United States District Court, E.D. Wisconsin
Stadtmueller U.S. District Judge.
an action for breach of contract and unjust enrichment.
Plaintiff provides auditing and certification services to
private security companies. Defendant accredits companies
like Plaintiff. Plaintiff sought accreditation from Defendant
but did not obtain it. Plaintiff believes that Defendant
wrongfully terminated it from the accreditation program.
Defendant, of course, disagrees. Defendant filed a motion for
summary judgment on March 1, 2018, seeking dismissal of both
claims. (Docket #16). The motion is now fully briefed.
(Response, Docket #24; Reply, Docket #27). For the reasons
explained below, the motion must be granted.
STANDARD OF REVIEW
Rule of Civil Procedure 56 provides that the “court
shall grant summary judgment if the movant shows that there
is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a); see Boss v. Castro, 816 F.3d
910, 916 (7th Cir. 2016). A “genuine” dispute of
material fact is created when “the evidence is such
that a reasonable jury could return a verdict for the
nonmoving party.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). The Court construes all
facts and reasonable inferences in a light most favorable to
the non-movant. Bridge v. New Holland Logansport,
Inc., 815 F.3d 356, 360 (7th Cir. 2016).
disposition of Defendant's motion turns on only a few key
facts. However, the subject matter of this action is somewhat
intricate. For clarity's sake, the Court will provide an
expanded recitation of the facts than is strictly necessary
to its decision. Plaintiff is in the business of providing
auditing and certification services to private security
companies (“PSCs”). This service, known as
Private Security Company Management Services
(“PSCMS”), has grown over the past fifteen years
with the increased use of PSCs by governments and because of
various well-publicized incidents of human rights abuses
perpetrated by PSC personnel.
certification is valuable to PCSs because it gives
governments some assurance that they are ethical and
rule-complaint. PSCMS companies like Plaintiff can in turn
seek accreditation to help market their services. There are
two bodies which provide PSCMS accreditation: Defendant and
the United Kingdom Accreditation Service
(“UKAS”). Both are private, non-governmental
entities. Plaintiff sought to enter the PSCMS market in 2012.
Though Plaintiff is based in Europe, it decided to pursue
accreditation through Defendant because Defendant is an
American company, and Plaintiff wanted to target American
Management Systems Accreditation Manual (the
“Manual”) describes its accreditation process.
Those seeking accreditation (like Plaintiff) are called
certification bodies (“CB”). There are seven
steps in the accreditation process:
1. The CB submits a fee and files an initial accreditation
application together with documentation demonstrating that it
conforms to certain baseline requirements. Defendant notifies
the CB whether or not its initial application is complete and
2. Once its initial application is accepted, the CB purchases
and downloads another application related to the specific
standard for which accreditation is sought. The CB then
uploads the completed application with the supporting
documentation. Defendant reviews the documentation to
determine whether the specific application is complete and
3. Following the acceptance of its specific application and
prior to conducting an Initial Office Assessment
(“IOA”), the CB performs a complete internal
audit and at least one complete management review that
includes review of the results of the complete internal
4. Defendant then performs an IOA and prepares a report
itemizing any nonconformities with applicable rules and
professional standards. The CB must address each
nonconformity by taking corrective action, in accordance with
the process and deadline set out in the Manual.
5. Next, Defendant performs the first of two Witnessed Audit
Assessments (“Stage 1 Witnessed Audit”) of the
CB's actual clients. Defendant then issues a report which
outlines nonconformities which the CB must remedy before
moving forward in the accreditation process.
6. Once those nonconformities are addressed, Defendant
performs the second Witnessed Audit Assessments (“Stage
2 Witnessed Audit”). Any identified nonconformities
must once again be corrected by the CB, in accordance with
the process set out in the Manual, before proceeding.
7. Finally, if the CB meets all of the foregoing
requirements, Defendant formulates an accreditation package
and recommendation on accreditation which it presents to its
Management Systems Accreditation Council (the
“Council”). The Council then votes on whether to
accredit the prospective CB. If the vote is favorable, then
the Defendant issues the CB a certificate of accreditation.
See (Docket #19-2 and #19-3). The Manual also
provides a one-year time frame for completion of the
accreditation process. (Docket #19-3 at 7). The Manual gives
Defendant discretion in enforcing that time limit, though the
parties dispute the extent of the latitude provided.
is not awarded based simply on Defendant's opinion of the
CB. Rather, Defendant applies national and international
standards to evaluate whether accreditation is appropriate.
These standards are developed in cooperation with a number of
international accreditation associations, of which Defendant
is a member. When Plaintiff began the accreditation process,
the standard for PSCMS accreditation was known as ISO/IEC
17021:2011 (“17021”). A new standard, ISO/IEC
17021-1:2015 (“17021-1”), was later published and
set to take effect on June 15, 2017, though Defendant planned
to transition its program to the new standard long before
then. (Docket #21-6 at 2). According to Accreditation Rule 50
(“AR 50”) promulgated by Defendant, CBs were
required to transition their application to the new standard
over the course of 2016. Id. at 2-4.
and 17021-1 are, in turn, based on even higher standards. The
first is “Management System for Quality of Private
Security Company Operations--Requirements with Guidance,
” American National Standard, ANSI/ASIS PSC.1:2012
(“PSC.1”). The second is “Conformity
Assessment and Auditing Management Systems for Quality of
Private Security Company Operations, ” American
National Standard, ANSI/ASIS PSC.2 (“PSC.2”).
Both standards are issued by the American National Standards
Institute and are based on various international documents
and agreements. PSC.1 provides “requirements and
guidance for a management system with auditable criteria[, ]
. . . consistent with respect for human rights, legal
obligations and good practices[.]” (Docket #21-7 at 3,
17-22). PSC.2 offers “requirements and guidance for
conducting conformity assessment of the [PSC.1]
Standard.” (Docket #21-8 at 3, 11). PSC.1 governs PSC
conduct, while PSC.2 is aimed at PSCMS companies. Of course,
Plaintiff needed to be intimately familiar with both of these
standards. Compliance with PSC.1 and PSC.2 was the end goal
of the PSCMS accreditation process.
itself is also subject to standards for processing
accreditation requests. ISO/IEC 17011 (“17011”)
is the standard relevant to Plaintiff's desired form of
accreditation. 17011 mandates that Defendant require a
commitment from its CBs to fulfill the requirements for
accreditation, including when those requirements change over
time. It also requires that CBs cooperate with Defendant in
the accreditation process. Plaintiff notes that 17011 further
obliges Defendant to “give due notice of any changes to
its requirements for accreditation, ” including a
decision on the time for implementing such changes. (Docket
#19-1 at 25). The Manual memorializes these and other
requirements for accreditation.
Defendant requires an accreditation-seeking PSCMS company to
execute a Certification Applicant Agreement
(“CAA”) at the outset of the application process.
Defendant's form CAA provides that it remains in effect
until the CB and Defendant execute an accreditation
agreement. CBs are required by Defendant to sign an
accreditation agreement upon successful completion of the
accreditation program. The form CAA also includes an
indemnity provision. The parties agree that, contrary to the
usual procedure, Plaintiff did not sign a CAA.
the parties proceeded through the accreditation process. On
September 22, 2014, Plaintiff paid the initial application
fee to Defendant. Plaintiff submitted a completed initial
application on October 28, 2014, thereby completing step one.
Six months later, Plaintiff obtained the specific application
for PSCMS companies. Soon afterward, on May 1, 2015,
Plaintiff submitted a completed application with supporting
documentation. Eventually, after a number of resubmissions of
the application, Defendant approved Plaintiff's
application on August 4, 2015.
conducted the IOA on September 9 and 10, 2015. The IOA
resulted in seventeen minor non-conformity reports
(“NCRs”). Defendant issued a report of its IOA to
Plaintiff on September 22, 2015. The Manual requires that all
minor NCRs be resolved within ninety days-in this case,
December 11, 2015. (Docket #19-2 at 16). The NCR resolution
deadline was twice extended by Defendant, consistent with the
terms of the Manual, at Plaintiff's request. Plaintiff
closed sixteen of the NCRs by January 16, 2016, and the final
NCR was closed on ...