RG Golf Warehouse, Inc. v. The Golf Warehouse, LLC

Background

RG Golf Warehouse, Inc. operated “golfwarehouse.com.” The Golf Warehouse, LLC sold golf merchandise through websites including “tgw.com.” In 2011, the parties entered a referral agreement under which RG would direct customers through its website, a dedicated phone line, and an email inbox to The Golf Warehouse’s websites. The Golf Warehouse agreed to pay commissions for qualifying orders placed through those sales channels.

The agreement provided different commission rates for new customers, return customers, existing The Golf Warehouse customers, and orders subject to promotional discounts. It required The Golf Warehouse to use reasonable best efforts to have customers identify themselves as new or return customers, provide monthly reports, and treated The Golf Warehouse’s customer-status calculations as final and binding. The agreement allowed either party to terminate it without cause on 30 days’ written notice and contained a merger clause superseding prior agreements. The parties terminated the agreement in December 2014.

RG alleged that The Golf Warehouse breached the agreement by improperly tracking repeat customers, phone sales, and website traffic; failing to use two-week “cookie” tracking; failing to use reasonable best efforts to identify customers; and failing to pay required commissions. The Golf Warehouse denied liability and asserted counterclaims for breach of contract and unjust enrichment, alleging that RG retained overpaid commissions.

Expert Testimony

The Golf Warehouse moved to exclude the opinions and testimony of RG’s damages expert, Fernando Torres, under Federal Rule of Evidence 702 and the standards governing reliable expert testimony. Torres calculated alleged unpaid commissions using an assumption that RG customers would place an average of 2.3 to 2.5 repeat orders annually.

The court found that the assumption was not adequately supported. The 2.5 figure came from RG management’s expectations, which Torres did not independently verify. The 2.3 figure came from testimony about a subset of customers in another company’s email loyalty program, not from evidence of a general golf-industry average or evidence that those customers were comparable to RG’s or The Golf Warehouse’s customers. The court concluded that Torres’s opinions relied on speculative calculations and unsupported factual premises, leaving too large a gap between the data and his conclusions. The court therefore granted The Golf Warehouse’s motion to exclude Torres’s opinions and testimony.

RG’s Breach-of-Contract Claim

The parties agreed that Indiana law governed the agreement. The court explained that RG had to prove a contract, a breach, and damages.

On repeat customers, the court held that the agreement plainly tied commissions to individual orders placed through RG’s sales channels, not to customers who had ever previously used those channels. An order placed directly on The Golf Warehouse’s website therefore did not qualify merely because the customer had earlier placed an order through RG. The court rejected RG’s arguments that the agreement was ambiguous or that the parties’ conduct had modified it.

On phone sales, the court found that RG had shown evidence that The Golf Warehouse once identified and agreed to correct a tracking problem, but RG presented no evidence that the problem continued or that The Golf Warehouse failed to correct it. On cookie tracking, the court held that the agreement did not require cookie tracking. Although the earlier letter of intent mentioned it, that document was expressly nonbinding and was superseded by the later agreement.

The court also rejected RG’s claim that The Golf Warehouse failed to use reasonable best efforts to identify customers. Even assuming that provision was enforceable, RG identified no evidence showing that The Golf Warehouse failed to make a good-faith effort. The court further concluded that RG had not shown that The Golf Warehouse underpaid commissions for qualifying orders. Because RG presented no evidence sufficient for a jury to find a breach or damages, the court denied RG’s motion for summary judgment on its breach-of-contract claim and granted The Golf Warehouse’s motion for summary judgment on that claim. The lack of admissible damages evidence independently supported summary judgment for The Golf Warehouse.

The Golf Warehouse’s Breach-of-Contract Counterclaim

RG moved for summary judgment on The Golf Warehouse’s counterclaim alleging that RG breached the agreement by failing to return overpaid commissions. The court held that the agreement made The Golf Warehouse’s customer-status calculations in its monthly reports final and binding. The agreement did not give The Golf Warehouse authority to recalculate past commission payments and demand repayment, and it did not require RG to repay alleged overpayments. The court therefore granted RG’s motion for summary judgment on The Golf Warehouse’s breach-of-contract counterclaim.

The Golf Warehouse’s Unjust-Enrichment Counterclaim

The court applied Indiana law to the unjust-enrichment counterclaim because the claim was closely related to the agreement and required interpreting it. The court held that the agreement did not address alleged commission miscalculations or overpayments, so the agreement did not prevent The Golf Warehouse from pursuing an unjust-enrichment theory.

Under Indiana law, the claim was subject to a six-year limitations period. Because The Golf Warehouse asserted the counterclaim on July 24, 2020, claims based on overpayments known or discoverable before July 24, 2014, were time-barred. The court noted that The Golf Warehouse identified alleged overpayments in a March 20, 2014 email, including $149,029 in alleged overpayments. The court therefore granted in part and denied in part RG’s motion for summary judgment on the unjust-enrichment counterclaim: the time-barred portion could not proceed, while the ruling did not eliminate the counterclaim to the extent it concerned amounts within the limitations period.

Disposition

The court granted The Golf Warehouse’s motion to exclude expert testimony and for summary judgment. It granted in part and denied in part RG’s motion for summary judgment: it granted the motion on The Golf Warehouse’s breach-of-contract counterclaim, and granted in part and denied in part the motion on The Golf Warehouse’s unjust-enrichment counterclaim.