584 F.Supp.3d 720
E.D. Wis.2022Background
- Marquette University submitted a renewal application for a federal Geriatric Workforce Enhancement Program grant; a software bug in Kuali’s SaaS caused certain budget entries to be double-counted, making the application exceed the grant maximum and resulting in denial.
- Marquette reviewed a PDF of the submission but did not catch the duplication and submitted close to the deadline, so error was not corrected.
- Marquette sued Kuali for breach of contract, breach of warranty, and negligence seeking nearly $4.5 million in damages (lost grant and consequential sums).
- The parties’ 2018 contract was a SaaS Master Subscription/Order Form: Marquette paid ~ $37,000/year for access; the software itself was available in a free form but Marquette lacked infrastructure to self-host.
- The contract contained a limited-remedy clause (termination and refund of prepaid fees) and an expansive disclaimer barring lost profits, consequential, and similar damages in contract or tort.
- The court held the contract was predominantly for services (not goods), so the UCC did not apply; the contract’s damage limitations governed and precluded Marquette’s requested relief, and Kuali was granted summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are Marquette’s alleged damages too speculative to recover? | Marquette: damages can be proved with reasonable certainty given high scores and history of grants. | Kuali: recovery of a grant is speculative because award was not guaranteed. | Denied Kuali’s argument; reasonable jury could find some damages (not wholly speculative). |
| Does the UCC apply (is the contract predominantly for sale of goods)? | Marquette: contract predominantly for sale of software (a good), so UCC remedies apply and contractual limits fail of essential purpose. | Kuali: contract is for SaaS and support services (services), so UCC does not apply. | Court: contract predominantly for services (hosting, maintenance, support); UCC does not apply. |
| Are contractual limits on remedies enforceable to bar Marquette’s claims? | Marquette: limits on warranty remedies do not apply to negligence; limited remedy is effectively no remedy. | Kuali: contract limits and disclaimer bar lost profits/consequential damages in contract or tort. | Enforced the contract’s limitations; Marquette limited to contractual remedy (termination/refund) and could not obtain sought consequential damages. |
| Can Marquette pursue negligence claim (or is it barred by economic loss doctrine)? | Marquette: negligence claim survives because contract is for services so economic loss doctrine is inapplicable. | Kuali: even if negligence claim survives, contract’s tort-damage waiver bars recovery of consequential losses. | Economic loss doctrine inapplicable (services), but negligence relief barred by the contract’s broad disclaimer; Kuali entitled to summary judgment. |
Key Cases Cited
- Anderson v. Liberty Lobby, 477 U.S. 242 (1986) (summary judgment standard)
- ProCD, Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996) (software licensing treated under UCC in some contexts)
- Linden v. Cascade Stone Co., 283 Wis. 2d 606 (2005) (predominant-purpose test and economic loss doctrine analysis)
- Micro-Managers, Inc. v. Gregory, 147 Wis. 2d 500 (Ct. App. 1988) (mixed software/service contracts may be predominantly services)
- Sopha v. Owens-Corning Fiberglas Corp., 230 Wis. 2d 212 (1999) (damages require reasonable certainty; wholly speculative damages unrecoverable)