MaxRelief USA Inc v. O'Maley

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION - CINCINNATI

MAXRELIEF USA, INC., : Case No. 1:21-cv-755

Plaintiff, Judge Matthew W. McFarland

¥ :

JOHN O’MALEY d/b/a JOHN O’MALEY

AND ASSOCIATES

Defendant.

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

This matter is before the Court on Defendant’s Motion for Summary Judgment

(Doc. 53). Plaintiff filed a Response in Opposition (Doc. 55), to which Defendant filed a

Reply in Support (Doc. 57). Thus, this matter is ripe for the Court’s review. For the reasons

below, Defendant’s Motion for Summary Judgment (Doc. 53) is GRANTED.

FACTS AND PROCEDURAL HISTORY

This case arises from a contract dispute between Plaintiff MaxRelief USA, Inc. and

Defendant John O’Maley, doing business as John O’Maley and Associates. (Compl., Doc.

1, 8.) MaxRelief manufactures and distributes topical pain relief products for muscle or

joint pain. (Id. at § 1.) MaxRelief is a Delaware corporation with its principal place of

business in San Francisco, California. (Id.) MaxRelief is owned by Peter Spoto, who also

serves as the Chief Executive Officer. (Spoto Decl., Doc. 55-2, Pg. ID 485; Spoto Dep., Doc.

54-1, Pg. ID 431.) John O’Maley and Associates is a national sales and marketing

consultant business owned by John O’Maley. (O’Maley Decl., Doc. 53-3, Pg. ID 407.)

O’Maley operates his business in his home state of Ohio. (Id.)

On April 21, 2016, Spoto contracted with O’ Maley for O’Maley to help launch two

MaxRelief products— MaxRelief pain medication and Lil’ Giggles. (Contract, Doc. 53-3,

Pg. ID 410-11; Spoto Dep., Doc. 54-1, Pg. ID 429-30.) O’Maley negotiated, executed, and

allegedly performed the Contract in Ohio. (O’Maley Decl., Doc. 53-3, Pg. ID 407.) Under

the Contract, O’Maley agreed to “hire, train [and] manage sales agencies for distribution

of [MaxRelief] product.” (Contract, Doc. 53-3, Pg. ID 410.) O’Maley acted as a “master

broker” under the Contract, as he was responsible for managing other brokers selling

MaxRelief products. (Spoto Decl., Doc. 55-2, Pg. ID 485.) The Contract did not guarantee

that O’Maley’s efforts would translate to a successful launch of MaxRelief’s products.

(Spoto Dep., Doc. 54-1, Pg. ID 433.)

The parties agreed to a payment structure for the sales agencies: “[MaxRelief] shall

compensate sales agencies 5% commission on net sales [and O’Maley] will not be

responsible for payment.” (Contract, Doc. 53-3, Pg. ID 410.) The Contract also specified

compensation for O’Maley. In return for O’Maley’s services, MaxRelief agreed to pay him

$2,000 on or before May 15, 2016, $2,000 on or before June 15, 2016, $7,000 each month

from July 15 through September 15 of 2016, and $5,000 each month after September 15,

2016. (Id.) MaxRelief also agreed to pay O’Maley 4% commission on net sales. (Id.)

The parties dispute whether O’Maley hired, trained, and managed sales agencies.

(Response, Doc. 55-1, Pg. ID 482.) The record includes declarations from three sales

agencies relevant to this dispute. Frank Parise, President of Performance Sales &

Marketing, declared that “Mr. O’Maley hired and trained me and Performance Sales &

Marketing on the products that MaxRelief sells.” (Parise Decl., Doc. 53-5, Pg. ID 419.)

Next, Paul Wendling, the sole proprietor of North Coast Sales & Marketing, declared that

“O’Maley contacted me to sell MaxRelief products, informed me about their products,

shared presentations and shared information he received at trade shows so I could follow

up with accounts.” (Wendling Decl., Doc. 53-6, Pg. ID 421.) Lastly, Thomas Goforth, who

previously worked for the brokerage firm Arena Inc., had a professional relationship with

O’Maley for several years. (Goforth Decl., Doc. 53-4, Pg. ID 415.) Goforth attached a letter

to his declaration that describes his training and work with O’Maley to launch MaxRelief

products. (Id.) The letter describes that O’Maley prepared Goforth to present MaxRelief

products to Walmart and recounts how Walmart responded to Goforth’s multiple

contacts with them about the products. (Id. at Pg. ID 417.)

Spoto does not dispute that O’Maley engaged with “commission-only brokers

who only get paid if they sell.” (Spoto Decl., Doc. 55-2, Pg. ID 486.) Rather, Spoto declares

that a commission-only arrangement does not constitute “hiring” within the brokerage

and distribution industry for personal care products. (Id.) According to Spoto, “[a]

‘hiring’ is consummated when a master broker pays a broker to distribute its product.”

(Id.)

On March 12, 2021, MaxRelief filed the present action in the United States District

Court for the Northern District of Texas. (See Complaint, Doc. 1.) The case was transferred

to this Court on December 6, 2021. (See Transfer, Doc. 27.) MaxRelief brings three causes

of action. First, under a breach of contract claim, MaxRelief alleges that O’ Maley failed to

adequately hire, train, and manage sales agencies as set forth in the Contract. (Complaint,

Doc. 1, § 16.) Second, under a Texas deceptive trade practices law claim, MaxRelief

alleges that O’Maley “made false, misleading, and deceptive statements to MaxRelief that

he was taking the necessary effort to hire, train, and manage certain sales agencies to sell

the MaxRelief products and that the MaxRelief products were well-received by

distributors.” (Id. at { 23.) Third, under an unjust enrichment claim, MaxRelief alleges

that O’Maley was unjustly enriched by retaining $60,000 in compensation while not

performing under the Contract. (Id. at J 29.)

LAW

Courts must grant summary judgment if the record “reveals that there is no

genuine issue as to any material fact and the moving party is entitled to a judgment as a

matter of law.” Laster v. City of Kalamazoo, 746 F.3d 714, 726 (6th Cir. 2014) (citing Fed. R.

Civ. P. 56(c)). Once the movant has met its initial burden of showing that no genuine issue

of material fact remains, the nonmoving party must present “specific facts showing that

there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

To do so, the nonmovant must present “significant probative evidence ... on which a

reasonable jury could return a verdict” in their favor. Chappell v. City of Cleveland, 585

F.3d 901, 913 (6th Cir. 2009) (citation omitted).

The court must view “the facts and any inferences that can be drawn from those

facts... in the light most favorable to the nonmoving party.” Bennett v. City of Eastpointe,

410 F.3d 810, 817 (6th Cir. 2005). This requirement, however, does not mean that the Court

must find a factual dispute where record evidence contradicts unsupported

allegations. “The ‘mere possibility’ of a factual dispute is not enough.” Mitchell v. Toledo

Hosp., 964 F.2d 577, 582 (6th Cir. 1992) (citation omitted). “If the moving party fulfills its

burden of demonstrating that no genuine issue of material fact exists, the nonmoving

party, to receive a trial, must present some significant probative evidence creating a

factual issue.” Stratienko v. Cordis Corp., 429 F.3d 592, 597 (6th Cir. 2005).

ANALYSIS

O’Maley moves for summary judgment on all counts, arguing that there is no

genuine issue of material fact that O’Maley (1) did not breach the Contract, (2) did not

make any false, misleading, or deceptive statements, and (3) was not unjustly enriched.

(Summary Judgment, Doc. 53, Pg. ID 391.) The Court will consider each argument in turn.

I. Breach of Contract Claim

O’Maley first argues that he is entitled to summary judgment on MaxRelief’s

breach of contract claim. To succeed on a breach of contract claim under applicable Ohio

law,! the plaintiff must show that “(1) a contract existed, (2) one party fulfilled his

obligations, (3) the other party failed to fulfill his obligations, and (4) damages resulted

from that failure.” Blake Homes, Ltd. v. FirstEnergy Corp., 877 N.E.2d 1041, 1052 (Ohio Ct.

App. Sept. 7, 2007) (citation omitted). Here, only the third element is disputed. MaxRelief

1 The Contract does not specify what substantive law applies. Thus, the Court turns to Ohio's

choice of law rules, which “require a court to apply the law of the state with the most significant

relationship to the contract.” Int’l Ins. Co. v. Stonewall Ins. Co., 86 F.3d 601, 604 (6th Cir. 1996).

Because O’ Maley allegedly performed the Contract in Ohio and resides in Ohio, the Court applies

Ohio law. (O’Maley Decl., Doc. 53-3, Pg. ID 407; Compl., Doc. 1, { 2.)

alleges that O’Maley failed to adequately hire, train, and manage sales agencies under

the Contract. (Compl., Doc. 1, J 16.)

O’Maley maintains that there is no genuine dispute that O’Maley hired sales

agencies. As support, O’Maley points to the declarations from three brokers. Frank

Parise—the President of Performance Sales & Marketing— declared that “Mr. O’Maley

hired and trained me and Performance Sales & Marketing on the products that MaxRelief

sells.” (Parise Decl., Doc. 53-5, Pg. ID 419.) Similarly, Paul Wendling — the sole proprietor

of North Coast Sales & Marketing—declared that “O’Maley contacted me to sell

MaxRelief products, informed me about their products, shared presentations and shared

information he received at trade shows so I| could follow up with accounts.” (Wendling

Decl., Doc. 53-6, Pg. ID 421.) Thomas Goforth— who previously worked for the brokerage

firm Arena Inc. — attached a letter to his declaration that describes how O’Maley prepared

Goforth to present MaxRelief products to Walmart and recounts how Walmart

responded to Goforth’s multiple contacts concerning the products. (Goforth Decl., Doc.

53-4, Pg. ID 415, 417.) Considering the collection of declarations, O’Maley easily meets

his initial burden of demonstrating that there is no genuine issue of dispute that he hired,

trained, and managed sales agencies for distribution of MaxRelief products.

Because O’ Maley met his burden, the burden shifts to MaxRelief to “present some

significant probative evidence creating a factual issue.” Stratienko v. Cordis Corp., 429 F.3d

592, 597 (6th Cir. 2005). MaxRelief points to Spoto’s declaration, in which he asserts that

O’Maley never hired brokers. (Spoto Decl., Doc. 55-2, Pg. ID 486.) Spoto states that

O’Maley “engage[d] with commission-only brokers who only get paid if they sell.” (Id.)

This is problematic, in Spoto’s estimation, because a “commission-only arrangement is

not considered ‘hiring’ by the brokerage/distribution industry for personal care

products.” (Id.) In response, O’Maley contends that the contractual term “hire” includes

commission-based brokers.

Thus, the operative question here is how to interpret the word “hire” within the

Contract. As the Sixth Circuit has explained, “disputed issues of contractual

interpretation can be resolved at summary judgment on the basis that they are questions

of law.” B.F. Goodrich Co. v. U.S. Filter Corp., 245 F.3d 587, 595 (6th Cir. 2001) (emphasis

omitted). “In a contract dispute, summary judgment is permissible when the contractual

language of the contract is unambiguous, or, if the language is ambiguous, where

extrinsic evidence leaves no genuine issue of material fact and permits contract

interpretation of the agreement as a matter of law.” Klopfenstein v. Fifth Third Bank, No.

1:12-CV-851, 2023 WL 3250622, at *3 (S.D. Ohio Mar. 29, 2023) (quotation omitted). A

contract is ambiguous only if “its meaning cannot be determined from the four corners

of the agreement or where the language is susceptible of two or more reasonable

interpretations.” EnQuip Techs. Grp. v. Tycon Technoglass, 986 N.E.2d 469, 475 (Ohio Ct.

App. Dec. 28, 2012) (quotations omitted). Courts construe contractual terms within the

broader context of surrounding contractual language. Id.

The Court begins with the contractual language in question. O’Maley agreed to

“hire, train [and] manage sales agencies for distribution of [MaxRelief] product.”

(Contract, Doc. 53-3, Pg. ID 410.) The term “hire” is undefined in the Contract.

“TC]ommon, undefined words appearing in a written instrument ‘will be given their

ordinary meaning unless manifest absurdity results, or some other meaning is clearly

evidenced from the face or overall contents of the instrument.” State ex rel. Petro v. R.].

Reynolds Tobacco Co., 820 N.E.2d 910, 915 (Ohio Ct. App. Dec. 30, 2004) (quoting Alexander

v. Buckeye Pipe Line Co., 374 N.E.2d 146, 150 (Ohio 1978)).

Within context, the Court finds the term “hire” to unambiguously include

commission-based hiring. Perhaps most tellingly, the sentence immediately following the

“hiring” language reads, “[MaxRelief] shall compensate sales agencies 5% commission

on net sales [and O’ Maley] will not be responsible for payment.” (Contract, Doc. 53-3, Pg.

ID 410.) In other words, the parties explicitly agreed that the sales agencies hired by

O’Maley would receive commissions from MaxRelief—not payment from O’Maley.

Therefore, concluding that “hire” excludes commission-based hiring would contradict

the plain language of the Contract.

The Court's conclusion would remain unchanged even without this compensation

language. Courts traditionally turn to dictionaries to determine the plain meaning of

undefined terms in a contract. Vandercar, LLC v. Port of Greater Cincinnati Dev. Auth., 196

N.E.3d 878, 886 (Ohio Ct. App. Sept. 9, 2022). The Merriam-Webster dictionary defines

the verb “hire” as (1) to engage the personal services of for a set sum; (2) to engage the

temporary use of for a fixed sum; (3) to grant the personal services of or temporary use

of for a fixed sum; or (4) to get done for pay. Hire, Merriam-Webster Dictionary, Merriam-

webster.com, https://www.merriam-webster.com/ dictionary / hire (last visited Nov. 29,

2023). Given these expansive definitions, personal services in exchange for fixed

commission-based pay comfortably falls within the plain meaning of “hire.”

Nevertheless, MaxRelief maintains that “hire” has a special meaning within the

brokerage and distribution industry for personal care products. (Response, Doc. 55, Pg.

ID 477; Spoto Decl., Doc. 55-2, Pg. ID 486.) But courts only consider evidence of trade

usage within an industry to ascertain the meaning of an ambiguous term. Maverick Oil &

Gas, Inc. v. Barberton City Sch. Dist. Bd. of Edn., 872 N.E.2d 322, 328 (Ohio Ct. App. Apr. 11,

2007). “It is well-settled that although extrinsic evidence of a general custom or trade

usage cannot vary the terms of an express contract, such evidence is permissible to show

that the parties to a written agreement employed terms having a special meaning within

a certain geographic location or a particular trade or industry, not reflected on the face of

the agreement.” Alexander v. Buckeye Pipe Line Co., 374 N.E.2d 146, 151 (Ohio 1978).

Because the term “hire” unambiguously includes commission-based hiring,

potential trade usage of the term is beyond the scope of this Court’s inquiry. Spoto’s

assertion that O’Maley engaged with commission-only brokers paid after the fact fails to

demonstrate that O’Maley breached the Contract by not hiring sales agencies. In fact, this

precise arrangement appears to have been contemplated by the parties through the

payment structure detailed in the Contract. Thus, the Court is unpersuaded by

MaxRelief’s argument and finds that there is no genuine dispute that O’ Maley hired sales

agencies in accordance with the Contract.? O’Maley is entitled to summary judgment on

MaxRelief’s breach of contract claim.

2 MaxRelief also contends that it suffered at least $60,000 in damages from the alleged breach of

contract. (Response, Doc. 55-1, Pg. ID 483.) In contrast, O’Maley argues that MaxRelief can only

recover up to $45,000. (Reply, Doc. 57, Pg. ID 493.) Because O’Maley is entitled to summary

judgment on the breach of contract claim, this dispute is moot.

II. Deceptive Trade Practices and Unjust Enrichment Claims

O’Maley also argues that summary judgment is appropriate as to the deceptive

trade practices and unjust enrichment claims. (See Summary Judgment, Doc. 53-1, Pg. ID

396-400.) MaxRelief fails to address O’Maley’s arguments—let alone even mention the

claims themselves—in its response. (See Response, Doc. 55.) Sixth Circuit precedent is

clear: “a plaintiff is deemed to have abandoned a claim when a plaintiff fails to address

it in response to a motion for summary judgment.” Brown v. VHS of Mich., Inc., 545 F.

App’x 368, 372 (6th Cir. 2013) (collecting cases); see also Southward v. FedEx Freight, Inc., 98

F. Supp. 3d 926, 933 (S.D. Ohio 2014) (granting summary judgment because nonmoving

party failed to make an argument in opposition). MaxRelief has therefore abandoned its

deceptive trade practices and unjust enrichment claims, and O’Maley is entitled to

summary judgment on each claim as a matter of law.

CONCLUSION

For the reasons above, the Court GRANTS Defendant's Motion for Summary

Judgment (Doc. 53). This case shall be TERMINATED from the Court’s docket.

IT IS SO ORDERED.

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

“Heke W galad

By: sis

JUDGE MATTHEW W. McFARLAND

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