## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it
N os. 10

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- 2068 G ARRY B O YD , B OY D M ED I CAL, I NC ., C HA RLES W ETHE RI LL, an d A DDI S ON M ED I CAL, I NC ., P la intif fs-A pp ellees, C ross-A pp ella nts, v. T ORNIE R, I NC ., D ef endant-Appellant, C ross-A pp ellee. Appeals from the United States District Court fo r the S outhernDi stricto f Illino is. No . 07 cv751

—Do naldG . Wil ker so n, Magistrate Judg e.
A RG UE D N OVE MBE R 29, 2010

— D ECI DE D A UGUS T 24, 2011

Befo re B AUER, W OO D , a nd S YKES, C ircu it Judges . W OO D , C i r c u i t Judge. Torni eri s a m anufa cture r of m ed ical good s related to j oint rep lacem en t and soft ti ssue re pai r. I t has di str ibu tor s a l lo verthe U ni ted2 N os. 10

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- 2068 S t a t e s , i nc l ud i ngBo y d Me di c al , run b y Ga r r y Bo y d, (c olle c tiv ely “B oy d ”) in M iss ou ri an d A d d iso n M ed ica l, ru n by C h ar l es W et h er ill, (c olle c tiv ely “W et h er ill”) in I ow a. B oth Boy d and W eth eril l h a d ex clusive d istribu torshi p agr eem ents w i th Tor ni erand re l i ed heavi l y o n that relatio nshi p f orthei r fi nanci alheal th. Tor ni er, sa dlyf or them , had other i deas a nd te rm i nate d its ag re em ents w i th ea ch one. A s with m any b re akups, so m ebo dy go t hurt. Thi s t i m e i t was Boyd and W ether i l l, bo th o f w hom were f or ced to shut down thei r bus in es ses. So on after, they sued Torni er f or bre ach of co n tr act, i ntenti onalm i sr epres entat i on, and negl i gent m i sr epresenta tion . A d d itio n ally , both a ske d fo r pu ni ti ve dam age s o n the i ntenti onalm i sr epres entat i on cl ai m s. The di st r i ctc o ur t di smi ss ed W ethe r i l l ’ s ne g l i g en t m i sr epr es en ta ti o n cla i m a t su m m ar y j udg m en t but all ow ed the oth er clai m s to proc e e d t o trial. Th e j ury r etur ne d a v er di cta g ains t To r ni er o n a l lo fthe r emai ni ng cl aim s, aw ar ding both actual and pun i ti ve dam age s t o both pl aint i ff s. The magi st r at e j udg e, pr es i di ngb y the c o ns e nto fthe pa r t i e s u nd e r 2 8 U. S
. C. § 6 3 6 ( c ) , s e ta s i de the punit i ve dam age s a w ar ds, fi nd i ng tha t the ev i dence did not support the j ury’ s deci si on. The co urt then enter ed j ud gm ent forea ch dis tr ibutor ’ s a ctualdam age s. This appeal and cr oss - appeal f ol l owed

. Torn ier ar gues that th e contr act express l y pr ecl ud es the a w ar d ofl ost profi ts f orthe bre ach o f c on tr act; thatthe pla i nti ff s’ in te n tio n al a n d n eg lige n t m isr ep re se n ta tio n c laim s fa il as a m att ero fl aw and fact; and that the dam age s a wa r ds o n the t o r tcl ai ms we r e n o ta de qu a t e l y s up -N os. 10

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- 2068 3 port ed by the e vi dence. Boyd a n d W ether i l lco unter that the p un i t i v e da mag e s a wa r ds s ho ul d b e r e i ns t a t e d. W e c o nc l ude tha t ea chs i de m us t wi n s o m ethi nga nd lose som eth ing. W e vaca te t h e a w ard s for th e plaintiff s o f l o s t p r o fi t s o n th e i r b r e a c h o f c o n t r a c t a c t i o n . We a ffi r m t he v e r di c t s a g a i ns tT o r ni e r o n i nt e nt i o na lm i sr e pr e s e n t a t i o n a n d n e g l i g e n tmi s r e p r e s e n t a t i o n, b u twe vac ate th e j ury’s aw ard s of actu al d a m a g e s , as the y w ere su p p orted by i ns uffici en t e v id e nc e. Finally, w e affirm the c ourt ’ s deci si on t o setas i de the pu ni ti ve d am ag es aw ard s. W e thu s rem an d the ca se to the d istri ct cou rt f o r a r ec al cul at i o n o fda m ag es c o ns i st en t wi ththi s o pi ni o n.

I In 2 00 3, T or n ier en te re d int o e x c lu siv e d ist rib u to rs h ip agr eem ents w i th Boyd and w ith W ether i l l

. Each ag re em en t s p ec ified th at t h e loc al a ge n t w as to be th e o n ly au th or ized se l l ero fTor ni erpro du cts i n i ts desi gnate d re gio ns. The ag re em ents al so dem anded excl usi vi ty f or To r ni er : e ac h di st r ibut or was r es tr i ct ed fr o m s el l i ng products that co m peted w i th Tor ni erpro du cts. A s a n adde d l ay ero fc o nt ractualpr o te ct i o n, To r ni erha d the r i g h t t o s e t s a l e s q u o t a s f o r B o y d a n d We th e r i l l ; i ft he d ist rib u to r d id n otm ee t t h e q u ot as , To rn ier co u ld te rm inate the agr eem ent. These ar ra ngem ents w er e c onfi ned to Torn ier’ s p rod uc t m arkets; Boyd and W eth eril l w ere sti l lfre e to sel lnon- com peti ng, non- Torni erpro du cts. The agr eem ents i ncl ud ed a Texas choi ce- of

- l aw cl ause. I n tr uth, Tor ni erwas not necess ar i l y c om m i tte d to i t s e x i s t i n gmo d e lo fe x c l u s i v e d i s t r ib u t o r s . A t th e s a me4 N os. 10

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- 2068 ti m e as i t was s i g ni ngthe se a g r ee m en ts, i t was c r afting al te r na ti ve pl an s f o r i ts futur e ex pan si o n an d grow th

. O ne of T ornie r ’s i d eas w as to “cap tu re” the distribu tors so th at th ey w er e s ellin g on ly T or n ier p ro d u c ts . Th is m eant that Torni erneeded to per suade i ts distrib utor s t o dr o p the no n- co m pet i ngno n- To r ni erpr o du cts a nd beco m e dedi cate d Torni ero utl ets
. To thi s en d , Tor ni er told B oyd and W eth eril l th at it w as going to acq uire so m e bi g g era nd bet te r pr o duct s an d g i ve the m e xc l usi ve di st r ibut i o n r i g ht s i n a s o l i d l o ng - l as tingr el ati o nsh ip . A t o ne poi nt Tor ni erto l d Boyd that i fBoyd d rop p ed the n on-T ornier p rod uc ts, h e w ou ld be T ornier’s

“ g u y i n S t
. L o u i s . ” T o We th e r i l l, T o r n i e r s i mi l a r l y p r o mise d thathe was the “cho sen o ne” in I owa. Tor ni eral so prom i sed W ether i l lthatW ether i l lwould ge t e xcl usi ve di st r ibut i o n r i g ht s to Nexa, a po pul arorth o pedi c br an d that Torni erwas so on g oi ng to acqui re . B u oy ed by these lo fty prom i ses , Boyd and W ether i l lea ch beg an to p r e p a r e f o r th e i r fu t u r e w i th T o r n i e r, b y dr o pp i n gs o me ofthei r othe r products a nd co ncentr ating o n Torni er ’ s. Bu t all w as not as i t s eem ed: Tor ni erwas i n f act not ple ase d w i th ei ther Boyd or W ether i l l

. Torni erhad deci ded i nt e r na l l y tha t Bo y d a nd W e the r i l l di d no t fi t the new busi ness m odeli t had devi sed f ori tse l f

. Ind eed, i t had al re ady posi ti oned al ternati ve dist ributor s to tak e o ver for th em . T ornier th en hiked B oyd ’s an d W eth eril l’ s 2 0 0 7quo t a s t o a n un r e a s o nab l e l eve l

— f orBoyd, 56 % hi gher t han the previ ous y ear, and f orW ether i l l, 82 % h igh er th an th e p re vio u s y ea r. W h en B oy d an d W et h er ill coul d not m eettho se expectat i ons, Tor ni er c u t them fro m the tea m and br ought i n thei r re pla cem ents. By thatN os. 10

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- 2068 5 t i me, Bo y d a nd Wethe r i l lha d b e c o me fi na nc i a l l y de pe nd

en t o n th eir rela tio n sh ip s w ith T or n ier an d co n se q u e n tly w ent o ut o fbusi ness. Boyd and W ether il lthen sued Torni erf orbr each o f co nt r ac t, i nt en ti o na lmis r epr es en ta ti o n, a nd ne g l i g en t m i sr epresen tati on. In additi on, theyas ked f orpuniti ve da mag e s i n c o nn e c t i o n wi th the i r i nt e nt i o na lmi s r e pre senta ti on theor i es. Invoking di ver si ty j uri sdic ti on, se e 28 U
. S. C. § 1 332, theybr ought thei r acti on in the federa l cour t in the Southern Dist ri ct o fI l l i noi s. Tor ni eri s a Dela w ar e co rporat ion with i ts pri nci pal pl ace ofbusi ness i n M i nn e s o t a ; Bo y d a nd hi s c o mpa ny a r e c i t i z e ns o f M i sso uri, and W ether i l land hi s c om pany ar e ci ti zens of Iow a. Boyd’ s t or t cl ai m s a re go ver ned by M i sso uril aw and W ether i l l ’ s byI owa l aw . The br each- of

- con tract cl ai m s ar e govern ed byTe xa s l aw, a s st i pul at ed i n the agr eem ents’ choi ce- of

- l aw cl auses . At s um m ar y j udg m en t, the d is tr i ctc o ur t al l o wed the breac h-of-contrac t claim s to pr o c e ed based on T ornier’s unreas onabl e hi ki ng o fBoyd ’s a nd W ether i l l ’ s s al es quo t a s . I ta l l o we d the i nt e nt i o na lmi s r e pr e s e nt a t i on cl ai m s t o go f or w ar d based o n T or ni er ’ s a l l ege dlym i sl eadi ng sta tem ents tel l i ng Boyd and W ether i l lto d ro p ot h er p ro d u c t l i n es to en su re a p ro m isin g re lat ion sh ip w i th To r ni e r a nd p r o mi s i ngWethe r i l ltha tT o r ni er woul d g r an t hi m the di st r ibut i o n r ights t o the Nexa bra nd

. Final l y, with r eg ar d to the ne gl i gent m i sr epres e n t a t i o n c o u n t s ( wh i c h w e r e p r e d i c a t e d o n th e s a me state m en ts as th e inten tional m isrepres en tation ch a r ges), th e di st r i ctc o ur t all ow ed Bo y d’ s cl ai m t o pr o ce ed, b ut6 N os. 10

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- 2068 i t di sm i sse d W ether i l l ’ s cl aim s because I owa l aw l i m i ts suc h c l a i ms t o a t t o r ne y s , a c c o un t a nt s , a nd o the r p r of essi onal s in the busi ness ofgu id ing o ther s in thei r aff ai rs . A t t ria l, th e jur y re tu rn ed a ve rd ict ag ain st T or n ier on all ofthe cl ai m s th at had survi ved sum m ar y j ud gm ent, awar di ng$ 1, 49 1, 00 0 i n actu alda m ag es f o r Bo y d a nd $1, 100, 000 i n actual dam age s forW ether i l l

. The j ury al so gave Boyd a n d W ether i l l$2 m i l l i on e ach i n pun i ti ve damag es . In r espon se t o To r ni er ’ s po st
- tr i almot i o ns un d er Fed eral Ru les ofCivil Proc ed u r e 5 0 (b) an d 59(e), th e m ag i st r ate j udg e uphe l d the j ur y v er di ct s o n the m i sr epres entat i on cl ai m s, se t a si de the pu ni ti ve dam age s, and enter ed j ud gm en t forthe actualdam age s. A l lpart i es t i mel y a pp e a l e d.

II A W e be g i n b y di sc us sing T orni er ’ s ar g um en t th atthe cou r te r r e d wh e n i tu ph e l d the j ur y ’ s a wa r d o fl ost p r o fi t s f o r e a c h p l a i n t i ff’ s b r e a c h o fc o n t r a c tc l a i ms . We re vi ew the denia l o f T or ni er ’ s m oti on t o al terthe j ud gm ent for a b use o fdi scr eti on, not i ng tha t forr el i efunder Rule 59( e) the m ova nt m ust dem onst ra te a m an ifes t e rr or ofl aw o r f act orp re sent new l y di sco ver ed evi dence. F ED . R. C IV . P. 59 (e); Kape l ans kiv. Johns on , 39 0 F
. 3d 525, 53 0 (7 th C ir. 20 04 ); County of M cHen ry v . Ins uranc eCo. of the West, 438 F.3d 813 , 819 (7th C ir. 2006). The To r ni erAge nc y A gr ee m en t si g ne d b y b o thpl ainti ff s a dd re sse d the s ubj ect ofl ostpro fi ts i n a m an n er thatN os. 10

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- 2068 7 i s no t hel pfulto the pla i nti ff s. A rti cl e 9
. 6, wh i ch w as i denti cali n the tw o agr eem ents, sa ys, “Up on t er m i na tion o fthi s Agr eem en t, ne i th erpa r tys ha l lb e l i ab l e to the othe r f orany l oss o fpro fi ts of any k i nd o r nature susta in ed or ar isin g ou t of su c h te rm in at ion .” D es p i t e th is langu age, the c ou rt up he ld th e j ury’s d ecision to aw ard one yea r’ s l ost p ro fi ts f orbo th Boyd and W ether i l l

. In so doi ng, i t r el i ed on a pri ncip le ofTexas l aw to the effect that a co ntra ctuall i m i tat i on o n dam ag es m ay not be en f o r ce d whena di spari tyo fb ar g aini ngpo were xi sts

— i.e. , wheno ne pa r ty ha s no r ea lc ho i ce i n a cc ept i ng th e a gr eem ent l i m i ti ng the l i abi l i ty ofthe othe r party
. Fed erated D ep’t S to r e s , Inc . v. Ho usto n L igh ting & P o w er Co. , 64 6 S. W
. 2d 509, 511-12 (T ex . A p p . 1982). T he cou rt r e a s o ne d th a tth e qu e s t i o n w h e th e r th i s k i n d o fi mbalan c e of power exi ste d w as one off act and thus for the j ury. S ee i d. (st at in g t h a t t h e ex ist en c e o f th is d ispa r i tyi s a que st i o n o ff ac t)
. The j ur y i n tur n fo und the necess ar y dispar i ty. W e concl ud e, to the contr ar y, th at on thi s r eco rd the j ury shoul d neverh av e b een aske d to make thi s det er m i na ti o n. Bo yd a n d W ether i l lpoi nt to l i ttl e that ind i cate s asubsta nti ald isp ar i ty i n bar gaini ng power. They s tat e that th eywer e bo thde pen den t o n To r ni er ’ s bus i ne ss a nd th a tth e y h a d b e e n u n ab l e t o n e g o t i a t e c o n t r a c t u a lt e r ms bef or e, but i fthati s e nough to m eetthe Texas r ule , then the s tat e m i ght a s wel lhave o utl aw ed the topi c o f dam age l i m i tat i ons f orpri vate o rder i ngs

— and i t has not do ne s o . Nei th ero fthe se s ta te m en ts t el l s us much abo ut the b ar gaini ng dynam i c. The m er e fa ct that Torni er w as fi rm i n nego ti ati on does noti nd i cate subst anti ally8 N os. 10

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- 2068

u n eq u al ba rg ain in g po w er . M or eo ve r, B oy d an d W et h er ill w er e bo th se l l i ng non- Torni erpro du cts. I t m ay b e that ove r ti m e they b ecam e dependent on To rni er, but both wer e so phi st i ca te d b us i ne ss es a nd the i r r es ul tingfi na nci aldepend ence w as the pr oduct ofthei r choi ces. They pro tes t that they were fra ud ule ntl y m an ipulat ed by Torni erand thus a ny appare nt el em ent o f c h oic e was i l l usor y, but that i s a d iffer ent point. There i s no nece ssar y c or re l ati on be tw een di spari ty i n si ze and ab il i ty of o ne pa r tyt o de fr au d a no th er . W e r ecogn i ze tha t, i n the appropri ate cas e, fra ud ule nt st ate m ents m ay vi ti ate a con tractin g p arty’s real ch oice and alter th e pa rty’s ac ce ss t o i nf o r m at i o n, a nd i n tha t wa y c reate s o m e k i nd of p ow er d isp ar ity . B u t w e d o n otth i n k t h at th is is su c h a c as e. A s w e w ill see b e l o w , B oy d an d W et h er ill w ere led astray , m uc h to th eir d etrim en t, by T ornier’s f al se ho o ds, a nd f o r thi s the y wi l lr ec ei ve c o m pen sa ti o n. A t the sa m e t i m e, theywere succe ssfuldi str ibutor s, w ith a c c es s t o T or n ier ’s c om p et ito rs an d oth er sim ilar ly si tu at ed co m pan i es . The y ha d the c ho i ce o fr ej ec ting Torni er’ s dem ands, o fdri vi ng a harderbar gain, o r of dive rs i fyi ng the i r own busi nesse s in a w ay that p re served Torni er ’ s e xcl usi vi ty i n the m edi caldevi ces m ar ket

. They c hose i nstea d to accept Torni er ’ s t er m s, and, at l eas t forpurposes o fthei r c ontracttheo ri es, that i s the c o nt r a c twi th whi c h the y mus tc o nt e nd

. There i s l i ttl e el se to say about the aw ar d o flost -p rofi ts dam age s. A rt i cl e 9
. 6 s peci fi cal l y e xcl ud es th i s for m o f r el ief

. Nei th erpl aint i ffha s o ffer ed an y o th err ea so n why i ts l ost
- profi t a w ar d doe s n ot fal lwithi n the sco pe ofN os. 10

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- 2068 9 that ar ti cl e. W e there f ore c oncl ud e that these dam age s m ust be se t a si de.

B W e tu r n no w t o To r ni er ’ s ar g um en ts th at th e the pl ainti ff s’ m i sr epres entat i on cl ai m s s houl d h av e been r ej ecte d bo tho n the l aw a nd a s a m at te r of fact

. W e r ev i ew the cour t’ s deni alo fTor ni er ’ s pos t- tr i al m oti on f orj ud gme n ta s a ma t t e r o fl a w deno vo , vie w in g t h e e v i d en c e in the l i ght m ost f avo rabl e to the nonm oving p ar ties , B oy d an d W e th er ill. Li u v . Pr i ceWat e rhous eLL P , 30 2 F.3 d 74 9, 75 4 (7 th C ir. 20 02 ). I f an y re as on a b l e ju r y co u ld have re ached the sam e c oncl usi on, then the m oti on wa s p r o pe r l y de ni e d. Id. Underb o thM i ss o ur ia nd I o wa l aw, t o e stab l i sha c l a i m o fi n t e n t i o n a lmi s r e p r e s e n t a t i o n, o n e mu s ts h o w: ( 1) the r e was a f al se , mate r i alr epr es en ta ti on; ( 2) the speake r knew ofi ts f al si ty; ( 3) the speak eri ntended to de c e i v e ; ( 4 ) the h e a r e r j us t i fi ab l y r e l i e d o n the r e prese n ta tio n be in g t ru e; an d (5) d am ag es . M ur r ay v. C rank, 94 5 S .W .2 d 2 8, 31 (M o. A p p . 199 7); City of M cGregorv. Janet t, 5 46 N. W
. 2d 61 6, 6 19 ( I o wa 1996). The j ur y f o und that Torni erm ade thr ee i nten tional m i sr epres entati o ns

— one to Boyd and tw o to W et heri l l

. The fi rs t occur re d w hen Tor ni erto l d Boyd that if h e dro pp ed othe r non- Torni erpro du ct l i nes that Boy d w as car ry i ng, he c o ul d l o o kf o r war d t o a l o ng, pr o du ctive r el at i o nshi p w i th Tor ni er ; the seco nd i nvol ved t h e s am e pr om i se to Wethe r i l l ; a nd the thi r d wa s T o r ni e r ’ s p r o mi s e to gi ve W ethe r i l la n e xc l us i ve di st r ibut o r sh i p f o r the10 N os. 10

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- 2068 N exa pro du ct l i ne. Tor n ier ar gues that these fi nd i ngs m ust be rej ecte d b ecause Boyd and W ether i l l have fa iled to est abl i sh two e ss enti alel em ents: j usti fi abl e r el i ance on th e p ar t o f B oy d an d W et h er i l l, an d T or n ier ’s k n ow ledge that the st ate m ents w er e f al se. To r ni erfi r sta r g ue s th atBo y d a nd W ethe r il l to o kno ac t i o n i n r e l i a n c e o n th e s t a t e me n t s . T h o u g h B o y d a nd W ether i l lbo th dro pp ed other non- Torni erpro du ct l i ne s, To r ni era ss er ts tha t th eydi d so f o r r ea so ns un related to th e all eged m isrepres en tations
. B ut there w as evi dence to the co ntra ryi n the re cor d. Garr y Boy d te st ified th at aft er T or n ier h ad m ad e it s p ro m ise s t o h im he dro pp ed t h e A l phatech and Exactech pro du ct l i nes, bo thno n- To r ni erpro duct s, i n o r dert o f o cus o n the Torni er bra nd s. Si m i l ar l y, Ch ar l es W ether i l lte stifi ed that he dro pp ed the Ex acte ch pro du ct l i ne and d id not p urs ue opp ortu nities w ith tw o oth e r com p an ies, Int egra LifeS ci ences and D epuy O rthopaedic s, i n re l i ance o n Torni er ’ s pro m i ses . Fu rt herm or e, W ether i l lhi re d a sa l esm an to foc u s o n N ex a s ale s. A rea so n ab le jur y c ou ld have f ound that these f acts est abl i shed j usti fi abl e r el i ance. T or n ier res p on d s t h a t e ve n if B oy d an d W et h er ill re l i ed on i ts prom i ses , theydi d so unj usti fi abl y. Tor ni er as se rt s t h at it s rep re se n ta tio n s t o B oy d an d W et h er ill w er e e xpressly c ondit i onal : i t s ai d only th at i fthey d r o p p e d all other n on-T ornier prod uc t line s, th ere wo u l d b e a l o ng, st ab l e r e l a t i o n s h i p a wa i t i n gth e m. Sin c e n eit h er B oy d n or W et h er ill d ro p p ed all of th eir non- Torni erpro du ct l i nes, nei therfulfi l l ed the condi tio n ofthe prom i se. Thus, ther e was no jus ti fi abler el i ance.N os. 10

- 2052 & 10

- 2068 11 U nfo rtunatel y forTor ni er, the evi dence does not supp or t thi s sto ry . Boyd tes ti fi ed that he w as tol d that h e s h o u l d “ [ f ] o c u s o n T o r n i e r, ” i n e x c h a n g e f o r th e p r o mi sed be nefi ts. S i m i l ar l y, W etheri l lte sti fi ed that he was supp ose d to “envi sio n w hat [ Torni er ’ s] busi ness pla n w as ” a n d d ro p lin es th at m ay co m p et e. N ot h in g in eith er Boyd’ s o r W ether i l l ’ s t est i m ony i nd i cate s that th eywer e r equi r ed to dr o p e ve r y s i ng l e non- To r ni erl i ne i n or der to quali fy f or a l ong- ter m re l ati onshi p with T ornier. A reason a b le ju ry cou ld h ave cred ited B oyd ’s and W ether i l l ’ s a ccount ofthe sco pe oft h e co m m i tm ent To rni erwas see ki ng and thus c oncl ud e that bo th Boyd and W ether i l lj usti fi abl y r el i ed on Torni er ’ s pro m i ses w hen theydro pp ed som e non- Torni erbr ands and f or ew ent o thero pp or tuni ti es. To r ni era l so a r g ue s th atthe e vi den ce is no t su ffi ci en t t o p e r mi tth e j u r y t o f i nd th a tT o r n i e r kn e w a tth e t i me it m ad e it s p ro m ise s t h at th ey w er e f a l s e. A ll of th e e vidence , i ta s s e r t s , i s e qu a l l y c o ns i s t e ntwi th g o o df ai thpr o m i se s, s ubs eque nt l y cha ng ed pl an s, a nd thus at m os t a f ai l ure to perf or m i n acco rdance w i th tho se pr o m i se s. In r es po ns e, Bo y d a nd W eth eri l lpo i ntt o the f act that at the s am e t i m e i t was ta l ki ng to them , Tor ni er w as qu iet ly p os itio n in g a lte rn at ive d ist rib u to rs in th e i r r e g i o ns . Ev e n mor e t e l l i ngwa s the e v i de nce sh o wi ngth at To r ni eri ns i der s ha d di sc us se d Bo y d’ s an d W eth eril l’ s lack of“fi t” w ith i ts bu siness m od el before th e m isr ep re se n ta tio n s w er e m ad e. T h is p ro vid es su ffici ent, m aybe ev en co m pel l i ng, r eas on f orfi nd i ng tha t Torni erknew at the t i m e i t s poke that the prom i ses w er e f al se, as i t ind i cate s that T or ni erhad no intenti on12 N os. 10

- 2052 & 10

- 2068 ofpursui ng a l ong- ter m r el ati onship w ith ei therBoyd o r W etheri l l

. Tor ni erpro tes ts that, as parto fi ts busi ness str ate gy, i t h ad setup substi tutes f oral lo fi ts distr ibu to rs , no t o n ly B oy d an d W e t h er ill. T h is d oe s litt le to p er su ade

. I fi t was b eh av i ngdupl i ci to us l y wi ththe other d istr ibutor s, then i t s ounds l i ke an as ser ti on that l o ts o fl i es a r e bette r tha n a few. I fi t was no t l ea di ng th e o th er s o n, th en its p lan s fo r th em are im m at er ial. I n l i ght o fthe ev i dence pres ented i n thi s ca se, a re as o nab l e j ur y c o ul d h a v e r ej e c t e d T o r ni e r ’ s e xp l a na t i on an d f ou nd i ns tead that Torn ier kn ew i ts p r o m ises w ere f al se . I n sh o r t, we co nc l ude th at th er e w as suffi ci en t e v i de nc e t o a ffi r m the j ur y ’ s v e r di c t s a g a i ns t To r ni er o n al lthr ee i ntenti onalm i sr epres entat i on cl ai m s. T h e j ury al so f ound fo r Boyd on the the or y o f ne gli gen t m isrepres en tation bas ed on ce again on T ornier’s pr o mi s e o fa fu t u r e c l o s e r e l a t i o n s h i p . In Mi s s o u r i, “ [ t] he el ement s o fne g l i g en t m i sr epr ese nt at i o n a r e: ( 1) the sp ea ke r s u p p lied info rm at ion in t h e c ou rs e o f h is bu sin es s; ( 2) bec ause ofthe speake r’ s f ai l ure to exer ci se re aso nabl e car e, the i nfo rm ati on was f al se; ( 3) the i nfo rm ati o n was i nt en ti o na l l y pr o vi ded b y the s pea k erf o r the gui da nc e o fl i mi t e d p e r s o ns i n a p a r t i c ul a r b us i ne ss tran sact ion; (4) th e hea rer j us tifiably reli ed on th e inform ation; an d (5) du e to the h earer’s rel iance on th e inform ati on, the hear ersuffer ed a pecuni ar y l oss . ” R enais sance Le as i ng, LL C v. Ve r m e e rM f g. Co. , 32 2 S.W .3d 11 2, 13 4 ( M o. 20 10)
. “ ‘ [ O]ne w ho, i n the cour se ofh i s business, profess i on o r em plo ym ent, o r i n any othe r tr ansact i on in w hich he h as a p ecu nia r y i n t e rest, su p p li es fal se inform ati on f orthe gui dance ofo ther s in thei r busi ness tr ans-N os. 10

- 2052 & 10

- 2068 13

a c t i o ns , i s s ubj e c tt o l i ab i l i t y f o r p e c un i a r y l o s s cause d to them bythei r j usti fi abl e r el i ance upon the infor m at i o n, i fh e f a i l s to ex e r c i s e r e a s o n ab l e c a r e o r c o mp et en c e in ob ta in in g or co m m u n ica tin g t h e in for m at ion .’ ” CA D C O , Inc. v . Fle et w ood En te rs . , Inc. , 220 S. W
. 3d 426, 43 8- 39 ( M o. A pp . 20 07) ( quoti ng R ES T AT EME NT( S e c o nd ) OF T ORTS, § 552(1) ( 1977 ))
. Torni erar gues that i m pli ci t in the fi rs t e l em ent i s a l i m i ta ti o n o fthi s to r t to a tto r ne y s, a cc o unt an ts , a nd oth er professiona ls w hos e bu sine s s i t i s to gi ve oth ers gu id an c e in th eir affa irs . To rn ier is n o t inv olv ed in th e b u sin e s s o f p ro vid in g g u id an c e t o p eo p le in th eir busi ness pu rs uit s

— i t m anufa ctu re s m edi caldevi ces. Thus , T o r n i e r a r g u e s , i tc a n n o tb e l i ab l e f o r n e g l i g en t m i sr epr es en ta ti o n . T o r n i e r a c k no wl edg es t ha t no M i sso urico urt h as so r ule d; never thel ess , Tor ni er i nvi tes us t o tak e that step. Other sta tes have done s o, i tp o i n t s o u t ; i n d ee d , i twa s f o r th i s r e a s o n th a tI o wa l a w b a r r e d We th e r i l l ’ s n e g l i g e n tmi s r e p r e s e n t a t i o n c l a i m. Feder alco urts ar e no t in a pos itio n t o i nnovate wh en st at e la w p ro vid es th e ru le of d ec isio n . A lth ou gh it is cer tainl y pos sibl e that M i sso urisom e d ay m i ght want to f ol l ow states l i ke I owa, we concl ud e that i t has notye t d one so. Th e M issouri courts , ad op ting th e Re state m en t’s vi ew , st ate thato ne “who, i n the cour se ofhi s bu siness , p rofession or em p loym en t, or i n a ny ot he rt r ans ac t i on in wh ich he ha s a pec un ia ry in terest ” m ay b e liab le for n eg lige n t m isr ep re se n ta tio n . E ve n th ou gh T or n ier is n otin the b usi ness ofp ro vid i ng guidance, i ts negl i gent m i sre p re se n ta tio n w as p ar t o fa tr an sa c tio n in w h ich it14 N os. 10

- 2052 & 10

- 2068 had a pecuni ar y inter est
. That i s en ou gh , under the M i ssou r ic as es we ha ve f o und; the y do no t r equi r e th e defen dant to be i n the busi ness of gi vi ng guidance to othe rs . Fo r ex ample , i n CA D C O , Inc. , a M issouri app ell ate cou rt up hel d a ve rdi ct fi nd i ng a m obi l e h om e m anufa cture r gui l ty ofn e g l i g e ntmi s r e pr ese ntati on in i ts tr ansact i on with a dea l er . 2 20 S
. W
. 3d at4 39
. The manuf ac tu r er to l d the deal erthati t would be al l owe d t o sel la parti cul arm odel an d th en ren eg ed

. Id. T h o u g h th e a ppea l i n CA D C O , Inc. pr i m ar i l y c o nc erne d da m ag es , the co ur t f o und tha t a l lthe ele m en ts of th e t or t h ad be en m et
. Id. Si nce M i sso urita kes a br oadervi ew o fnegl i gent mi s r e prese ntati on than Torni er sugge sts , and the evi dence sup port ed the j ury’ s co ncl usi on i n f a v o r o fBo y d, w e r ej e c tT o r ni e r ’ s e ff o r tt o s e ta s i de thi s par t o fthe ver dict

.
C Fi nal l y, w e rea ch the topi c oftortdam age s, abo ut wh i ch both si des have so m et h in g to say . Tor ni eras ser ts that th e aw ar d ofactual dam age s was notsupporte d by s u ffici ent e vi dence. A s thi s was p ar t o fTor ni er ’ s Rul e 5 9( e) m otion to alter the j ud gm en t t h at th e d istri ct cou rt den i e d, o urr e v i e w i s o nc e a g a i n o nly f o r ab us e o fdi scr et i o n. The j ur y ’ s awar ds o fa ctua lda m ag es f o r the pl aint i ff s i nc l ude d l o stpr o fi ts for si x y ea r s an d ass um ed a gr owth r ate of 20% per yea r f or bo th Boyd an d W ether i l l

. Tor ni erar gues that the a w ar ds shou ld b e lim ite d to on e y ea r’s lost p ro fits , as t h e d ist rib u to rs h ip c o n t r ac ts w er e o n ly for on e-y ea r te rm s. Inad d itio n, i t ar gue s th ate ve n i fthe a war ds i n th eory can g o b ey o ndN os. 10

- 2052 & 10

- 2068 15

one yea r, the evi dence h er e ofactual dam age s di d not su ppo r t su cha n e xt en si o n. B oth M issouri and I ow a all ow lost p rofi t d am ages in tort to exceed the te rm o fthe c on tract i fthe m i sr epres entati o n i nc l ude d pr o m i se s o f an o ng o i ng, l as ting rel at i o ns h ip
. Jac ob s M

f g. Co. v. Sa m Br own Co. , 1 9 F
. 3 d 1 2 5 9 , 12 64 (8t h C ir. 19 94 ) (ap p lyin g M iss ou ri law ); R obins on v. P erpetual Se rvs . Corp. , 4 1 2 N. W. 2 d 5 6 2 , 5 6 6

- 6 7( I o wa 1 9 8 7 )
. As we have al re ady es tabl i shed, the j ury here was enti tl ed to co nc l ude tha t To r ni erfr au dul en tly pr o m i se d B oyd a nd W ether i l lan o ngoing, l ast i ng r el ati onshi p. In pri nci ple , th er efor e, Bo y d a nd W ethe r i l lc o ul d r ec o ve r b ey o nd the o ne- yea r ter m s o fthei r contr acts
. N everthe l ess , any such dam age s would have had to fi nd supp or t i n the evi dence. A pla i nti ff c an n ot r eco ver f o r da m ag es tha t ar e spe cul at i ve o r unc er ta i n. Tho ug h a pla i nti ff w illnotbe denie d rec ove rym er el y b ecause th e a m o un t of d am ages is difficult to ascerta in, th ere m us t be a r ea so nabl e ba si s i n the r ecord fr o m whi chthe a mou nt o f da mag e s c a n b e i nfe r r e d o r app r o xi mat e d. C o o nis v . Ro gers , 429 S.W .2d 70 9, 71 4 (M o. 19 68 ); Robi ns on , 41 2 N .W .2d at56 7. No s u c h r e a s o n ab l e b a s i s i s p r e s e n th e r e . T h e a s s u mpti on that Boy d and W et h er illwould susta i n 20% annual gr owth fo r si x conse cuti ve yea rs was buttr ess ed by lit t l e m or e t h an co nj ec tu re an d h op e. B oy d an d W et h er ill offe re d as ev id en c e t h eir o w n t es tim on y a n d th e t es tim on y of e x p er t w itn es s Jo h n K ae lble in . W e t h e rill te st ifi ed that the b asi s forhi s 2 0% -gr ow th as sum pti on w as that thi s was the i nd ustr y s tandard. Boyd ec hoed16 N os. 10

- 2052 & 10

- 2068 thi s v i ew o n the i nd ustr y’s st andard gr owth and added th at h is c o m p an y w ou ld gro w by 20 % as th at w as h is c om m iss ion p er c e n t a g e. B u t t h e la tt er p oin t a b ou t h is co m m i ss i o n s ay s no th i ngabo uthi s co m pan y ’ s g r o wth. The r e i s no o bv i o us c o r r el at i o n b etwee n g r o wth a nd com m i ssi on per centag e. Ind eed, o ne m i ght c ult i vate a co m pan y ’ s g r o wth b y t ak i nga s m al l erc o m m i ss i o n a nd re in ve s tin g in th e c om p an y; co n ve rs ely , on e c ou ld i nhibi t g ro w th b y gobbl i ng up profi ts thro ugh a hi gh com m i ssi on that depl ete s the co m pany’s fina n ci alr esour ces. A s forBoyd ’s and W ether i l l ’ s s pecula ti on about sta nd ar d gro w th i n the i nd ustr y, the tes ti m ony of th ei r ow n expe r t co nt r adi ct ed th ei r a ss er ti o ns . At the trial hel d i n 2 00 9, Kae lbl ein t es ti fi ed th athe tho ug ht th at all m ed ica l co m p an ies w ou ld gro w atsign ific a n t ly l e s s tha n 2 0 % fo r thr e e y e a r s a nd tha t 2 0 % g r o wth w as not s us t a i nab l e , e s pe c i a l l y g i v e n the the n- s l ug g i s h s t ate ofthe eco nom y. Thi s i s s i m plynoteno ugh evi dence to supp or t a j ury fi nd i ng tha t the pl ai nti ff s’ busi nesse s w oul d have g ro w n at a s tea dy ra te of 2 0% p erye arf or si x yea rs . I n additi on t o the a ctualdam ages, the j ury aw ar ded Bo yd a n d W ether i l l$2 m i l l i on e ach i n pun i ti ve dam age s. I n the dist ri ct c ourt, T or n i erar gued that ther e was no e vi denti ar y b asi s forthe aw ar ds and m ove d to set them as i de. The m agi str ate j ud ge agreed and gr anted Torni er ’ s m ot ion forj ud gm ent a s a m att ero fl aw o n th e re q u es ts for p u n itiv e d am ag es . In th ei r c ro ss -ap p ea l, Boyd and W ether i l lchal l enge th is det er m i nati on; they i nsi st that Torni er ’ s co n d u c t w as re ckl ess with r espect to the grave fi na nc ialcons eq ue nc es they ultim ately suf-N os. 10

- 2052 & 10

- 2068 17 f er e d, a nd thi s wa s e no ugh t o s ho w l e g a lmal i ce. O ur review is un d er the fam il iar deno vo s ta nda r d, v i ewing th e ev i den ce mos t f av o r ab l y t o no nm o va nts Bo y d a nd W et h er ill. M edcom Holding C o. v. B axterTravenol Labs. , Inc. , 10 6 F .3d 13 88 , 140 2 (7 th C ir. 19 97 ). Puni ti ve da m ag es may be a war ded o nl y upon a showing ofo utra geo us co nd uct that dem onst ra tes actual or lega l m alic e. Je

ff erson v. Am er ican Fi n. G roup, Inc. , 16 3 S.W .3d 48 5, 48 8 (M o. A p p . 200 5); P eters v. G enera l M o t o rs C o rp. , 200 S. W
. 3d 1, 24 (M o. A p p . 2006); Va n S i c kl eCo n st
. C o. v. Wachov ia Co m m er cial M ortgage, Inc. , 78 3 N
. W
. 2d 684, 689 ( I owa 2010 )
. A ctu al m ali ce m ay be s how n by spi te, h at re d , ill w ill, or vin d ict ive m ot ive s. Van Si ck l eCons t
. Co. , 78 3 N .W .2d at68 9-9 0; B ram on v. U -Haul, Inc. , 94 5 S
. W
. 2d 6 7 6 , 6 8 4 ( M o . Ap p . 1 9 9 7 )
. L e g a lma l i c e ma y b e s h o wn by re ckl ess i nd i ffer ence f oran a ct’ s co nsequences. O ster v. K ri bs Fo rd, Inc. , 660 S. W
. 2d 348, 355 (M o. A p p . 1983); Van S i ck l eCons t
. Co. , 7 8 3 N
. W
. 2 d a t6 9 0
. T he s e s t a nd a r ds ar e no t t o be t ake n l i ghtly : p u n i ti ve dam age s a re an ex tr ao rd in ar y m ea su re , t o be ap p lied sp ar in gly

. A rt il la C o ve R esort, Inc. v. Ha rtley, 7 2 S
. W
. 3 d 2 91, 29 6 ( M o . App
. 200 2). M er el y obj ecti onabl e co nd uct i s insuffi ci ent t o su st ain a p u n itiv e d am ag es aw ar d

. Wolf v. Wolf , 69 0 N
. W
. 2d 887, 893 (I ow a 2005 ). The dist ri ct courtcorr ectly rul ed that thi s reco rd d i d not su ppo r t puni ti ve da m ag es a g ains t To r nier. To r ni ere ngag ed i n to rt i ous b ehavi or, but ther e was no evi dence that i ts b eh avio r w as w i th anykind o fm al i ce

— actualo r l ega l

. N othi ng i nd i cate s that Torni erbore i l lwil lo r hatr ed to w ar ds them , nor does the e vi dence show l ega l18 N os. 10

- 2052 & 10

- 2068

m al i ce. Tor ni erenga ged i n a fra ud ule nt busi ness str ate gy w i th so phist i cated busi ness partner s. I t m ay have r ea l i ze d tha t Boyd an d W ethe r i l lc o ul d b e affec te d fi na nci al l y b y i ts mis r epr es en ta ti o ns , b uti t was a ct i ngi n the busi ness ar en a w i th par ti es that w er e ca pabl e o fpro te c t in g the m selves. Th is f all s short of reckless ind ifference . M or eov er, tho ugh to rt i ous a nd o bj ecti onabl e, Torni er ’ s c on d uct was not outr age ous. Bad consequences r e s u l t e d f o r B o y d a n d We th e r i l l , an d th e y w i l lb e c o mp en sated f or their losses. Pu nitive d am ages, how ever, wou ld bo tho ve r c o m pen sa te Bo y d a nd W ethe r i l la nd unne ce ss ar i l y puni shTorn i er . W e thus a ffi r m the dist ri ct c ourt ’ s decis i on t o setas i de the pu ni ti ve dam age s aw ar ds. * * * W e V ACATE the aw ar d ofl ostpro fits on the br each o f contr act acti on. W e A FFIRM the ver dict s aga i nst To rnie r on intenti onalm i sr epres entat i on and negl i gent m i sr eprese n tat i on, but w e V ACATE the j ur y ’ s a wa r d o fa c t ua l dam age s. Final l y, we A FF I RM th e o r de r s e t t i nga s i de the punit i ve dam age s a w ar ds. The cas e i s R EMAND ED to th e di st r i ctc o ur t f o r a recal cul at i o n o fda m ag es c o nsi ste nt with thi s o pini on. Each si de i s to beari ts own co sts
.

8- 24- 11