NO T R EC OM M EN DE D F OR F UL L- TEX T P UB LIC AT ION F ile Nam e: 09a0683n.06 No. 09-1033 UN ITED STA TES C OU RT OF AP P EA LS F OR THE SI XT H C IR CU IT
C OM PASS GROUP USA, I NC., d.b.a. Cha rt we lls , Plaintiff-Appellee , v. EA TO N R

API DS P UB L I C SCH OO L S, De fe nd ant- Ap pe lla

nt, WAV ERLY C OM MU

NI TYSCH OO L S, De fe nd ant. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ON APPEALFROM THE U NI TED STATES DI STRI CT COURT FOR THE WES TERN DI STRI CT OF MI CHI GAN

B e fo re : SU TT ON , KET HL ED GE and WHI TE , Ci rc uit

Judg e s. SUTTON, Circuit J udg e. Eaton Rapids Publ ic Schools appea ls the district court’s g rant of
summa ry jud g me nt t o Ch art

we lls in t his c on tr act dispute . B e c a us e the re c or d s up po rt s a sin g le
con c lu s io n

—th a t E a to nRa

p id s b r e a c h e d

a b in d in g n o n - c o mp e te c la u s e
— w e a f f ir m t h e ju d g me nt of the dis tr ic t c ourt . I.
I n ear ly 2002, Eaton Rapids published a R equest For Proposal (RF P), soliciting bids for the operation of its food service s. Chartwells won the bidding process, and on J une 26, 2002, the Eaton Rapids school board a

uthorized the superintende nt to c ontrac t w ith Char twells. The super intendentNo. 09-1033

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- 2 - and Chartwe lls ex ecute d an agr eeme nt that expressly “incor porate d” all of the “ter

ms and conditions within the [ RFP].” R.85 Ex
. 2 at 19. Three months later, on Septe mber 30, 2002, the supe rintendent sig ne d a fi na l a g re e me nt w ithCha rt we lls , th a t pu

rp or te d to be “ the a g re e me nt” of the pa rt ie s and to “super sede[]” any

other a rra ng ement. R
. 30 Ex . A at 13. The final ag ree ment included a noncompete c lause that provides: “Ne ither party shall during the term of this Ag ree ment or for one y ear there afte r solicit to hire, hire or contra ct with e ither party ’s employ ees . . . .” Id. at 3. Should either party violate t his clause , it adds, t he bre achingparty would owe liquidated damag es to the injured party “equa l to the annual sala ry of the re levant employ ee.” Id.
Eaton Ra pid s’ su pe ri nte nd e nt r e ne we d th e on e -ye ar ag re e me nt w ithCha rt we lls fo ur tim e s, until Eaton Rapids decided to mana g e it s food services oper ation in-house for the 2007–08 school y ear . I n the spring of 2007, as Eaton Rapids was consider ing this c h an ge, i t re ceived sever al
un so lic ite d r e sume s f

ro m f oo d s e rv ic e s p ro fe ssi on a ls, inc lud ingL ind a Vai nn e r, the n Ch art we lls ’ direc tor of dining service s for the ne arby Waverly and Willi amston school districts. After se vera l
ro un ds of int e rv ie ws , E a ton

Ra pid s o ff e re d to hir e Va inn e r a s f

ood ser vic e s d ir e c tor , s tart ingJuly 1, 2007. The school board authorized the hire on May 9, 2007, and Va inner notified Char twells of her de cision to a cce pt E aton Rapids’ offe r that day
. She continued to w ork for Chartwells until J une 28, 2007.
Cha rt we lls su e d E a ton

Ra pid s, c la imi ngthat th e sc ho ol d ist ri c t br e a c he d th e no n- c omp e te clause when it hired V ainner and committed seve ral re lated torts. The district court g rante d summary judgme nt in favor of

Eaton Rapids on the tort cl aims and in favor of Chartwe lls on theNo. 09-1033

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- 3 - contra ct claim. The court order ed Eaton Rapids to pay $61,243.53 in liquidated damag es plus prejudgme nt interest. Eaton Rapids, but not Chartwells, appe aled.
II.
Eaton Ra pid s f ir st c on te nd s th a t the dis tr ic t c ourt la c ke d su bje c t matte r j ur isd ic tio n o ve r t his dispute. Chartwells, it say s, did not satisfy the amount-in-c ontroversy require ment, see 28 U. S.C. § 1332(a) , beca

use i t “appe ar[s] to a lega l cer tainty ,” St. Paul Mercury

Indem . Co. v. Red Cab Co. , 303 U.S. 283, 289 (1938), that C hartwe lls could not recove r any more than $61,243.53—the liquidated damag es authorized for brea ching the non-c ompete cla us e. I n deter

mining whe ther Chartwells re ache d the $75,000 jurisdictional threshold, the school district a cknowledg es, we may ag g reg ate its tort and contr act c laims. See Kleppe r v. First Am. Bank, 916 F.2d 337, 341 ( 6th Cir. 19 90 ). B ut i t ma int a ins that th is pr inc ipl e do e s n ot h e lp C ha rt we lls be c a

us e Mic h. Com

p. L aws § 691.1407, which giv es M i chigan g overnme ntal entities immuni ty from tort liability , barr ed Chartwells’ tort c laims.
Courts a s s e s s th e a mo u n t in c o n tr o v e r s y b a s e d o n th e f a c e o f th e c o mp la in t, not the subsequent application of affirmative defense s, such as statutory g overnme ntal immunit y . Se e St. Paul , 3 0 3 U
. S
. a t28 8– 89 ; W o r t hams v. Atlanta Life Ins. Co. , 533 F.2d 994, 998 ( 6th Cir. 1976). Eaton Rapids may

be rig ht that the district c ourt corr ectly reje cted Char twells’ tort claims base d on the Mic hig an im mun ity st atu te. B ut t he ult imate su c c e ss o f t hat a ff ir mativ e de fe ns e is j us t that—succe ss on an af

firmative defense —not a theory by which the value of the tort claims must beNo. 09-1033

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- 4 - ignor ed in deter

mining the amount in controve rsy . The district cour t had subject matter

jurisdiction over this diversity

case . III
. Eaton Rapids attac ks the mer i t s o f t h e d istrict court’s c ontrac t ruling on two f ronts: (1) Eaton Rapids did not breac h the non-c ompete cla use, and ( 2) the fina l ag ree ment did not bind the school district. We give fre sh review t o t h e district court’s summary judgme nt decision, draw ing all rea sonable fa ctual infe renc es in Eaton Rapids’ fa vor. See Med. Mut. of Ohio v. k. Am alia Enters., Inc. , 548 F.3d 383, 389 (6th Cir. 2008)
. And we will a ffirm the judgme nt if the rec ord reve als “no g enuine issue a s to any

materia l fac t” and Char

twells “is entitled to judgment a s a matter of law.” Fe d. R. Civ. P . 56(c)
. A.
Th e c ourt c or re c tly de termi ned

that E a ton

Ra pid s b re a c he d th e no n- c omp e te c la us e a s a matter of la

w. B y any rea sonable co n s t ru ct i o n of the c ontrac t, Eaton Rapids “solicit[ ed] to hire, hire[d] or contract[ed] with” a Chartwells employ ee “during the t erm of [ the] Agr eeme nt or for one y e ar t he re a ft e r. ” R.3 0 E x. A at 3. Ne ith e r p a rt y dis pu te s th e fo llo wi ng: on May 9, 20 07 , w hil e Chartwells re mained Eaton Rapids’ food servic es provider , the school district offe red to hire Vainner ; Chartwells employ ed Vainner until June 28, 2007; a nd Vainner beg an working for Eaton Rapids on J uly

1, 2007. These f

acts a lone demonstrate that Eaton Rapids br eac hed the clause in at least three way s. Fi rst , Eaton Rapids “solicit[ed] to hire” V ainner by interviewingher a

nd offe ringNo. 09-1033

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- 5 - her a job, all while she wa s still in Chartwells’ employ
. Second, Eaton R apids “hire [d] ” Va inner on May 9 when the sc ho o l board a pproved V ainner ’s employ ment contra ct, Vainne r ac cepte d the position and s h e subm itted her re signation to C hartwe lls. Thi rd , Vainner ’s employ ment contra ct with Eaton Rapids was ef fec tive J uly

1, less than “one y ear” a fter the termination of the f inal
a g re e me nt.
That Va inner wa s no longe r a Char twells employ ee when she star ted workingfor Eaton R a p i d s i s b e s i d e t h e p o i n t . E a t o n R a p i d s h a d a l r e a dy b r e a c h e d t h e c l a u s e m o n t h s e ar l i e r w h e n it “solici t[ ed] to hire” a c urre nt Chartwells employ ee. E ven if we acc ept that Eaton Rapids did not solicit Vainner’ s resume, it as s u re d l y solicited her—“ reque st[ ed]” to hire her , see Blac k’s Law Di c tio na ry

1427 (8th ed. 2004)—when it offe red he r a job on May 9. And once Vainner acc epted the offe r, Eaton Rapids had “ hire[d] ” her . The ordina ry use of “ hire” ref

ers to the of

fer and
acc eptanc e of e mploy

ment, not the first day

of work. Cha

rtwells’ a lternative c onstruction of the noncompete clause —which would exclude “for mer e mploy ees” like Vainner —would destroy

the forc e of the c la us e un le ss t

he e mpl oy e e so me ho w wo rk e d simult ane ou sly fo r bo th pa rt ie s, an im

pr ob a bly
narr ow construc tion of a non-c ompete cla use.
B e c a us e the RF P a lr e a dy

ob lig a te d Ch art

we lls to p ro vid e fo od se rv ic e s to the sc ho ol d istri c t, Eaton Rapids a dds, the final ag ree ment amounted to an imper missibl e “modific ation of an e x isting
c on tr a c tua l r e latio ns hip ,” wh ic h lac ke d co ns ide ra tio n be c a us e it wa s supp or

te d only by

a “ pr omi se to perfor m that w hich [C hartwe lls] was alre ady require d to do.” Eaton Rapids’ B r. at 19 (quotation marks omitted). Ye t the exchang e of mutual promises constitutes consideration, se e Ga rlo c k v . M otzNo. 09-1033

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- 6 - Tire & Rubb er Co. , 159 N.W. 344, 346 (Mich. 1916), and the non-compe te clause amounts to a mutual promise: Each pa

rty promised not to hir e the other’s employ ees. Char twells, then, provided the re quisite consideration—in the form of a promise not to hire Eaton Rapids personne l—to support the fi na l a g re e me nt.
B. Eaton Rapids separ ately m ak es an ultra vires argument—that the superintende nt had no authority to sign the f

inal ag ree ment and thus he c ould not bind the school district. The school district’s leg al pre mise is corre ct: An ag ent cannot bind its principal when it exceeds the limit s of its authority
. See Mic h. Com p. L aws § 3 80 .1 20 1( 1) ; Mi c h. Pa y te l J oin t Ve ntu re v . Ci ty

of D e tro it , 287 F.3d 527, 539–40 ( 6th Cir. 2002). But i t s co n cl u s i o n is not: On J une 26, 2002, the boa rd authorized “the supe rintendent . . . to ente r into a contra ct with Chartwells Corporation to provide manag ement ser

vices for the district’s food ser

vice de partment . . . with an option to renewfor up to four additional y ear s, in strict acc ordanc e with their submitted proposal .
. . .” R.85 Ex
. 19 at 88. T h a ti s j u s tw h a tt h e s u

p e r i n t e n d e n td i d , a l l w i t h i nh i s a c tu a l a u t h o r i t y.
Not so, Eaton R apids responds. The authorization extended only to the RFP, not to the final
a g re e me nt. B ut t

he langua g e of

the a uth or iza tio n a

nd Eat on Ra

pid s’ bylaws c on tr a dic t th e po int
. The boa rd authorized the sup er i n t endent to sig n “a c ontrac t,” not “the RF P,” not “the attac hed contra ct” and not a

ny other simil arly limit ed g rant of authority
. The boa rd’s qua lification that the
c on tr a c t be “ in s tr ic t a ccor dan ce wit h [Ch art we lls ’] s ub mitte d p ro po sa l,” R.8 5 E x.19 a t 88 , s e t aNo. 09-1033

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- 7 - baseline f or the c ontrac t, but it di d not prohibit filli ng in the details of the f inal ag ree ment, as the steps from an RF P to a final contra ct nec essar ily require
. Eaton Rapids’ by laws confirm this conclusion. The super intendent, they say , is designated “the c hief e x ecutive of

fice r of the School District,” Eaton Rapids’ Appx. at 20, and has “the latitude to de termine the best method of implementing the policies of t h e B o ar d,” id. at 21. The boa rd approves the “br oad purpose and func tion,” id. a t 2 0 , o f th e d is tr ic t’ s p r o g r a ms , but the
su pe ri nte nd e nt “ a dmi nis te r[s ]” the de ta ils , id. at 21. Eaton Rapids’ June 26 contrac t authorization followed this approa ch: The boa rd appr oved the para

meters of the food ser

vice a g ree ment and lef

t it to the s u p er intendent to sign “ a contr act” in acc ordanc e with them. That is just what the superintende nt did, and the inclus ion of a non-c ompete cla use alongwith other standar d contra ct pr ov isi on s f

e ll w ith in t

he se pa ra me te rs . T he su

pe ri nte nd e nt d id n ot e xce e d th e sc op e of his authority
. Th e same is tru e of

the fo ur on e -ye ar e xten sio ns of

the c on tr a c t. E ve n if

the sc ho ol b oa

rd did not independently

authorize ea ch extension, the superintende nt did, a nd he had the discretion to do so. The boar d “author ized [the superintende nt] to e nter into a contra ct with Cha rtwells . . . with an option to renew for up to four a dditional y ear s.” R.85 Ex . 19 at 88. And, leaving no doubt a bout the point, the school board ratified the extensions by permitting Chartwells to c ontinue to perfor m in relianc e on the a g ree ment. See M cLaughlin v. Bd. of Educ. , 239 N.W. 374, 376 (Mich. 1939).No. 09-1033

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- 8 - I V. Eaton Rapids also cha lleng es the damag es a wa rd. Althoug h it does not dispute the computation of the liquidated damag es, it maintains that we should reduc e or strike t h e aw ard be c a us e (1 ) Chart wel ls fai le d to mit ig a te its dama g e s, and (2 ) t he awa rd a mou nte d to a “ do ub le
rec overy ,” Eaton Rapids’ Br . at 52. As Eaton Rapids see s it, Chartwells knew the sc hool dis t ri ct i n tended to bre ach the noncompete c lause a

nd, instead of wa

rning the superintende nt, “[lay ] i n the wee ds” and w aited for the brea ch and the anticipated liquidated da mag es. Id. at 46. The common law of c ontrac ts, to be sure, impo s e s o n in

ju r e d p a rti e s a d u ty to mi ti g a te th e d a ma g e s c a u s e d b y a b r e a c h o f c o n tr a c t. See H a r r in g to n - W

ia rd Co
. v . B lo m s trom Mfg. Co. , 1 31 N. W. 5 59 , 5 64 (M ic h. 19 11 ). B ut t his du ty attache s only

“whe n there has been a breac h of contract,” not before , and thus requir es the injured party only “to diminish t he dama g es,” not a ffirmatively to preve nt the brea ch itself. Id
. Cha rt we lls had no duty to do what Eaton Rapids should have done: preve nt the contra ct from beingbrea ched. That Chartwe lls may

have know n of the bre ach in a dvance does nothing to reduc e the damag es
ow e d. Se c tio n 2 .3 of

the fi na l a g re e me nt g ive s n o c omf or t f or the sc ho ol d ist

ri c t ei th er, a s it
conce rns the ter

mination of the contra ct upon bre ach, not the dut y to preve nt brea ch or the measure of dama g es upon bre ach.
Th e do ub le -r e c ov e ry

argume nt f

are s no be tte r. Wav e rl y

Sc ho ol D istri c t, whic h w a s a pa rt y to a similar contra ct, hired V ainner as i ts food services director soon af ter Eaton Rapids did, on theNo. 09-1033

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- 9 - un de rs tand ingthat V a inn e r w ou ld s pli t he r t ime be tw e e n the dis tr ic ts. Ac c or din g to E a ton Ra pid s, Waverly has already settled its contra ct di spute with Chartwells out of cour t, to the tune of $30,000. Be cause Chartwells has a lrea dy rec eived this settlement, the school d istrict argues, any rec overy from this case g reater than $31,243.53 w ould result in comp en sation g reater than the liquidated damag es benc hmark. To prevail on this poi nt, however , Eaton Rapids must demonstrate that the two br eac hes
cause d a “single injury ,” Great N. Pac kaging, Inc. v. Gen. Tire & Rubber Co. , 399 N.W.2d 408, 410 (Mich. Ct. App. 1986), name ly the loss of Vainne r as an employ ee. Yet that possibili ty overlooks a key point: The clause pr otects Chartwe lls fr om more than just the loss of an e mploy ee. Avendor
su c h a s Ch art

we lls ha s an in te re st in p re ve nti ng tr a ine d e mpl oy e e s f

ro m he lpi ngsc ho ol d istri c ts operate their food se rvice operations in-house, which re sults in t he loss of both an employ ee a nd an
a c c ount— and wh ic h is pr e c ise ly wh a t ha pp e ne d to Cha

rt we lls ’ E a ton

Ra pid s and Wav e rl y a c c ounts . Her e, althoug h the under ly ing con d u ct wa s simil ar, Ea ton Rapids and Waverly

eac h brea ched a differ ent contra ct an d eac h trig g ere d a distinct liquidated damag es liability . The district cour t’s j u d g m e n td i d

n o ta m o u n tt o ani mp e r

m i s s i b l e d o u

b l e r e c o v e r

y.
V.
F or the se re a so ns , w e a ff

ir m.