Cooper Distributing Co. v. Amana Refrigeration
| Decision Date | 18 June 1999 |
| Docket Number | No. 98-6400.,98-6400. |
| Citation | 180 F.3d 542 |
| Parties | COOPER DISTRIBUTING CO., INC., a New Jersey corporation, Appellant v. AMANA REFRIGERATION, INC., a Delaware corporation. |
| Court | U.S. Court of Appeals — Third Circuit |
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Donald A. Klein, Kenneth K. Lehn, Winne, Banta, Rizzi, Hetherington & Basralian, Hackensack, New Jersey, John J. Gibbons, Gibbons, Del Deo, Dolan, Griffinger & Vecchione, Newark, New Jersey, for Appellant.
Stephen M. Greenberg, Stern & Greenberg, Roseland, New Jersey, for Appellee.
Before: SLOVITER, SCIRICA and ALITO, Circuit Judges.
Submitted Pursuant to Third Circuit LAR 34.1(a) April 23, 1999.
This is the second appeal of a damages award for wrongful termination of a franchise under the New Jersey Franchise Practice Act ("NJFPA"). In the first appeal, we vacated the award and remanded for a new trial on the appellant's NJFPA damages. See Cooper Distributing Co. v. Amana Refrigeration, Inc., 63 F.3d 262 (3d Cir.1995) (Cooper I). The plaintiff appealed again following the second trial. After argument, we remanded so that the District Court could rule on one open matter. Thereafter, the parties returned to this Court. We will affirm in part, reverse in part, and remand for further proceedings.
From 1961 to 1991, Cooper Distributing Company ("Cooper") was a distributor of appliances manufactured by Amana Refrigeration, Inc. ("Amana"). Under the terms of their distribution contract, Cooper bought a specified quantity of products at a wholesale discount from Amana and then resold them to retailers, who in turn sold them to consumers. Although Cooper did not have exclusive distribution rights under the contract, Cooper was the only distributor of Amana products in its territory, which primarily encompassed New York, New Jersey, and Connecticut. By 1991, Cooper's sales of Amana products generated $20 million per year in revenues and constituted about 80 percent of Cooper's business.
In November 1991, Amana attempted to terminate its distribution relationship with Cooper on ten days' notice, citing a provision in the distribution contract allowing either party to do so. It is undisputed that the attempted termination was motivated by changes in Amana's nationwide business strategy rather than unsatisfactory performance on Cooper's part.
Cooper sued Amana in New Jersey state court, alleging four causes of action: (1) unlawful termination without good cause in violation of the NJFPA; (2) breach of contract; (3) breach of the implied obligation of good faith and fair dealing; and (4) tortious interference with prospective economic advantage. Amana removed the case to federal district court in New Jersey. In February 1992, the District Court issued a preliminary injunction prohibiting Amana from "`taking any action whatsoever to limit . . . or in any way interfere with Cooper's activities as a distributor of Amana products.'" Cooper I, 63 F.3d at 267-68 (quoting the injunction). The injunction was still in effect when the parties went to trial in February 1994.
At trial, the jury found Amana liable on all four counts and awarded Cooper $4.375 million in compensatory damages on its NJFPA claim, $2 million on its breach of contract claim, and zero in actual damages on both of the remaining two common-law claims. It also awarded Cooper $3 million in punitive damages on the tortious interference claim. Accordingly, on March 8, 1994, the District Court entered a judgment of $9.375 million in damages to Cooper and dissolved the injunction, thereby allowing Amana to terminate the distributorship and pay damages.
On appeal, we affirmed the judgment of liability under the NJFPA but held the District Court should have found as a matter of law that there was no breach of contract; therefore, we reversed the award of $2 million in damages on that claim. See Cooper I, 63 F.3d at 280-81. We also reversed the award of $3 million in punitive damages for tortious interference because no actual damages had been found, see id. at 284, and we vacated the award of $4.375 million in NJFPA damages and remanded for a new trial on that issue, see id. at 277-78.
Cooper I identified two defects in the original calculation of NJFPA damages. First, the jury had mistakenly assumed that Cooper had an exclusive right to sell Amana products to retailers in its territory. This assumption, we found, was expressly contradicted by the unambiguous terms of the contract and it resulted in a significantly higher valuation of the franchise. See id. at 278. Second, we held the franchise had been valued as of the wrong date. The District Court had instructed the jury to value the franchise as of November 8, 1991, the date on which Amana first attempted to terminate the franchise. As we pointed out, however, the more appropriate valuation date was March 8, 1994, the date on which the franchise actually was terminated. Cooper had continued to earn income from its franchise after November 8, 1991. Thus, to value the franchise as of that date would bestow upon Cooper a "double recovery," as Cooper would receive both the value of the franchise on November 8, 1991—that is, the present value of lost future earnings from the franchise—and the actual earnings from the franchise after that date. Id. Consequently, we held "the proper date of valuation in this case is March 8, 1994," id., and remanded for "a new trial on NJFPA damages consistent with this opinion," id. at 285.
On remand, the District Court ruled prior to trial that the "only issue" in the case was the franchise's fair market value to a hypothetical buyer and seller as of March 8, 1994. Thus, Cooper was barred from presenting evidence relating to additional damages theories, including the value of the franchise to the actual parties and the amount of lost profits Cooper allegedly suffered before March 8, 1994.
In the second trial, Cooper received an award of $377,000. Cooper now appeals, asserting four grounds for reversal: (1) the District Court erred in limiting the scope of the second trial to a determination of the fair market value of the franchise as of March 8, 1994; (2) the court's jury instructions were misleading and erroneous; (3) the court improperly allowed hearsay testimony and failed to give effect to stipulations by Amana; and (4) the court erroneously denied Cooper's post-trial motion for prejudgment interest.
Cooper argues the District Court misconstrued our mandate in Cooper I, preventing it from proving important components of its damages: the value of the franchise to Cooper and Amana specifically, rather than to a hypothetical buyer and seller; Cooper's lost profits between November 8, 1991 and March 8, 1994; the value of Cooper's complementary distribution lines; and the enhanced value of the franchise due to Amana's subsequent expansion of its distribution line. Amana responds that the District Court's restriction of damages to the fair market value of the franchise as of March 8, 1994 was not only consistent with Cooper I, but was required by the New Jersey Supreme Court's decision in Westfield Centre Service, Inc. v. Cities Service Oil Co., 86 N.J. 453, 432 A.2d 48 (1981).
We exercise plenary review on these issues because they involve whether the District Court properly interpreted the law of the case as set forth in Cooper I. See Feather v. United Mine Workers of America, 903 F.2d 961, 964 (3d Cir.1990). It is "axiomatic" that on remand after an appellate court decision, the trial court "must proceed in accordance with the mandate and the law of the case as established on appeal." Bankers Trust Co. v. Bethlehem Steel Corp., 761 F.2d 943, 949 (3d Cir.1985). Moreover, where (as here) the mandate requires the District Court to proceed in a manner "consistent" with the appellate court decision, the effect is "`to make the opinion a part of the mandate as completely as though the opinion had been set out at length.'" Id. (quoting Noel v. United Aircraft Corp., 359 F.2d 671, 674 (3d Cir.1966)).
Our opinion in Cooper I did not expressly address whether the measures of damages that Cooper now proposes should be included in the scope of the second trial. As noted, we remanded in order for the District Court to remedy two errors in the original calculation of damages: the jury's mistaken assumption that Cooper had possessed an exclusive distributorship, and its valuation of the franchise as of the wrong date. Cooper does not claim either error was repeated in the second trial. Moreover, to the extent our opinion provided guidance as to the specific method by which damages should be calculated on remand, we held the franchise should be valued according to "`either the present value of lost future earnings or the present market value of the lost business, but not both.'" 63 F.3d at 278 (quoting Johnson v. Oroweat Foods Co., 785 F.2d 503, 507 (4th Cir.1986)). The District Court's choice of the latter of these two measures was consistent with that mandate.
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