Judge Barrett on Statutory Claims II

These civil law claims arise out of statutes and do not fit within any other category. As always, please read the overview for context.

PMT Machinery Sales, Inc. v. Yama Seiki USA, Inc. (2019)

PMT Machinery Sales aspired to become Yama Seiki’s exclusive dealer in eastern Wisconsin. It rejected Yama Seiki’s formal offer of exclusive dealer status, however, because it did not think it would be able to meet the requirements. Negotiations continued, during which Yama Seiki’s representative referred to exclusivity. Ultimately, they reached an agreement in which PMT would solicit customers and negotiate prices, then refer them to Yama Seiki. Yama Seiki never refused an order from PMT. PMT used the Yama Seiki logo on its website and spent $3803.14 on advertising, at least $1200 of it on advertising Yama Seiki products. Eventually, PMT learned that other distributors in eastern Wisconsin were selling Yama Seiki products. [2-4]

PMT sued Yama Seiki under the Wisconsin Fair Dealership Law, Wis. Stat. § 135.03, which prohibits alteration or cancellation of exclusive dealerships without good cause. Judge J.P. Stadtmueller granted summary judgment for Yama Seiki, holding that PMT had failed to provide evidence that it was a dealer under the law. [4]

Under the statute, a dealership required the right to either sell goods or services or to use a commercially recognisable symbol of the supplier. [4-5] The district court had held that PMT had done neither. [5] Judge Barrett observed that making sales typically meant the right to transfer the product itself (either physically or legally) or to commit the manufacturer to a sale. Judge Barrett held that Yama Seiki’s lack of refusals was not sufficient. Rather, PMT had to show that it exercised significant influence or control over sales. Citing Wisconsin and 7^th Circuit case law, Judge Barrett held that it had failed to do so. Yama Seiki had agreed on sales terms, collected payment, and delivered the product. PMT had merely found customers and directed them to Yama Seiki, which was not sufficient to qualify as selling the product. [6-8]

Likewise, PMT’s use of Yama Seiki’s commercial symbols was not sufficient. Under 7^th Circuit case law, a dealership had to associate the symbol with itself, which it did by investing substantially in the symbol and thereby putting itself at risk should the manufacturer leave. Use of the Yama Seiki logo on PMT’s website was not enough and neither was the $1200 that PMT could prove it spent advertising Yama Seiki. [9-10]

Therefore, summary judgment for Yama Seiki was affirmed.

Walton v. EOS CCA (2018)

Deborah Walton was a former customer of AT&T, which sent her a letter informing her that she owed it $268.47. A few months later, EOS sent Ms. Walton a letter asserting that she owed money to AT&T, identifying the correct amount of debt but using the wrong account number. In reply, Walton wrote to EOS that she did not owe AT&T any money under that account number. [2] EOS checked its records, which contained the wrong number (erroneously sent by AT&T), and sent Walton a response that it had verified the debt. [2-3] EOS also reported the debt, and that Walton had disputed it, to two credit reporting agencies. In April, Walton wrote to the agencies that the debt did not belong to her; they notified EOS of her complaint and it checked its records again. In May, she complained again; this time, the agencies notified EOS of the error in her account number. EOS then asked the credit agencies to delete the record of Walton’s debt. [3]

Walton sued EOS. She alleged that its failure to verify her debt with AT&T violated the Fair Debt Collection Practices Act and that its failure to reasonably investigate disputed claims violated the Fair Credit Reporting Act. A magistrate judge recommended that the district court enter summary judgment for EOS and Judge Tanya Walton Pratt agreed. [3-4]

The first question before the Court of Appeals for the 7^th Circuit was the meaning of “obtain[] verification of the debt” under the FDCPA. Judge Barrett wrote for the Court that the statute did not define the term and a dictionary offered little assistance. She then reasoned that to require a debt collector to investigate the validity of the debt would not only impose a burden on the debt collector; it would extend well beyond the purpose of the FDCPA, which was to limit abusive practices by debt collectors, not by creditors. Judge Barrett accordingly held, as had the 4^th and 9^th Circuits, that “obtain[ing] verification of the debt” meant no more than ensuring that a debt collector’s letters to a supposed debtor matched the information received from the creditor. [4-5] Therefore, Judge Barrett held that EOS had satisfied its obligations: it had checked its records, to be sure it had contacted the right person; it had informed her of the details of the alleged debt, including the identity and address of her creditor; and, in doing so, it had enabled her to dispute the debt and ultimately eliminate the record with credit agencies. [5-6]

The second question was whether EOS’ investigation was reasonable under the FCRA. Judge Barrett held that it unquestionably was, satisfying the standard for summary judgment. Walton’s first complaint to the credit agencies denied that the debt was hers, so it was reasonable for EOS to check its files and verify that (so far as EOS knew) it was. The second complaint to the credit agencies was more specific, so EOS fulfilled its obligations by asking the credit agencies to delete the record of her debt. [6]

Walton further argued that EOS had violated the FDCPA and FCRA by failing to report that the debt was disputed. Judge Barrett held that, even if Walton had not waived this argument, it would fail because there was evidence that EOS had reported the debt as disputed and no evidence that it had not (and because the FCRA did not provide a private cause of action for this). [6-7] Walton argued that the district court had erred in ordering consolidated briefing but Judge Barrett held that this was within the magistrate judge’s discretion. [7] Finally, Judge Barrett held that the district court had properly reviewed Walton’s objections to the magistrate’s report, despite a statement that Walton took out of context. [7-8]

Washington Central Limited v. TiEnergy, LLC (2018)

Allied Track Services had a plan to dispose of some used railroad ties. Wisconsin Central would deliver them to TiEnergy by rail. TiEnergy would then grind up the ties and sell the remains to generate power.  [2-3] Allied’s contract with Wisconsin Central (or, more accurately, its parent company) incorporated CN Tariff 9000, under which demurrage fees would begin to accrue if the trains remained on the track for more than two days. [2] Allied formed no written contract with TiEnergy. [12] Without the knowledge or consent of TiEnergy, Allied listed TiEnergy as the consignee of the ties on the bills of lading. [3] Because the cars remained on the train tracks for longer than two days, Washington Central was required to charge demurrage fees to TiEnergy. TiEnergy objected to these fees but did not move the trains, so the fees mounted to roughly $100,000. [3]

Washington Central sued TiEnergy for the demurrage fees. TiEnergy argued that it wasn’t responsible for these fees but also sued Allied for indemnification or contribution. All of the parties moved for summary judgment. TiEnergy lost twice over: Judge Amy St. Eve granted summary judgment to both Washington Central and Allied. [3-4]

The Court of Appeals for the 7^th Circuit first considered whether it had jurisdiction. Judge Barrett, writing for the Court, held that the federal courts had subject matter jurisdiction because the claim arose out of federal law. 49 U.S.C. § 10743 charged “rates for transportation,” which at the time had included demurrage fees, to the consignee and created a cause of action under federal law. [6-7 and note 3 on pages 8-9] TiEnergy argued that the Court was prevented from exercising jurisdiction by 28 U.S.C. § 1337(a), which required that each bill of lading be worth at least $10,000, but Judge Barrett held that this limitation applied only to two statutes under which Washington Central was not suing (and which addressed suits against, not by, rail carriers). [7] Had Washington Central simply brought a contract claim, the unusual circumstances might have given rise to federal-question jurisdiction under Grable & Sons Metal Products v. Darue Engineering & Manufacturing, but the Court did not need to consider that argument (which Washington Central hadn’t made). [5-6 and note 2 on page 6] Judge Barrett also held that the Court of Appeals had jurisdiction to consider TiEnergy’s appeal from summary judgment on the third-party claim against Allied, even though the district court had not docketed an order of judgment, because the district court had clearly indicated its intent to fully dispose of that case. [4-5]

Reaching the merits, Judge Barrett explained that, while a consignee was typically liable for demurrage, being identified as consignee on the bills of lading was not itself enough to render a party the consignee. [8 and note 3 on pages 8-9] Likewise, handling the goods was not sufficient to become the consignee. Rather, the consignee was the party with an interest in, or control of, the transported goods. [9] TiEnergy fit that bill for multiple reasons: it was in the business of disposing of, not transporting, used railroad ties; it demonstrated control of the ties by grinding them; it reaped the benefit of the ties by selling the grounds; and it kept the full payments of that sale. [10] If TiEnergy really believed that it was Allied’s agent, as it claimed, it could have informed Western Central that it lacked beneficial title to the ties and it informed it of who possessed such title. Because TiEnergy was the consignee, it was liable for demurrage fees. [11] Judge Barrett summarily found no abuse of discretion in the district court’s consideration of facts that allegedly violated a local rule of the district court. [Note 1 on page 4] Judge Barrett also quickly disposed of all TiEnergy’s theories for indemnity or contribution. TiEnergy could prove neither a written nor oral contract of indemnification. [12] TiEnergy was not Allied’s agent, because Allied did not control how TiEnergy disposed of the ties or play any part of the sales. [10, 12, and note 4 on page 10] Illinois’ Joint Tortfeasor Act was inapplicable, because accruing demurrage fees was not a tort and, even if it were, Allied was not liable to Western Central so was not a joint tortfeasor. [12-13]