Boyd v. Tornier, Inc.
2011 U.S. App. LEXIS 17692
| 7th Cir. | 2011Background
- Tornier granted exclusive distributorships to Boyd (Missouri) and Wetherill (Iowa) in 2003 with quotas and termination rights.
- Tornier planned to shift distributors to exclusively Tornier products, promising exclusivity and Nexa rights to Wetherill.
- Tornier raised 2007 quotas drastically; Boyd and Wetherill could not meet them and were removed.
- Boyd and Wetherill sued Tornier for breach of contract, intentional misrepresentation, negligent misrepresentation, and punitive damages.
- District court allowed contract and misrepresentation claims to proceed; punitive damages were later set aside; Texas law governed contract, Missouri/Iowa law governed torts.
- Jury awarded actual damages and punitive damages; magistrate judge vacated punitive awards and entered judgment for actual damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are lost profits recoverable on contract claim? | Boyd/Wetherill seek lost profits despite Article 9.6 limits. | Contract excludes lost profits as damages. | Lost profits must be vacated; contract excludes them. |
| Was the misrepresentation verdict supported by law and fact? | Tornier knowingly misrepresented to induce reliance. | Statements were conditional or not justifiably relied upon. | Intentional misrepresentation affirmed; substantial evidence supports justifiable reliance and knowledge of falsity. |
| Is negligent misrepresentation recoverable under Missouri law? | Tornier supplied false information in business transaction with pecuniary interest. | Tornier not in guidance business; Missouri should follow Iowa approach. | Negligent misrepresentation affirmed under Missouri broad view. |
| Are punitive damages appropriate? | Tornier acted with reckless disregard causing grave harm. | Conduct was not malice or outrageous; punitive damages improper. | Punitive damages set aside; no malice shown; affirmed reduction. |
Key Cases Cited
- Jacobs Mfg. Co. v. Sam Brown Co., 19 F.3d 1259 (8th Cir. 1994) (allows lost-profits in Missouri tort context when ongoing relationship promised)
- Robinson v. Perpetual Servs. Corp., 412 N.W.2d 562 (Iowa 1987) (loss profits extend beyond contract term in Iowa law)
- CADCO, Inc. v. Fleetwood Enters., Inc., 220 S.W.3d 426 (Mo.App. 2007) (Missouri view supports negligent misrepresentation liability)
- Federated Dep't Stores, Inc. v. Houston Lighting & Power Co., 646 S.W.2d 509 (Tex.App. 1982) (contract damage limitations may fail under power disparity)
- Jacobs Mfg. Co. v. Sam Brown Co. (duplicate allowed for emphasis), 19 F.3d 1259 (8th Cir. 1994) (see above)