Jacobson Warehouse Co., Inc. v. Schnuck Markets, Inc., 14f4th659

Background

Schnuck Markets, Inc. (SMI) contracted XPO Logistics (XPO) to manage a new Northpark distribution center under a 2015 Amended and Restated Operating Agreement; XPO began operations in July 2016.
Northpark experienced immediate operational failures after the transition, causing alleged inventory loss/damage, reduced store sales, and mitigation costs; SMI withheld payments and demanded reimbursement.
XPO sued SMI for breach and payment (action on account); SMI counterclaimed for breach of contract, negligence, fraud, conversion, and related torts.
After a 10-day jury trial, the jury awarded XPO ~$3.65M (after offsets/interests) and awarded SMI $147,000 on its breach counterclaim.
Parties appealed multiple district-court rulings concerning (inter alia) construction of Section 5(b) (indemnity/limitation of liability), classification of damages, negligence claim dismissal, admission of emails, prejudgment interest, and entitlement to attorneys’ fees.

Issues

Issue	Plaintiff's Argument (SMI unless noted)	Defendant's Argument (XPO unless noted)	Held
Whether Section 5(b) permits SMI to recover non-direct damages (incidental/consequential/indirect/punitive)	Section 5(b)’s prefatory exception (“Except for their respective indemnification obligations...”) preserves first‑party indemnification and thus allows non-direct damages	Section 5(b) unambiguously limits liability to direct damages; indemnity language contemplates third‑party indemnity and does not except all liabilities from the cap	Court: Section 5(b) unambiguously bars recovery of non‑direct damages; indemnification read as third‑party only, so limitation applies
Whether the limitation violates Missouri public policy by shielding willful misconduct or gross negligence	Limitation is unenforceable as against public policy because one cannot contractually exonerate willful misconduct/gross negligence	Limitation does not exonerate liability; it only limits types of recoverable damages and remains enforceable between sophisticated parties	Court: Limitation valid; does not violate public policy because it limits damages rather than completely exonerating liability; gross negligence rule narrowed by Missouri law
Whether SMI may recover mitigation costs despite the Limitation of Liability	Mitigation expenditures (moving inventory, crisis team costs, promotions) should be recoverable	Such mitigation and incidental expenses are incidental/consequential and barred by the Limitation	Court: Mitigation costs are incidental/consequential and barred under §5(b)
Classification of SMI’s claimed damages (lost profits, transfer/mitigation expenses, crisis‑team costs)	Lost profits and mitigation expenses are direct damages from XPO’s breach	Lost profits are consequential; moving/mitigation costs are incidental/consequential and excluded	Court: Lost profits are consequential; inventory‑transfer and mitigation costs are incidental/consequential and barred
Whether JMOL on SMI’s negligence counterclaim was improper	Negligence claim pleads an industry‑standard duty separate from contract; jury should decide	Alleged duty is identical to contractual duties incorporated in the Agreement; no independent tort duty shown	Court: JMOL proper—no evidence of a duty independent of the contract, so negligence claim fails
Whether two internal Ryberg emails were protected by attorney‑client privilege or unduly prejudicial	Emails addressed to in‑house counsel are privileged and should be clawed back; admission prejudicial	Emails were business/financial analysis, not seeking legal advice; not privileged and not unfairly prejudicial	Court: Admission not an abuse—emails not privileged and Rule 403 exclusion not warranted
Whether prejudgment interest award to XPO was improper	Some withheld amounts ("labor credits") were unliquidated and invoices were not demands, so interest shouldn't apply	Withheld amounts were reasonably ascertainable and invoices qualified as demands; statutory prejudgment interest applies	Court: Award affirmed—claims were liquidated/ascertainable and invoices were demands under Missouri law
Cross‑appeal: whether JMOL should have been entered for XPO on SMI’s breach and whether XPO is entitled to attorneys’ fees under §6(h)	(XPO) JMOL should have been granted due to speculative damages; alternatively §6(h) entitles XPO to fees as prevailing party	(SMI) SMI presented reasonable evidence to support the $147,000 award; §6(h) fee‑shift applies only to Inventory Claim Procedure disputes	Court: Denial of JMOL affirmed—sufficient evidence for jury award (clawback/management‑fee theory); §6(h) does not authorize fees for this litigation (applies to inventory‑deficiency ADR process only)

Key Cases Cited

Sligo, Inc. v. Nevois, 84 F.3d 1014 (8th Cir. 1996) (contract interpretation is a question of law)
Monarch Fire Prot. Dist. of St. Louis Cnty. v. Freedom Consulting & Auditing Servs., Inc., 644 F.3d 633 (8th Cir. 2011) (indemnity clauses ordinarily address third‑party claims)
DeCormier v. Harley‑Davidson Motor Co. Grp., 446 S.W.3d 668 (Mo. banc 2014) (Missouri limits on invalidating exculpatory clauses for gross negligence)
Liberty Fin. Mgmt. Corp. v. Beneficial Data Processing Corp., 670 S.W.2d 40 (Mo. Ct. App. 1984) (limitation of liability that does not fully exonerate is not per se against public policy)
Diversified Indus., Inc. v. Meredith, 572 F.2d 596 (8th Cir. 1977) (elements for corporate attorney‑client privilege)
Business Men’s Assurance Co. of Am. v. Graham, 891 S.W.2d 438 (Mo. Ct. App. 1994) (tort recovery requires duty independent of contract)
Barkley, Inc. v. Gabriel Bros., Inc., 829 F.3d 1030 (8th Cir. 2016) (requirements for statutory prejudgment interest under Missouri law)
Macheca Transp. Co. v. Phila. Indem. Ins. Co., 737 F.3d 1188 (8th Cir. 2013) (liquidated/ascertainable standard for prejudgment interest)