Opinion ID: 602402
Heading Depth: 2
Heading Rank: 2

Heading: directing the verdict

Text: 24 The district court correctly noted that in diversity cases the court must apply the forum state's standard for directed verdict. Kessinger v. Grefco Inc., 875 F.2d 153 (7th Cir.1989); see also Krivo Indus. Supply Co. v. National Distillers & Chem. Corp., 483 F.2d 1098, 1101 (5th Cir.1973) (federal law provides procedure in diversity suit but state law provides substantive law for scrutinizing evidence). 25 According to the Illinois Supreme Court, A directed verdict or a judgment n.o.v. is properly entered in those limited cases where 'all of the evidence, when viewed in its aspect most favorable to the opponent, so overwhelmingly favors movant that no contrary verdict based on that evidence could ever stand.'  Maple v. Gustafson, 151 Ill.2d 445, 177 Ill.Dec. 438, 442, 603 N.E.2d 508, 512 (1992) (footnote omitted) (quoting Pedrick v. Peoria & E. R.R. Co., 37 Ill.2d 494, 229 N.E.2d 504, 513-14 (1967)). This standard does not require a complete lack of evidence to support the nonmovant's claim. Rather, a directed verdict is still proper when there is only a mere scintilla of evidence to support the nonmovant's allegations.... Pennsylvania Truck Lines, Inc. v. Solar Equity Corp., 882 F.2d 221, 225 (7th Cir.1989) (summarizing Illinois law). 26 Neither party contends the trial court was unaware of the proper standard for granting a directed verdict; the dispute instead centers on the trial court's application of this standard. 27 It is obvious that the jury inconsistently assessed damages. As noted earlier, the jury awarded PFW a total of $2,048,000 on the general verdict form. Yet on the special interrogatories, the jury found Gannett had damaged PFW in the total amount of $142,000. 28 The jury's inconsistency prompted a number of post-trial motions. After considering the parties' briefs on those motions and having reviewed the 1,580 pages of trial record, Judge Nordberg stated that he was convinced Gannett was entitled to a directed verdict on PFW's fiduciary duty and unjust enrichment claims. Again, on appeal PFW only objects to the directed verdict on the fiduciary duty claim. 29 To understand whether the directed verdict was proper, it is first necessary to understand the law governing PFW's breach of fiduciary duty claim. In its brief, PFW cites only one case in support of its argument that Gannett owed PFW a fiduciary duty; that case is Whewell v. Cox, 54 Ill.App.3d 179, Ill.Dec. 876, 369 N.E.2d 330 (1977). PFW relies on Whewell for the proposition that the primary consideration in determining whether a fiduciary relationship exists ... is the state of mind of the subservient party. It is true the case does use similar language, see id. at 880, 369 N.E.2d at 334, but the context in which the Illinois Appellate Court made this comment has nothing to do with the present situation. 30 In Whewell, the plaintiff sought a constructive trust over a farm which the defendant purchased. The court found the defendant, who was plaintiff's brother-in-law, had purchased the farm as plaintiff's agent. As an agent, the defendant stood in a fiduciary relation to the plaintiff. There is no agency, however, in the current case, nor is there a conveyance of real estate, nor is there a family relationship. Instead, we have an arms-length business relationship between two corporations based upon a written contract. Whewell simply does not support PFW's allegation of a fiduciary duty. 31 The district court also found it difficult to find case law that would support PFW's claim. Speaking to counsel at a jury instruction conference, Judge Nordberg remarked, [T]he thing is that we have not been able to find any support in your cases for your theory of the case. Tr. at 1263-64. In that same conference, counsel for Gannett stated that there is no cognizable theory ... that can be given in this case. Id. at 1269. 32 Nonetheless, the court ended up giving the jury the following instruction regarding fiduciary duty: 33 For the defendant to have been a fiduciary for the plaintiff, the plaintiff must prove by a preponderance of the evidence that the defendant completely controlled the plaintiff's 1984 summer subscription mailing campaign. Merely providing advice or counseling, or mere influence or pressure by the defendant on the plaintiff is insufficient. The defendant must have both possessed and exercised actual control over the plaintiff's business for a fiduciary relationship to have existed. 34 Pro Football Weekly, Inc. v. Gannett Co., Inc., No. 85 C 6612, 1991 WL 256693, at  3 (N.D.Ill. Nov. 20, 1991). 35 The authorities cited in support of this jury instruction, however, have little if anything to do with the facts of this case: Southern Pacific Co. v. Bogert, 250 U.S. 483, 39 S.Ct. 533, 63 L.Ed. 1099 (1919), dealt with the duty a majority shareholder owes a minority shareholder; Spartech Corp. v. Opper, 890 F.2d 949 (7th Cir.1989), involved the liabilities between the sole shareholder of a corporation and its former owners; In re W.T. Grant Co., 699 F.2d 599 (2d Cir.), cert. denied, 464 U.S. 822, 104 S.Ct. 89, 78 L.Ed.2d 97 (1983), featured a settlement between debentureholders and a bankrupt estate; Weinberger v. Kendrick, 698 F.2d 61 (2d Cir.1982), cert. denied, 464 U.S. 818, 104 S.Ct. 77, 78 L.Ed.2d 89 (1983), concerned the liability of a bank to the stockholders of a bankrupt company which the bank had effectively controlled; Krivo Industrial Supply Co. v. National Distillers & Chemical Corp., 483 F.2d 1098 (5th Cir.1973), discussed the liability of one corporation for the debts of another when the debtor corporation was a mere instrumentality of the solvent corporation; and In re Honold, 46 B.R. 125 (Bankr.E.D.Pa.1985), examined the subordination of a creditor's claim in bankruptcy proceedings where the creditor allegedly was the debtor's alter ego. 36 Despite the shortage of relevant law cited to this court, let us assume for the sake of this discussion that a fiduciary duty could arise between PFW and Gannett if Gannett took complete control over PFW's business. Even so, it is undisputed that Gannett did not control the entirety of PFW's business. 37 Although PFW initially alleged, in its amended complaint, that Gannett had actual control of PFW, it quickly retreated from this position. By the time the jury instruction conference rolled around, PFW's counsel stated that I don't think we allege anywhere in the complaint that they took over the entire business. Tr. at 1271. In oral arguments before this court, PFW's counsel stuck with the latter position and admitted there was no evidence of [Gannett's] complete control of the entire business. Based on our review of the record, we agree with PFW--there is no evidence Gannett controlled PFW. 38 Does it matter, though, if Gannett completely controlled only a part of PFW's business? The district court believed it did: Although the Court agrees that PFW has cited no case on point in support of its claim, the Court believes that complete control of a separate part of a business could impose a fiduciary duty in connection with that separate part. Pro Football Weekly, 1991 WL 256693, at  11 n. 1. Perhaps the district court is correct. However, even under this unsubstantiated legal standard, it is beyond dispute that the summer mailing was not a separate part of PFW's business. The mailing was merely one, albeit perhaps the most important, of a number of direct mail solicitations PFW regularly conducted. Reaching the same conclusion, the district court stated in its Memorandum Opinion and Order that it erred in ... instructing the jury on this claim. Id. 39 While the court may have erred in instructing the jury on this claim, it did not err in directing the verdict for Gannett. Aside from the suspect legal theory underpinning PFW's claim, the evidence, when viewed most favorably to PFW, overwhelmingly favors Gannett's contention that it did not have complete control over the summer mailing. As Judge Nordberg pointed out, and the testimony plainly shows, PFW had substantial power over the timing, printing, content, and destination of the direct mailing. Gannett clearly is entitled to a directed verdict on the breach of fiduciary duty claim.