Roboserve, Inc. v. Kato Kagaku Co., Ltd., 96-3456
| Decision Date | 30 July 1997 |
| Docket Number | 97-1843.,No. 96-3456,96-3456 |
| Citation | 121 F.3d 1027 |
| Parties | ROBOSERVE, INCORPORATED, a Delaware corporation, Plaintiff-Appellant, v. KATO KAGAKU COMPANY, LIMITED, a Japanese company, Defendant-Appellee. ROBOSERVE, INCORPORATED, a Delaware corporation, Plainiff-Appellant, v. KATO KAGAKU COMPANY, LIMITED, a Japanese company, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Eric C. Cohen, Robert B. Breisblatt (argued), A. Sidney Katz, Laurie A. Haynie, Kara F. Cenar, Suzanne Hines, Jerold B. Schnayer, Welsh & Katz, Chicago, IL, for Plaintiff-Appellant in No. 96-3456.
Eric C. Cohen (submitted), Robert B. Breisblatt, A. Sidney Katz, Laurie A. Haynie, John L. Ambrogi, Welsh & Katz, Chicago, IL, for Plaintiff-Appellant in No. 97-1843.
Jerome H. Torshen (argued), Abigail K. Spreyer, Torshen, Spreyer & Garmisa, Chicago, IL, Michael P. Connelly, Kathleen A. Bridgman, Eugene S. Kraus, Charles P. Piacentini, Connelly & Schroeder, Chicago, IL, for Defendant-Appellee in No. 96-3456.
Jerome H. Torshen (submitted), Abigail K. Spreyer, Torshen, Spreyer & Garmisa, Chicago, IL, for Defendant-Appellee in No. 97-1843.
Before RIPPLE, MANION, and KANNE, Circuit Judges.
Argued April 10, 1997 in No. 96-3456.
Decided July 30, 1997 in No. 96-3456.
Submitted May 16, 1997 in No. 97-1843.*
Decided July 30, 1997 in No. 97-1843.
This breach of contract and fraud case is before us again, this time in two appeals on the same damages issue. Roboserve, Inc. and Kato Kagaku Co., Ltd., agreed that Roboserve would provide hotel minibars for the Hyatt Regency Chicago hotel. After Kato revealed to Roboserve that it had contracted with another company for the same service, Roboserve sued for breach of contract, fraud, and wrongful termination. A jury found Kato liable on these claims and awarded nearly $10 million in compensatory and punitive damages. The district court remitted that amount in small part.
In the first appeal, we affirmed the jury's liability findings on each of Roboserve's claims but remanded for a new trial unless Roboserve accepted a substantially reduced damages amount of approximately $2 million. On remand, Roboserve accepted the remittiturs, but the parties disputed whether Kato could deduct from the wrongful termination portion of the damages monthly payments Kato had made since the first trial to Roboserve for use of the minibars. The district court ruled that Kato could, and Roboserve appeals. Meanwhile, Roboserve filed suit against Kato again, alleging breach of contract and unjust enrichment arising from Kato's use of the Robobars after termination of the concession agreement from January 1, 1994 through September 1996. The district court found these claims barred by res judicata. Roboserve also appeals that ruling. We consolidated the second and third appeals and affirm the district court's decisions in each case.
Roboserve leases and services hotel minibars. Kato owns the Hyatt Regency Chicago ("HRC"), although the Hyatt Corporation manages the hotel. In 1986, Roboserve and Hyatt entered into a written concession agreement under which Roboserve would install its "Robobars" in some of the HRC's rooms, and the HRC would use reasonable efforts to place guests likely to use minibars in those rooms and to encourage those guests to make minibar purchases. In early 1987, Roboserve installed most of the minibars. In late 1987 and early 1988, Roboserve learned that Hyatt intended to contract with ServiSystems, Roboserve's competitor, to install "ServiBars" in other rooms in the HRC. A Hyatt representative wrote to Roboserve to explain that the dual installation was a one-year test to evaluate the respective minibars and that the winner would become the preferred minibar provider for Hyatt hotels.
Roboserve won the test and began negotiations with Hyatt about replacing the ServiBars with Robobars. But the one-year test was a pretext. Without Roboserve's knowledge, when Hyatt announced the test it had already entered into a long-term contract with ServiSystems to install ServiBars in the HRC. The negotiations continued for three years, but in early 1992 Hyatt finally revealed its agreement with ServiSystems and informed Roboserve that their concession agreement had come to an end.
Roboserve sued Kato alleging that Kato (through its agent Hyatt) breached the agreement by failing to allow installation of all the minibars and by failing to properly promote the Robobars, wrongfully terminated the agreement, and defrauded Roboserve of further Hyatt business. The jury found Kato liable on each of these three counts and awarded almost $10 million in damages: $2.1 million for the breach of contract, $850,000 for the wrongful termination, and $7 million for fraud ($1 million in compensatory and $6 million in punitive damages).
In post-trial motions, the district court upheld the jury's verdicts, although it agreed with Kato that the jury calculated the wrongful termination damages award based upon an incorrect starting date. Although the jury had answered a special verdict inquiry that the concession agreement had not begun to run at the time of the termination, leading the jury to award damages for a five-year period beginning to run January 1, 1994, the district court determined that that period had begun on March 1, 1993. Because there was a three-quarters of a year difference between the starting dates, the district court remitted the amount the jury would have awarded for three-quarters of a year of profits, from $850,000 to $722,500 in compensatory damages for wrongful termination.
In our resolution of the first appeal, we affirmed the jury's findings of liability on each of Roboserve's claims, including the wrongful termination count, but vacated the breach of contract and fraud damages and remanded for a new trial unless Roboserve accepted remittiturs to $1,053,784 on the breach of contract claim and $37,810 on the fraud claim. Roboserve accepted the breach of contract remittitur while it petitioned for certiorari as to whether it could recover punitive damages for Kato's fraud. The Supreme Court denied Roboserve's petition, so Roboserve accepted this court's formulation of the damages award on the fraud count as well.
On remand, Kato moved pursuant to Fed. R.Civ.P. 60(b)(5) & (6) to set the amount to be paid in satisfaction of the judgment on the wrongful termination claim. After Kato terminated its agreement with Roboserve, Kato did not remove the minibars from the HRC, but continued to pay Roboserve, on a monthly basis, a percentage of the revenues received from those minibars. According to Kato, those payments from January 1994 to July 11, 1996 totaled $312,687.22. The Robobars were finally removed from the HRC in September 1996, just before the notice of this second appeal. In its Rule 60(b) motion, Kato asked the district court to offset the wrongful termination damages award by the money Kato paid to Roboserve for Kato's post-trial use of the Robobars.
Roboserve contested the motion, first arguing that the law of the case doctrine precluded Kato's request. Roboserve asserted that Kato raised this exact issue twice before, once in the district court in post-trial motions and once in the first appeal. In briefs to each court Kato stated that "all revenues paid to Roboserve from the use of its bars at HRC after January 1, 1994 should be set off against the verdict." The district court concluded that The district court therefore concluded that previous court rulings had not decided this issue.
Roboserve also argued that the amounts Kato paid following the judgment were not made in satisfaction of the judgment. To Roboserve, Kato's payments were simply for its continued use of the Robobars still installed at the HRC, not on the wrongfully terminated concession agreement or in satisfaction of the judgment. The district court determined that when the wrongful termination judgment was entered for Roboserve, Kato would have to pay Roboserve $722,500 (plus interest) to compensate Roboserve for the concession payments Roboserve would have received had the agreement not been terminated. But because Kato continued to use the Robobars and to pay Roboserve the amounts due under the concession agreement, Roboserve received some of the money it was due according to the verdict and judgment on the wrongful termination claim. To allow Roboserve the full amount of the wrongful termination judgment in light of these payments, the district court decided, would allow Roboserve to collect some concession payments as if the parties' agreement had not been terminated, as the verdict and judgment presumed.
Accordingly, on September 5, 1996, the district court granted Kato's Rule 60(b) motion and directed the parties to submit a stipulation of the exact amount remaining to be paid in satisfaction of the judgment on the wrongful termination claim. When the parties could not so stipulate, the district court adopted the figures Kato submitted, and on September 13, 1996 subtracted from the $722,500 (the amount Kato owed to Roboserve) the $312,687.22 Kato paid to Roboserve for use of the minibars from January 1994 to July 1996.2
The district court had jurisdiction over this case pursuant to 28 U.S.C. § 1332, as Roboserve is a Delaware corporation with its principal place of business there, Kato is a Japanese corporation, and the amount in controversy easily satisfies the statutory jurisdictional requirement. Roboserve appealed from the September 5 and 13, 1996 orders on ...
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