Migerobe, Inc. v. Certina USA, Inc.
924 F.2d 1330 (1991)
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Rule of Law:
Under the Uniform Commercial Code, multiple documents, including internal memoranda, can be integrated to satisfy the Statute of Frauds. Consequential damages for lost profits on corollary sales are recoverable if they were foreseeable to the breaching party and can be proven with reasonable certainty using the best evidence available, such as historical data from similar promotions.
Facts:
- Migerobe Inc., a jewelry retailer, sought to purchase a large quantity of Certina USA watches at a discount for an After-Thanksgiving 'door-buster' sales promotion.
- Migerobe communicated its interest and promotional plan to Gerald Murff, a sales representative for Certina.
- Certina's vice president of retail sales, William Wolfe, authorized Murff to offer Migerobe a specific list of watches at a price of $45 each.
- During a meeting on October 29, 1987, Murff was made aware that Migerobe intended to use the watches as 'loss leaders' to increase store traffic and boost corollary sales of non-advertised items.
- After a full day of negotiations, Migerobe agreed to purchase over 2,000 watches at the specified price.
- Murff telephoned Certina's office to report the sale, and an administrative assistant recorded the transaction on a Certina order form.
- On November 4, 1987, Certina's national accounts manager, Don Olivett, informed Migerobe that Certina would not ship the watches ordered.
- Certina's president later stated the order was rejected due to concerns that the special price might violate the Robinson-Patman Act.
Procedural Posture:
- Migerobe Inc. sued Certina USA in federal district court for repudiation of an oral contract.
- Following a five-day trial, a jury returned a verdict in favor of Migerobe, awarding it $157,133 in damages.
- Certina filed a post-trial motion for judgment notwithstanding the verdict and for a new trial or remittitur.
- The district court denied Certina's motions.
- Certina (Appellant) appealed the judgment to the U.S. Court of Appeals for the Fifth Circuit, and Migerobe (Appellee) sought to have the judgment affirmed.
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Issue:
Under the Uniform Commercial Code, does a seller's breach of a contract for goods intended as 'loss leaders' permit the buyer to recover consequential damages for lost profits from corollary sales, when such damages are proven with historical data from similar, but not identical, past promotions?
Opinions:
Majority - Thornberry, Circuit Judge
Yes. The UCC permits recovery for lost corollary sales because the seller had reason to know the goods were intended for a loss leader promotion, making such losses a foreseeable consequence of breach, and the buyer may prove these damages with reasonable certainty using the best evidence available, which can include historical data from similar promotions. The court affirmed the jury's verdict, finding sufficient evidence on all challenged grounds. First, the Statute of Frauds was satisfied by integrating three documents: a signed internal memo from Certina's VP authorizing the sale, a signed memo establishing a promotion code for the Migerobe order, and an unsigned Certina order form detailing the sale terms. Second, there was sufficient evidence for a jury to find the salesman, Murff, acted with both actual authority, expressly granted by his superior, and apparent authority, as Certina's actions clothed him with the semblance of authority to finalize the sale. Finally, Migerobe was entitled to consequential damages for lost corollary sales because it satisfied the two-part test: the losses were foreseeable to Certina, who knew the watches were 'door-busters,' and the amount was proven with reasonable certainty through expert testimony and historical data from previous years' promotions. The court held that a breaching party cannot complain about a lack of mathematical precision in damages when its own breach made such precision impossible.
Analysis:
This decision reinforces the UCC's flexible approach to contract formation, allowing multiple documents, even internal ones, to be pieced together to satisfy the Statute of Frauds. Its primary significance, however, lies in its treatment of consequential damages in a retail context. The ruling provides strong support for the recovery of lost profits on 'corollary sales,' affirming that historical data from similar, though not identical, promotions can meet the 'reasonable certainty' standard for proof. This lowers the evidentiary burden for plaintiffs seeking such damages and establishes that a seller aware of a buyer's promotional strategy bears the risk of losses stemming from that strategy if the seller breaches.
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