In the
United States Court of Appeals
For the Seventh Circuit
Nos. 10-2600 & 10-3571
B ERNADINE E. M ATTHEWS,
Plaintiff-Appellant,
v.
W ISCONSIN E NERGY C ORPORATION, INC.,
f/k/a W ISCONSIN G AS C OMPANY,
Defendant-Appellee.
Appeals from the United States District Court
for the Eastern District of Wisconsin.
No. 05-C-537—J. P. Stadtmueller, Judge.
A RGUED A PRIL 1, 2011—D ECIDED JUNE 1, 2011
Before E ASTERBROOK, Chief Judge, and B AUER and
E VANS, Circuit Judges.
E VANS, Circuit Judge. We last saw this case just over
three years ago when we remanded it for further pro-
ceedings on a single issue—breach of contract. A grant of
summary judgment against Matthews on retaliation
under Title VII was affirmed. Matthews v. Wis. Energy
Corp., Inc., 534 F.3d 547 (7th Cir. 2008) (Matthews I).
2 Nos. 10-2600 & 10-3571
Bernadine Matthews, a former employee of Wisconsin
Energy Corporation, Inc. (WEC), sued WEC, alleging it
violated a settlement agreement by breaching a “reference-
request provision.” On remand, a jury sided with WEC,1
and now Matthews appeals for the second time.
Because a jury has rendered a verdict, we view the
evidence in the light most favorable to that verdict. Cruz
v. Town of Cicero, Ill., 275 F.3d 579, 583 (7th Cir 2001). Here
are the facts.
Matthews was employed by WEC from 1980 to 1999.
When she left WEC, the parties entered into an agree-
ment that included provisions regarding how WEC
would respond to reference requests about her from
prospective employers. In 2003, Matthews sued WEC
alleging that it breached those provisions. To resolve
that suit, the parties entered into a confidential settle-
ment agreement (the Agreement) which addressed the
information WEC would disclose to prospective employ-
ers:
Wisconsin Gas agrees to respond to any request for
a reference regarding Matthews in a manner that is
consistent with the Wisconsin Gas policy in place
regarding reference checks at the time. Wisconsin
Gas will not respond to any request for a reference
regarding Matthews by indicating that Matthews
was terminated or fired from Wisconsin Gas.
WEC’s policy regarding reference requests was to
confirm that the individual had worked there, and to
1
WEC was formerly known as Wisconsin Gas Company.
Nos. 10-2600 & 10-3571 3
provide the dates of employment, salary, and posi-
tion. WEC would not release any subjective informa-
tion about the former employee’s performance.
In May 2005, Matthews filed this lawsuit, alleging
that WEC breached the Agreement’s reference-request
provision by failing to properly verify her employ-
ment twice in 2004. A few days prior to filing the suit,
Matthews, in an effort to find a new job, enrolled in
a Social Security Administration (SSA) program called
the “Ticket to Work Program” which allows disabled
individuals receiving social security benefits to work
while continuing to receive their benefits. See generally,
The Ticket Program: What is the Ticket Program?, http://
www.yourtickettowork.com/program__info. (last visited
May 19, 2011).
In accordance with the program, Matthews hired
Howard Schwartz, President and CEO of Career Con-
sulting Services of America (CCSA), a consultant who
specializes in helping disabled individuals seek employ-
ment through the Ticket To Work Program. Matthews
signed a SSA Consent and Release of Information
form, giving Schwartz permission to talk to third parties
about information he determined was relevant to her
job search. She also signed a Confidential Information
Release Authorization (CIRA), which was specific to
Schwartz’s company. Under the CIRA, she voluntarily
consented to the disclosure to CCSA of information
related to her personal background, health, employ-
ment, education and other data, and specifically granted
Schwartz the right to contact her former employers to
4 Nos. 10-2600 & 10-3571
elicit personal information that he deemed potentially
helpful to the job search.
For several months, Schwartz had no luck finding
Matthews a job. He approached her about his difficulties,
and she claimed that WEC was blackballing her. When
Schwartz asked why, Matthews said she was unable to
discuss it because of the confidentiality provision in the
Agreement. She directed Schwartz to reach out to her
lawyer, Janet Heins. Schwartz called Heins who con-
firmed that Matthews had filed a lawsuit against WEC.
After his conversation with Heins, Schwartz revised
Matthews’ resume—removing her WEC employment
entirely.2 He sent the new resume to Heins and Matthews
for authorization and also called Heins to ask if he
could contact WEC for a reference. A few weeks later,
Heins called Schwartz authorizing him to contact WEC.
Schwartz then faxed a letter to Art Zintek, Vice-President
of Human Resources at WEC.3 The letter indicated
that CCSA was contracted by the SSA to assist Matthews
2
There was significant debate over whether Schwartz changed
Matthews’ resume as a result of a phone call with Lynne
English, in-house counsel at WEC, as Matthews claims, or if
he changed it prior to the call. WEC presented significant
evidence that the document was changed before the call.
Because we view the evidence in a light most favorable to
the jury verdict, we assume the document was changed before
Schwartz spoke with English.
3
Schwarz claims he sent an identical letter in the mail several
days earlier, but WEC never received it.
Nos. 10-2600 & 10-3571 5
in her job search and requested that WEC confirm
Matthews’ work history at WEC and provide comments
regarding her work performance. It also said that a
release authorizing WEC to provide the information
was enclosed, but Schwartz failed to include it.
When Zintek’s office received the fax, due to Matthews’
pending suit against WEC, it was forwarded to Lynne
English in the Legal Department because she had
handled the 2003 settlement agreement. In October 2005,
English called Schwartz to discuss his letter. During
the conversation, she told Schwartz that he had not
included a release. Schwartz said he would send the
release, but he also pushed English to answer his
reference request over the phone. She testified that she
told him she could not because “[Matthews] has sued us
for how we respond to reference requests,” or “we’re in
litigation with her.” English also informed Schwartz
that the written response to his reference request would
only provide basic information and would not include
the comments on Matthews’ performance he had re-
quested. After the conversation, Schwartz sent English
the release form. WEC then mailed Schwartz a letter
verifying Matthews’ employment. At trial, Matthews
admitted that WEC’s response letter was substantially
correct.
In the first round of this case, the district judge granted
WEC’s motion for summary judgment as to all claims
and awarded it $173,232.44 in attorneys fees, pursuant
to the fee-shifting provisions in the Agreement. Matthews
appealed, and we affirmed the dismissal of all claims
6 Nos. 10-2600 & 10-3571
except the breach of contract claim predicated on
WEC’s communication with Schwartz. We remanded
the case for further proceedings on this issue and vacated
the award of attorney’s fees. Matthews I, 534 F.3d at 559-60.
On remand, a jury heard Matthews’ breach of contract
claim and returned a general verdict finding that WEC
did not breach the Agreement. The district judge
reinstated his 2007 fee award. WEC then filed a post-
trial motion for additional attorney’s fees under the
Agreement, submitting redacted billing statements and
declarations from its outside counsel authenticating
them. The judge granted WEC’s motion—finding the
fees commercially reasonable and noting that WEC paid
the legal bills before the verdict, without any assurance
that they would be recouped—and awarded attorney’s
fees in the amount of $522,527.75 and nontaxable costs
and expenses in the amount of $40,493.64.
On this appeal, Matthews argues that the judge erred
by: (1) instructing the jury it could find that Matthews
waived enforcement of the Agreement; (2) refusing to
bifurcate the issues of breach and damages in the jury
instructions; (3) allowing the case to go the jury with an
agency instruction; and (4) awarding WEC attorney’s
fees and costs.
Matthews first claims that the judge erred when he
instructed the jury that it could find Matthews “waived”
enforcement of the Agreement by authorizing Schwartz
to elicit personal information about her. We review a
district judge’s decision regarding jury instructions for
abuse of discretion. Consumer Products Research & Design,
Nos. 10-2600 & 10-3571 7
Inc. v. Jensen, 572 F.3d 436, 438 (7th Cir. 2009). Moreover,
we will only grant a new trial if the verdict is against the
clear weight of the evidence. Tammi v. Porsche Cars North
America, Inc., 536 F.3d 702, 708 (7th Cir. 2008).
Matthews makes two arguments with regard to wav-
ier. First, WEC failed to plead waiver as an affirma-
tive defense, and therefore the judge erred by allowing
WEC to argue waiver and by including the instruction
about waiver. WEC notes, however, that Matthews
never pled—in her complaint or an amended com-
plaint—the facts that give rise to the use of waiver as a
defense. Instead, Matthews seems to argue that WEC
should have preemptively pled wavier regarding the
conversation between English and Schwartz which had
not yet occurred when she filed her complaint. This
argument is meritless. WEC was not obligated to
forecast future events.
Furthermore, even if Matthews had included the
phone conversation in her complaint or an amended
complaint, we have previously held that the “rule that
forfeits an affirmative defense not pleaded in the answer
(or by an earlier motion) is, we want to make clear, not
to be applied rigidly.” Herremans v. Carrera Designs, Inc.,
157 F.3d 1118, 1123 (7th Cir. 1998). “The failure to plead
an affirmative defense in the answer works a forfeiture
only if the plaintiff is harmed by the defendant’s delay
in asserting it.” Carter v. United States, 333 F.3d 791, 796
(7th Cir. 2003). Here, Matthews has not argued that she
was prejudiced when the judge allowed WEC to argue
waiver as a defense. WEC did not call any new witnesses
8 Nos. 10-2600 & 10-3571
or introduce any new evidence as a result of the waiver
defense. All of the evidence at issue was in the posses-
sion of Matthews’ key witness, Schwartz. See Williams v.
Lampe, 399 F.3d 867, 871 (7th Cir. 2005) (finding that
where the plaintiff “does not suggest any prejudice to
her from the defendants’ delay [in asserting a defense]
other than her subsequent preparation for trail, the
court did not abuse its discretion in allowing the defense”).
Matthews also argues that the judge erred when he
gave a wavier instruction to the jury because the Agree-
ment required waivers to be in writing. According to
Matthews, the provision of the Agreement—“The terms
of this Agreement may not be altered, amended, or waived
except by another written agreement signed by the
Parties”—should have rendered an instruction on
wavier a no-no. We disagree.
WEC never contended that the parties met and agreed
to modify the terms of the settlement agreement. The
sort of waiver question put to the jury concerned unilateral
waiver of entitlements under an unchanged contract.
WEC did not contend (and the instruction did not ask
the jury to find) that there had been a change in “the
terms” of the agreement (which is what the change-only-in-
writing clause covers). It is common for people to forego
benefits that cannot be waived through a contract. For
example: No employee can agree with the employer
that the Age Discrimination in Employment Act will not
apply to the job in question; the statute’s benefits can’t
be waived or altered by contract. But anyone can
retire whenever he wants, and in that sense waive the
Nos. 10-2600 & 10-3571 9
statute’s benefits. That is how the instruction here
referred to “waiver.” The jury was not asked to find that
Matthews and WEC changed the terms of their agree-
ment, so that in the future WEC could respond to inquiries
by telling other potential employers about Matthews’
litigation history or that Matthews had been fired.
The question put to the jury was whether Matthews
unilaterally authorized disclosure to Schwartz (who was
acting as her agent) on this one occasion. In that sense,
the giving of an instruction waiver was not error.
Matthews’ second claim is that the judge erred “by
refusing to bifurcate the issues of breach and damages
in the substantive jury instructions.” We review the
judge’s decision regarding jury instructions for abuse
of discretion. Jensen, 572 F.3d at 438. In his instructions,
the judge told the jury:
In order to prevail on her breach of contract claim,
Bernadine Matthews must prove each of the
following elements by a preponderance of the evi-
dence:
First, the existence of a valid contract creating obliga-
tions between the parties;
Second, a material breach of the contract by Wisconsin
Energy, and
Third, damages to Bernadine Matthews flowing
naturally and probably from the breach.
Matthews argues that this instruction was improper
because the jury had to find damages before it could
find that a breach had occurred. But the instruction is
10 Nos. 10-2600 & 10-3571
in line with the elements of a breach of contract claim in
Wisconsin. See Matthews I, 534 F.3d at 553 (“The elements
for a breach of contract in Wisconsin are familiar; the
plaintiff must show a valid contract that the defendant
breached and damages flowing from that breach.”)
(citing Northwestern Motor Car, Inc. v. Pope, 51 Wis.2d
292, 296 (Wis. 1971)).
While we agree with Matthews that given the some-
what unusual fee-shifting provisions of the settlement
agreement it might have been wiser to more clearly
separate out the questions of breach and damages, we
are mindful of our duty to view jury instructions as a
whole. Jury instructions are considered “both in the
context of the other instructions given and in light of the
allegations of the complaint, opening and closing argu-
ments and the evidence of record.” Lynch v. Belden & Co.,
Inc., 882 F.2d 262, 267 (7th Cir. 1989). Here, the judge
also instructed the jury that it must determine whether
WEC breached the settlement agreement, and that if it
found a breach but her damages had no monetary value,
it must return a verdict in her favor and award her
nominal damages. With that being the case, we cannot
conclude that the judge incorrectly instructed the jury on
the issue of breach and damages.
Next, Matthews claims that the judge abused his dis-
cretion when he allowed the case to go to the jury with
the instruction that it could find Schwartz was acting as
Matthews’ agent. Matthews argues that the evidence
was insufficient to support an agency instruction. This
argument fails for several reasons.
Nos. 10-2600 & 10-3571 11
First, the agency instruction Matthews now challenges
was submitted to the court in the parties’ Joint Final
Pretrial Report. WEC notes that—despite Matthews
claim to the contrary—this is one of the jury instruc-
tions upon which the parties agreed. Second, al-
though Matthews correctly states that she objected to the
instruction, she misstates the reason for her objection.
Matthews’ objection acknowledges that:
[O]ne might also view Howard Schwartz as Matthews’
agent with the undertaking being that of placing her
in employment. The evidence elicited by [WEC] . . .
however, was designed to show that in requesting
a reference from WEC, Schwartz was not acting on
behalf of Matthews, but instead, at the behest of
Attorney Heins.
In no way does this objection undermine the instruction
on agency. In fact, it does exactly the opposite—
Matthews’ objection asserts that Schwartz is her agent,
working on her behalf, and not at the behest of Heins.
Similarly, Matthews read into evidence a stipula-
tion that presumed Schwartz was her agent: “[T]he de-
fendant will not argue that Mr. Schwartz’s status as
Ms. Matthews’ agent was negated by virtue of the fact that
she had previously assigned her ticket to work to the
Department of Vocational Rehabilitation.” Matthews also
signed CCSA’s waiver, granting Schwartz the authority
to elicit information on her behalf, which he did when
he spoke to attorney English. Therefore, while we agree
that these acknowledgments of agency are not disposi-
tive of Schwartz’s status as Matthews’ agent, given the
12 Nos. 10-2600 & 10-3571
evidence presented a jury could reasonably find that
Schwartz was acting as Matthews’ agent and that, conse-
quently, WEC did not breach the Agreement.
Finally, Matthews claims that the district judge erred
in awarding WEC $563,021.39 in attorney’s fees and
costs. We review a district court’s award of attorney’s
fees and costs for abuse of discretion. TruServ Corp. v.
Flegles, Inc., 419 F.3d 584, 593 (7th Cir 2005). The award
of attorney’s fees is governed, in this case, by the Agree-
ment, which states:
[T]he breaching party will indemnify and hold the
non-breaching party harmless for any costs, damages
or expenses, including reasonable attorney’s fees,
arising out of the breach of the Agreement by that
party, or arising out of any suit or claim to enforce the
Agreement. The parties agree that in the event that
one of the Parties hereto commences a lawsuit or
other legal proceeding alleging that the other Party
breached the Agreement, the prevailing Party in that
action shall be entitled to recover her or its rea-
sonable attorneys fees and expenses incurred in such
lawsuit or legal proceeding from the non-prevailing
Party.
The judge held that Matthews filed suit and lost when
the jury found WEC did not breach the Agreement, and
WEC was therefore entitled to reasonable attorney’s fees
under the Agreement. Matthews attacks the judge’s
award of attorney’s fees on several levels.
Matthews first argues that the judge erred in granting
WEC’s motion for attorney’s fees because the request
Nos. 10-2600 & 10-3571 13
lacked any description of the work performed. Matthews,
however, ignores the fact that this is a contractual fee-
shifting case, not a statutory fee-shifting case. In Medcom
Holding Co. v. Baxter Travenol Labs., Inc., 200 F.3d 518, 520
(7th Cir. 1999), we held that fee-shifting contracts
require “reimbursement for commercially-reasonable
fees no matter how the bills are stated.” Thus, the stand-
ard in a contractual fee-shifting case is a “commercially
reasonable” standard, Balcor Real Estate Holdings, Inc. v.
Walentas-Phoenix Corp., 73 F.3d 150, 153 (7th Cir. 1996),
and does not require courts to engage in “detailed, hour-
by-hour review” of a prevailing party’s billing records,
Medcom, 200 F.3d at 521.
Matthews next argues that the fees are not com-
mercially reasonable. In determining whether they are,
a court will look to the aggregate costs in light of the
stakes of the case and opposing party’s litigation strat-
egy. Id. Concerning the “stakes” in the suit, and Matthews’
“litigation strategy,” it is interesting to note that WEC’s
lawyer told us at oral argument, without contradiction
from Matthews, that her final settlement demand was
$500,000. That makes spending the kind of money WEC
did to defend the case look a bit more reasonable. Had a
more modest sum been the goal, the defense spending
might also have been considerably less.
A willingness to pay is an indication of commercial
reasonableness. Balcor, 73 F.3d at 153. Here, the district
court correctly applied the commercial reasonableness
standard to the facts of the case and found the fees rea-
sonable. While the total attorney’s fees in this case
14 Nos. 10-2600 & 10-3571
are unquestionably, and unfortunately, very high, WEC
presented evidence that it paid its legal fees before the
jury reached a verdict, unsure if it would ever recover
them. See Kallman v. Radioshack Corp., 315 F.3d 731, 742 (7th
Cir. 2002) (finding the prevailing party’s payment of
her legal bills to be “strong evidence of commercial rea-
sonableness, which is all that is required” under a con-
tractual indemnity clause). Matthews has offered no
evidence to counter WEC’s payment of the bills. Accord-
ingly, WEC’s attorney’s fees are commercially reasonable.
Matthews also argues that the judge incorrectly
granted WEC fees for the second summary judgment
motion because they were not the prevailing party on that
motion. Under Wisconsin law, however, a “prevailing
party” is not required to win in “all respects.” Metavante
Corp. v. Emigrant Savings Bank, 2009 WL 4556121, at *3
(E.D.Wis. Nov. 27, 2009), aff’d, 619 F.3d 748 (7th Cir. 2010).
“Where a party’s claims ‘arise out of a common core of
facts,’ a ‘losing party is not entitled to a reduction in
attorney’s fees for time spent on unsuccessful claims, if
the winning party achieved substantial success and the
unsuccessful claims were brought and pursued in good
faith.’ ” Id. Matthews does not argue that WEC brought
the second motion for summary judgment in bad faith.
Thus, as the judge noted, Metavante completely dismantles
Matthews’ argument with respect to motions on which
WEC was unsuccessful.4 WEC prevailed in the action,
4
The judge also noted that the language of the Agreement
allows the prevailing party to recover even for unsuccessful
(continued...)
Nos. 10-2600 & 10-3571 15
and under the Agreement it is accordingly entitled
to reasonable attorney’s fees and costs.
Finally, Matthews argues that the award of attorney’s
fees was inequitable because she made a good faith
claim, and she cannot afford to pay the fees. But, as the
district judge noted, the fee-shifting provision of the
Agreement does not provide an exception for financial
hardship or good faith. Unless the provision is the
product of unequal bargaining power, courts generally
will not dispute the fairness of such provisions. Berthold
Types Ltd. v. Adobe Systems, Inc., 186 F. Supp. 2d 834, 837
(N.D.Ill. 2002) (citing Medcom, 200 F.3d at 520; Balcor, 73
F.3d at 153); see, e.g., United States, for the use of C.J.C., Inc. v.
Western States Mechanical Contractors, Inc., 834 F.2d 1533,
1548 (10th Cir. 1987) (“[W]here contracting parties have
agreed that a breaching party will be liable for attor-
neys’ fees, the purpose of the award is to give the parties
the benefit of that bargain, and the court’s responsibility
is to enforce that bargain”). This is not a case in which
one party had unequal bargaining power, and no
equitable requirement applies to the attorney’s fee under
the Agreement. Therefore, the district judge correctly
found that Matthews’ final claim also fails.
4
(...continued)
motions. We agree. Under the Agreement, the “prevailing
Party in that action shall be entitled to . . . fees and expenses
incurred in such lawsuit.” Thus, the provision applies to
all claims in the action and allows recovery on all fees
and expenses in the lawsuit, regardless of the outcome of
individual claims.
16 Nos. 10-2600 & 10-3571
A moment ago, we noted that the fees here are “unques-
tionably, and unfortunately, very high.” What else can
one say about a staggering figure like $563,021.39 in a case
like this? But whether even a portion of those fees are
collectable is not a matter about which we can be con-
cerned.
For these reasons, the judgment of the district court
is A FFIRMED.
6-1-11