Court Opinion

ID: 4245500
Source: CourtListenerOpinion
Date Created: 2018-02-15 19:00:27.202186+00
Date Added: 2024-06-11T14:43:40.441273
License: Public Domain

In the

    United States Court of Appeals
                 For the Seventh Circuit
No. 16-3800

CNH INDUSTRIAL AMERICA LLC,
                                                   Plaintiff-Appellee,

                                  v.

JONES LANG LASALLE AMERICAS, INC.,
                                                Defendant-Appellant.

         Appeal from the United States District Court for the
                    Eastern District of Wisconsin.
          No. 2:15-cv-00981-JPS — J. P. Stadtmueller, Judge.

 ARGUED SEPTEMBER 13, 2017 — DECIDED FEBRUARY 15, 2018

   Before BAUER, ROVNER, and SYKES, Circuit Judges.
    ROVNER, Circuit Judge. CNH Industrial America LLC
(“CNH”), which manufactures farming and construction
machinery (including tractors, combines, backhoes, and the
like) under the New Holland brand name, hired the global real
estate services firm Jones Lang LaSalle America, Inc. (“JLL”) to
manage a corporate re-branding program that involved the
2                                                 No. 16-3800

replacement of signage at each of CNH’s more than 1,400
dealers in North America. The program ran into problems
when it was discovered that the vinyl used in the new signs
was defective, necessitating the re-manufacture and replace-
ment of virtually all of the signs already installed. After the
vinyl manufacturer walked away from its commitment to
replace, at its own cost, the defective signs, CNH sued JLL for
breach of the service agreement between the two firms. CNH
alleged that JLL had failed to perform adequate quality control
in the manufacturing of the signs, failed to negotiate the best
possible warranty on the vinyl and the signs themselves, and
failed to properly document and manage the warranties.
Following a bench trial, the district court agreed that JLL had
indeed breached its contractual obligations to CNH and that
CNH had suffered damages in the amount of $5,482,735.
Pursuant to the contract’s terms, the court reduced JLL’s
liability to $3,026.361.60—the sum CNH had paid to JLL in
project management fees—plus such other amounts as JLL
might recover from third parties (including the vinyl manufac-
turer and the sign fabricators) in the future. JLL appeals, and
we affirm the judgment in all respects.
                              I.
    In 2007, CNH’s global parent—the Italian automaker
Fiat—decided that the New Holland brand needed updating.
It commissioned a team to create a new logo and prototype
dealer sign, and then it directed CNH to implement a re-
branding program pursuant to which all of the signage at each
of CNH’s 1,442 independent dealerships in North America
would be replaced. The typical dealer would require a family
of five signs, including a pylon sign mounted on a large pole,
No. 16-3800                                                    3

a dealership name sign, an outdoor wall-mounted logo sign, a
“parts” sign, and a “service” sign. CNH was to hire one or
more American sign manufacturers to adapt the prototype and
build the dealer signs to American specifications. Given the
logistics entailed in replacing the signs at over 1,400 dealers
(including site surveys, landlord approval, obtaining the
requisite permits from governmental entities, manufacturing
and installing the new signs, and disposing of the old signs),
CNH decided to hire another firm to manage the process.
    CNH chose JLL to manage the sign-replacement program.
JLL is a commercial real estate services firm that offers a wide
array of services to property owners and investors. JLL
represented that it had precisely what CNH was looking for:
experience with large-scale signage replacement programs and
the ability to provide “turnkey” management of all aspects of
the re-branding program. CNH and JLL entered into a Service
Agreement in April 2008.
   JLL’s obligations under the agreement—set forth in a
Statement of Work attached thereto—were comprehensive,
consistent with its role as the manager of the re-branding
program. It was to develop specifications for the signs, identify
and recommend to CNH for approval a firm or firms to
manufacture the new signs, do the same with respect to raw
materials suppliers for the sign components, supervise the
manufacturing process, coordinate the entire replacement
process with dealers from beginning to end, and handle any
complaints from dealers about installed signs. Four of the
obligations that JLL expressly assumed under the Service
Agreement are particularly relevant here: (1) the obligation to
“negotiat[e] … the best possible Warranty Program for the
4                                                   No. 16-3800

Family of Signs manufactured and disclose all elements of [the]
Warranty Program to CNH and Dealers”; (2) “research and
document[ ] … warranty information for all raw materials and
sub components”; (3) “provide ongoing Project Management
services for Warranty within One[ ]Year from the date of
installation” for each sign; and (4) take “direct control and
responsibility of all manufacturing including quality control
meeting all [JLL] and CNH expectations.” Ex. 1002 Attach. B
§ 1(B) ¶4; § 1(C) ¶1; § 2(C) ¶¶ 1, 2. CNH retained the authority
to control the sign-replacement project and approve or reject
JLL’s recommendations, but it is clear from the agreement that
JLL was assuming the burden of managing the project. And the
testimony of CNH’s witnesses leave no doubt that CNH,
consistent with JLL’s presentation materials, viewed JLL as the
expert in this area and deferred to it as such.
    In order to reduce shipping costs, three different sign
manufacturers at diverse locations around the country were
chosen to produce the new signs. JLL signed the manufactur-
ing contracts on CNH’s behalf, so that the multitude of
invoices on the manufactured signs would be directed to JLL
and it could make payment and resolve any disputes that
arose. The agreements took effect on June 17, 2008. The
contracts were identical to one another and contained the same
warranties on the manufactured signs: a one-year warranty on
parts, labor, and workmanship. The one-year warranty period
constituted a reduction from the three-year period originally
proposed. CNH was keenly interested in “value engineering”
that would reduce the costs of the re-branding program to
itself and its dealers, and toward that end it accepted a shorter
No. 16-3800                                                    5

warranty period in exchange for lower costs on the new
signage.
    CNH required its dealers to pay for three of the five new
signs to be installed at each dealership; CNH paid for the
remaining two. Dealers expressed displeasure about the cost of
the new signs—$10,500 for the three dealer-owned signs. In
response to those concerns, dealers were given the option to
finance their sign purchases; they were also given the option to
make their own arrangements to install their signs, which
would reduce their cost to $7,000. However, self-installation
would nullify the one-year warranty on the signs—a nullifica-
tion that the district court understood to be limited to problems
associated with the installation as opposed to defects in the
components of the signs.
    Upon JLL’s recommendation, Arlon, Inc. (“Arlon”) was
selected as the exclusive supplier of the vinyl used to manufac-
ture the new signs. The design specifications called for the New
Holland signs to be fabricated using two custom-formulated
colors: blue and yellow. The presentation materials Arlon had
submitted in support of its successful proposal to CNH and
JLL included details about the warranties Arlon offered on its
products. Arlon’s standard warranty provided for replacement
of the vinyl only (as opposed to labor, shipping, and other
costs) on a prorated basis for a period of seven years. Distinct
warranty terms were specified for Arlon’s Flexface®FX vinyl
substrate, a product that JLL and CNH rejected in favor of
Arlon’s translucent vinyl, which the sign manufacturers would
apply to acrylic, heat, and then mold to create the sign faces.
Arlon’s materials compared its standard warranties to those of
its leading competitor, 3M, to demonstrate that Arlon’s
6                                                  No. 16-3800

warranties were superior in all respects. Custom warranties
were also available on Arlon’s products.
    JLL accepted the warranty terms that Arlon proposed
without, so far as the record reveals, attempting to negotiate
terms that were more favorable to CNH. (Arlon’s representa-
tive would later testify that he was aware of no negotiations
over the terms, and the JLL employee who was the project
manager at the time believed he discussed the warranty with
Arlon but could not recall any specifics.) As we will discuss
below, there is some real question as to what the actual
warranty terms were. The only evidence of the warranty that
either party has been able to identify is a brief summary of the
terms that was included in an exhibit attached to each of the
sign-manufacturing contracts. Arlon has disclaimed authorship
of that summary and has disputed its accuracy; for its part, JLL
does not know who drafted it. The summary states in full:
     Arlon Vinyl Extended Warranty—7 year warranty
     on 1st surface. 2nd surface on exterior sign applica-
     tions is 9 years. These [sic] is no charge for
     parts/labor/shipping for 1-year from date of installa-
     tion.
Ex. 52 & Ex. E-Warranty thereto. The reference to the one-year
period during which there would be no charge for parts, labor,
or shipping evidently was a reference to the sign manufactur-
ers’ warranty on the completed signs rather than the warranty
on the Arlon vinyl. The reference to the Arlon warranty itself
is incomplete. Arlon’s presentation materials indicated that it
would replace defective vinyl on a pro-rated basis tied to the
number of months remaining in the seven-year term; and JLL
No. 16-3800                                                    7

understands this to be a materials-only warranty that excluded
coverage for labor and other costs. But, again, there is no
document in the record that actually sets out the agreed-upon
terms of the Arlon warranty.
    As manufacturing of the signs commenced late in 2008,
problems soon emerged with the Arlon vinyl. In December
2008, one of the sign fabricators reported that the yellow vinyl
being used in the two-color CNH signs failed during the
manufacturing process—the vinyl showed signs of bubbling
and tearing. JLL reported the problem to CNH and worked
with the sign manufacturers and Arlon to identify the source
of the problem. The vinyl was determined to be defective, and
Arlon agreed to replace the defective run of vinyl and reim-
burse the sign manufacturers for their expenses. The replace-
ment vinyl supplied by Arlon was stress-tested by the manu-
facturers, and signs fabricated with the new vinyl came off the
assembly line free of noticeable defects. JLL did not arrange for
any independent testing of the vinyl to confirm that it was free
of defects, nor did it demand that Arlon supplement its
original warranty with any written assurance that it would
take care of future problems with the vinyl at its expense.
    A second manufacturing problem occurred sometime after
this incident and before 2010 as the result of a discrete run of
vinyl that had not been properly cured. When the sign manu-
facturers reported the problem, Arlon tested and reformulated
the vinyl, and the problem appeared to be solved.
   The more serious problem with the vinyl—and the one that
gave rise to this suit—first emerged in late 2010 or early 2011,
as dealers began to report that blue vinyl on the signs which
8                                                     No. 16-3800

had been installed on their premises was showing signs of
cracking and peeling. By the fall of 2011, some twenty-three
installed signs had been reported as defective. That number
would increase substantially through the remainder of the year
and into 2012 as dealers continued to notice problems with the
signs.
    In October 2011, Arlon agreed to cover the expense of
replacing any and all signs that failed due to problems with its
vinyl. This agreement significantly improved upon Arlon’s
warranty, as it was not limited to replacing the defective vinyl
but covered the full cost (including parts and labor) of manu-
facturing and installing replacements for the defective signs. So
far as the record reveals, however, Arlon never memorialized
that agreement by way of an amended warranty or other
formal instrument; and as problems with the vinyl continued
to mount, Arlon would eventually walk away from its commit-
ment to replace the defective signs.
    At no time did the parties undertake any form of audit or
inventory to determine how many signs in the field might be
failing; they instead chose to passively wait for dealers to
notice and report failures to CNH and JLL and ask the sign
manufacturers and Arlon to address them at that time. The
parties agree that the possibility of such an audit was dis-
cussed, but they disagree as to who proposed it and who was
responsible for rejecting it. JLL insists that it suggested the
possibility of both a field survey of all signs that were installed
in 2008 and 2009 or, alternatively, a telephonic survey of
dealers, but that CNH rejected both options in favor of what
JLL labels the “break and fix” approach in order to keep the re-
branding program on schedule. CNH disputes that account
No. 16-3800                                                    9

and contends that it raised the possibility of an audit, but that
JLL assured CNH an audit was unnecessary given Arlon’s
commitment to replace any and all defective signs.
    As time wore on, it became clear that the problems with
Arlon’s vinyl were anything but isolated. Dealers continued to
report problems with cracking and peeling signs, and JLL
would in turn forward those reports to the sign manufacturers
and Arlon so that replacements could be produced. A joint
review of the reported vinyl failures by JLL and CNH in
January 2014 revealed that approximately 46.7% of the 628 sites
where signs had been installed in 2008 and 2009 had failed, and
yet Arlon had been able to replace just over half (53.6%) of the
defective signs. CNH complained about the delays, and JLL in
turn spoke with Arlon about speeding up the replacement
process.
   Unbeknownst to anyone else, Arlon had determined in
early 2012, based on weatherometer testing, that there had
been a failure in the formulation of all versions of the custom
blue vinyl that it had produced for the CNH re-branding
program to that date. Arlon thus had reason to foresee that
signs manufactured using that vinyl would continue to fail at
a substantial rate. Arlon kept this information to itself. Not
until Arlon was required to disclose this information by
subpoena in this litigation did the parties become aware of
what Arlon had determined years earlier.
   Arlon Graphics LLC had acquired the operating assets of
Arlon, Inc.’s vinyl manufacturing division late in 2011 and in
connection with acquisition agreed to indemnify Arlon, Inc. for
any warranty obligations stemming from defective vinyl
10                                                           No. 16-3800

products, including the custom vinyl produced for CNH. The
new entity—which we shall continue to label “Arlon”—took
over the replacement program for the failing New Holland
signs.
    In 2013 and early 2014, Arlon began to chafe under the
burdens of its commitment to replace the failing signs. In 2013,
it complained about the prices that the sign manufacturers
were charging for replacement signs. It also hired its own sign
installer in an effort to reduce costs. Additionally, Arlon
prevailed upon JLL and CNH to confine their replacement
requests to no more than 10 per month in order to slow the
pace of replacements.
    Following discussions with JLL in early 2014 about the need
to expedite the replacement of defective signs, Arlon evidently
decided it had had enough. In May 2014, Arlon informed JLL
that it had been replacing signs pursuant to a three-year
warranty (set forth in the 2008 presentation materials as the
standard warranty on Arlon’s Flexface® FX/PSA combination
vinyl products, which JLL and CNH had not selected) rather
than a seven-year warranty, and that the three-year warranty
period had expired. Arlon indicated that it was willing to
contribute $3,000 per dealer site toward the ongoing replace-
ment of defective signs, but no more. CNH responded by
threatening legal action. In July 2014, Arlon declared that it
would cease replacing signs altogether and would no longer
communicate with JLL.1

1
  CNH filed suit against Arlon in California state court in April 2015. That
suit remains pending.
No. 16-3800                                                  11

    When the bad news from Arlon was reported to CNH, the
latter’s point person on the project emailed JLL accusing it of
mismanaging the situation with Arlon.
     This is beyond disappointing. The process we
     followed was … put into place by JLL, Arlon &
     Priority [one of the three sign manufacturers] and
     was not the process that CNH requested. The order
     in which signs were repaired was not within CNH
     control either. There are signs that were reported in
     2011 that are still not repaired.
     CNH did not let dealers … self report, this was the
     process we were given to get the warranty covered.
     I have had numerous conversations over the last
     year with [the current JLL project manager] about
     sending a letter to our dealers and asking them [to]
     check their signs and report them, however, I was
     assured this was not necessary because Arlon was
     going to cover the signs via warranty. The informa-
     tion you have provided is the first time I am hearing
     that they are not willing to cover the replacement of
     the signs or that there is a limit on what they are
     going to cover.
     We pay JLL to manage our signs. I would have
     expected the management would include managing
     this problem and it appears it was not managed
     properly.
Ex. 135A at 1. The two continued doing business as before,
however, until JLL gave CNH notice in February 2016 (approx-
imately six months after CNH commenced this litigation
12                                                             No. 16-3800

against JLL) that it was terminating the Service Agreement
effective March 31, 2016. Thereafter, CNH made arrangements
with one of the three sign manufacturers to replace the sign
faces on all of the failed signs, and it engaged 3M to supply the
vinyl for the additional replacement signs it required. 3M
provided a warranty of up to 9 years on the new vinyl,
depending on whether the signs would be installed in the
American Southwest, illuminated, or fabricated with additional
ultraviolet protection.
    CNH filed this suit against JLL in August 2015 alleging that
JLL had breached its obligations under the Service Agreement.2
After a one and one-half day bench trial, the district court
found in CNH’s favor. The court, in sum, agreed with CNH
that JLL had (1) failed to engage in any negotiations with Arlon
over the terms of its warranty on the vinyl, thus breaching its
obligation to negotiate the best possible warranty on the signs
and sign components; (2) failed to research and document
Arlon’s warranty terms and accurately inform CNH of those
terms, instead relying on a warranty summary of unknown
provenance and accuracy; (3) breached its duty to exert quality
control over the manufacturing process by failing to engage in
any sort of independent effort to identify the cause of the
failing signs and confirm that Arlon had resolved it; and (4)
breached its obligation to provide warranty management

2
  JLL in turn filed a third-party complaint against the sign manufacturers,
who are contractually responsible for enforcing Arlon’s warranty. The
manufacturers invoked their right to arbitration and were dismissed from
this litigation. The arbitration has been stayed pending the resolution of this
appeal.
No. 16-3800                                                   13

services within one year of the date of installation of each sign
by failing to ensure that warranty claims were presented in a
timely manner. In reaching these conclusions, the court
adopted CNH’s proposed facts where they conflicted with
JLL’s, and necessarily discredited the testimony of JLL’s
original project manager on the CNH job as to certain pro-
active steps JLL had allegedly suggested to CNH to deal with
the problem signs but that CNH had allegedly rejected. The
court found that, owing to these contractual breaches, CNH
had suffered damages totaling $5,482,735, a figure CNH’s
damages expert arrived at based on the cost of replacing all
defective signs. However, based on a limitation of liability
provision in the agreement, the court reduced the damage
award to $3,026,361.60, a sum equal to the total amount of fees
CNH had paid to JLL over the life of the agreement, plus
whatever additional amounts JLL might later recover from the
individual sign manufacturers, Arlon, or its own insurance
company.
   JLL has appealed from the adverse judgment, contesting
the district court’s rationale in toto.
                               II.
A. Subject matter jurisdiction
    We begin our review by resolving a belated argument
regarding jurisdiction. Subject matter jurisdiction in this case
is premised on diversity of citizenship, 28 U.S.C. § 1332, and it
is beyond dispute that there is complete diversity of citizenship
as between the named parties: CNH is a limited liability
company whose sole member, Case New Holland Industrial,
Inc. is a Delaware corporation which maintains its principal
14                                                  No. 16-3800

place of business in Wisconsin; whereas JLL is a Maryland
corporation whose principal place of business is in Illinois.
And, of course, CNH’s claim for relief surpasses the statutory
$75,000 threshold for diversity jurisdiction.
    But CNH’s suit is founded not only on its own injuries, but
on those suffered by 260 Case New Holland dealers who
assigned their individual claims to CNH. As we noted in our
factual summary, ownership of the dealer signs is divided: the
dealers each paid for and own three of the five signs installed
at every dealership, and CNH paid for and owns the other two.
Before bringing suit, CNH invited all of its 1,442 North
American dealers to assign their claims regarding the defective
signs to CNH so that it could pursue relief on behalf of the
dealers as well as itself. Some 260 dealers did so.
    Under the terms of the assignment, each dealer surrendered
to CNH “all rights and interest in and to any claims arising out
of signs owned by the Dealer … which show cracking or
checking in the blue vinyl fields.” The dealer acknowledged
that, as a result of the assignments, it would “not be a party to
negotiations or litigation …, and that counsel for [CNH] will
not be acting as counsel for the Dealer.” CNH, in turn, under-
took to “negotiate or litigate these claims as the owner of the
assigned claims … .” It further agreed to pay for the cost of
repairing or replacing defective signs “pending a successful
resolution of these matters.” A successful resolution was
defined as “a recovery or settlement value equal to or greater
than $8,000 per dealer location.” R. 99-1 at 3.
  JLL was aware of the assignments below. They were
mentioned in CNH’s unsuccessful motion for summary
No. 16-3800                                                     15

judgment, R. 83 at 17–18, and they were the subject of a motion
in limine filed by JLL prior to trial, R. 153. Yet JLL neither
raised an objection to the assignments nor took any action
consistent with the view that the dealers were the real parties
in interest with respect to the assigned claims. It did not, for
example, seek to join the dealers as necessary parties pursuant
to Federal Rule of Civil Procedure 19(a), nor did it move to
dismiss the case pursuant to Rule 19(b) on the ground that the
dealers were indispensable parties to the litigation.
    On appeal, however, JLL argues for the first time that the
dealer assignments to CNH amount to a collusive effort to
confer federal jurisdiction over the dealers’ claims. Some 16 of
the 260 dealers that assigned their claims to CNH are citizens
either of Maryland or Illinois and would thus share the same
citizenship with JLL. And no dealer has a claim that satisfies
the $75,000 threshold. Consequently, the dealers would be
unable to sue JLL in federal court in their own right. Yet, in
JLL’s view, the dealers are the real parties in interest with
respect to the claims they have assigned to CNH. The assign-
ments, JLL argues, are in effect a sham, serving the sole
purpose of putting dealer claims before the district court
despite the fact that those claims fall outside the limited subject
matter jurisdiction of the federal courts. See 28 U.S.C. § 1359
(“A district court shall not have jurisdiction of a civil action in
which any party, by assignment or otherwise, has been
improperly or collusively made or joined to invoke the
jurisdiction of the court.”); Kramer v. Caribbean Mills, Inc., 394
U.S. 823, 89 S. Ct. 1487 (1969) (deeming assignment to be
collusive for purposes of § 1359 when made to attorney-
assignee for $1 and assignee agreed to pay assignor 95 percent
16                                                    No. 16-3800

of net recovery “solely as a [b]onus”); Steele v. Hartford Fire Ins.
Co., 788 F.2d 441, 444 (7th Cir. 1986) (“if getting into federal
court was the sole purpose of the assignment, then even if the
assignment was supported by consideration and was lawful
under state law, one could question in just what sense the
assignment was bona fide, and, more to the point, could ask
whether it is not the precise purpose of section 1359 to discour-
age people from using the device of assignment to get access to
the federal courts”).
    Courts have cited a variety of factors as bearing on the
determination whether the assignment of a claim amounts to
collusion for purposes of section 1359. Among the factors
courts have considered are:
     1. Whether the assignee of the claim lacked a prior
        connection to the litigation;
     2. Whether the assignor of the claim selected the
        assignee’s legal counsel and/or paid for the
        assignee’s litigation expenses;
     3. Whether the assignor retained control of the
        litigation;
     4. Whether the assignee agreed to share with the
        assignor any portion of the recovery;
     5. Whether the assignee provided meaningful
        consideration for the assignment;
     6. Whether the timing of the assignment is suspi-
        cious; and
No. 16-3800                                                         17

   7. Whether the assignment was motivated by a
      desire to create diversity jurisdiction.
YP Recovery Inc. v. Yellowparts Europe, SL, 2016 WL 4549109, at
* 6 (N.D. Ill. Sept. 1, 2016) (St. Eve., J.) (citing, inter alia, Nat’l
Fitness Holdings, Inc. v. Grand View Corp. Ctr., LLC, 749 F.3d
1202, 1205–06 (10th Cir. 2014) (setting out these same seven
factors as among those court should consider in evaluating
totality of circumstances); Branson Label, Inc. v. City of Branson,
Mo., 793 F.3d 910, 916–17 & n.5 (8th Cir. 2015) (agreeing these
factors are “a helpful guide” without adopting Tenth Circuit’s
test); and Boyd v. Phoenix Funding Corp., 366 F.3d 524, 531–32
(7th Cir. 2004) (remanding case removed from state to federal
court for determination whether assignment of loans to
assignee who filed notice of removal was bona fide assignment
or instead designed to evade time limit on removal)). JLL
concedes these factors cut both ways in this case but nonethe-
less asserts that, on balance, they point to collusion. CNH
naturally disagrees, emphasizing the factors (including CNH’s
pre-existing and independent interest in this litigation and in
protecting its goodwill by aggregating like claims for disposi-
tion in one suit) which weigh against a finding of collusion. But
we find it unnecessary to proceed down this multi-factor
analysis in order to reject JLL’s contention that the dealer
assignments amounted to a collusive effort to manufacture
federal jurisdiction.
   In material respects, this case is on all fours with Grede v.
Bank of New York Mellon, 598 F.3d 899, 900–01 (7th Cir. 2010).
There, the trustee of a liquidation trust holding the assets of a
bankrupt investment management firm, Sentinel Management
18                                                   No. 16-3800

Group, sued the Bank of New York Mellon, seeking to recover
payments to the Bank that the trustee characterized as prefer-
ential payments or fraudulent conveyances. There was
complete diversity of citizenship as between the trustee (a
citizen of Illinois) and the Bank and its parent (citizens of New
York and Delaware). The trust was not solely pursuing its own
claims in the litigation, however. Some 100 of Sentinel’s
investors had assigned their own claims against the Bank to the
liquidation trust for collection as permitted by the terms of the
trust, and the trustee was also pursuing those claims in the suit.
A number of those 100 investors were citizens of New York,
and as such would not have been able to invoke the court’s
diversity jurisdiction had they sued the Bank themselves; yet,
in the Bank’s view, they were the real parties in interest as to
the assigned claims. The Bank argued that the assignments to
the trust were thus a collusive means of ushering the investors’
claims into federal court. Invoking section 1359, the Bank
argued that the case should have been dismissed for lack of
jurisdiction.
    We dispatched the Bank’s argument, emphasizing both that
diversity jurisdiction was present over the trust’s own claims
against the Bank and that bringing the assigned dealer claims
into the suit was a matter of efficient aggregation of similar
claims rather than collusion to create federal jurisdiction where
none existed in the first instance. 598 F.3d at 901. Because our
analysis in Grede bears directly on the facts of this case, we
quote it in full:
     A collusive assignment is a genuine jurisdictional
     problem. We treat an assignment as collusive when
     its sole function is to shift litigation from state to
No. 16-3800                                                     19

    federal court. Steele v. Hartford Fire Insurance Co., 788
F.2d 441, 444 (7th Cir. 1986); Hartford Accident &
    Indemnity Co. v. Sullivan, 846 F.2d 377, 382 (7th Cir.
    1988).
    Assignment to a trust could be designed to take
    advantage of the rule that a trust’s citizenship is that
    of the trustee, rather than the beneficiaries, for the
    purpose of 18 U.S.C. § 1332(a). See Navarro Savings
    Association v. Lee, 446 U.S. 458, 100 S. Ct. 1779, 64 L.
    Ed. 2d 425 (1980). Cf. Northern Trust Co. v. Bunge
    Corp., 899 F.2d 591 (7th Cir. 1990) (a non-trustee
    holder of injured parties’ claims has the same citi-
    zenship as the claims’ owners). But it would not be
    sensible to put the assignments to the Sentinel
    Liquidation Trust in the collusive category.
    The Bank is a citizen of New York; many investors
    are not, and many individual claims exceed $75,000,
    so these investors could sue under the diversity
    jurisdiction in their own names. Or one investor
    could sue on behalf of a class; only the plaintiff’s
    citizenship would count, much as only a trustee’s
    citizenship counts. See Snyder v. Harris, 394 U.S. 332,
    340, 89 S. Ct. 1053, 22 L. Ed. 2d 319 (1969). What’s
    more, the Trust already is suing the Bank in federal
    court in its capacity as holder of Sentinel’s claims to
    recover preferential or fraudulent transfers; the
    investors’ claims could be added under the supple-
    mental jurisdiction. See 28 U.S.C. § 1367; Exxon Mobil
    Corp. v. Allapattah Services, Inc., 545 U.S. 546,
20                                                   No. 16-3800

     125 S. Ct. 2611, 162 L. Ed. 2d 502 (2005). The assign-
     ments thus do not move litigation from state to
     federal court; instead they facilitate efficient aggre-
     gation of claims, just as Fed. R. Civ. P. 23 does.
     Subject-matter jurisdiction is secure.
Grede, 598 F.3d at 900–01.
    Obviously this case does not involve a trust, but in all other
respects the relevant circumstances are nearly identical to those
at issue in Grede. CNH has its own contractual claims against
JLL. Those claims lie at the center of the suit and indubitably
fall within the diversity jurisdiction of the court. Of the 260
assigned dealer claims, the vast majority involve dealers who
are not citizens of either Maryland or Illinois. True, no dealer
claim meets the $75,000 threshold, but given the diversity of
citizenship, the dealers would qualify as pendent parties
entitled to invoke supplemental jurisdiction of the court.
§ 1367; Exxon Mobil, 545 U.S. at 558–567, 125 S. Ct. at 2620–25.
As in Grede, then, the assignments of those claims to CNH did
not serve the function of moving the litigation from state to
federal court: CNH’s claims independently met the require-
ments of section 1332; and most of the dealers’ claims could
have been pursued via supplemental jurisdiction. The assign-
ments serve the function of efficient aggregation rather than
collusion to evade the requirements of diversity.
  In sum, we are not convinced that the 260 dealer assign-
ments amounted to a collusive effort to create federal jurisdic-
No. 16-3800                                                         21

tion where it otherwise would not have existed. The district
court properly exercised jurisdiction over the assigned claims.3
B. Limitation on liability
   JLL’s opening argument on the merits of the case rests on
the limitation of liability provisions found in Section 26 of the
Service Agreement. JLL reads Section 26 to preclude CNH
from recovering anything from JLL even if, as the district court
found, JLL breached its contractual obligations to CNH.
Section 26 of the contract provides:
     Notwithstanding anything else contained herein to
     the contrary, each party shall look solely to the
     assets of the other party for satisfaction of any
     liability or obligations relating to this engagement …
     and in no event shall [JLL’s] liability to CNH and the
     CNH Dealers collectively … exceed (i) in the case of
     performance by the Additional Service Providers,
     the amounts which [JLL] can recover from the
     Additional Service Providers and their insurers, and
     (ii) in any other case, the greater of the project
     management fees paid to [JLL] hereunder or One
     Million Dollars except for [JLL]’s liability under
     Section 9A above.
Ex. 1002 § 26. In JLL’s view, subsection (i) is the one and only
provision of Section 26 applicable to CNH’s claims. JLL reasons

3
   In view of our conclusion as to collusion, we need not address CNH’s
alternative argument that the assigned dealer claims could be dismissed
pursuant to Federal Rule of Civil Procedure 21 in order to preserve the
judgment as to CNH.
22                                                   No. 16-3800

that the harm underlying CNH’s complaint stems from the
defective vinyl used to manufacture the dealer signs, and
CNH’s recovery is tied to the cost of replacing those failed
signs. JLL, by contrast, was hired to provide management
services, not to fabricate the signs; and although it signed the
manufacturing contracts on CNH’s behalf, those contracts
make clear that its liability was limited to its role as manager
and that it was not a guarantor as to the quality of the signs
themselves. Ex. 52 § 17.012. Thus, CNH’s recovery is, in JLL’s
view, limited by subsection (i) to whatever JLL might be able
to recover from Arlon, the vinyl manufacturer. But CNH is
already suing Arlon in California state court; for that purpose,
CNH took assignment of all the sign manufacturers’ rights,
title and interest in their claims against Arlon. So there is, in
JLL’s view, nothing that JLL can recover from Arlon—and
CNH can in turn take from JLL pursuant to section 26(i)—that
CNH is not already seeking from Arlon directly. And as
subsections (i) and (ii) of section 26 are mutually exclusive, JLL
reasons, CNH cannot simultaneously invoke both (i) and (ii).
In any event, JLL believes that subsection (ii) does not logically
apply, as Arlon is the source of CNH’s injury. JLL—in its own
view—did not commit any independent wrong that injured
CNH.
    The threshold problem with this argument is that it was not
raised below. This is a civil rather than a criminal case, which
means that we typically will not entertain an argument raised
for the first time on appeal, even for the limited purpose of
ascertaining whether a plain error occurred. E.g., Packer v.
Trustees of Indiana Sch. of Medicine, 800 F.3d 843, 849 (7th Cir.
2015). Compounding the problem for JLL is that JLL did not
No. 16-3800                                                        23

simply overlook section 26 below but instead made an argu-
ment directly contrary to the one it is making on appeal: JLL
argued to the district court that subsection (ii) rather than
subsection (i) of section 26 should apply to any recovery by
CNH. R. 180 at 33; R. 182 at 44–45. Arguably, then, JLL did not
simply forfeit, but deliberately waived, the argument it is
making now. See generally United States v. Olano, 507 U.S. 725,
733, 113 S. Ct. 1770, 1777 (1993) (distinguishing waiver from
forfeiture).
    JLL nonetheless contends that we should entertain its
appellate argument because the proper construction of a
contract presents a question of law, and as such we have the
discretion to address it notwithstanding JLL’s failure to make
(or its choice not to make) the argument below. See Hively v. Ivy
Tech Cmty. Coll. of Indiana, 853 F.3d 339, 351 (7th Cir 2017) (en
banc) (citing Amcast Indus. Corp v. Detrex Corp., 2 F.3d 746, 750
(7th Cir. 1993)); see generally Singleton v. Wulff, 428 U.S. 106, 121,
96 S. Ct. 2868, 2877 (1976) (“The matter of what questions may
be taken up and resolved for the first time on appeal is one left
primarily to the courts of appeals, to be exercised on the facts
of individual cases.”)
    But we are not convinced that we should exercise our
discretion to entertain the argument. See Allen v. City of Chicago,
865 F.3d 936, 944 (7th Cir. 2017) (noting discretion to take up
issues raised for first time on appeal in civil cases is one we
exercise “rarely”). Although the proper construction of the
Service Agreement may present a legal issue, that issue is not
on par with a statutory-construction question that has the
potential to affect large numbers of people beyond the parties
24                                                    No. 16-3800

to this case. Few beyond JLL and CNH will be affected by our
interpretation of their private contract. Moreover, the district
court’s understanding of the contract, and its application of
both subsections (i) and (ii) of section 26, was not obviously
wrong. Yes, the defective vinyl that Arlon manufactured
certainly lies at the heart of this case, but it is JLL’s own breach
of its contractual obligations to CNH for which the latter is
seeking recovery. CNH’s theory of the case is that the defective
vinyl ultimately would not have been a problem had JLL
properly overseen the manufacturing process, secured the best
possible warranty on the vinyl, properly documented the
warranty issued, and proactively managed enforcement of the
warranty. In this respect, it appears logical for JLL to have
invoked subsection (ii) and, accordingly, for the district court,
upon finding that JLL had breached its contractual obligations
to CNH, to have awarded CNH the fees it had paid to JLL.
    At the same time, it is not clear to us that subsection (i) has
no concurrent role to play in fashioning a recovery for CNH.
JLL has assumed that Arlon constitutes an “Additional Service
Provider” to which subsection (i) applies; but we are inclined
to agree that it is the sign manufacturers rather than Arlon that
are properly deemed Additional Service Providers for pur-
poses of this provision. And just as CNH has sued Arlon, JLL
sued the sign manufacturers for their own (purported) contri-
bution to the sign fiasco. That issue will be resolved in arbitra-
tion. See supra n.2. Assuming that JLL might eventually recover
something from the sign manufacturers in the arbitration, we
see no reason why JLL may not be obligated to forward the
proceeds to CNH pursuant to subsection (ii).
No. 16-3800                                                    25

   To be clear, we are not reaching the merits of JLL’s argu-
ment as to the limitation of its liability. We are, rather, citing
the plausibility of the district court’s construction of the
contract as a reason not to overlook JLL’s about-face and
exercise our discretion to entertain the argument it presents for
the first time on appeal.
C. Breach of contract
    JLL next contends that the evidence does not support the
district court’s findings that it breached its agreement with
CNH in multiple respects. Even if a breach was established as
to one or more of its contractual duties, JLL argues, CNH did
not establish that its damages were the natural and foreseeable
result of such breach. We take JLL’s various obligations in turn.
   1. Failure to document warranty
    Pursuant to the Statement of Work setting forth the
“deliverables” JLL agreed to provide, it was JLL’s obligation to
supply “[r]esearch and documentation of warranty informa-
tion for all raw materials and sub components” and to
“disclose all elements of [the] Warranty program to CNH and
Dealers.” Ex. 1002 Attach. B § 1(B) ¶4; § 2(C) ¶1. CNH’s claim
in this regard is that JLL never properly ascertained and
documented the terms of Arlon’s warranty on the vinyl, such
that all parties understood from the start what those terms
actually were. JLL, on the other hand, contends that the terms
of Arlon’s warranty were clear from the moment Arlon first
submitted presentation materials to the parties in its ultimately
successful quest to supply vinyl to the sign manufacturers; that
CNH approved the selection of all vendors, including Arlon,
and the contracts with those vendors; and that the terms of the
26                                                  No. 16-3800

Arlon warranty were documented in a summary attached to
each of the sign manufacturing contracts. The district court was
not persuaded. Judge Stadtmueller found that JLL had essen-
tially paid little attention to the warranty terms and demon-
strated a “complete abdication of responsibility” in ascertain-
ing and documenting those terms. He was convinced that had
JLL complied with its obligation to research and document the
warranty terms, the instant lawsuit would never have oc-
curred. R. 178 at 14.
     The record supports the district court’s finding that JLL
breached its duty to CNH in this regard. We may assume for
the moment that Arlon’s presentation materials left little doubt
as to the warranty terms it was offering. But it is noteworthy
that the sole evidence regarding the final warranty terms to
which Arlon (purportedly) agreed is the abbreviated summary
attached to each of the sign manufacturing agreements. That
summary is all that was attached to the manufacturing
contracts; it is all that was produced to CNH; and it is all that
was produced at trial. But apart from the fact that this was only
a summary rather than a full statement of the warranty terms,
it is unknown who even prepared that summary—JLL itself
did not. JLL’s first project manager attributed the duty to
maintain custody of the warranty to the sign manufacturers.
But the Service Agreement places the obligation to document
the warranty terms on JLL. It is inconceivable that JLL did not
obtain formal documentation of the terms from Arlon itself; if
JLL did so, it was never able to produce a copy. Indeed, JLL’s
project manager was not even sure whether the summary itself
was accurate. The failure to obtain a copy of the actual war-
ranty gave rise to doubt as to what Arlon’s obligations were,
No. 16-3800                                                               27

and that uncertainty made it easier for Arlon to contend, as it
ultimately did in 2014, that its responsibilities to replace the
defective vinyl were at an end.
    One might reasonably conclude that JLL breached its
obligations to document the Arlon warranty for a second time
when, in 2011, Arlon promised to replace any and all failing
signs at its cost. Evidently, there was no memorialization of
that promise, upon which Arlon of course later reneged when
the extent of the problem with the defective vinyl, and the
corresponding costs to Arlon in replacing the signs, became
fully apparent. That JLL did not insist upon Arlon document-
ing its 2011 commitment in a contract that would have effec-
tively broadened and extended its warranty and bound Arlon
to its promise reflects a second lapse in judgment on its part.4
By this time, JLL knew that there were serious deficiencies in
Arlon’s vinyl production that would necessitate the replace-
ment of a significant number of installed signs, at substantial
cost. The need for certainty as to Arlon’s obligations could not
have been clearer by that point in time.
    2. Failure to negotiate best possible warranty
   Closely related to JLL’s obligation to research and docu-
ment the terms of Arlon’s warranty was the obligation to
negotiate the most favorable warranty on CNH’s behalf. In the

4
   When asked about the failure to demand that Arlon put its promise in
writing by modifying the warranty terms, JLL’s project manager simply
stated, “No. I got results. It occurred.” R. 180 at 108. He seemed to believe
that the warranty was “a one-time event.” R. 180 at 110. But we can see no
reason why JLL could not have insisted that Arlon modify its warranty by
placing its full-replacement commitment in writing.
28                                                   No. 16-3800

Warranty Assurance section of the Statement of Work, JLL
“guarantee[d] negotiation of the best possible Warranty
program for [the] Family of Signs manufactured … .” Ex. 1002
Attach B § 2(C) ¶1. There is no dispute that this guarantee
extends to the warranty on the sign components, including the
vinyl supplied by Arlon, as well as the warranty on the signs
themselves. Indeed, CNH has argued that JLL breached this
obligation with respect to both warranties. But as we think
JLL’s omissions with respect to the Arlon warranty are
sufficient to establish that it breached this duty, we confine our
analysis to that warranty alone.
    In the Program Specifications Arlon submitted to JLL in
support of its successful endeavor to be selected as the vinyl
manufacturer for the new signs, Arlon compared the warran-
ties on its products with those of a leading competitor to
demonstrate that its warranties (seven years or longer in most
instances, depending on where the signs were installed) were
more generous. JLL concedes that it would have been possible
to obtain a longer and better warranty from Arlon than the one
it provided, but it casts doubt on the notion that CNH would
have been willing to pay the additional cost that an upgrade to
the warranty terms likely would have entailed. JLL emphasizes
that CNH accepted a reduction in the length of the warranty
from the sign manufacturers on the completed signs from three
years to one in order to cut costs and make the sign replace-
ment program more palatable to the dealers. How then, JLL
asks, can it be faulted for not seeking a longer warranty on the
vinyl components of the signs?
   The important point, to our mind, is that the record reflects
no effort at all by JLL to negotiate more favorable warranty
No. 16-3800                                                     29

terms on CNH’s behalf, or even to ascertain what the possibili-
ties were. JLL’s project manager believed that he discussed the
warranty with Arlon’s representative to confirm that the terms
were commensurate with those offered by other manufactur-
ers, but he could not recall any specifics. To be fair, as Judge
Stadtmueller pointed out, the record indicates that none of the
parties gave much thought to the warranty terms. But the
obligation to do so was JLL’s, and so far as the record reveals,
it simply accepted the terms as Arlon offered them—and as set
forth above, did nothing whatsoever to document them. The
dispute between Arlon and the other parties about the extent
of Arlon’s obligation illustrates the significance of JLL’s failure
in this respect. Certainly it is possible that CNH would not
have agreed to pay for a better warranty on the vinyl; the
record supports the inference that CNH was interested in the
opportunity to reduce costs wherever possible. The fact that
CNH accepted a shorter warranty on the completed signs is
consistent with that possibility. Then again, it is also possible
that CNH, in view of the shorter, one-year warranty on the
signs themselves—the risk of which was aired in “many
discussions,” according to JLL (R. 180 162)—might have chosen
to pay for a longer warranty on a critical component of the
signs. This is particularly so given that Arlon was formulating
custom-colored vinyl with no history in the field to establish its
viability. In any case, the obligation to present that option to
CNH lay with JLL, which did nothing to explore the possibility
of a stronger warranty and determine whether CNH was
interested in such a warranty. There was no clear error in
Judge Stadtmueller’s finding that JLL breached its obligation
to CNH in this respect.
30                                                    No. 16-3800

     3. Failure to manage warranty program
    An additional pledge that JLL made as part of its Warranty
Assurance commitment was “to provide ongoing Project
Management services for Warranty with One-Year from [the]
date of installation.” Ex. 1002 Attach. B § 2(C) ¶2. The wording
of this pledge is a bit stilted, but we take it that JLL agreed to
manage any and all warranty matters that presented them-
selves with respect to individual signs for a period of one year
following the installation of the sign. In CNH’s view, JLL’s
commitment in this respect entailed the obligations to
(a) ascertain the terms of the warranties on the signs, and
(b) ensure that any warranty claims were timely submitted to
the sign manufacturers and the vendors who supplied the
components of the signs, including Arlon in particular. Again,
our focus here is on JLL’s actions and omissions with respect to
Arlon.
    The evidence certainly supports the district court’s finding
that JLL breached its obligations in this regard. We have
already discussed JLL’s omission to document the terms of
Arlon’s warranty on the vinyl, which fostered uncertainty as
to the extent of Arlon’s obligation to replace defective signs.
The critical failure insofar as this claim is concerned is JLL’s
failure to pursue a more proactive, global approach to war-
ranty management once it became clear that the vinyl on
significant numbers of installed signs was failing in the field. It
is true, as JLL takes pains to emphasize, that as the problem
emerged, Arlon promised to replace any defective signs at its
cost. JLL took Arlon at its word, and to an extent, that is
understandable: Arlon had a reputational interest in fixing its
mistakes and ensuring that a large customer like CNH was
No. 16-3800                                                    31

satisfied with the final product. But it is also reasonable to
expect that JLL, a sophisticated party with extensive experience
and expertise in the logistics of large-scale projects like CNH’s
re-branding program, would anticipate and plan for the worst-
case scenario. JLL understood that the manufacturers’ war-
ranty on the signs themselves did not extend beyond one year,
and that although Arlon’s warranty on the vinyl itself ex-
tended beyond that period, its obligations as to related
replacement costs (including labor) likewise dropped off after
the one-year mark. Once it was clear that the issue with the
vinyl was not isolated, it was JLL’s obligation to take all
reasonable steps to ascertain the scope of the problem and to
ensure that all failures were detected and remediated in a
timely manner, so that its client would obtain the full benefit of
the relevant warranties.
    The evidence supports the district court’s finding that JLL
did not do this. There is, to be sure, a dispute in the testimony
as to whether JLL suggested some form of audit of the installed
signs and was turned down by CNH or whether it was the
other way around. As the factfinder, the district judge was free
to credit CNH’s testimony on this point. And having done so,
Judge Stadtmueller plausibly concluded that JLL’s passive
acceptance of Arlon’s assurances breached its obligation to
manage the warranties on CNH’s behalf, with the result that
CNH was left to deal on its own with a large number of
defective signs when Arlon announced that its warranty
obligations were at an end and it would no longer take
responsibility for replacing any signs at its cost.
32                                                  No. 16-3800

     4. Failure to exercise quality control
    Finally, in the Statement of Work, JLL agreed to assume
“[d]irect control and responsibility of all manufacturing
including quality control meeting all Provider and CNH
expectations.” Ex. 1002 Attach. B § 1(C) ¶1. The district court
found that the quality-control obligation extended to Arlon’s
production of the vinyl, and we agree that this is a reasonable
interpretation of the provision. As JLL points out, the agree-
ment also gave it the power to delegate its duties, including
this one, to the sign manufacturers. Ex. 1002 § 1(B). Even so, to
the extent CNH was harmed by the failure to ensure that
Arlon’s product was produced according to specifica-
tions—which plainly it was—JLL may be faulted for not
ensuring that the sign manufacturers themselves took appro-
priate steps to identify and correct any failings in Arlon’s
manufacturing process.
    Arlon, of course, bears the blame for its deliberate conceal-
ment of the discovery in 2012 that all of the blue vinyl it had
theretofore been producing for the signs was defective. But
JLL’s contractual obligation to exercise control over the
manufacturing process, including quality control, entailed an
independent obligation to anticipate and rectify such problems.
When sign after sign was reported to JLL as being defective,
JLL arguably was obliged to look beyond what Arlon was
telling it about the vinyl and to take steps to independently
evaluate the nature of the problem.
   This JLL never did. As the district court pointed out, there
were options available to JLL: it could have arranged for
independent sampling and testing of the vinyl, and rather than
No. 16-3800                                                                 33

waiting to see how the completed and installed signs fared in
the field over time it could have subjected vinyl samples to
testing in a weatherometer. There is no real dispute that such
steps would have made it possible to confirm that the vinyl
Arlon was producing was defective. Indeed, according to
Arlon’s internal emails, weatherometer testing is what led it to
conclude in 2012 that all formulations of the blue vinyl used on
the CNH signs to date were defective. Given these facts, no
expert testimony was necessary to demonstrate what JLL could
have done to expose the defective vinyl and why, given
industry best practices, it should have done so. Particularly
given the pattern of sign failures and the number of signs
involved, JLL was on notice of the need to investigate the
source and extent of the problem. The steps necessary to make
those determinations might have been costly, but once it
became clear that the failures were not an isolated problem,
JLL became obligated to do something other than rely on
Arlon’s assurances. If nothing else, it could have demanded to
see Arlon’s own testing data, which would have involved no
cost at all.5 Judge Stadtmueller found it “inconceivable” that
JLL did not pursue any such avenues and simply accepted
Arlon’s assurances. R. 178 at 15. There was no clear error in his
finding.

5
   JLL’s project manager testified that he did ask for Arlon’s testing data
when the first failure occurred but conceded that he never got it, choosing
instead to accept Arlon’s representation that it had identified and fixed the
problem with the vinyl. “I wanted a full explanation. I did not get that. I did
not get testing information. I had got resolution that it was solved.” R. 180
at 90.
34                                                   No. 16-3800

D. Damages for breach
    The district court found that CNH had incurred a loss of
$5,482,735 as a result of JLL’s contractual breaches, relying on
the testimony of CNH’s expert as to the costs entailed in
replacing the defective signs. JLL contends that the district
court’s damages calculation is flawed in two respects.
    JLL’s initial contention is that the loss calculation signifi-
cantly exceeds CNH’s actual sign-replacement costs, pointing
out that not all installed signs failed, some signs were already
replaced by Arlon, and some signs were self-installed by
dealers, who agreed to a voiding of the warranties on the signs
in exchange for the reduced costs of installing the signs
themselves. But JLL stipulated below that a specified number
of sign faces and other parts had failed, that CNH had con-
tracted with another firm to replace the failed signs, and that
CNH would incur specified costs to replace the defective signs.
R. 174 ¶¶ 1–9. CNH’s expert relied on those stipulations in
calculating his loss figure, not on any assumptions about what
broader category of signs might fail in the future. R. 181 at 67.
If JLL believed that these stipulated numbers were over-
inclusive or inaccurate in some respect, it is not clear why it
agreed to them. Indeed, JLL does not respond at all in its reply
brief to CNH’s contention that JLL stipulated to the basis for its
loss calculation. We need not explore this point further.
    CNH’s broader point is that the loss calculation essentially
holds JLL to account for Arlon’s failures. In JLL’s view, the
court, by using the cost to replace failed signs as the measure
of CNH’s damages, essentially held JLL liable for Arlon’s poor
workmanship and breach of warranty on the signs.
No. 16-3800                                                   35

    But the district court’s findings make clear that JLL’s own
failures with respect to quality control in the manufacturing
process and with respect to the warranty on the vinyl made the
defective-sign problem much worse for CNH than it otherwise
would have been. As we have discussed, the evidence supports
the court’s findings that had JLL taken the initiative to test
Arlon’s vinyl once problems began to surface, the flaws in
Arlon’s manufacturing process would have been exposed
much sooner than they were and the number of completed and
installed defective signs would have been much smaller than
it turned out to be. Likewise, had JLL properly documented
and managed the Arlon warranty on the vinyl, it would have
been more aggressive in identifying defective signs and filing
timely warranty claims to ensure that CNH had maximum
coverage as to the signs.
    Consequently, we can find no clear error in the district
court’s loss assessment. The basis for JLL’s liability certainly
was distinct from Arlon’s, but the measure of the loss to CNH
is essentially the same: the cost to replace the defective signs,
the pool of which JLL might have limited to a much smaller
group had it not breached its contractual duties to CNH.
E. Waiver of right to object to JLL’s performance
   1. Waiver by conduct and duty to speak
    JLL contends that to the extent its performance fell short of
standards specified by contract, CNH waived any shortcoming
by virtue of its own conduct in accepting JLL’s performance in
silence rather than voicing an objection. As JLL sees things,
36                                                            No. 16-3800

nothing about Arlon’s warranty or the number of failing signs6
was a secret—CNH was involved from the start with the
selection of Arlon as a vendor and on through the entire
warranty claims process on the defective signs—and yet CNH
never indicated that it wanted a better warranty than the one
Arlon proposed, that it wanted outside testing on Arlon’s
product once the first problems with the vinyl were noticed, or
that it wanted JLL to handle the replacement of defective signs
differently. Having sat back in silence for years while the
problems with Arlon’s vinyl unfolded and JLL endeavored to
address them, CNH cannot now claim that JLL should have
negotiated a better warranty on the vinyl, taken the initiative
to have outside testing done on the vinyl, and been more
aggressive in making sure that faulty signs were identified,
presented to Arlon, and replaced within the warranty period.
   JLL bears a significant burden on this line of argument, and
the district court by no means clearly erred in rejecting it.
Waiver entails the voluntary and intentional relinquishment of
known right. See United States v. Olano, supra, 507 U.S. at 733,
113 S. Ct. at 1777. So to establish waiver, JLL was required to
show that CNH realized JLL’s performance did not satisfy its
contractual obligations and chose nonetheless to accept JLL’s
performance as it was.
   On the matters of quality control and warranty manage-
ment, JLL stresses that CNH had the power, as it did with
other aspects of the sign project, to approve and disapprove of

6
   Arlon, of course, did conceal the scope of the problem with its vinyl, but
it kept both JLL and CNH in the dark in this regard.
No. 16-3800                                                   37

particular proposals, and that although it regularly exercised
that authority, it was silent with respect to JLL’s handling of
the problems with the early runs of Arlon’s vinyl. But this
assumes that CNH had a duty to speak up if it was concerned
about something JLL was doing, at pain of waiving its contrac-
tual rights if it did not.
    CNH did not have a duty to speak up. JLL concedes it “ran
the program at the granular level.” JLL Brief at 41. Under the
express terms of the contract, it was JLL’s obligation to monitor
the manufacturing process and to deal with problems that
emerged as it saw fit. JLL is effectively trying to transfer that
duty to CNH by asserting that it was CNH’s duty to affirma-
tively ask JLL to more aggressively manage the production
process if that is what CNH expected and wanted. This is
turning the contract on its head. CNH no doubt had the
authority to sign off upon or object to any particular proposals
that JLL presented to it. But the responsibility to oversee and
correct the manufacturing process, as necessary, was JLL’s in
the first instance. Taking the facts as the district judge found
them, nothing suggests either that CNH had some unique
knowledge that might have triggered a duty to speak on its
part or that CNH stood in the way of JLL taking a more
proactive approach with respect to Arlon and its problematic
vinyl.
    As for the warranty on the vinyl: Although CNH may have
accepted the warranty as presented to it, CNH cannot be
charged with knowing and accepting the fact that JLL had
failed to even ascertain what warranty options were available,
let alone negotiate the best possible warranty. Nor is there any
evidence showing that CNH knew that the only documenta-
38                                                   No. 16-3800

tion of the warranty in JLL’s possession was nothing more than
an incomplete summary prepared by an unknown third party.
    Finally, with respect to JLL’s warranty management
responsibilities, it is a fair inference from the record that CNH
accepted JLL’s assurances as to what the term of Arlon’s
warranty were and as to Arlon’s commitment to replace the
defective signs. And certainly CNH participated in the claims
submission process. But there is no evidence that CNH realized
the extent to which JLL’s chosen course of action with respect
to enforcement of the warranty placed CNH at risk of being
left with a substantial number of defective signs if and when
Arlon ceased cooperating, as it ultimately did. At worst, CNH
deferred to JLL in handling the warranty matters, but that was
wholly consistent with the contract between CNH and JLL. JLL
in turn chose to place its trust in Arlon, which in retrospect was
a mistake.
     2. Acceptance of “deliverables”
    JLL makes a second waiver argument that is rooted in the
notice-and-opportunity-to-cure provisions of its contract with
CNH. The Statement of Work describing JLL’s responsibilities
under the Agreement identified the particular services JLL was
to provide—which constitute what the Agreement refers to as
“deliverables”—along with a set of supporting requirements
(“acceptance criteria”) for each such service. Section 1(D) of the
Service Agreement sets forth the parties’ respective responsi-
bilities with respect to these “deliverables”: (1) JLL would
furnish a deliverable; (2) CNH in turn would evaluate the
deliverable to decide whether it satisfied the acceptance criteria
in material respects and, if not, inform JLL of the shortcomings
No. 16-3800                                                   39

(and the necessary corrections) in writing; (3) JLL would then
make its best efforts to fix the problem and resubmit the
deliverable to CNH; and (4) if JLL was unable to remedy the
non-conforming aspect of the deliverable, CNH would have
the right to terminate the agreement. Ex. 1002 § 1(D). JLL’s
point is that not until 2014, when Arlon announced that it was
no longer willing to stand by its commitment to replace the
defective signs at its cost, did CNH ever signal to JLL that it
was dissatisfied with any aspect of JLL’s performance. Several
of the service obligations that CNH faults JLL for mis-handling
in this litigation constitute (or overlap with) deliverables that
are identified in the Statement of Work—including negotiating
the warranty terms, researching and documenting the war-
ranty information, exercising quality control, and overseeing
post-installation problems with the signs. By not registering
timely written objections to JLL’s work in these areas and
giving JLL the opportunity to cure the shortcomings, JLL
argues, CNH failed to comply with the contractual provisions
for non-conforming deliverables and thereby waived the
objections it has pursued in this litigation.
   We reject this contractual argument for the same reasons
that we rejected JLL’s generic waiver argument. Apart from the
awkward fit between JLL’s undefined “deliverables” terminol-
ogy and services that were, in many instances, ongoing in
nature, the argument either presumes awareness on CNH’s
part of the shortcomings in JLL’s performance or demands that
CNH have regularly cross-examined JLL as to what steps it
had or had not taken or considered in delivering services to
CNH. For example, it presumes that when JLL advised CNH
what the warranty terms were on the Arlon vinyl, CNH should
40                                                No. 16-3800

have asked JLL what the range of possible warranties was,
what efforts JLL made to negotiate the warranty terms with
Arlon, what the costs associated with each warranty option
were, and why JLL chose or accepted the warranty terms it
was relaying to CNH. Only in that way could CNH evaluate
how effective JLL had been in negotiating the warranty terms.
Likewise with quality control. If JLL’s point is that CNH
should have alerted it to any dissatisfaction CNH had with its
handling of the early reports of problems with the Arlon vinyl,
for example, then one must presume that CNH knew what
measures JLL had or had not taken with Arlon to confirm that
the problems with the vinyl had indeed been corrected. That in
turn would require either that JLL have briefed CNH thor-
oughly on these points (which the evidence does not show) or
that CNH took the initiative to interrogate JLL: What did Arlon
tell you was the source of the problem? How can you be
confident that the problem has been corrected? What if any
testing data did Arlon provide you? What other options did
you consider to verify that the problem has been addressed?
And so on.
   But, again, imposing on CNH the duty to look behind JLL’s
recommendations and services is inconsistent with the role that
JLL assumed in managing the sign project. CNH wanted a firm
that could provide turnkey management and that is what JLL
undertook to provide CNH. Unless JLL can show that CNH
was contemporaneously aware of the sorts of shortcomings
Judge Stadtmueller found in JLL’s performance, then CNH
cannot be faulted for failing to cite these failures to JLL and
giving it the chance to remediate them. The evidence does not
show this. Not until May of 2014, when Arlon essentially
No. 16-3800                                                      41

abandoned its commitment to replace the defective signs at its
own expense could CNH have begun to appreciate the
ramifications of JLL’s failures to negotiate a robust warranty on
the vinyl, to properly verify and document the warranty terms,
and to exercise more proactive quality-control oversight over
the manufacturing process. True, CNH elected not to fire JLL
immediately when this occurred. But insofar as the contractual
obligations underlying the judgment are concerned, the ship
had long since sailed. JLL has not convinced us that there was
any correction it could have made in 2014 that would have
materially reduced the damages that CNH already had
incurred. (Nor has it undertaken to show what portion of the
judgment might be attributable to the period of time after May
2014.) There was no contractual waiver.
F. Admission of parties’ pre-contractual conduct
    Finally, in its opening brief, JLL has made a cursory
argument that the district court erred by admitting certain
evidence as to the parties’ course of conduct prior to entering
into their contract. In view of the integration clause in the
agreement, JLL argues, such evidence was inadmissible.
    But not until its reply brief did JLL make any effort to
explain what pre-contract evidence in particular was enter-
tained and how it may have factored into the district court’s
merits decision, thus depriving CNH of the opportunity to
respond to the argument in a meaningful way. This is too late
in the day. E.g., Bitsin v. Holder, 719 F.3d 619, 630 n.23 (7th Cir.
2013). JLL waived the argument.
42                                               No. 16-3800

                            III.
  For all of the reasons discussed in this opinion, the judg-
ment in favor of CNH is AFFIRMED.