906 F.3d 403
6th Cir.2018Background
- Powdered Metal (Connecticut) contracted to supply 90,000 powdered-metal flanges per year (F.O.B. Watertown, CT) to Bosal (Michigan); initial deliveries required a 16-week lead time.
- Bosal pressured Powdered Metal to accelerate deliveries in June 2014; Powdered Metal complied. Cracking defects and production issues followed; Bosal halted production in mid-October for a root-cause investigation.
- Unbeknownst to Powdered Metal, Bosal had been negotiating with alternate suppliers and decided to switch suppliers by mid-October, but did not notify Powdered Metal until December 12; meanwhile Bosal accepted additional flanges and communicated that it was continuing the investigation.
- Powdered Metal sued under the Connecticut Unfair Trade Practices Act (CUTPA) and for breach of contract. After a five-day bench trial the district court found Bosal breached the contract, engaged in deceptive conduct violating CUTPA, and awarded damages plus attorneys’ fees and sanctions.
- On appeal the Sixth Circuit affirmed the CUTPA finding and most awards but held the district court erred by applying Connecticut’s statutory postjudgment interest rate instead of the federal rate under 28 U.S.C. § 1961.
Issues
| Issue | Plaintiff's Argument (Powdered Metal) | Defendant's Argument (Bosal) | Held |
|---|---|---|---|
| Choice of law for CUTPA claim | Connecticut law applies because Powdered Metal is in CT, flanges manufactured/delivered there, and harm occurred there | Michigan law should govern; Michigan forbids applying its consumer-protection statute to this commercial dispute | Connecticut law governs (contacts center on CT; strongest state interest where harm occurred) |
| Whether breach + deception gives rise to CUTPA liability | Bosal’s secret supplier switch and two-month silence intentionally misled PM into believing contract would continue, causing ascertainable loss | Silence and continued acceptance of parts were not wrongful notice; at-will contract termination requires only reasonable notice and no CUTPA violation | CUTPA violation sustained: wrongful termination without reasonable notice plus attendant deception supports CUTPA liability (deference to district court’s factual findings) |
| Attorneys’ fees under CUTPA | Fee award is proper and should include work on intertwined breach and CUTPA claims, plus some out-of-district rates | Fees should be reduced/segregated because breach claim also failed; out-of-district rates excessive | Fee award affirmed; district court did not abuse discretion in rate reductions, 20% overall reduction, and allowing recovery for intertwined work |
| Postjudgment interest rate | Federal postjudgment interest statute governs in diversity cases | District court applied Connecticut’s 10% statutory rate | Reversed as to interest calculation: 28 U.S.C. § 1961 governs (federal rate) |
Key Cases Cited
- Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (federal courts apply forum state choice-of-law rules)
- Naples v. Keystone Bldg. & Dev. Corp., 295 Conn. 214 (CUTPA liability can attach to contractual breaches accompanied by intentional misrepresentations)
- Ulbrich v. Groth, 310 Conn. 375 (CUTPA provides a remedy separate from contract law where breach is accompanied by aggravating circumstances)
- Byrne v. United States, 857 F.3d 319 (standard of review for bench-trial factual findings and legal conclusions)
- Anderson v. City of Bessemer City, N.C., 470 U.S. 564 (where two permissible views of the evidence exist, factfinder’s choice is not clearly erroneous)