Minnesota Supply Co. v. Raymond Corp.
| Decision Date | 28 December 2006 |
| Docket Number | No. 04-2169.,No. 04-1850,No. 04-1416,No. 04-2168,04-1416,04-1850,04-2168,04-2169. |
| Citation | 472 F.3d 524 |
| Parties | MINNESOTA SUPPLY COMPANY, a Minnesota Corporation, Plaintiff-Appellee/Cross-Appellant, v. The RAYMOND CORPORATION, a New York Corporation, Defendant-Appellant/Cross-Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
James B. Nichaus, argued, Cleveland, OH, for appellant.
Gary W. Leydig, argued, Chicago, IL, for appellee.
Before ARNOLD, BOWMAN, and GRUENDER, Circuit Judges.
In this diversity action, a jury returned a verdict in favor of Minnesota Supply Company (MN Supply) against The Raymond Corporation (Raymond) on three claims arising under the Minnesota Heavy and Utility Equipment Manufacturers and Dealers Act (HUEMDA), Minn.Stat. §§ 325E.068-325E.0684, and awarded MN Supply over $14 million in damages. The District Court entered judgment for MN Supply but reduced the damages award. The court then awarded MN Supply attorney fees and actual costs, but in an amount less than that requested by MN Supply. Raymond appeals, raising several allegations of error. MN Supply cross-appeals the reduction of damages and the amount of costs awarded. We affirm in part, reverse in part, and remand the case to the District Court for a new calculation of attorney fees and costs to be awarded MN Supply.
Raymond and MN Supply entered into a dealership agreement in 1947 whereby MN Supply would act as a dealership for lift trucks, i.e., forklifts, manufactured by Raymond. MN Supply was located in Eden Prairie, Minnesota, and its territory under the dealership agreement included Minnesota, North Dakota, South Dakota, and the western counties of Wisconsin. MN Supply sold only lift trucks manufactured by Raymond until 1989, when MN Supply also began selling lift trucks manufactured by Caterpillar. These Caterpillar lift trucks were designed and classified differently from the Raymond lift trucks and because of market conditions and customer preferences, generally did not compete with the Raymond lift trucks.
Also in 1989, the Minnesota legislature passed HUEMDA. HUEMDA specified that a heavy-equipment manufacturer must have good cause to terminate, cancel, or fail to renew a dealership agreement or to change the competitive circumstances of the agreement. The statute gave examples of what would constitute such good cause and specified certain actions that would amount to violations of HUEMDA. In particular, HUEMDA made it a violation for a manufacturer to "coerce an equipment dealer into a refusal to purchase the equipment manufactured by another equipment manufacturer." Id. § 325E.0682(b)(2). HUEMDA also gave equipment dealers the right to seek damages from or an injunction against manufacturers for any violation of the statute. Id. § 325E.0684.
In 1990, MN Supply and Raymond updated their dealership agreement. One provision (Paragraph 18) of the updated agreement gave Raymond the right to terminate the agreement if MN Supply sold lift trucks that competed directly with Raymond lift trucks without first obtaining Raymond's written consent. Again, the Caterpillar trucks sold by MN Supply at the time were considered noncompeting because of their different design and target customer. In 1992, however, Raymond began producing narrow-aisle lift trucks for Caterpillar that did compete directly with the Raymond brand of lift trucks.1 MN Supply elected to sell the new Caterpillar narrow-aisle lift trucks even though Raymond asserted that doing so would run afoul of Paragraph 18.
Raymond was concerned about MN Supply's diversion of time and attention from representing Raymond lift trucks, and Raymond wanted to ensure that MN Supply would maintain Raymond's market share in MN Supply's territory. For this reason, Raymond negotiated changes to the dealership agreement before giving MN Supply consent to sell the competing Caterpillar lift trucks. The primary factor driving these negotiations was the threat that Raymond would terminate the dealership agreement pursuant to Paragraph 18 if MN Supply did not agree to amend the terms. By 1993, the parties had negotiated an amendment (the 1993 Amendment) under which MN Supply agreed to create a separate and independent division for the sale of Caterpillar narrow-aisle lift trucks. The 1993 Amendment also required MN Supply to maintain the market share for Raymond lift trucks that MN Supply had achieved in 1992, and it gave Raymond the right to terminate the dealership agreement if these conditions were not met. After the parties executed the 1993 Amendment, MN Supply began selling the competing line of Caterpillar lift trucks.
By 1995, Raymond's market share in MN Supply's territory had diminished substantially. Raymond expressed its concern to MN Supply, and MN Supply asked for a year's time to improve. In addition, MN Supply submitted to Raymond a business plan and performance objectives but nevertheless failed to reach the required performance levels over the next year. Raymond served notice to MN Supply on December 31, 1996, that it wished to terminate the dealership agreement, and Raymond denied MN Supply's request to provide a further extension to the agreement. The parties then began the process of terminating their fifty-year relationship.
The 1990 dealership agreement provided that as part of the termination process, Raymond would repurchase certain parts and inventory from MN Supply. The parties met in April 1997 to discuss this repurchase and other transitional issues. After the meeting, Raymond sent MN Supply a document entitled Termination by Mutual Consent (TMC) to spell out some of the termination issues. This document included a release of any claims by MN Supply against Raymond. The parties had several conversations regarding the TMC, and during the process of negotiating, Raymond informed MN Supply that Raymond would not move forward with the parts repurchase unless the TMC was finalized.
Further negotiations ensued, and MN Supply returned to Raymond a modified draft of the TMC it had received from Raymond. The modified draft included a release of any claims by Raymond against MN Supply similar to the release MN Supply had been asked to sign. MN Supply's modified draft of the TMC also declared Minnesota law as controlling the agreement, which was contrary to Raymond's original draft declaring New York law as controlling. MN Supply's president had signed the modified draft of the TMC before sending it to Raymond, but MN Supply never received a signed copy of the modified draft back from Raymond. In fact, MN Supply heard nothing more about the TMC until after the termination. Raymond claims its vice president of sales received the modified draft, signed it, and placed it in Raymond's file without sending a signed copy back to MN Supply. In any event, the parties moved forward with the inventory and parts repurchase, and they eventually terminated their relationship. Raymond immediately awarded MN Supply's former territory to a newly formed dealership that was a subsidiary of Raymond.
In 1999, MN Supply brought this diversity action in federal court, claiming three violations of HUEMDA. MN Supply first claimed that Raymond had unlawfully coerced MN Supply into agreeing to the 1993 Amendment by threatening to terminate the dealership agreement if MN Supply sold the Caterpillar narrow-aisle lift trucks. MN Supply next claimed that the 1993 Amendment constituted a change in competitive circumstances imposed by Raymond without good cause. Finally, MN Supply claimed that Raymond's termination of the dealership agreement in 1997 was without good cause because it was based on MN Supply's failure to meet unreasonable terms set forth in the 1993 Amendment. Each party moved for summary judgment, with Raymond arguing, inter alia, that the suit was barred by the release of claims contained in the TMC and with MN Supply countering that the TMC was never formed. The court granted MN Supply's motion in part, finding that because Raymond never sent a signed copy of the TMC back to MN Supply, the release of claims contained in the TMC was not enforceable. The court denied Raymond's motion for summary judgment and the remainder of MN Supply's motion, and the parties prepared for a jury trial.
Prior to trial, the District Court held a jury-instruction conference at which Raymond sought to have the jury instructed that the TMC's release provision was an affirmative defense to MN Supply's claims, notwithstanding the partial grant of summary judgment in favor of MN Supply on the issue. MN Supply filed a motion in limine arguing that any evidence of the TMC should be suppressed pursuant to the District Court's summary judgment order. In response to MN Supply's motion in limine, Raymond brought forward alleged new evidence that it had indemnified MN Supply in a product-liability suit in 1997 and that this indemnification was pursuant to the terms of the TMC. This evidence, Raymond claimed, indicated that the TMC had indeed been formed. The District Court agreed with MN Supply, ruling that the evidence of indemnification should have been produced at the summary judgment stage and that no evidence of the TMC could be produced to the jury.
At trial, as evidence of damages, MN Supply produced an expert who testified that MN Supply had lost more than $14 million as a result of the 1997 termination of the dealership agreement. In reaching the amount of lost profits occurring before and after trial, the expert had present-valued certain portions of the actual losses claimed. Raymond objected, arguing that MN Supply's expert had included prejudgment interest in his estimate of damages, which by statute was to be calculated by the court, not the jury. See Minn.Stat. § 549.09. The District Court allowed the expert's testimony and proposed to resolve the issue of...
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