email, Mr, LeJeune asked Global Poly to work with Fred’s and, “in some cases, cancel PO’s if
necessary” (/d.).

Mr. Wolf responded on the same day stating that “at no time has anyone at Fred’s mentioned
any cancellation of orders between [the] companies,” or indicated that Fred’s would not pick up
orders already shipped (Fred’s Rule 56,1(b)(3) Statement, Ex. C). Mr. Wolf wrote that it expected
Fred’s to “honor open orders and honor orders that were exclusively manufactured for them and
awaiting pick-up on the West Coast” (/d.). Mr. LeJeune replied that : “[iJn our first meeting I asked
you to look at canceling orders that had not yet been manufactured and you agreed to look at those
orders.” ({d.). Mr. LeJeune added that he “will do everything [he] can to work with [Globat Poly}
to receive the goods ordered by Jerry Doler . . . on behalf of Fred’s,” but “will not receive non-
critical supplies, that I do not need, .. .” ( /d.).

On December 10, 2002, after the foregoing exchange of emails between Messrs. LeJeune and
Wolf, Global Poly set up orders with third party for supplies to fill certain of the purchase orders
placed by Fred’s in June 2002. These supply orders referenced six of the purchase order numbers
issued by Fred’s to Global Poly in June 2002 (see Fred’s Rule 56.1(b)(3) Statement, Ex. D).

On March 18, 2003, April 25, 2003, and March 9, 2003, Global Poly issued three invoices
for bags delivered pursuant to three of the June 2002 purchase orders (P.O. Nos. 832812, 832821,
and 832839); the bags were apparently shipped around the same time the invoices issued (see Global
Poly’s 56.1(a)(3) Statement, J 8). Fred’s acknowledged receipt of the bags pursuant to these
invoices, but initially refused to pay for them (Id., ]9). That failure to pay was the subject of Count I

of the complaint, which now has been settled (/d., ff 10-11).


with non-affirmation of the transaction or retains the benefit of the transaction. Srathis, 692 N.E. 2d
at 808. The rationale behind the doctrine of ratification is that when a party obtains a benefit through
the actions of someone acting in the party’s behalf, ratification will be found “as long as the principal
has full knowledge of the facts and has the choice of either accepting or rejecting the benefits of the
benefits of the transaction.” Yugoslav-American Cultural Ctr., 682 N.E.2d at 408 (quoting Swader
v, Golden Rule Ins. Co., 561 N.E.2d 99, 106 (Ill. App. Ct. 1990)).

Here, there is a genuine dispute over whether Fred’s conduct in accepting the first three
shipments was inconsistent with its position that Mr. Doler lacked authority to enter into the June
2002 purchase order that provided the order could not be changed or cancelled. Mr. LeJeune’s
August 27, 2002 email stated that Fred’s may require Global Poly to “in some cases, cancel P.O.’s
if necessary” (See Fred’s Rule 56.1(b)(3) Statement 7 12, Ex. C) (emphasis added). A jury
reasonably could conclude that Fred’s later conduct in accepting three shipments, but not eight
others, was consistent with its position as expressed in Mr. LeJeune’s email, and did not ratify all
eleven purchase orders made by Mr. Doler in June 2002. Generally, the question of ratification turns
on the principal’s intent to affirm. Progress Printing Corp. v. Jane Byrne Political Comm., 601
N.E.2d 1055, 1067 (Il. App. 1992). Whether Fred’s acceptance of the first three shipments reflected

an intent to accept all shipments under the June 2002 purchase orders is a question of fact for the

jury.


Bank & Trust Co., 682 N.E.2d 401, 406 (Ill. App. 1997). Fred’s contends that Mr. Doler, in his
capacity as Purchasing Manager, did not have authority to make all purchase orders with Global Poly
“non-changeable” and “non-cancellable.” Global Poly counters that Mr. Doler had authority to enter
into the non-cancellable order agreement simply because of his position with the company. Global
Poly also claims that Fred’s has failed to offer evidence to support its challenge Mr. Doler’s authority
~ overlooking that affidavits of Mr. LeJeune and John McMorrough, Mr. Doler’s supervisor, were
presented by Fred’s to show Mr. Doler’s lack of authority.

We first address Global Poly’s argument that Mr. Doler had actual authority to set the terms
for Fred’s orders. An agent has actual authority to act on a principal’s behalf when the principal’s
words or actions (i.e., the principal’s “manifestation” of intent) would lead a reasonable person in
the agent's position to believe that he or she was so authorized. Opp v. Wheaton Van Lines, Inc., 231
F.3d 1060, 1064 (7" Cir. 2000) (interpreting Illinois law and the Restatement (Second) of Agency).
Actual authority may either be express or implied. Restatement (Second) of Agency § 7 cmt.c. An
agent has express actual authority when the principal explicitly grants the agent the authority to
perform a particular act. Sphere Drake Ins. Ltd. v. Am. Gen, Life Ins. Co., 376 F.3d 664, 672 (7" Cir.
2004) (citing Amcore Bank, N.A. v. Hahnaman-Albrecht, Inc., 759 N.E.2d 174, 181 (ll. App. Ct.
2001)). Global Poly has not offered undisputed facts to show express authority here, as no evidence
was presented to show that Fred’s explicitly granted Mr. Doler the authority to enter into “non-
cancelable and non-changeable” orders.

Nor has Global Poly offered undisputed facts to show that Mr. Doler possessed implied
actual authority. Implied authority is that authority which is inherent in an agent’s position and is,

simply, actual authority proved through circumstantial evidence. Moriarty v. Glueckert Funeral


The goods ordered by Fred’s in the eight remaining purchase orders of June 2002 (P.O. Nos.
832847, 832871, 832880, 832936, 832961, 832995, 833002, and 833029) have not been
manufactured or delivered, as Fred’s has not provided shipping dates for those goods or assurance
it would pay for them if delivered (Global Poly’s Rule 56.1(a)(3) Statement, 4 12). Those remaining
purchase orders are the subject of Count II of the complaint, and of the pending summary judgment
motion,

i.

Global Poly contends that the undisputed facts demonstrate that Fred’s (through Mr. Doler)
made a “non-cancelable and non-changeable” order for plastic shopping bags in June 2002, and that
Fred’s now is responsible for $93,558.08 lost profits resulting from Fred’s failure to follow through
on those purchase orders (Global Poly’s Rule 56.1(a)(3) Statement, J 14), Fred’s contends that there
is a genuine fact dispute (1) as to Mr. Doler’s authority to bind Fred’s to such an order, and if he
lacked that authority, (2) as to whether Fred’s nonetheless subsequently ratified that June 2002
purchase order. We consider each of these contentions in turn.

A.

A principal is liable for those acts of its agents which the agent has actual or apparent
authority to perform. Bank of Waukegan v. Epilepsy Foundation of Amer., 516 N.E.2d 1337, 1340
il. App. 1987). Under Illinois law, the existence of an agency relationship and its extent are
questions of fact. Kinesoft Development Corp. v. Softbank Holdings Inc., 139 F.Supp. 2d 869, 899
(N.D. Ill. 2001) (citing Brunswick Leasing Corp. v. Wisconsin Central, Ltd., 136 F.3d 521, 526 (7"
Cir. 1998)). The burden of proving agency and the scope of authority is on the person seeking to

charge the alleged principal —here, Global Poly. Yugoslav-American Cultural Cir., Inc. v. Parkway



possesses authority to act on the principal’s behalf; and (3) the third party relied to his detriment on
the agent’s apparent authority. Bethany Pharmacal Co., Inc. v. QVC, Inc., 241 F.3d 854, 859 (7"
Cir. 2001) (citing Stathis v. Geldermann, Inc., 692 N.E.2d 798, 807, (Ill. App. Ct. 1998)).
Specifically, the principal must do something to lead the third party to believe that the agent is
authorized to act on its behalf. Yugoslav-American Cultural Ctr., Inc.,682N.E.2d at 406. The agent
cannot unilaterally create an apparent agency through his own words or conduct. See id. However,
apparent agency may arise from silence of the principal if the principal knowingly allows another
to act for them as agent. Bethany Pharmacal Co., 241 F.3d at 860.

Insupport of its apparent authority argument, Global Poly points only to Mr. Doler’s job title
with Fred’s, and the contents of Mr. Doler’s November 17, 2001 letter. However, Global Poly has
provided nothing to show Fred’s knew of Mr. Doler’s commitment that orders would be non-
cancellable and non-changeable, and acquiesced to that commitment. While a jury might conclude
that Fred’s knew of that commitment (despite its assertion to the contrary), a jury also might infer
lack of knowledge from evidence such as Mr. LeJeune’s emails to Mr. Wolf in the summer of 2002,
after Mr. Doler was terminated and Fred’s told Global Poly it was then undertaking a review of
accounts. Resolution of these questions of fact must be left to a jury.

B.

Global Poly argues that even if Mr. Doler lacked authority to bind Fred’s to non-cancellable
and non-changeable orders, Fred’s ratified that agreement of the June 2002 purchase order by
accepting delivery of the first three shipments under the purchase order in the Spring of 2003 — long
after Mr. LeJeune was aware of Mr. Doler’s actions, Ratification takes place with the principal, with

knowledge of the material facts regarding an unauthorized transaction, takes a position inconsistent


Minute Order Form (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Judj i i Sitting Judge if Other
vor Magistrate Todge Sidney I Schenkier than Assigned Judge
CASE NUMBER 03 C 4561 DATE 10/28/2004
CASE Global Poly, Inc. vs. Fred’s, Inc.
TITLE
[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.]
DOCKET ENTRY:
qd) Oo Filed motion of [ use listing in “Motion” box above.]
(2) Oo Brief in support of motion due
QB) a Answer brief to motion due. . Reply to answer brief due .
(4) Oo Ruling/Hearing on set for at
(5) Oo Status hearing{held/continued to] [set for/re-set for] on set for at
(6) Q Pretrial conference[held/continued to] [set for/re-set for] on set for at .
(7) Q Trial[set for/re-set for] on at
(8) Qo [Bench/Jury trial} [Hearing] held/continued to at
(9) Oo This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
DOFRCP4(m) (C)Local Rule 41.1 OFRCP41(a\(1) [2 FRCP41(a)(2).
(10) MW [Otherdocket entry] Enter Memorandum Opinion and Order. For the reasons stated in the attached
Memorandum Opinion and Order, plaintiff's motion for summary judgment on Count II of the complaint
(doc. # 19) is denied. The matter is set for a status conference on November 23, 2004, at 9:00 a.m. to
discuss scheduling for trial. The parties are directed to seriously explore settlement prior to that status
“ MO, AC~
(1) @ [For further detail see order attached to the original minute order.]
No notices required, advised in open court,
No notices required.
Notices mailed by judge's staff. lan
Notified counsel by telephone. OC} 29 2004
a | Docketing to mail notices.
Mail AO 450 form, sigia “sn
Copy to judge/magistrate judge. pal]
courtroom ©2738 NY 6¢ 1904002
mm deputy’s wey
initials "Date = bea Py
central Clerk’s Office



CONCLUSION
For the foregoing reasons, plaintiff's motion for summary judgment on Count Il of the
complaint (doc. #19) is denied. The matter is set for a status conference on November 23, 2004,
at 9:00 a.m. to discuss scheduling for trial. The parties are directed to seriously explore settlement
prior to that status date.

ENTER;

Oz Ao

SfDNKY I. SCHENKIER
United States Magistrate Judge

Dated: October 28, 2004

10


Home, Ltd., 155 F.3d 859, 866 (7 Cir. 1998); see also Opp v. Wheaton Van Lines, Inc., 231 F.3d
at 1064 (“implied authority is actual authority that is implied by facts and circumstances and it may
be proved by circumstantial evidence”). An agent has implied authority for the performance or
transaction of anything reasonably necessary to effect execution of his express authority. Opp, 231
F.3d at 1064 (citing Advance Mortg. Corp. v. Concordia Mut. Life Ass'n, 481 N.E.2d 1025, 1029,
(Il. App. Ct. 1985).

Global Poly argues that if Mr. Doler was the Purchasing Manager, then he necessarily must
have had the implied authority to set whatever terms of purchase orders he wished — including
whether an order could be cancelled or changed. That may be a permissible inference; but, it is not
the only permissible inference. A jury might reasonably conclude, upon hearing all the evidence,
that Mr. Doler had authority to make purchases, but that there were limitations on that authority. The
title of “purchasing manager” may not automatically vest in a person sole authority to commit a
company to any and all possible terms of purchase. For example, a purchasing manager might have
limitations on the dollar value of purchases he or she can make. Or, a purchasing manager may have
limits on his or her authority to commit a company to purchases, without having some wiggle room
for cancelling or changing the orders ~ and, indeed, that is in substance what Fred’s affidavits on
summary judgment say. Where there are conflicts in the evidence, we are not at liberty on summary
judgment to decide which party’s version a jury would be more likely to accept.

In the alternative, Global Poly argues that Mr. Doler had apparent authority to bind Fred’s
to the terms of the November 17, 2001 letter stating that ail orders would be “non-cancelable and
non-changeable.” Under Illinois law, apparent authority 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



1999). Rather, Fred’s must “come forward with appropriate evidence demonstrating that there [was]
a pending dispute of material fact.” Waldridge v. American Hoechst Corp., 24 F.3d 918, 921 (7
Cir. 1994),

Il.

Set forth below are the material, undisputed facts, drawn from the parties’ Rule 56.1
statements and related exhibits. As will be clear upon review, while many facts are not in dispute,
the inferences to be drawn from these facts are genuinely disputed, and preclude summary judgment.

In early 2001, Fred’s and Global Poly entered into a business relationship whereby Fred’s
would issue purchase orders to Global Poly to make plastic shopping bags, bearing Fred’s logo, for
future delivery ((Global Poly’s 56.1(a)(3) Statement in Support of Its Motion for Summary
Judgment, { 5). On November 17, 2001, Jerry Doler, then the Purchasing Manager of Fred’s, sent
a letter to Tom Wolf, President of Global Poly, stating that “all of Fred’s PO’s [purchase orders} to
[Global Poly] are non-cancelable and non-changeable” (Global Poly’s 56.1(a)(3) Statement { 6 and
Ex. C). Further, Mr. Doler stated that the letter was a “standing agreement for all PO’s current and
future,” (/d., Ex. C).

On June 20, 2002, Fred’s issued eleven purchase orders to Global Poly for the manufacture
and delivery of shopping bags on various dates (Global Poly’s 56.1(a)(3) Statement, {{ 7).

On July 15, 2002, Byron LeJeune, Vice President of Corporate Services for Fred’s, sent an
emai} to Mr. Wolf informing him that Mr. Doler was “no longer with” the company and that Fred’s
was in the process of “reviewing accounts.” (see Fred’s Rule 56.1(b)(3) Statement, J 12, Ex, C.).
Mr. LeJeune sent another email to Mr. Wolf on August 27, 2002, stating that Fred’s had placed PO’s

with several vendors for supplies in “quantities that exceed normal business practice,” (/d.). In that


IL

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); see also Lexington Ins. Co. v. Rugg & Knopp, Inc., 165 F.3d 1087, 1090 (7 Cir.
1999). A genuine issue of materia) fact exists when 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, 246,
91 L.Ed, 2d 202, 106 S.Ct. 2505 (1986). Accordingly, disputes of fact in the record should be
viewed in favor of the opponent to a motion for summary judgment, and reasonable inferences from
the evidence drawn in the opponent’s favor. See Little v. Ill. Dept. of Revenue, 369 F.3d 1007, 1011
(T* Cir. 2004). However, conclusory statements by the nonmoving party which are unsupported by
specific facts will not be enough to overcome a motion for summary judgment. First Commodity
Traders v. Heinold Commodities, 766 F.2d 1007, 1011 (7" Cir, 1985).

Global Poly has complied with the Local Rule 56.1(a), which requires a party moving for
summary judgment to submit a statement of material facts as to which the party contends there is no
genuine issue in dispute. This statement of undisputed, material facts included “references to the
affidavits, parts of the record, and other supporting materials relied upon to support the facts set
forth.” UNITED STATES DIsT. CourT, N. DIST. OFILL. LR 56.1. All properly supported material facts
set forth in a motion for summary judgment are deemed admitted unless properly controverted by
the opposing party. See Jd. ; see also Corder y, Lucent Techs, Inc., 162 F.3d 924, 927 (7* Cir. 1998).
Therefore, Fred’s could not simply rely on its denials in the pleadings to show the existence of a

genuine issue of material fact. See Shermer v. Mlinois Dep't of Transp., 171 F.3d 475, 477 (7" Cir.


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
GLOBAL POLY INC., an Illinois )
Corporation, )
)
Plaintiff, )
) No. 03 C 4561
vs. )
) Magistrate Judge Schenkier
FRED’S INC., a Tennessee )
Corporation, )
)
Defendant. )

MEMORANDUM OPINION AND ORDER

This is the Court’s second opinion in this diversity suit involving a dispute between the
plaintiff, Global Poly, Inc. (“Global Poly”) and the defendant, Fred’s Inc. (“Fred’s), concerning an
alleged failure to pay for purchase orders (“PO’s”) entered into between the two parties. In the
Court’s previous opinion, Global Poly’s motion to stay Fred’s counterclaims was granted, and the
motion to strike Fred’s affirmative defenses was granted in part and denied in part. After the Court’s
earlier opinion, the parties settled Count I of the complaint. See Global Poly, Inc. v. Fred’s, Inc.,
No. 03 C 4561, 2004 WL 532844 (N.D. Ill. Mar. 11, 2004). Global Poly has now filed a motion for
summary judgment on Count II of its complaint (doc. # 19), which alleges breach of contract for

Fred’s alleged failure to pay for certain goods it ordered. For the following reasons, the motion for

summary judgment is denied. DOCKE TED
OCT 2 9 2004

Za