In the

United States Court of Appeals

For the Seventh Circuit

No. 07-4058

INTERACTIVE INTELLIGENCE, INCORPORATED,

Plaintiff-Appellant,

v.

KEYCORP, KEYBANK NATIONAL ASSOCIATION, and

ADAM RAVENS,

 Defendants-Appellees.

Appeal from the United States District Court

for the Southern District of Indiana, Indianapolis Division.

No. 05 C 1518—Larry J. McKinney, Judge.

ARGUED SEPTEMBER 12, 2008—DECIDED OCTOBER 24, 2008

Before RIPPLE, ROVNER, and EVANS, Circuit Judges.

EVANS, Circuit Judge. Interactive Intelligence, Inc.

filed this action against KeyCorp, KeyBank, and Adam

Ravens (a former employee of KeyBank), alleging various

contractual and tort theories of liability arising out of

foreign exchange (FX) currency transactions. The district

court granted the defendants’ motions for summary

judgment; Interactive appeals.
2 No. 07-4058

Interactive and KeyBank had a commercial banking

relationship in which Interactive began executing FX

transactions through the bank. The transactions involved

both the conversion of dollars into foreign currencies

and foreign currencies into dollars. Ravens, a KeyBank

FX salesman based in Cleveland, Ohio, had primary

responsibility for Interactive’s account during most of the

relationship. KeyBank, not surprisingly, made a profit

from the transactions. The parties continued their relationship for over seven years.

During the first three years of their relationship the

parties did business without a written contract. Traci Shaw,

who worked in Interactive’s accounting department,

arranged FX transactions. When she received an invoice

with an amount stated in foreign currency, she would go

to the Internet and “come up with a conversion.” She

gave the information to Keith Midkiff, Interactive’s vicepresident of finance. After she received approval from

him, she “would fax that to KeyBank for them to initiate

the transfer.” Then a person at KeyBank would “insert

whatever information she needed to in her system,

initiate the transfer, and then she would call [Shaw] with

an exchange rate and the U.S. dollar amount.” Shaw then

“entered the invoice into the system with the U.S. dollar

amount.” Later confirmations were made by fax or

KeyBank’s FX online system. The terms were binding

on both parties if Interactive did not object within two

business days. But what was KeyBank to be paid for its

services?

John Gibbs, a cofounder and former executive vicepresident of Interactive, testified that he had conversa-
No. 07-4058 3

tions in either 1997 or 1998 with “someone” from KeyBank

about having the bank perform FX transactions “at market.” Gibbs understood “at market” to mean either the

exchange rate from the Wall Street Journal or the rate a

person could obtain using a Visa credit card. He also

recalled that Interactive agreed to pay KeyBank a processing fee for each FX transaction. In other words, Gibbs

thought Interactive would pay a fee per transaction,

rather than “on a spread” (a percentage markup of an

exchange rate).

In May 2001, the parties signed a contract which was

silent on the issue of fixed fees versus “a spread.” The

contract indicated that Interactive was not relying on

advice from KeyBank in entering FX transactions, but

rather had consulted with its own advisors.

Information on exchange rates is widely available.

Interactive’s assistant controller, Barbara Claassen, for

instance, knew that she could find information about

exchange rates on the Internet. And, in fact, at some

point Interactive noticed that the rates KeyBank was

using were not the same as the ones published in the Wall

Street Journal. Shaw was asked to investigate, and Ravens

told her the discrepancy resulted from the differences in

the size of the transactions. Later, another Interactive

official noticed significant disparities but did not request

an investigation. In its suit, Interactive contends that it

was overcharged more than $2 million for KeyBank’s

services.

The culprit, according to Interactive, was Ravens. He

worked for KeyBank as an FX trader from 1998 to 2005.
4 No. 07-4058

He was an employee at will, but as a condition of his

employment he agreed to comply with the “KeyBank

Code of Ethics,” which contained guidelines concerning

confidentiality, self-interested transactions, gifts, entertainment, loans, etc. No one at Interactive saw KeyCorp’s

Code of Ethics during the time KeyBank provided it

with FX services.

Ravens applied a spread to the FX transactions, and the

amount of the spread gradually increased over the years.

Ravens did not inform Interactive that he was applying

a spread. But KeyBank was allegedly aware that Ravens

aggressively used a spread and lost customers as a result.

KeyBank eventually terminated Ravens’ employment

in July 2005.

In an attempt to recover some of what it contends were

overcharges, Interactive set out a number of causes of

action, which were dismissed on summary judgment. In

this appeal, Interactive claims to be a third-party beneficiary of the “employment contract” between Ravens and

KeyBank. Interactive also claims that KeyBank was negligent in supervising Ravens and that KeyBank breached

a fiduciary duty and an oral contract. Interactive filed some

of the claims as class action claims. The district

judge dismissed those claims as well.

One problem in this case, which is not adequately

addressed by the parties, is what law applies to the claims.

On the claims based on the supposed employment contract, KeyBank says the parties agree that Ohio law governs; however, Interactive cites the law of Connecticut

and New Jersey. KeyBank says that on all other claims
No. 07-4058 5

Indiana law controls; however, while Interactive relies on

Indiana law on the claims based on breach of a fiduciary

duty and of oral contract, it says Ohio law applies to the

negligence claims. Like much else in this case, what

law should apply is unclear, but the deficiencies in the

plaintiff’s case are clear under the laws of either Ohio or

Indiana. We will proceed with our de novo review. Gillespie

v. Equifax Info. Servs., L.L.C., 484 F.3d 938 (7th Cir. 2007).

Interactive’s first claim is that it is a third-party beneficiary of a contract between KeyBank and Ravens and

therefore a beneficiary of KeyBank’s Code of Ethics, which

Ravens allegedly violated. This claim is hopelessly

flawed. First, Ravens was an at-will employee. He signed

a form, as a condition of his employment, saying he

would abide by the bank’s Code of Ethics, but he did not

have an employment contract. Second, it would be a

rather bad public policy, it seems to us, to say that customers are third-party beneficiaries of codes of ethics. If

that were the case, a company could avoid liability by, of

course, simply doing away with its ethics codes. That

would not be very desirable. Furthermore, there is no

evidence that Interactive relied in any way on the Code

of Ethics in its dealings with the bank. In short, the evidence cannot support this bizarre claim that Interactive

is a beneficiary of any sort of contract or code between

Ravens and his employer.

Interactive also contends that KeyBank was negligent

for failing to properly supervise Ravens. Citing Greenberg

v. Life Insurance Co. of Virginia, 177 F.3d 507 (6th Cir. 1999),

Interactive says that KeyBank negligently failed (a) to
6 No. 07-4058

train and supervise its employees about making proper

disclosures; (b) to monitor the accuracy of FX trades; and

(c) to take action to stop Ravens’ “aggressive spreading”

despite the company’s knowledge of his activities. This,

Interactive says, is a well-recognized claim under Ohio

law—apparently as set out in Greenberg. KeyBank, on the

other hand, says that under Indiana law, because the

parties have a contract, the extent of any duty owed is

a matter of contract interpretation. Perryman v. Huber,

Hunt & Nichols, 628 N.E.2d 1240 (Ind. Ct. App. 1994).

KeyBank says a “duty” cannot be used to expand the

obligations the parties assumed in their contract, relying

for this proposition on Zenith Insurance Co. v. Employers

Insurance of Wausau, 141 F.3d 300 (7th Cir. 1998), a case,

by the way, in which the law of Wisconsin controls—adding yet more variety to our stroll through

state law.

Unfortunately for Interactive, the case on which it relies

does not support its claim. In Greenberg, the court quoted

an Ohio case for the proposition that an “underlying

requirement in actions for negligent supervision and

negligent training is that the employee is individually

liable for a tort or guilty of a claimed wrong against a

third person, who then seeks recovery against the employer.” Strock v. Pressnell, 527 N.E.2d 1235, 1244 (1988).

Greenberg does not simply say, as Interactive would have

us believe, that “an employer always has a duty to adequately train and supervise its employees so as not to

cause injury to others.” For KeyBank to be negligent,

Ravens must have breached a duty of care he owed

Interactive. But he had no such duty.
No. 07-4058 7

It goes without saying that Ravens had no fiduciary

duty to Interactive. Interactive contends, however, that a

fiduciary relationship should be “presumed” even

between contracting parties in situations in which one

party has a superior position and sustains a substantial advantage over the other. The hoary case, which

predates America’s entry into World War I, that Interactive

relies on is Westphal v. Heckman, 113 N.E. 299, 301 (Ind.

1916). In that case, the court said:

There are certain legal and domestic relations in

respect to which the law raises a presumption of trust

and confidence on one side and a corresponding

influence on the other. The relations of attorney and

client, principal and agent, husband and wife, and

parent and child, belong to this class, and there may

be others. Where such a relation exists between two

persons and the one occupying the superior position

has dealt with the other in such a way as to sustain a

substantial advantage, the law will presume that

improper influence was exerted and that the transaction is fraudulent.

To put it mildly, Westphal is not helpful. The facts in that

case are that a few days before his death, Westphal conveyed property to his son to the exclusion of his two

daughters, who promptly sued, claiming the son had

undue influence over their father. In that context the

court set out the presumption we quoted but then found

that it applied as to the influence of a parent over a child,

but not a child over a parent. So the presumption did not
8 No. 07-4058

A later case, Rogers v. Nat’l City Bank of Evansville, 622 N.E.2d 1

476 (Ind. 1994), found that the presumption of undue influence

of a husband over a wife was superseded by statute in the

case of joint bank accounts.

carry the day in Westphal. In our view, the Indiana courts 1

would not extend the presumption to a commercial

relationship like the one Interactive had with KeyBank.

Our conclusion is buttressed by Wilson v. Lincoln Federal

Savings Bank, 790 N.E.2d 1042, 1046 (Ind. Ct. App. 2003),

where the court says that a “business or ‘arm’s length’

contractual relationship does not give rise to a fiduciary

relationship. That is, the mere existence of a relationship between parties of bank and customer or depositor

does not create a special relationship of trust and confidence.” (Internal citation omitted.)

It is true that a bank may owe a customer a fiduciary

duty if a confidential relationship exists between them.

Paulson v. Centier Bank, 704 N.E.2d 482 (Ind. Ct. App. 1998).

But there is nothing confidential in the FX transaction. The

uncontroverted evidence shows that Interactive’s employees knew that exchange rates were available on the

Internet and in the Wall Street Journal. In fact, on occasion,

Interactive employees asked KeyBank about the reasons

for the difference between published rates and the rates

the bank was using. This is simply not a situation in

which the bank was acting as a fiduciary.

Finally, Interactive says KeyBank breached a late 1990s

oral contract. Gibbs (the former executive vice-president

of Interactive) testified that he entered into an oral agree-
No. 07-4058 9

ment with KeyBank for its FX services. The terms of the

agreement, he said, were that Interactive would “get

foreign exchange services at market.” When asked to

explain “market,” he said it would be the rate as published in the Wall Street Journal or what Visa would

charge. The testimony continued:

Q All right. So it was your understanding that

KeyBank would be making no profit on FX transactions done for Interactive?

A Not on a spread. It was mentioned that—of course

we have to have some kind of processing fee or

something to that effect. And I said, “Meaning?”

And they said—he said, “A nominal processing

fee.” And I recall the example being, like, $23, $17,

depends, $27, depends on the size of the transaction, but we need to charge some kind of processing fee.

Later he said, “Again, I was told we would get it at exchange—at market rate. There would be no spread.” Gibbs

also testified that he left the working out of the details to

Midkiff (Interactive’s vice-president of finance). However,

Midkiff said that he did not recall entering into any

agreement other than the signed contract in 2001.

The supposed oral contract is too vague to be enforceable. See Pepsi-Cola Gen. Bottlers, Inc. v. Woods, 440 N.E.2d

696 (Ind. Ct. App. 1982). An agreement to work out more

definite terms at some future time is not enforceable.

Wolvos v. Meyer, 668 N.E.2d 671 (Ind. 1996). That is all that

the evidence can possibly show in this case, and accordingly there is no enforceable oral contract.
10 No. 07-4058

For these reasons, we will affirm the judgment dismissing Interactive’s claims against all defendants. There is

no need, then, to consider the appeal relating to dismissal

of requests for class action status.

The judgment of the district court is AFFIRMED.

10-24-08