No. 22-1209 ___________________________

Louis DeGidio, Inc.; Louis DeGidio Services, Inc.

lllllllllllllllllllllPlaintiffs - Appellants

James DeGidio; Michael DeGidio

lllPlaintiffs

v.

Industrial Combustion, LLC, et al.

lllllllllllllllllllllDefendants - Appellees ____________

Appeal from United States District Court for the District of Minnesota ____________

Submitted: December 15, 2022 Filed: April 24, 2023 ____________ Before LOKEN, ERICKSON, and KOBES, Circuit Judges. ____________ LOKEN, Circuit Judge.

When a manufacturer sells replacement parts to a distributor to repair products the distributor sold, does the manufacturer collect an indirect “franchise fee” within the meaning of the Minnesota Franchise Act, Minn. Stat. § 80C.01, subd. 4, if it charges the distributor a price based on the retail price the manufacturer paid a third party vendor for the parts? We agree with the district court1 the answer is clearly no and therefore the distributorship agreement here at issue was not a franchise. We further agree that the manufacturer, Industrial Combustion, LLC (“IC”), did not breach an oral implied-in-fact contract, and was not barred by promissory estoppel, when it terminated the DeGidio sales representative without cause. Applying Minnesota law and reviewing de novo, we affirm the grant of summary judgment in favor of IC and its parent company, Cleaver-Brooks, Inc. See HIP, Inc. v. Hormel Foods Corp., 888 F.3d 334, 338 (8th Cir. 2018) (standard of review).

I. Background

In 1958, Louis DeGidio, the father of plaintiffs James and Michael DeGidio, began purchasing, distributing, and servicing IC burners for institutional boiler systems in a sales area including most of Minnesota. IC’s non-exclusive distributors are responsible for installing and servicing the IC burners they sell. In 1996, the family incorporated Louis DeGidio, Inc. (“LDI”) and Louis DeGidio Services, Inc. (“LDSI”). LDI continued purchasing burners from IC. LDSI installed and serviced the burners LDI sold, purchasing replacement parts from IC. The two corporations shared the same location, officers, and shareholders. James and Michael were joint 50% shareholders and key officers of both. Whatever written agreement was then in effect is not in the record, but it is undisputed that LDI was the distributor.

Plaintiffs’ lengthy Second Amended Complaint (“SAC”) alleges that in 2000 IC presented a new written distributorship agreement for the same sales territory. LDI signed the agreement, allegedly relying on “IC’s express commitment to continue providing IC products in the future.” In 2007, IC presented a new Non-Exclusive

1 The Honorable John R. Tunheim, then Chief Judge of the United States District Court for the District of Minnesota.

-2- Sales Representative Agreement between IC and LDI (“2007 Agreement”). The SAC alleges:

Both before and after Mike DeGidio signed the 2007 Agreement, IC’s Director of Sales and Marketing, John Stupec (“Stupec”), made the express promise that “[LDI and LDSI] would be regarded by IC as the same entity” and that “the signature of Mike DeGidio as President of [LDI] would be regarded by IC as a signature made on behalf of both.” LDSI was not a named party to the 2007 Agreement. Plaintiffs allege that during or at the end of the meeting at which the parties signed the Agreement, James DeGidio noted that LDSI was not in