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Mellum v. BioWorld Merchandising., Inc.: US District Court : EMPLOYMENT - contract precluded quantum meruit claim; damages speculative

1
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Carl Mellum,
Plaintiff,
v. Civil No. 07-3348 (JNE/JJG)
ORDER
BioWorld Merchandising, Inc.,
Defendant.
D. Clay Taylor, Esq., D. Clay Taylor, P.A., appeared for Plaintiff Carl Mellum.
Joel E. Abrahamson, Esq., and Rebecca L. Neubauer, Esq., Leonard, Street and Deinard P.A.,
appeared for Defendant BioWorld Merchandising, Inc.
As an independent sales representative, Carl Mellum sold goods on behalf of BioWorld
Merchandising, Inc. (BioWorld), to Target Corporation. After BioWorld terminated their
relationship, Mellum brought this diversity action asserting claims for violations of the
Minnesota Termination of Sales Representatives Act, Minn. Stat. 325E.37 (2006 & Supp.
2007); breach of contract; quantum meruit and unjust enrichment; and violation of Minnesotas
statute regarding prompt payment of commissions to commission salespeople, Minn. Stat.
181.145 (2006). The case is before the Court on BioWorlds motion in limine and for partial
summary judgment. For the reasons set forth below, the Court grants the motion.
I. BACKGROUND
From 2003 to 2007, Mellum worked as an independent sales representative for BioWorld.
He sold goods to Target and received commissions on his sales. An oral agreement of indefinite
duration governed the relationship between Mellum and BioWorld. On January 4, 2007,
BioWorld notified Mellum that it had terminated the parties relationship effective immediately.
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Approximately six months after the termination of his relationship with BioWorld,
Mellum brought this action. He asserted that BioWorld had terminated him without prior
warning or good cause; that BioWorld had failed to pay him commissions on sales made in 2005
and 2006; and that BioWorld had failed to pay him commissions for sales made before his
termination where the goods were shipped after his termination. Accordingly, he alleged that
BioWorld had violated Minn. Stat. 325E.37 by terminating his sales representative agreement
and by failing to pay him commissions; that BioWorld had breached a contract and had violated
Minn. Stat. 181.145 by failing to pay him commissions; and that BioWorlds failure to pay him
commissions entitled him to recover under the theories of quantum meruit or unjust enrichment.
Several months after Mellum brought this action, the parties resolved their dispute with
respect to BioWorlds alleged failure to pay commissions on sales of goods that shipped to
Target before termination of the parties relationship. BioWorld now seeks summary judgment
on Mellums claim for quantum meruit and unjust enrichment. BioWorld also seeks to preclude
Mellum from introducing certain evidence of damages due to BioWorlds alleged wrongful
termination of the parties relationship.
II. DISCUSSION
A. Quantum meruit and unjust enrichment
In Count IV of his Complaint, Mellum asserts that he is entitled to recover under the
theories of quantum meruit and unjust enrichment. BioWorld maintains that summary judgment
on this count is appropriate because a contract governed the parties relationship. Mellum
counters that he properly pleaded the count as an alternative to his claim for breach of contract.
The existence of an express contract between the parties precludes recovery under the theories
of quasi-contract, unjust enrichment, or quantum meruit. Sterling Capital Advisors, Inc. v.
3
Herzog, 575 N.W.2d 121, 126 (Minn. Ct. App. 1998); see In re Stevenson Assocs., Inc., 777 F.2d
415, 421 (8th Cir. 1985); Sharp v. Laubersheimer, 347 N.W.2d 268, 271 (Minn. 1984); Breza v.
Thaldorf, 149 N.W.2d 276, 279 (Minn. 1967); Schimmelfennig v. Gaedke, 27 N.W.2d 416, 420-
21 (Minn. 1947). Here, Mellum asserts that BioWorld is contractually obligated to pay him
commissions on the sales that he made before his termination where the goods shipped after his
termination. BioWorld concedes that it is contractually obligated to pay Mellum commissions
on these sales. Accordingly, the Court grants BioWorld summary judgment on Count IV.
B. Damages
In Count I of his Complaint, Mellum claims that BioWorlds termination of the parties
agreement violated the Minnesota Termination of Sales Representatives Act. With regard to this
claim, BioWorld seeks to preclude Mellum from introducing evidence of damages other than lost
potential commissions during the 180 days following BioWorlds termination of the parties
relationship. According to BioWorld, Mellum conceded in his deposition that any damages
other than lost commissions during the 180-day period were speculative. Mellum asserts that he
is entitled to recover commissions that he would have earned if he had continued to work as an
independent sales representative for BioWorld through the date of trial.
Under Minnesota law, damages may not be speculative, remote, or conjectural.
However, once the fact of damages is proved with certainty, the extent of the damages need only
be shown to have a reasonable basis in the evidence. Storage Tech. Corp. v. Cisco Sys., Inc.,
395 F.3d 921, 928 (8th Cir. 2005) (citation omitted). In Wingert & Associates, Inc. v.
Paramount Apparel International, Inc., 458 F.3d 740 (8th Cir. 2006), the Eighth Circuit set forth
the applicable construction of the Minnesota Termination of Sales Representatives Act:
The Minnesota Termination of Sales Representatives Act provides that a
sales representative agreement of indefinite duration shall be treated as if it were
4
for a definite duration expiring 180 days after the giving of written notice of
termination. When the agreement is terminated, the sales representative is
entitled to be paid for all sales as to which [it] would have been entitled to
commissions pursuant to the provisions of the sales representative agreement,
made prior to the . . . end of the notification period. Thus, a representative
terminated without 180 days notice is entitled to commissions earned within 180
days of the termination. The statute also separately provides for an award of
damages without a time limitation.
458 F.3d at 742 (alteration in original) (citations omitted).
In Wingert, a sales representative organization entered into a verbal agreement of
indefinite duration to be a sales representative for an apparel manufacturer. Id. at 742. The
manufacturer paid the organization a commission. Id. Later, the manufacturer terminated the
agreement without giving 180 days notice. Id. The organization then brought suit under the
Minnesota Termination of Sales Representatives Act. Id. At trial, the organization introduced
evidence of its lost commissions during the 180-day period following the notice of termination.
Id. at 743. It also introduced evidence of lost profits for the next 4.5 years. Id. The
organizations expert explained that the organization did not have sufficient agents to serve a
replacement line and could not arrange for replacements because the manufacturer failed to give
180 days notice. Id. The organization was ultimately awarded the lost commissions and the lost
profits, and the Eighth Circuit affirmed. Id. at 742-44.
Unlike the organization in Wingert, Mellum has no evidence of how BioWorlds failure
to provide him with 180 days notice damaged him apart from lost commissions during that
period. At his deposition, BioWorld repeatedly asked what Mellum would have done if
BioWorld had given him 180 days notice and what negative financial consequences he
experienced due to the lack of 180 days notice. Mellum responded that he could not answer the
questions because BioWorld had not given him 180 days notice. For example, BioWorld asked
Mellum, Do you believe that if you had received 180 days advance notice of BioWorlds
5
decision to end the relationship that you then would have avoided any negative financial
consequences? He responded:
I have no idea. I was not presented with that. I dont know how I would
have reacted. I dont know if I would have gone out and gotten a truck driver job.
I have no clue what I would have done. I never had that opportunity, so I cant
answer that.
Similarly, BioWorld asked, Fair to say that youd have to speculate in order to say one way or
the other whether the lack of advance notice caused you any harm? Mellum responded: I
cant even speculate. Like I said, Ive never been put in that position. I dont even know what
would happen. What would I do with the buying staff at Target? Im the guy thats going out.
Thats negative. Because Mellums damages other than lost commissions during the 180 days
following BioWorlds termination of the parties relationship are speculative, the Court grants
BioWorlds motion in limine.
III. CONCLUSION
Based on the files, records, and proceedings herein, and for the reasons stated above, IT
IS ORDERED THAT:
1. BioWorlds motion in limine and for partial summary judgment [Docket
No. 19] is GRANTED.
2. Count IV of the Complaint is DISMISSED WITH PREJUDICE.
3. Mellums potential damages under Count I of the Complaint are limited to
lost commissions that Mellum could have earned during the 180 days after
BioWorlds termination of the parties agreement.
Dated: September 9, 2008
s/ Joan N. Ericksen
JOAN N. ERICKSEN
United States District Judge
 

 
 
 

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