993 F.3d 1299
11th Cir.2021Background:
- In 2005 Kinwong (manufacturer) contracted with Circuitronix (Florida distributor) granting Circuitronix exclusive rights to sell Kinwong products to customers Circuitronix recruited and prohibiting Kinwong from dealing with those customers directly or indirectly.
- A 2010 settlement modified the relationship, adding a Covenant Not to Circumvent (covering entities listed on Schedule A) and a $2 million per-breach liquidated-damages clause.
- Circuitronix sued Kinwong in 2017 for repeated circumvention; the district court dismissed unjust enrichment, allowed breach claims, held the liquidated-damages clause unenforceable on summary judgment, and barred Circuitronix from seeking lost-profit damages for failure to disclose computations.
- At trial a jury awarded Circuitronix roughly $1 million in compensatory damages; Kinwong moved under Rule 50 regarding whether sales to General Motors and Nissan fell outside the covenant.
- Post-judgment Kinwong filed a Rule 50(b) renewed motion after a clerk’s office holiday closure and after electronic filing was available; the timeliness and merits of that motion were appealed.
- The Eleventh Circuit affirmed: Rule 6 tolling applied because the clerk’s office was officially inaccessible; Kinwong’s Rule 50 motions fail on contract interpretation; liquidated-damages clause is an unenforceable penalty; exclusion of lost-profit damages was not an abuse of discretion.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of Rule 50(b) filing when clerk’s office closed | Kinwong’s filing timely because official closure made clerk’s office inaccessible under Rule 6(a)(3) and tolled the deadline | Filing was untimely; electronic filing was available so deadline was not extended | Court held official closure renders clerk’s office inaccessible under Rule 6(a)(3); electronic filing availability does not prevent tolling; Kinwong’s filing timely |
| Whether sales to GM and Nissan breached covenant (contract interpretation) | Kinwong: covenant’s trigger requires orders "from" end-customers (i.e., direct orders), so GM/Nissan outside scope | Circuitronix: GM/Nissan are listed on Schedule A and sales to them circumvent Circuitronix’s protected relationship with Lear | Court held Kinwong breached: sales to GM/Nissan circumvented Circuitronix’s protected relationship with Lear and violated the covenant |
| Enforceability of $2M per-breach liquidated-damages clause | Circuitronix: clause enforceable as reasonable pre-estimate of damages | Kinwong: $2M per breach is grossly disproportionate and a penalty under Florida law | Court held clause unenforceable as a penalty because the stipulated amount was grossly disproportionate to foreseeable damages |
| Exclusion of lost-profit damages for nondisclosure under Rule 26/37 | Circuitronix: omission harmless; Kinwong could compute damages and exclusion was too severe | Kinwong: failure to disclose computations was unjustified and prejudiced its preparation | Court held exclusion not an abuse of discretion; nondisclosure was not harmless and Circuitronix forfeited argument that lesser sanctions were required |
Key Cases Cited
- Chao Lin v. U.S. Att’y Gen., 677 F.3d 1043 (11th Cir. 2012) (official closure of clerk’s office makes it "inaccessible" for filing deadlines)
- Unitherm Food Sys., Inc. v. Swift-Eckrich, Inc., 546 U.S. 394 (U.S. 2006) (preservation rule for Rule 50 motions and need to renew post-judgment)
- Lefemine v. Baron, 573 So. 2d 326 (Fla. 1991) (Florida test for enforceability of liquidated-damages clauses)
- Mee Indus. v. Dow Chem. Co., 608 F.3d 1202 (11th Cir. 2010) (analysis of prejudice and discovery-sanction effects)
- Rosenberg v. DVI Receivables XIV, LLC, 818 F.3d 1283 (11th Cir. 2016) (timeliness/preservation consequences for Rule 50(b) motions)
- Shotts v. OP Winter Haven, Inc., 86 So. 3d 456 (Fla. 2011) (severability principles in Florida contract law)
- Sec. & Exch. Comm’n v. Marin, 982 F.3d 1341 (11th Cir. 2020) (legal error as a per se abuse of discretion)