denial of the
plaintiff’s motion to amend his complaint on the
grounds of undue delay and prejudice even though
the district court did not address those issues).
Bethany did not seek to add its promissory
estoppel claim until after the close of discovery
and after QVC had filed its motion for summary
judgment./5 The factual basis of Bethany’s
promissory estoppel claim is virtually identical
to the factual basis of its breach of contract
claim; therefore, Bethany could have brought the
promissory estoppel claim at the time it filed
its original complaint if it had prepared for
this litigation with the appropriate foresight.
Bethany has offered no explanation for waiting
until it was faced with a summary judgment motion
before attempting to add its promissory estoppel
claim. See Kleinhans v. Lisle Savs. Profit
Sharing Trust, 810 F.2d 618, 625 (7th Cir. 1987)
("In view of [plaintiff’s] failure to adequately
explain the unreasonable delay in moving to amend
his complaint to state a claim for punitive
damages when all of the information necessary to
stating such a claim has been available to him
for eighteen months, we agree with the judgment
and reasoning of the district court that
[plaintiff’s] motion represents an apparent
attempt to avoid the effect of summary judgment
[on his other claims]." (internal quotation marks
omitted)). Because discovery already had closed
and because QVC already had briefed its summary
judgment motion, allowing Bethany to add its
promissory estoppel claim would have required
additional delays in the resolution of the case
to allow QVC to respond to a new theory of
liability. We do not require a district court to
tolerate such delays. See Cleveland v. Porca Co.,
38 F.3d 289, 297-98 (7th Cir. 1994) (holding that
the district court did not abuse its discretion
in refusing to allow the plaintiffs to amend
their complaint when they waited until after
discovery had been completed and summary judgment
motions had been fully briefed before filing
their motion to amend); see also Perrian, 958
F.2d at 195 (stating that long delays before
seeking to amend a complaint can burden the
judicial system, can defeat the public’s interest
in a speedy resolution of legal disputes, and can
justify a district court’s denial of a motion to
amend). As an alternate ground for decision, the
district court rightfully could have denied
Bethany’s request for leave to amend its
complaint on the ground of undue delay.
Conclusion
The district court properly granted summary
judgment. It also acted well within its
discretion in denying Bethany leave to amend its
complaint to add a promissory estoppel claim.
Accordingly, the judgment of the district court
is affirmed.
AFFIRMED
/1 Scott later indicated in a deposition that this
statement was in error. In fact, Bethany only had
1,500 jars of Ti-Creme on hand. This misstatement
is irrelevant to our analysis of the issues in
this case.
/2 The record does not conclusively indicate whether
anyone from QVC ever saw or approved the Janis
letter before it was sent to the vendors.
However, QVC, NTA, and Janis had been discussing
the potential shortage in hotel rooms mentioned
in the Janis letter for several months prior to
the time the letter was sent.
/3 Given the importance of the Janis letter to this
litigation, we set forth its text in full:
Dear QVC Participants:
Congratulations! We just received the news from
QVC identifying the twenty companies who will be
participating in the QVC broadcast in Springfield
at the Illinois State Fair on August 9th.
The Department of Commerce and Community Affairs
Small Business Division will be preparing a press
release and distributing it statewide. When it is
ready, we will provide a copy to you for your
use.
The broadcast will be held on the first Saturday
of the State Fair which usually draws close to
150,000 attendees that day. The broadcast itself
will be three (3) hours in length. The actual
time for the broadcast is yet to be determined.
The site selected for the broadcast is a 40,000
square foot area within the Farm Expo area. The
site is in direct proximity to the Fair’s main
entrance.
Hotel rooms will be filling up fast. A listing of
some Springfield hotels is provided to assist you
in locating accommodations. A map of the State
Fairgrounds is also provided.
Look forward to assisting you during the
broadcast. See you at the Fair!
Sincerely,
Roberta Janis
QVC Project Manager
R.31, Ex.6 at 6.
/4 Because we have concluded that Janis was not
QVC’s apparent agent, she had no authority to
bind QVC to a contract with Bethany. Therefore,
we need not consider Bethany’s contention that
the Janis letter was a valid and binding
contract.
/5 In fact, Bethany filed its request to amend its
complaint on the same day that it filed its
response to QVC’s summary judgment motion.