Court Sends Contract Claim Back For Recalculation Of Damages
SUPERL SEQUOIA LIMITED v. THE CARLSON CO. (August 11, 2010)
In preparation for a Martha Stewart promotion, Macy's solicited bids for the furniture required to create the promotion settings and its installation. Carlson Company, a Wisconsin furniture manufacturer, wanted to bid but lacked sufficient capacity. Superl Sequoia, a Hong Kong manufacturer, and Carlson agreed to work together. Sequoia agreed to provide most of the furniture -- Carlson agreed to install the furniture and to fix or replace furniture, as necessary. They also agreed to split the profits 50-50. Sequoia quoted a $3.4 million price to Carlson. Carlson marked up the quote, added its anticipated cost, and submitted a $5 million bid. Macy's accepted the bid, was satisfied with the work, and paid the invoice. Carlson only paid Sequoia $2 million, however, claiming that it spent more on replacements and repairs for late or substandard furniture than it had anticipated. Sequoia brought an action for breach of contract. Judge Crabb (W.D. Wis.) concluded that Sequoia breached the contract because of late and substandard deliveries and that Carlson could recover its replacement and repair costs. She then held a bench trial to calculate those costs. She disregarded the $3.4 million quote, instead demanding that Sequoia provide evidence of its actual costs. At trial, the court first concluded that Sequoia's costs were $2.2 million and that Carlson's were $.4 million -- entitling each to approximately $1.15 million in profit. But the court then added that Carlson was entitled to an additional $1.16 million to cover its extra expenses and entered judgment for Carlson for approximately $10,000. Sequoia appeals.
In their opinion, Chief Judge Easterbrook, Circuit Judge Kanne, and District Judge Kennelly vacated and remanded. The Court first concluded that the district court's calculations of damage amounts were not clearly erroneous. On the other hand, the Court questioned two legal decisions of the trial court. The first was the court's allowance of the $1.16 million in replacement and repair costs to Carlson, which was calculated to include overhead and profit. Although the agreement of the parties was documented in a group of e-mails without a formal contract, the Court concluded that the parties agreed that only Carlson's out-of-pocket repair and replacement costs were recoverable. The second legal decision addressed by the Court was the district court's treatment of the $3.4 million bid. Again interpreting a number of e-mails documenting the agreement with some difficulty, the Court disagreed with that treatment. First, the Court noted that Carlson accepted the quote long before the relevant e-mail exchange. The quote was the basis upon which Sequoia joined the venture -- Carlson cannot retroactively ignore it. Second, the quote was given as a fixed amount -- both the floor and the ceiling on Sequoia's costs. The later e-mails should not be viewed as fundamentally changing the structure of the deal. The Court remanded with instructions to the district court to recalculate the judgment.
Airadigm Communications' principal assets when it petitioned for bankruptcy in 1999 were fifteen mobile phone service licenses issued by the FCC. Pursuant to regulation, the FCC revoked the licenses and Airadigm's 2000 reorganization plan treated them as if they were not part of the bankruptcy estate. It did, however, petition for reinstatement of the licenses. The plan provided alternative treatment for the claims of two major creditors (Oneida and Ericsson), depending on whether the licenses were reinstated. Payment of both claims was going to be financed by loans from Telephone and Data Systems, Inc. ("TDS") -- and the claims have since been assigned to TDS. TDS also advanced additional funds directly to Airadigm pursuant to three loans. Each of the loans was to be repaid by collateral surrender. Several years after the reorganization plan was confirmed, the Supreme Court
Ronald Lehn was employed at a General Electric Company facility in Ottawa, Illinois and participated in the company's retirement plan. For many years, his wife Lisa was the primary beneficiary under the plan. Lehn created a trust in 2002 which directed the trustee to distribute 25% shares to his wife, his son, his daughter, with a fourth 25% share going to other family members. He did not attempt to change the designated beneficiary with the Plan, however, until 2005. When he attempted to designate the Trustee as the primary beneficiary, he was told that he needed the signed and notarized consent of his spouse. He submitted a form that purported to contain Lisa's signature that had been notarized by one of his coworkers. The coworker did not witness Lisa's signature. Lehn died later that year. The company advised Lisa that it was aware of his death and that their records indicated that the Trust was the beneficiary of his retirement benefits. Lisa's representative submitted a claim for benefits and advised the company that Lisa had not been competent at the time of her supposed consent. Over the next several months, Lisa's representative submitted substantial additional information and support for her position, including a letter from Lehn himself describing his wife as "profoundly demented." The company advised the Trust of Lisa's claim. The Trust's investigation discovered the absence of a properly notarized consent form. In late 2006, the Plan granted Lisa's claim for benefits and denied the Trust's claim. Following some additional investigation, the Trust indicated its concurrence with the Plan's decision. The Trust nevertheless filed suit against the company and the Plan. Judge Mihm (C.D. Ill) dismissed the § 502(a)(3) and breach of fiduciary duty claims and other state law claims and granted summary judgment on the ERISA § 502(a)(1)(B) claim. The Trust appeals.
Mark Serafinn is a member of Local 722 of the International Brotherhood of Teamsters. In fact, he served three terms as its president. Serafinn is also a member of the Teamsters for a Democratic Union ("TDU"), a large and active dissident group opposed to the current international leadership. Serafinn alleges that the presidents of the union and the joint council, which is a group of leaders from locals in the same region, colluded to have internal disciplinary charges brought against him. The joint council suspended Serafinn and ordered restitution. Serafinn brought an action against both the local union and the joint council under the Labor Management Reporting and Disclosure Act. He alleged that the actions taken against him were taken without due process in retaliation for his exercise of free speech and assembly rights, all in violation of the Act. The district court granted summary judgment to the joint council. The claim against the local union proceeded to a jury trial, where Serafinn was awarded $50,000 in compensatory damages and $55,000 in punitive damages. After trial, the court denied a motion by Serafinn for relief from the summary judgment granted to the joint council on the grounds of newly discovered evidence. The court also awarded attorneys fees to Serafinn, but in a lesser amount than requested. The union local appeals. Serafinn cross appeals.
Kirsten Majeski was a nurse consultant for Metropolitan Life Insurance Co. ("MetLife"). Her typical workday involved sitting at a desk, using a phone and computer. In 2006, she was diagnosed with cervical radiculitis, a compression in the upper spinal. MetLife originally approved short-term disability benefits. It later determined that Majeski was not entitled to benefits, concluding that her impairment did not prevent her from performing her job. Majeski appealed and submitted medical evidence from her doctor and physical therapist. The conclusion of the medical evidence was that she had difficulty sitting and using her hands -- and was thus unable to perform her job. MetLife had a physician review the records. He concluded that there were "minimal objective findings" to support the suggested limitations. MetLife rejected the appeal. Majeski brought suit under ERISA. The district court granted summary judgment to MetLife. Majeski appeals.
Elizabeth Black was the executive director of the Milwaukee World Festival, Inc., the organization that operates an annual summer music festival in Milwaukee. In early 2001, she had surgery to repair two aneurysms. She returned to work after several weeks and was well enough to run the festival that summer. Although her contract was not scheduled to expire until the end of 2003, she sought a renewal after the 2001 festival. The organization deferred a decision until 2002. When that time came, many of her relationships with coworkers had deteriorated. She complained, and had several doctors support her complaints, that the stress and abuse of her job was harmful to her health. In July of 2003, the organization elected not to extend her contract. Within a month, Black claimed that she was disabled and could no longer work. She filed a disability claim with the organization's plan. The plan denied the claim, based on a review of the records she submitted. After an administrative appeal, the plan’s underwriter consulted four physicians and a psychiatrist, each of whom reviewed her records and concluded that she was not disabled. The underwriter denied the appeal. Black appealed to the district court, which granted summary judgment to the plan. Black appeals.
Michelle Eskridge died of pneumonia after having been treated at Access Community Health Network (Access) and Stroger Hospital. Access was a U. S. Public Health Service facility and Stroger was a Cook County facility. Michelle's parents sued Access and Cook County in state court. The United States removed the case to federal court, where the case against the U.S. was dismissed for failure to exhaust Federal Tort Claims Act remedies. The court remanded the case against Cook County to state court. The Eskridges exhausted their remedies and filed a second suit in federal court against the county and the United States and dismissed the earlier suit. Later, having decided to pursue only Cook County, the Eskridges filed yet a third lawsuit, in state court, against Cook County and moved to dismiss the federal suit. Their motion was granted. Meanwhile, in state court, Cook County moved to dismiss the suit on procedural grounds. Upon realizing the merits of the County’s defense, the Eskridges filed a motion in federal court for relief from their own voluntary dismissal, claiming they intended only to dismiss the United States. The court denied the motion. They then moved for reconsideration, a motion which was considered a second Rule 60(b) motion, which was also denied. The Eskridges appeal.
After 23 years on the job, Edward Raybourne went on long-term disability. He was about to have the first of four surgeries on the big toe of his right foot. His disability plan provided payments for 24 months upon a showing that he was unable to perform his regular job. After 24 months, he had to show that he was unable to perform any job in order to continue receiving benefits. After an independent medical examination concluded that Raybourne could return to work, Cigna terminated his long-term disability benefits. Raybourne's treating physician continued to state that he was unable to return to work. After his internal appeals were unsuccessful, Raybourne brought suit under ERISA. The district court granted summary judgment to Cigna, concluding that it had not abused its discretion. Raybourne appeals.
Charles Jenkins went to work for PricewaterhouseCoopers LLP ("PwC") in 1989. He started experiencing health problems related to HIV in 1993. He suffered from fatigue, nerve damage, decreased sensation, dexterity limitations, and infections. By the end of 1993, he was no longer able to work. He filed a claim under PwC’s long-term disability plan. The plan administrator agreed that he met the definition of "total disability" and paid him benefits from 1994 until 2006. Beginning in 2004, the plan administrator began to review Jenkins' file. After two medical record reviews and an independent medical examination, the plan administrator terminated Jenkins' benefits. The more recent reviews concluded that Jenkins' condition was fairly stable and that he may be capable of performing some jobs. In fact, a rehabilitation specialist identified certain specific positions that fit within Jenkins’ limitations. Jenkins' treating physician disagreed with the conclusion and maintained that he was unable to work. After an unsuccessful internal appeal, Jenkins brought an action under ERISA. The district court granted summary judgment to the plan. Jenkins appeals.
Lisa Leger suffered from osteoarthritis for years. Prior to 1990, she underwent three different arthroscopic procedures but was able to hold a job and engage in a rehabilitative exercise program. However, in 1990, she stopped working for WGN-TV and went on short-term disability. She began receiving long-term disability benefits in December 1990. She continued to receive benefits through 2005. During that time, she continued to have pain and problems with her knees and underwent multiple additional surgeries. The plan administrator reviewed her benefits in 2005 and requested updated information. Her treating physician advised that she was essentially unable to walk. The plan administrator's medical review concluded that she had significant osteoarthritis but that she was not precluded from sedentary work. A vocational rehabilitation consultant identified several employment positions for which she was qualified. The plan administrator therefore terminated her benefits in October of 2005. Leger appealed and provided additional medical information. The plan administrator arranged for another review of the file. That review highlighted some inconsistencies in her records. For example, the records indicated that she could not sit for more than 30 minutes at a time but she nevertheless was wheelchair bound. The plan administrator upheld the decision to terminate her benefits. Leger brought an action pursuant to ERISA’s section 1132 (a)(1)(b) to reinstate her benefits. The lower court granted summary judgment to the plan, stating that it advanced a reasonable explanation for its decision to terminate the benefits. Leger appeals.