United States District Court, D. Minnesota
MATTHEW MENARD and MATADOR LLC d/b/a VAUGHN ASSOCIATES MN, Plaintiffs,
BESTWAY (USA), INC., and BESTWAY INFLATABLES AND MATERIALS CORP., Defendants.
Michael W. Weaver and Kaitlin P. Sheehan, McDermott Will
& Emery, and Laura A. Pfeiffer, Winthrop & Weinstine,
appeared for Defendants Bestway (USA), Inc., and Bestway
Inflatables and Materials Corp.
L. Scott, Stinson Leonard Street LLP, appeared for Plaintiffs
Matthew Menard and Matador LLC d/b/a Vaughn Associates MN.
N. ERICKSEN UNITED STATES DISTRICT JUDGE
Matthew Menard and Matador LLC d/b/a Vaughn Associates MN
(“Vaughn MN”), bring this action for breach of
contract and violation of two Minnesota statutes relating to
sales representatives, Minn. Stat. §§ 325E.37 and
181.145. See Compl., Dkt. No. 1. Defendants Bestway
(USA), Inc. (“Bestway USA”), and Bestway
Inflatables and Materials Corp. (“Bestway China”)
move for summary judgment on all claims [Dkt. No. 49]. For
the reasons set forth below, the Court denies the motion.
judgment is proper if “the movant shows that there is
no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a). To support an assertion that a fact cannot be or is
genuinely disputed, a party must cite “to particular
parts of materials in the record, ” show “that
the materials cited do not establish the absence or presence
of a genuine dispute, ” or show “that an adverse
party cannot produce admissible evidence to support the
fact.” Fed.R.Civ.P. 56(c)(1)(A)-(B). “The court
need consider only the cited materials, but it may consider
other materials in the record.” Fed.R.Civ.P. 56(c)(3).
In determining whether summary judgment is appropriate, a
court must view genuinely disputed facts in the light most
favorable to the nonmovant, Ricci v. DeStefano, 557
U.S. 557, 586 (2009), and draw all justifiable inferences
from the evidence in the nonmovant's favor, Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
case concerns whether Plaintiffs were fully compensated for
their work in helping Defendants sell airbed products into
the retailer Target Corp. (“Target”).
Summary of the Claims
the allegations provides helpful context to Defendants'
motion for summary judgment on each of the Complaint's
claims. Plaintiffs allege that in 2011, they entered into a
“Joint Marketing Agreement” with Vaughn
Associates, Inc. (“Vaughn, Inc.”), a separate
organization from Vaughn MN. Plaintiffs and Vaughn Inc.
agreed to work together to represent manufacturers, including
Defendants, in the sale of their products to retailers in
Minnesota and other states. In 2012, Defendants
“engaged Vaughn and Plaintiffs to act as sales
representatives in order to sell airbeds” to Target.
Compl. ¶ 12. That same year, Plaintiffs secured an
agreement for Target to buy a year's worth of airbeds
from Defendants in 2012 through 2013. “In connection
with [the] sale of Defendants' products to Target,
Plaintiffs were entitled to receive 2% of all airbed sales as
a sales commission.” Compl. ¶ 13. In July 2013,
Plaintiffs secured a second agreement for Target to buy two
years' worth of airbeds and pumps from Defendants in 2014
through 2016. “In connection with this deal, Plaintiffs
were entitled [to] receive 2% of all 2014 shipments and 3% of
all 2015 shipments of Defendants' products to
Target.” Compl. ¶ 15. “Thus, Plaintiffs
entered into a sales representative agreement with Defendants
to receive commissions in the amount of 2% of all of
Defendants' 2013 shipments to Target, 2% of
Defendants' 2014 shipments to Target, and 3% of all of
Defendants' 2015 shipments to Target.” Compl.
¶ 16. In December 2013, Defendants “purported to
terminate Plaintiffs' sales representative
agreement.” Compl. ¶ 18. Defendants paid
Plaintiffs approximately $130, 000 in sales commissions for
2014 sales, which Plaintiffs allege was insufficient.
Defendants failed to pay any commissions for Defendants'
2015 sales to Target.
claims are threefold. In Count I, they allege that
“Plaintiffs and Defendants entered into a ‘sales
representative agreement, ' as that term is defined
within Minn. Stat. § 325E.37, under which Plaintiffs
were granted the right to represent, sell, and offer for sale
Defendants' products to customers, including Target, and
under which Plaintiffs were and are to receive commissions on
all sales of Defendants' products to the same.”
Compl. ¶ 24. Plaintiffs allege that Defendants never
properly terminated the agreement, but rather
“purported to terminate the parties' sales
representative agreement without notice.” Compl. ¶
27. In Count II, Plaintiffs allege that they are parties to a
contract with Defendants “which requires Defendants to
pay Plaintiffs commissions at the rate of 2% for all of
Defendants' 2014 shipments to Target, and 3% for all of
Defendants' 2015 shipments to Target.” Compl.
¶ 33. They allege that Defendants breached the contract
by failing “to pay Plaintiffs' commissions for all
of Defendants' 2014 and 2015 Target shipments.”
Compl. ¶ 34. In Count III, Plaintiffs allege that they
are “commission salespersons as defined under Minn.
Stat. § 181.145” and that they have not been paid
the commissions earned before Defendants terminated them.
Compl. ¶¶ 37-39.
Summary of Undisputed Facts and Preview of Dispute
November 2011, Plaintiffs and Vaughn, Inc., entered into a
Joint Marketing Agreement. See Sheehan Decl. Ex. P,
Dkt. No. 66. The agreement states that the Minnesota-based
Plaintiffs and the Illinois-based Vaughn, Inc., would work
together in the business of representing manufacturers,
“shar[ing] certain product lines and the compensation
generated therefrom in accordance with the provisions hereof
so as to appear, for marketing purposes, as though they are a
single entity.” Id. at ‘757. It states
that Vaughn, Inc., and Vaughn MN “shall enter into
separate agreements with all of the Vaughn Factories, it
being the understanding and agreement of the parties hereto
that each shall have independent relationships with”
the identified manufacturers. Id. at ‘757-758.
“Best Way” was identified as a “potential
new” manufacturer “in Minnesota” for
Vaughn, Inc. Id. at ‘764. Vaughn, Inc., had a
preexisting sales representative relationship with
Defendants, but Defendants had never successfully sold into
January 2012, at the introduction of Vaughn, Inc.'s
president Tom Strauss, Menard met with the then-head of
Bestway USA, Danny Kwok, in Hong Kong. The parties'
accounts diverge significantly at this point. According to
Menard, he told Kwok that his company Vaughn MN was separate
from Vaughn, Inc., and that he would need a separate contract
and should be paid directly. See Menard Dep.
22:4-22:17, Sheehan Decl. Ex. C, Dkt. No. 56. Kwok hired him
on the spot as sales representative to Target based on an
oral agreement that Bestwaywould pay Vaughn MN a three
percent commission on all shipments by Bestway to Target.
Menard Dep. 22:18-22:25, 34:9-34:11. According to Defendants,
they were never informed that Menard operated a separate
company. Rather, they understood Menard to be a
Minnesota-based employee of Vaughn, Inc., and proceeded
accordingly, without entering into any agreement with Menard
or Vaughn MN. See Defs.' Br. 3-4, 7-8, Dkt. No.
Menard's January meeting with Kwok, he began to promote
Bestway's products to Target. See Defs.' Br.
4; Pls.' Br. 10, Dkt. No. 72. On July 20, 2012, Target
informed the parties that it was committing to purchase a
year's worth of airbeds from Defendants. Defs.' Br.
4; Pls.' Br. 10.
after receiving the news from Target, on July 23, Menard
emailed Kwok the following message: “Now that we for
sure have business, we should get a contract signed by both
of us. Attached is the standard contract I use with my
vendors, please review and let me know if ok.” Sheehan
Decl. Ex. D, at ‘111, Dkt. No. 57. The draft contract
provided for commissions at the rate of three percent.
See Sheehan Decl. Ex. T, at ‘704, Dkt. No. 68;
Defs.' Br. 22. Kwok replied,
We don't utilize rep agreement[s] with any of our reps,
all of our agreements with Tom [Strauss] and Vaughn
Associates since the beginning of this cooperation are ...