Quad/Graphics, Inc. v. One2One Communications, LLC
529 F. App'x 784
7th Cir.2013Background
- Bruce Heverly, long-time billing-sales executive, formed One20ne (initially named Openfirst Communications) while representing Openfirst/its billing division and securing cable-billing contracts.
- Openfirst (later acquired by Quad/Graphics) and Heverly had no written agency agreement; the jury found an agency relationship based on parties’ conduct (titles, use of name, business cards, email, customer reliance).
- Heverly diverted customers and contracts to One20ne/its Illinois facility while representing they remained with Openfirst; Quad discovered this and terminated Heverly and One20ne, then withheld commissions.
- Quad sued Heverly and One20ne for breach of fiduciary duty, breach of contract, tortious interference, and fraud; Heverly counterclaimed for conversion (commissions) and defamation claims against Openfirst management.
- A jury found Heverly/One20ne liable to Quad (including $8M compensatory and $3M punitive each), found Quad liable for conversion to Heverly ($410k plus punitive), and the district court entered judgment; both sides appealed.
Issues
| Issue | Quad's Argument | Heverly's Argument | Held |
|---|---|---|---|
| Standing / Assignment of Openfirst's claims to Quad | Quad had been validly assigned Openfirst’s rights and thus has standing | Assignment was not proved; Quad lacked standing to recover | Heverly waived challenge by stipulating in pretrial filings; standing challenge denied |
| Existence of agency (Openfirst–Heverly) | Conduct and representations established an agency relationship | No express agreement; contracts signed in Heverly’s company name; no principal control | Reasonable jury could find agency from parties’ conduct; denial of Rule 50 upheld |
| Damages for lost/prospective contracts (Bright House, Insight) | Heverly’s misconduct caused Openfirst to lose renewals; lost profits recoverable | No evergreen/renewal guaranteed; prospective contracts too uncertain | Evidence supported jury’s conclusion that clients would have renewed but for fraud; damages sustained |
| Punitive damages (against both sides for respective claims) | Quad sought punitive against Heverly for malicious/reckless conduct; defended its withholding of commissions | Heverly argued lack of malice and that Quad’s conduct was justified | Jury could find reckless/intentional misconduct by Heverly and also reckless conduct by Quad re: commissions; punitive awards upheld |
Key Cases Cited
- Plotkin v. Ryan, 289 F.3d 882 (7th Cir.) (Article III standing reviewed de novo)
- Graefenhain v. Pabst Brewing Co., 870 F.2d 1198 (7th Cir.) (district court has broad discretion in case management)
- Ashland Oil, Inc. v. Arnett, 875 F.2d 1271 (7th Cir.) (parties held to representations in pretrial filings)
- Spring Commc’ns Co., L.P. v. APCC Servs., 554 U.S. 269 (U.S. Supreme Court) (assignment of rights confers standing)
- Clarett v. Roberts, 657 F.3d 664 (7th Cir.) (standard for reviewing denial of Rule 50 motion)
- Gentry v. Export Packaging Co., 238 F.3d 842 (7th Cir.) (appellate court defers to jury credibility determinations)
- Wangen v. Ford Motor Co., 97 Wis.2d 260, 294 N.W.2d 437 (Wis.) (punitive damages available for reckless indifference to rights)