Thompson Corrugated Sys. v. Engico S.R.L.

MEMORANDUM AND ORDER

J. PHIL GILBERT DISTRICT JUDGE

This matter comes before the Court on the motion of plaintiffs Thompson Corrugated Systems, Inc. and Thompson Corrugated Systems LLC (collectively, “TCS”) for an award of attorney's fees, costs, and prejudgment interest (Doc. 139). It also seeks to convert the amounts of the jury's verdict from euros to dollars. Defendant Engico S.r.l. has responded to the motion (Doc. 144), and TCS has replied to that response (Doc. 145). As a preliminary matter, the Court will grant TCS's motion for leave to file its overly long reply (Doc. 146).

I. Background

This case arose out of a relationship between Engico and TCS that began in 2002 and went south in 2019. TCS alleged that in 2004 Engico orally agreed that TCS would jointly be the exclusive sales representative for Engico's products-machinery to produce corrugated materials-in North America, and that it would be paid on commission. The relationship was terminated in 2019.

TCS filed this lawsuit on January 30, 2020, to recover commissions it believed Engico owed for sales of Engico machines in 2019 to Lawrence Paper Company, in 2019 to President Container, and in 2020 to Welch Packaging. Count I was a claim for breach of contract; Count II was for violation of the Illinois Sales Representative Act (“IRSA”), 820 ILCS 120/0.01 et seq.;

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Count III was for an accounting; and Count IV, pled in the alternative, was a claim for unjust enrichment.

The Court granted TCS partial summary judgment on Count I (breach of contract) and Count II (ISRA) based on the 2019 sale to Lawrence Paper and determined that the amount awardable for Count I is $202,194 in compensatory damages for unpaid commission for that sale (Docs. 95 & 108). The Court further granted Engico summary judgment on Count IV (unjust enrichment/quantum meruit) (Doc. 95).

The remaining claims went to trial, and a jury rendered a verdict on Count I for compensatory damages in the amount of €192,000 based on the 2019 sale to President Container and for compensatory damages in the amount of €96,000 based on the 2020 sale to Welch Packaging. As for Count II, the jury further found that Engico willfully and wantonly failed to pay commissions due to TCS in violation of the ISRA and that TCS was therefore entitled to exemplary damages in the amount of €120,000 for the 2019 sale to Lawrence Paper, in the amount of €60,000 for the 2019 sale President Container, and in the amount of €120,000 for the 2020 sale to Welch Packaging.

The Court sought further briefing from the parties on the questions of:

• whether to award prejudgment interest at the rate of 5% under the Illinois Interest Act “on money withheld by an unreasonable and vexatious delay of payment.” 815 ILCS 205/2; and

• the amount of the mandatory award of fees and costs to a prevailing party under the ISRA, 820 ILCS 120/3

TCS also raises the question of converting the jury verdict from euros to dollars. Those issues are now before the Court.

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II. Analysis

A. Currency Conversion Rate

The Court has already converted the compensatory damage amount for unpaid commissions for the Lawrence Paper sale from euros to dollars, ending up with a compensatory damage award of $202,194. To arrive at this figure, the Court used the euro/dollar conversion rate from May 19, 2019, the date of the sale. Engico did not dispute this calculation when it was made, so has waived any objection.

TCS now asks the Court to convert the amounts in the jury's verdict, which was rendered in euros, to dollars as well. Engico does not dispute that the Court should apply the conversion rate from the date of the sale, but it urges the Court to use the U.S. Federal Reserve published rate rather than the slightly different rates offered by TCS. TCS does not object to use of the rate suggested by Engico. Using those rates, the jury's verdict is converted as follows:

Sale to	Count	Verdict Amount	Exchange Rate	Dollar Amount
Lawrence Paper	II	€120,000	1.1241	$134,892
President Container	I	€192,000	1.1123	$213,562
President Container	II	€60,000	1.1123	$66,738
Welch Packaging via Haire	I	€96,000	1.1041	$105,994
Welch Packaging via Haire	II	€120,000	1.1041	$132,492

To the extent any party objects to the submission of an exemplary damages award to the jury, the Court confirms that, for the reasons set forth below in support of its prejudgment interest award, it would make the same findings had the question been before the Court.

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B. Prejudgment Interest

TCS asks for prejudgment interest on compensatory damages at the rate of 5% under the Illinois Interest Act, 815 ILCS 205/2, on Count I from the date of each machine's sale to the date of entry of judgment. Engico makes a pro forma objection repeating its position that its failure to pay commissions on the President Container and Welch Packaging sales was not unreasonable or vexatious but a good faith dispute that had not yet been settled.

The Interest Act provides that creditors shall pay prejudgment interest at a rate of 5% “on money withheld by an unreasonable and vexatious delay of payment.” 815 ILCS 205/2. The Court has discretion under Illinois law to award prejudgment interest under this statute. Twenhafel v. State Auto Prop. & Cas. Ins. Co., 581 F.3d 625, 630 (7th Cir. 2009); In re Est. of Feinberg, 6 N.E.3d 310, 344 (Ill.App.Ct. 2014).

The Court has already determined any failure to pay the 2019 Lawrence Paper commission after the Court's July 22, 2022, order (Doc. 108) would be unreasonable and would entitle TCS to prejudgment interest on that amount from at least July 22, 2022. The Court now turns to the issues of prejudgment interest between the date of the Lawrence Paper sale (May 19, 2019) to July 22, 2022, and prejudgment interest on the President Container and Welch Packaging sales.

The Court finds that Engico's failure to pay the commission on the Lawrence Paper sale at the time of the sale-May 19, 2019-was not unreasonable or vexatious. Engico had conducted the sale independent of TCS and directly with Lawrence Paper. Engico wrongfully withheld the commission, which was due based on the industry practice of compensating exclusive sales representatives for any sales within their territories, but it did not hide the sale from TCS or display any other duplicity. This was the first time Engico had failed to pay a commission to TCS under their oral agreement, and the failure to pay was arguably not in bad

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faith but was instead based on an honest misunderstanding of the customs and usages in the manufacturers' sales representative industry. It is implicit in the jury's verdict that such a custom and practice was incorporated as a term of the sales representative agreement, and based on the credible expert testimony of Scott Lindberg as to industry custom and practice, the Court agrees that it was. Engico was wrong about this, but this ignorance was not unreasonable or vexatious, at least the first time it failed to pay based on this misunderstanding. Consequently, TCS is not entitled to prejudgment interest from as early as May 19, 2019.

The same is not true for the sales to President Container on October 30, 2019, and to Welch Packaging via Haire on January 20, 2020. By the time TCS and Engico met on August 7, 2019, to discuss the relationship, Engico should have been disabused of its notion that it did not need to pay TCS based on industry customs and practices. In fact, around the time of the meeting, Engico offered to pay TCS a commission on the Lawrence Paper sale, evidence of its epiphany as to its contractual obligations.

Additionally, there is evidence of Engico's bad faith in failing to pay commissions on the President Container and Welch Packaging sales. Before either of those sales, Engico hired the Haire Group as its sales representative while it already had an exclusive arrangement with TCS, a clear violation of the obligation to act in good faith with its exclusive sales representative. Engico then offered TCS a reduced commission on sales concluded before the end of 2019, then went through a transactional shell game to consummate the Welch Packaging sale in January 2020 and to make it appear as if the sale was not actually to Welch Packaging, a customer developed by TCS. These shenanigans are evidence of bad faith and lead to the conclusion that the delay in payments for those commissions was unreasonable and vexatious.

In light of these facts, established by credible evidence at trial, the Court finds that Engico's failure to pay the commissions became unreasonable and vexatious as follows:

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Sale to	Amount	Date delay became unreasonable and vexatious
Lawrence Paper	$202,194	August 7, 2019
President Container	$213,562	October 30, 2019
Welch Packaging via Haire	$105,994	January 23, 2020

Accordingly, TCS is entitled to prejudgment interest at the rate of 5% under the Illinois Interest Act for each unpaid commission from its respective date listed above to the date of judgment. This result is consistent with the jury's findings that Engico willfully and wantonly failed to pay commissions on a timely basis and was therefore subject to exemplary damages under the ISRA. The Court leaves it to the parties to calculate the sum certain based on this method of computation.

C. Accounting

Count III, TCS's claim for an accounting of Engico's other...