635 F. App'x 222
6th Cir.2015Background
- CDG (Contract Design Group) and its owner Robert Murray had long-term contracting with Wayne State University (WSU). A 2008 blanket contract required time-and-materials performance and prevailing-wage compliance, but WSU and project manager George Dorset routinely handled jobs as lump-sum orders.
- WSU suspended CDG in Aug. 2009, withheld payment on 29 invoices, terminated the 2008 contract in Oct. 2009, and formally debarred CDG for three years in Dec. 2009 citing prevailing-wage violations and alleged fraudulent payrolls.
- Whistleblower allegations, altered payroll documents, and management concerns (including Dorset’s later suspension/termination) underlay WSU’s actions; a state Wage & Hour investigator later found no prevailing-wage violation for the specific subcontractor at issue.
- CDG and Murray sued under 42 U.S.C. § 1983 (procedural due process), and under Michigan law for account stated, breach of contract, and other claims. At trial the jury awarded: $100,000 (procedural due process to Murray), $200,000 (account stated to CDG), and $250,000 (breach of contract to CDG).
- District court awarded attorneys’ fees under § 1988 and other costs; defendants moved under Rules 50(b) and 59 for judgment as a matter of law, new trial, or remittitur; appeals followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether account stated and breach of contract claims may both stand (merger) | CDG argued the claims were alternative theories to recover the same sums (lump-sum jobs or BPO) and sought both kinds of relief | Defendants argued account stated supersedes/merges antecedent contract claims under Michigan law, preventing double recovery | Court: Judgment reversed on breach claim — account stated merged and superseded antecedent breach claim; breach award vacated/remitted |
| Whether George Dorset had authority to bind WSU for lump-sum orders | CDG relied on longstanding practice and Dorset’s role approving job estimates to show WSU accepted/paid lump-sum work | Defendants argued Dorset lacked authority to form binding contracts for WSU, so no valid contracts existed to support account stated or breach claims | Court: Defendants waived authority argument by failing to raise it pre-verdict; issue not decided on merits |
| Whether remittitur or a new trial was required for excessive/unsupported damages (account stated and breach awards) | CDG argued jury verdicts were supported and district court properly denied remittitur/new trial | Defendants argued duplicative awards and awards exceeded amount pleaded or instructed (account stated exceeded requested $143,837.19) | Court: Remanded — account stated award must be remitted to $143,837.19; breach award vacated (merger/double recovery) |
| Admissibility and weight of expert testimony on lost profits (Daubert issues) | CDG argued expert Funke was admissible; methodological flaws go to weight, not admissibility; opposing expert countered at trial | Defendants argued Funke’s methodology was speculative, used gross not net profits, and should have been excluded; error required new trial on damages | Court: District court did not abuse discretion in admitting Funke; problems were for cross-examination and weight; no new trial warranted on that basis |
Key Cases Cited
- Fisher Sand & Gravel Co. v. Neal A. Sweebe, Inc., 494 Mich. 543 (Mich. 2013) (account stated merges and supersedes antecedent causes of action included in the account)
- Carey v. Piphus, 435 U.S. 247 (U.S. 1978) (procedural due process can compensate emotional distress caused by deprivation of process itself)
- Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (U.S. 1993) (trial judge gatekeeper role for expert testimony reliability and relevance)
- Kumho Tire Co. v. Carmichael, 526 U.S. 137 (U.S. 1999) (Daubert gatekeeping applies to all expert testimony, not just scientific)
- Wallace v. FedEx Corp., 764 F.3d 571 (6th Cir. 2014) (standards for remittitur: beyond range, shocks conscience, or mistake)
- In re Scrap Metal Antitrust Litig., 527 F.3d 517 (6th Cir. 2008) (abuse-of-discretion standard for admission of expert testimony and assessing whether flaws go to weight)
- Advance Sign Grp., LLC v. Optec Displays, Inc., 722 F.3d 778 (6th Cir. 2013) (standard of review for Rule 50(b) denial is de novo)