CNH Industrial America LLC v. Jones Lang LaSalle Americas
882 F.3d 692
7th Cir.2018Background
- CNH hired Jones Lang LaSalle (JLL) in 2008 to manage a turnkey re-branding program replacing signage at ~1,442 New Holland dealerships; JLL’s Statement of Work required it to negotiate and document warranties, provide one-year post-installation warranty management, and exercise manufacturing quality control.
- JLL selected Arlon as the exclusive vinyl supplier; manufacturing contracts (signed by JLL) contained only a one-year warranty on completed signs while Arlon’s vinyl warranty terms were not fully documented in the record.
- Beginning in 2008–2011, vinyl problems (bubbling, tearing, later cracking/peeling of blue vinyl) emerged; Arlon initially agreed to replace defective vinyl and in 2011 allegedly agreed to replace failing installed signs, but never formalized that commitment and later stopped full replacement.
- CNH sued JLL in 2015 for breach of contract, alleging JLL failed to negotiate/document warranties, failed to perform adequate quality control, and failed to manage warranty claims timely; district court found multiple breaches and awarded $5,482,735 in damages reduced by contract to $3,026,361.60 (amount of fees paid to JLL).
- JLL appealed, raising jurisdictional and contract-construction defenses (including that dealer claim assignments were collusive and that Section 26 limited its liability to recoveries from Additional Service Providers or fees/ $1M). The Seventh Circuit affirmed.
Issues
| Issue | Plaintiff's Argument (CNH) | Defendant's Argument (JLL) | Held |
|---|---|---|---|
| Validity of dealer claim assignments / subject-matter jurisdiction | Assignments aggregated dealer claims to CNH for efficient resolution; diversity jurisdiction proper because CNH had independent claims and supplemental jurisdiction covered most dealer claims | Assignments were collusive to manufacture federal jurisdiction (some assignors share JLL citizenship; dealer claims individually under $75k) | Assignments not collusive; federal jurisdiction proper (CNH’s own diverse claims and supplemental jurisdiction justify inclusion) |
| Contractual limitation of liability (Section 26) | CNH: Section 26 properly applied to limit recovery to fees paid (district court applied subsections to reduce award) | Section 26(i) should cap JLL’s liability to amounts JLL can recover from Additional Service Providers (effectively precluding CNH recovery from JLL) | Court declined to resolve new construction raised on appeal; district court’s mixed application of subsections was plausible and JLL forfeited/waived the new argument on appeal |
| Breach of contract (warranty documentation / negotiation / warranty management / quality control) | JLL failed to document Arlon warranty, failed to negotiate better terms, passively managed warranty claims, and failed to perform independent quality-control/testing, causing larger scope of failures | JLL acted reasonably: relied on Arlon’s assurances, CNH approved vendors/contracts, cost constraints explained warranty choices, and CNH waived objections by silence/acceptance | District court’s findings of breach were supported: JLL breached multiple obligations (did not document/clarify warranty, did not negotiate or manage proactively, and failed to investigate/manufacture QC) |
| Damages causation and waiver/acceptance | Damages equal cost to replace failed signs; JLL’s breaches made the loss larger and are proximate cause | Damages overstated; CNH waived claims by accepting deliverables and failing to timely object; some failures were known or self-installed by dealers | District court’s damages assessment was not clearly erroneous; CNH did not waive claims—JLL bore primary duty to manage and CNH reasonably relied on JLL’s role |
Key Cases Cited
- Grede v. Bank of New York Mellon, 598 F.3d 899 (7th Cir. 2010) (assignments to a single plaintiff for efficient aggregation do not necessarily create collusive jurisdictional assignments)
- Kramer v. Caribbean Mills, Inc., 394 U.S. 823 (U.S. 1969) (assignment may be collusive when designed solely to invoke federal jurisdiction)
- Steele v. Hartford Fire Ins. Co., 788 F.2d 441 (7th Cir. 1986) (discussing collusive assignment doctrine under 28 U.S.C. § 1359)
- Exxon Mobil Corp. v. Allapattah Services, Inc., 545 U.S. 546 (U.S. 2005) (supplemental jurisdiction principles for joining related claims)
- Navarro Savings Ass'n v. Lee, 446 U.S. 458 (U.S. 1980) (trust citizenship and related jurisdictional principles)