## Facts

- P.I.M.L., Inc. (PIML) acted as a commission-based sales representative for a business operating as “Fashion Links,” tied to the Maurice’s and Target retail accounts.
- The agreement with PIML was made before Fashion Links was formally incorporated.
- Individuals Edwin W. Davidson, Christopher J. Hilburn, and John D. McKelvey participated in negotiating and operating the Fashion Links business and held themselves out in business dealings as affiliated with Fashion Links.
- Evidence supporting personal involvement included business cards bearing “Fashion Links,” statements and conduct indicating “partner” status, and emails coordinating sales and marketing efforts for the Maurice’s and Target accounts.
- PIML performed sales-representative work but did not receive all commissions allegedly owed on the Maurice’s and Target accounts.
- After a bifurcated jury trial, the jury found (among other things) that the individuals were pre-incorporation promoters and joint venturers, that a contract existed with PIML on behalf of Fashion Links, and that the contract was breached by nonpayment of commissions.
- The jury awarded commission damages for Maurice’s and Target and found additional unpaid commissions due as of PIML’s last day of work.
- The court entered judgment against Davidson, Hilburn, and McKelvey jointly and severally for $350,930.61, which included a $151,514.66 statutory penalty under Minn. Stat. § 181.145 for failure to timely pay sales-representative commissions.

## Issues

1. Whether the evidence permitted a reasonable jury to find Davidson, Hilburn, and McKelvey personally liable as pre-incorporation promoters and joint venturers for obligations under the PIML commission agreement.
2. Whether sufficient evidence supported the jury’s findings on contract formation, breach, and the amounts of unpaid commission damages.
3. Whether the evidence supported applying Minn. Stat. § 181.145 and awarding the statutory penalty for nonpayment of commissions.

## Decision

- The court denied the defendants’ renewed Rule 50(b) motions for judgment as a matter of law.
- The court held that the evidence, viewed in the light most favorable to the verdict, was sufficient to sustain the jury’s findings of promoter and joint-venture status and resulting personal liability.
- The court upheld the jury’s contract, breach, and damages findings, including the specific commission amounts awarded for the Maurice’s and Target accounts.
- The court left intact the Minn. Stat. § 181.145 penalty and the previously entered joint-and-several judgment.

## Legal Principles

- Judgment as a matter of law under Rule 50(b) is improper if a reasonable jury could find for the nonmoving party on a legally sufficient evidentiary basis when the evidence is viewed favorably to the verdict.
- Individuals who act as pre-incorporation promoters and enter or authorize contracts on behalf of a not-yet-formed business may be held personally liable for contractual obligations when the business does not satisfy them.
- A joint venture may be found from evidence of a shared business purpose, coordinated decision-making and control, and sharing in profits; joint venturers may be jointly and severally liable for the venture’s contractual debts.
- Minn. Stat. § 181.145 authorizes penalties when a principal fails to timely pay earned commissions to a qualifying sales representative after termination; liability may extend to persons functioning as the principal behind the business relationship.

## Conclusion

The court upheld the jury’s verdict and joint-and-several judgment, concluding that sufficient evidence supported personal liability of the individual defendants as promoters and joint venturers for unpaid commissions and supported imposing statutory penalties for failure to timely pay sales-representative commissions under Minnesota law.


P.I.M.L., Inc. v. Chain Link Graphix, LLC, 2006 U.S. Dist. LEXIS 88600 (D. Minn. 2006)