Court Opinion

ID: 3012167
Source: CourtListenerOpinion
Date Created: 2015-10-13 21:06:02.781196+00
Date Added: 2024-06-11T11:39:41.507024
License: Public Domain

Opinions of the United
2002 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

7-24-2002

Glenn Distr Corp v. Carlisle Plastics
Precedential or Non-Precedential: Precedential

Docket No. 00-2710

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2002

Recommended Citation
"Glenn Distr Corp v. Carlisle Plastics" (2002). 2002 Decisions. Paper 430.
http://digitalcommons.law.villanova.edu/thirdcircuit_2002/430

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 2002 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
PRECEDENTIAL

       Filed July 24, 2002

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 00-2710
No. 00-2790

GLENN DISTRIBUTORS CORPORATION,
       Appellant in No. 00-2710

v.

CARLISLE PLASTICS, INCORPORATED
       Appellant in No. 00-2790

Appeal from the United States District Court
for the Eastern District of Pennsylvania
Civ. No. 98-cv-02317
District Judge: Honorable James T. Giles

Argued December 18, 2001

Before: SLOVITER and McKEE, Circuit Judges, and
DEBEVOISE, District Judge*

(Opinion Filed: July 24, 2002)

       James T. Smith, Esq. (Argued)
       Rebecca D. Ward, Esq.
       Blank, Rome, Comisky & McCauley
       One Logan Square
       Philadelphia, Pennsylvania 19103

        Attorneys for Appellant
_________________________________________________________________

* Honorable Dickinson R. Debevoise, United States Senior District Judge
for the District of New Jersey, sitting by designation.

       David B. Snyder (Argued)
       Mindee J. Reuben
       Fox, Rothschild, O’Brien & Frankel
       2000 Market Street
       10th Floor
       Philadelphia, Pennsylvania 19103

        Attorneys for Appellee

OPINION OF THE COURT

McKEE, Circuit Judge:

This appeal arises out of a lawsuit Glenn Distributors
Corp. filed against Carlisle Plastics, Inc. for breach of a
contract in which Glenn had agreed to purchase certain
merchandise from Carlisle. At trial, the jury agreed that
Carlisle had breached the contract and it awarded Glenn
actual damages as well as lost profits. However, the district
court thereafter granted Carlisle’s motion for judgment as a
matter of law as to the award of lost profits. The court held
that, although Glenn proved the amount of its lost profits,
Glenn’s failure to establish that it made reasonable efforts
to "cover" precluded recovery of those consequential
damages.

Glenn appeals the court’s order vacating the award of lost
profits, and Carlisle has filed a cross-appeal in which it
argues that the district court erred in failing to hold as a
matter of law that it did not breach the contract with Glenn.1
For the reasons that follow, we will affirm the district
court’s ruling as to Carlisle’s liability, but reverse the order
vacating the jury award for lost profits.

I.

Glenn is a purchaser and reseller of various types of
_________________________________________________________________

1. As we note more fully below, on September 7, 1999 the district court
initially granted summary judgment in favor of Carlisle. However, the
court thereafter granted Glenn’s motion for reconsideration and vacated
that order. The matter then proceeded to trial before a jury.

                                2

close-out merchandise. Carlisle manufactures plastic goods,
particularly trash bags, and sells them to wholesale and
retail customers, including close-out purchasers such as
Glenn. Glenn and Carlisle have had a business relationship
since at least 1995. On June 5, 1997, Carlisle faxed Glenn
a list of close-out merchandise that Carlisle had available
for sale. That list specified several types and quantities of
trash bags.

The phrase, "[a]ll quantities subject to change," or
"[q]uantities subject to change[ ]" appeared at the bottom of
each of the five pages comprising the June 5 list. J.A. at
41-46. Glenn Segal, the president of Glenn Distributors,
responded to the fax on June 12, 1997 by sending
Purchase Order No. 10354 ("the Purchase Order") to Sandy
Johnson at Carlisle. The Purchase Order was for all of the
close-out goods on the June 5 list. The Purchase Order
specifically referenced that list stating: "QUANTITIES ARE
PER FAXED LIST FROM CARLISLE ON JUNE 5, 1997[.]" Id.
at 47 (capitals in original). The Purchase Order contained
columns labeled: "Quantity," "Prod. #," "Description,"
"Pack," "Price," and "Amount." Several quantities were listed
in the "quantity" column, and descriptions and prices were
entered under the corresponding columns in rows reflecting
the quantities that were listed for given items and prices.
Id. The Purchase Order also contained a handwritten entry
asking Johnson to "PLEASE SIGN AND FAX BACK AND
CALL FOR DELIVERY APPTS." Id. (capitals in original).
On June 13, 1997, Johnson responded to the Purchase
Order by sending Segal a letter thanking him for the order
he had placed for "all of our close-outs." The letter also
informed Segal that Johnson "had to enter the orders with
a per case price so that if the quantities change we have a
way to bill you for only what you have received." The June
13 letter also offered an additional 2,184 cases of
merchandise for sale. Sometime thereafter, Segal faxed the
letter back to Johnson accepting the additional cases
Johnson had offered. Glenn offered to pay Carlisle a total
amount of approximately $990,000.

Between June and September 1997, Glenn sent Carlisle
a total of $750,000 in eight separate payments, beginning
with a $100,000 payment on June 12, 1997. Carlisle began

                                3

shipping goods shortly after June 12, and continued
shipping through August 1997. During that period, Carlisle
shipped approximately $736,000 worth of trash bags to
Glenn. However, some of the goods that Glenn ordered from
the June 5 list were never delivered because Carlisle sold
them to other customers.

On May 1, 1998, Glenn sued Carlisle alleging, inter alia,
that Carlisle’s failure to deliver all of the trash bags listed
in the June 5 fax constituted a breach of contract. Glenn
claimed damages in the amount of $14,000 for payments it
had made to Carlisle for goods that Carlisle never shipped,
and lost profits in the amount of approximately $230,000.
The latter sum represented the profit Glenn claimed it
would have realized from the resale of the trash bags that
Carlisle never shipped. Glenn and Carlisle eventually filed
cross motions for summary judgment. Carlisle claimed that
the undisputed facts established as a matter of law that it
was not under any binding obligation to sell any given
quantity of goods. Glenn claimed the reverse. Glenn
claimed it was entitled to summary judgment as to
Carlisle’s liability as a matter of law inasmuch as there was
no dispute that Carlisle did not ship all of the items ordered
by Glenn that were listed in the original fax.

The district court, however, initially agreed with Carlisle
and granted Carlisle summary judgment based upon the
court’s conclusion that the "subject to change" language in
the June 5 fax clearly and unambiguously established that
the quantities of goods Carlisle would sell could change at
any time and for any reason. Accordingly, the court entered
an order awarding Glenn only the $14,000 it had paid for
merchandise it never received, and dismissing the
remainder of Glenn’s claim. However, on January 13, 2000,
the court subsequently granted Glenn’s motion for
reconsideration and vacated the entry of summary
judgment. All issues of liability and damages were then
submitted to a jury at the ensuing trial.

During that trial, Glenn Segal offered the following
testimony about efforts he made to replace the merchandise
that was ordered from the June 5 fax but never shipped:

                                4

       Q: Did you take any steps to cover -- to cover the
       shortfall that had occurred as a result of this
       particular non-shipment?

       A: I tried to, yes.

       Q: Okay. Can you explain to the Court and to the
       members of the jury in substance the steps that
       you took?

       A: Well, they shipped us two categories of trash bags,
       one was Ruffies, which is a brand name, and the
       other was supermarket names, which are like a --
       like a half-brand name, because people know it’s a
       certain quality when it’s going to be -- when it has
       a supermarket name on it. So, we went to trade
       shows, we asked salesmen, we were looking for
       another trash bag company where we could buy a
       name brand or we could buy supermarket labels at
       the closeout price, and we couldn’t do it. We tried
       to -- we tried to replace the goods, but really the
       only ones that could replace Ruffies was Carlisle,
       they’re the only ones that make the product.

       Q: Did you have any luck on the bags that weren’t
       Ruffies?

       A: No.

       Q: Okay. Did you take steps to try to buy those too?

       A: We -- we looked in the marketplace, went to trade
       shows, we spoke to salesmen, we -- we couldn’t
       replace them at that time.

J.A. at 303-04.

On cross-examination, Carlisle’s counsel questioned
Segal about his earlier deposition testimony. At his
deposition, Segal had testified that he did not know who
else made supermarket brand trash bags and he did not
know how to discover who did. He stated, "[t]he only ones
I knew had them were Carlisle and I tried to get them to do
it[.]" Id. at 308. He added that he would have to "go to the
supermarket and buy up trash bags retail" to replace the
ones Carlisle didn’t ship. Id. Segal had also testified in his
deposition that despite twenty years in the business and

                                5

numerous area contacts, he could not think of any way to
replace the private label bags other than buying from
Carlisle or purchasing bags at retail prices. See id. at 309-
10.

As noted earlier, the jury returned a verdict in favor of
Glenn, and awarded a total of $244,003.00 in damages,
including $230,003.00 for the lost profit Glenn claimed
resulted from not being able to resell the merchandise it
expected to receive from Carlisle. Following trial, the district
court denied Carlisle’s Rule 50 motion for judgment as a
matter of law as to liability, but granted it as to the award
of lost profits. The court reasoned that Glenn failed to
establish that it could not reasonably have avoided losing
those profits by attempting to "cover" and entered judgment
in favor of Glenn for $14,000 plus interest. This appeal and
cross-appeal followed.2

II.

As noted earlier, Carlisle is cross-appealing the district
court’s order of January 13, 2000 by which the court
vacated the order of September 7, 1999 granting partial
summary judgment in favor of Carlisle. Inasmuch as our
discussion of Glenn’s appeal of the court’s grant of
Carlisle’s motion for judgment as a matter of law overlaps
the issues raised in Carlisle’s cross-appeal, we need not
address the court’s summary judgment ruling separately.

Our review of the district court’s grant of Carlisle’s Rule
50 motion is plenary. See Rhone Poulenc Rorer
Pharmaceuticals, Inc. v. Newman Glass Works, 112 F.3d
695, 696 (3d Cir. 1997). In reviewing the grant of a
judgment as a matter of law under Fed. R. Civ. P. 50
following a jury verdict, we must view the evidence in the
light most favorable to the non-moving party, and
determine whether the record contains the "minimum
quantum of evidence from which a jury might reasonably
afford relief." Mosley v. Wilson, 102 F.3d 85, 89 (3d Cir.
_________________________________________________________________

2. The district court had subject matter jurisdiction over plaintiff ’s
claims pursuant to 28 U.S.C. S 1331. We have jurisdiction over the
appeal and the cross-appeal under 28 U.S.C. S 1291.

                                6

1996), quoting Parkway Garage, Inc. v. City of Philadelphia,
5 F.3d 685, 691 (3d Cir. 1993).

The standard for granting summary judgment under Rule
56 "mirrors the standard for a directed verdict under Fed.
R. Civ. P. 50(a)[.]" Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 250 (1986); see also Beers-Capitol v. Whetzel, 256 F.3d
120, 130 n.6 (3d Cir. 2001). A moving party is entitled to
summary judgment "if the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to a
judgment as a matter of law." Fed. R. Civ. P. 56(c); see also
Celotex Corp. v. Catrett, 477 U.S. 317 (1986).
Accordingly, we must determine if the evidence here was
sufficient to establish a binding contractual obligation on
the part of Carlisle to sell a given quantity of merchandise
to Glenn. If it was, we must then consider if Glenn
presented sufficient evidence to prove consequential
damages in the form of lost profits that resulted from
Carlisle’s breach. In resolving this latter inquiry, we must
consider Glenn’s argument that the district court
improperly placed the burden of proving reasonable efforts
to cover on Glenn rather than requiring Carlisle to establish
Glenn’s failure to cover as an affirmative defense.

A.

The district court concluded that the substantive law of
Pennsylvania controlled this dispute, and that is not
challenged on appeal.3 It is well-settled under Pennsylvania
_________________________________________________________________

3. Inasmuch as the district court was exercising diversity jurisdiction, it
was required to apply the substantive law of Pennsylvania, the forum
state. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938); McKenna v.
Pacific Rail Serv., 32 F.3d 820, 825 (3d Cir. 1994). Our analysis is
therefore controlled by applicable decisions of the Pennsylvania Supreme
Court. If that Court has not decided an issue before us, we look to
decisions of the intermediate appellate courts of Pennsylvania for
guidance. See McKenna, 32 F.3d at 825; Nationwide Ins. Co. v.
Resseguie, 980 F.2d 226, 229 (3d Cir. 1992). Of course, our analysis is
also controlled by applicable state statutes as interpreted by
Pennsylvania’s appellate courts.

                                7

contract law that the meaning of a clear and unambiguous
written contract and the intent of the contracting parties
must be determined from the four corners of the contract.
See Steuart v. McChesney, 444 A.2d 659, 661 (Pa. 1982).
However, if the written contract is ambiguous, a court may
look to extrinsic evidence to resolve the ambiguity and
determine the intent of the parties. See Bohler-Uddeholm
Am., Inc. v. Ellwood Group, Inc., 247 F.3d 79, 93 (3d Cir.
2001). We have explained that a contract is ambiguous
under Pennsylvania law

       if, and only if, it is reasonably or fairly susceptible of
       different constructions and is capable of being
       understood in more senses than one and is obscure in
       meaning through indefiniteness of expression or has a
       double meaning. A contract is not ambiguous if the
       court can determine its meaning without any guide
       other than a knowledge of the simple facts on which,
       from the nature of the language in general, its meaning
       depends; and a contract is not rendered ambiguous by
       the mere fact that the parties do not agree on the
       proper construction.

Duquesne Light Co. v. Westinghouse Elec. Corp. , 66 F.3d
604, 614 (3d Cir. 1995) (quoting Samuel Rappaport Family
Partnership v. Meridian Bank, 657 A.2d 17, 21-22 (Pa.
Super. Ct. 1995)).

Here, the June 5 fax from Carlisle to Glenn clearly and
unambiguously set forth specified quantities for each
description of merchandise offered for sale to Glenn.
However, as noted, the fax also stated: "quantities subject
to change" and "quantities per faxed list." J.A. at 41-46.
The district court concluded that Carlisle’s specification of
precise quantities while at the same time informing the
buyer that the quantities were "subject to change" created
an ambiguity as to the intent of the parties regarding the
quantity Carlisle intended to sell, and the quantity Glenn
intended to buy from the faxed list. We agree.

The Purchase Order specifically stated that Glenn wanted
to buy the "quantities . . . per faxed list . . . on June 5,
1997." Id. at 47. Moreover, as noted above, the Purchase
Order stated the specific quantities of each item Glenn was

                                8

agreeing to buy, and those quantities were taken directly
from Carlisle’s June 5 fax. Given this scenario, Carlisle may
have intended the notification that "quantities[were]
subject to change" to inform Glenn that Carlisle was not
promising any specific quantity and that the quantities on
the list were only illustrative of the quantities Carlisle might
have available for sale. However, Glenn did not interpret the
fax in this manner as Glenn took some care to specify the
quantities it wanted to purchase, and the specific price for
each of the types of merchandise it wanted. Moreover,
Glenn thereafter began paying Carlisle based upon the
quantities specified in the Purchase Order.

Carlisle may also have intended the reservation of
quantities listed in the June 5 fax to inform Glenn that,
although Carlisle may have been offering the specific
quantities set forth therein, Carlisle’s obligation to sell them
was contingent upon availability. This would have allowed
Carlisle room to adjust for problems in manufacturing the
items listed, and offered flexibility in the event of inventory
error. Given that the language was susceptible to at least
these two opposing reasonable alternatives (and perhaps
others), the district court allowed extrinsic evidence of the
intent of the contracting parties.4

Glenn called Sandra Johnson as an adverse witness at
trial in an effort to establish the meaning of the reservation
as to quantity. The explanation that she offered was that
the reservation on the June 5 fax was intended to allow for
any discrepancies in inventory. However, she also admitted
that the merchandise that had been offered to Glenn on
June 5 had been sold to other customers. She also testified
that the " ‘quantities subject to change’ on there allowed
[Carlisle] to be able to ship all, none or some of a particular
item." J.A. at 433. When questioned more closely,"All, none
or some?" she confirmed, "Yes." Id. Glenn’s counsel then
impeached Johnson with her deposition testimony. During
_________________________________________________________________
4. Courts must be mindful to "adopt an interpretation [of ambiguous
language] which under all circumstances ascribes the most reasonable,
probable, and natural conduct of the parties, bearing in mind the objects
manifestly to be accomplished." Metzger v. Clifford Realty Corp., 476
A.2d 1, 4 (Pa. Super. Ct. 1984).

                                9

her deposition, Glenn’s counsel had asked Johnson if the
reservation was intended to guard against "some inaccurate
number in the computer inventory report[,]" to which
Johnson responded, "Yes." Id. at 439-40. She specifically
denied that the qualification as to quantities was intended
to allow Carlisle to ignore an offer from a buyer in the event
that a better deal came along.

The jury obviously rejected Johnson’s testimony that the
disputed language was intended to allow for discrepancies
in inventory or that it allowed Carlisle to sell some or all of
the items listed. The jury’s finding that Carlisle breached its
agreement with Glenn is clearly supported by the evidence,
and the district court correctly concluded that Carlisle was
not entitled to judgment as a matter of law against Glenn
on Glenn’s breach of contract claim. Accordingly, we will
affirm the orders denying Carlisle’s Rule 50(b) motion as to
liability as well as the January 13, 2000 order granting
Glenn reconsideration and vacating the partial summary
judgment order in favor of Carlisle. However, we do not
agree that the district court was correct in granting
Carlisle’s Rule 50(b) motion for judgment as a matter of law
as to lost profits.

B.

Pennsylvania has adopted the Uniform Commercial Code
("UCC"). Under the UCC, a buyer can recover consequential
damages resulting from a seller’s breach of contract. See 13
PA. CONST. STAT. ANN. S 2714(c) (2002);Nat’l Controls Corp. v.
Nat’l Semiconductor Corp., 833 F.2d 491, 495 (3d Cir.
1987). However, a buyer may recover lost profits only to the
extent that the loss was not reasonably avoidable. See 13
PA. CONST. STAT. ANN. S 2715(b)(1) (2002). Accordingly,
Pennsylvania imposes a duty of mitigation or "cover." That
duty is defined as making "in good faith and without
unreasonable delay any reasonable purchase of or contract
to purchase goods in substitution for those due from the
seller." See 13 PA. CONST. STAT. ANN.S 2712(a) (2002).

Here, the district court concluded that Glenn had the
burden of proving its reasonable efforts to cover. The court
stated, "Glenn . . . must present sufficient evidence of its

                                10

reasonable efforts to ‘cover,’ that is, to purchase and resell
replacement goods in an effort to offset its anticipatory
losses." Glenn Distrib. Corp. v. Carlisle Plastics, Inc., No.
CIV.A. 98-2317, 2000 WL 1224941, at *10 (E.D. Pa. Aug.
29, 2000). The court stretched that duty to include not only
trash bags, but anything else that "reasonably" could have
been sold to a customer to recover some or all of Glenn’s
lost profit. The court concluded:

       Glenn’s cover duty required it not only to look for
       replacement trash bags to sell to the same customers,
       as had bought previous Carlisle products, but to look
       for any replacement close-out items from any of its
       suppliers that Glenn could re-sell to any customers to
       recover some or all of its profit. For example, Glenn
       could have recouped some of its lost profits by
       purchasing and reselling Hershey product to some
       customer, although perhaps not to the same customers
       which would have purchased the trash bags. However,
       there is no evidence that Glenn took any steps to look
       for, purchase, or sell items other than trash bags.

Id. The court therefore required Glenn to demonstrate
reasonable efforts to obtain items for resale to customers
"from a myriad of manufacturers, including Hershey,
Nestle, Carnation, and Johnson & Johnson[.]" Id. We
conclude that was error.

We hold that Carlisle, not Glenn, had the burden of proof
as to Glenn’s efforts to cover. Moreover, we do not believe
that the Supreme Court of Pennsylvania would require a
reseller to attempt to obtain any and all items that might
conceivably be resold in order to mitigate lost profits
resulting from a reseller’s inability to acquire a particular
close-out item.

1.

       It is a familiar rule of law that a party who suffers a
       loss due to a breach of contract has a duty to make
       reasonable efforts to mitigate his losses. Put another
       way, the amount recoverable by the damaged party
       must be reduced by the amount of losses which could
       have been avoided by that party’s reasonable efforts to

                                11

       avoid them. Furthermore, the party who has breached
       the contract or caused the loss has the burden of
       showing the losses could have been avoided through
       the reasonable efforts of the damaged party.

State Public School Bldg. Auth. v. W. M. Anderson, Co., 410
A.2d 1329, 1331 (Pa. Commw. Ct. 1980) (emphasis added;
citations omitted). Thus, in applying Pennsylvania law, we
stated in S.J. Groves & Sons Co., 576 F.2d 524 (3d Cir.
1978) that "the cover rules are an expression of the general
duty to mitigate damages and usually the same principles
apply. The burden of proving that losses could have been
avoided by reasonable effort and expense must be borne by
the party who has broken the contract." S.J. Groves & Sons
Co., 576 F.2d at 528-29 (emphasis added; citations
omitted). Therefore, Pennsylvania requires that the plaintiff
attempt reasonable efforts to cover in order to mitigate
damages, and the failure to do so is an affirmative defense
to be proven by the defendant/seller. See Koppers Co., Inc.
v. Aetna Cas. and Surety Co., 98 F.3d 1440, 1448 (3d Cir.
1996); see also Williams v. Masters, Mates & Pilots of Am.,
120 A.2d 896, 901 (Pa. 1956); Aircraft Guar. Corp. v. Strato-
Lift, Inc., 991 F. Supp. 735, 738 (E.D. Pa. 1998); Carl
Beasley Ford, Inc. v. Burroughs Corp., 361 F. Supp. 325,
335 (E.D. Pa. 1973), aff ’d, 493 F.2d 1400 (3d Cir. 1974).

The district court rested its burden of proof analysis
upon Big Knob Volunteer Fire Co. v. Lowe & Moyer Garage,
Inc., 487 A.2d 953 (Pa. Super. Ct. 1985). There, the court
did place the burden of proving the inability to cover on the
plaintiff/buyer. See Big Knob Volunteer Fire Co. , 487 A.2d
at 959-960. However, Big Knob involved a claim for replevin
of a specific, customized item under UCC S 2-716. It is
therefore distinguishable. The Official Comment to 13 PA.
CONS. STAT. ANN. S 2712, which mirrors UCC S 2-712(duty to
"cover"), makes clear that the rules and burdens relating to
the duty to "cover" are based upon the extent to which
goods are fungible:

       [T]he operation of the [UCC]   section on specific
       performance of contracts for   "unique" goods must be
       considered [when applying to   duty to "cover"] for
       availability of the goods to   the particular buyer for his
       particular needs is the test   for that remedy and

                                12

       inability to cover is made an express condition to the
       right of the buyer to replevy the goods.

Official Comment, 13 PA. CONS. STAT. ANN. S 2712, P 3.

Specific performance is only appropriate where the
uniqueness of goods precludes a remedy in damages. The
law therefore requires the plaintiff/buyer to show the goods
under a breached contract were unique. This does not
apply here as the items involved, trash bags, are largely
fungible. Moreover, we are bound by our prior resolution of
the appropriate burden of proof as set forth in S.J. Groves
& Sons Co., supra. Accordingly, it is clear that if the
breaching seller believes that the plaintiff ’s efforts to cover
were not adequate, that defendant must present sufficient
evidence to allow a reasonable fact finder to deny recovery
to the buyer on that basis.

Here, the district court concluded that Glenn’s evidence
was "not detailed or specific enough to establish that Glenn
took reasonable efforts [to cover] under the
circumstances[,]" because Glenn did not provide evidence
that similar merchandise could not have reasonably been
acquired. Glenn, 2000 WL 1224941, at *10. However, it was
up to Carlisle to establish that reasonably similar items
were available and that it would have been reasonable for
Glenn to acquire them. Inasmuch as Carlisle did not
introduce sufficient evidence to prevail on what should have
been an affirmative defense, the record supports the jury’s
award of lost profits.

2.

Moreover, the Official Comment to 13 PA. CONS. STAT. ANN.
S 2712 is instructive as to the types of goods that may be
purchased as substitute merchandise in an effort to
mitigate loss. Paragraph 2 of the Comment provides that a
buyer may purchase "goods not identical with those
involved but commercially usable as reasonable substitutes
under the circumstances of the particular case[.]" Official
Comment, 13 PA. CONS. STAT. ANN. S 2712,P 2 (emphasis
added). The duty is therefore more narrow than that
imposed by the district court. It does not include all

                                13

merchandise that might be resold no matter how dissimilar
it might be to the original product.

The district court did not cite any cases to support its
conclusion that Glenn’s duty of mitigating the lost sales of
trash bags required it to go into the market in search of
products from such diverse sources as Hershey, Nestle,
Carnation, or Johnson & Johnson, and our research has
not disclosed any Pennsylvania appellate cases that suggest
that is the law. Moreover, even assuming arguendo that it
was commercially reasonable for Glenn to look for other
classes of merchandise from sources such as those, it was
up to Carlisle, not Glenn, to introduce the relevant evidence
and establish the commercial feasibility of doing so. Thus,
we hold that the district court erred in vacating the jury
award for lost damages based upon Glenn’s purported
failure to cover.

C.

In its cross-appeal, Carlisle also argues that irrespective
of Glenn’s duty to cover, "Glenn’s evidence [as to the
$230,003.00 in lost profits] was nothing more than
unsubstantiated speculation and the district court’s
decision may be affirmed on that basis as well." Carlisle’s
Br. at 25. We again disagree.

The district court thoroughly and adequately disposed of
this argument in its Memorandum Opinion dated August
29, 2000. See Glenn, 2000 WL 1224941, at * 8. There, the
district court correctly noted that evidence of lost profits
"need not be mathematically precise, but the evidence must
establish the fact with a fair degree of probability." Id.
(internal quotations omitted), quoting Advent Sys. Ltd. v.
Unisys Corp., 925 F.2d 670, 680 (3d Cir. 1991). 5 Moreover,
_________________________________________________________________

5. Under Pennsylvania law, a buyer is entitled to recover lost profits as
consequential damages of a seller’s breach of contract when the seller
knows (or has reason to know) the buyer is purchasing goods for resale.
National Controls Corp. v. National Semiconductor Corp., 833 F.2d 491,
(3d Cir. 1987). Carlisle does not claim that it did not know that Glenn
was purchasing for resale. Moreover, this record would not support that
argument as it is clear from the circumstances, including the quantities
involved and the relationship between the buyer and seller, that Carlisle
knew, or should have known, that Glenn was not going to use the trash
bags itself.

                                14

the district court meticulously set forth the evidence Glenn
presented in support of its claim for lost profits, and the
methodology Glenn Segal used in calculating the figure that
the jury awarded. We agree with the district court’s
analysis of this issue and reject Carlisle’s challenge to the
award of lost profits substantially for the reasons set forth
by the district court.6

III.

For the foregoing reasons, the district court’s order of
_________________________________________________________________

6. The district court concluded that the following evidence sufficiently
established the amount of Glenn’s lost profits:

       The only evidence from Glenn as to the amount of its lost profits is
       the Damages Report prepared by [Glenn] Segal and his testimony.
       Carlisle challenges the reliability of the Damages Report, that is,
       Carlisle argues that the Report is unreliable and fails to establish
       the amount of lost profits with reasonable certainty or a fair degree
       of probability. The reliability of evidence goes to its weight rather
       than to its admissibility . . . .

       Segal [testified] that approximately 60 cases of 20 different items
       used in calculating net lost profits were not Carlisle products and
       were not sold to Glenn under this contract. Segal did recalculate the
       lost profits without those 60 items, however, and Glenn urges that
       any difference in the final figures is infinitesimal. The jury
       apparently agreed and there is no basis to disturb that finding.

       [Sandra] Johnson testified, based on her knowledge of the products
       that Carlisle sells, that other items used by Segal in creating the
       Damages Report were not on the June 5 list or June 13 letter and
       were not shipped as part of P.O. No. 10354 . . . . Johnson also
       reviewed several pages of the Report at random and testified that
       there were a number of items contained therein that were not sold
       to Glenn as part of P.O. No. 10354. However, Johnson conceded
       that every item included in the Damages Report had, at one time or
       another, been produced by Carlisle. Segal also testified that every
       item included in the Damages Report was received from Carlisle
       since June 1997, the relevant time period for this transaction, and
       that Glenn did not purchase private-label trash bags from any
       producer other than Carlisle. Johnson also testified that she did not
       know whether substitutions had been made at the warehouse at the
       time of shipping, although she did state that the shipping
       department had no authority to do so.

                                15
January 13, 2000 granting Glenn’s motion for
reconsideration and vacating the entry of summary
judgment in favor of Carlisle is affirmed. We will vacate the
district court’s order dated August 29, 2000 granting
Carlisle’s motion for judgment as a matter of law as to
damages for lost profits, and remand to the district court
for entry of judgment in favor of Glenn in the full amount
of the jury award.

A True Copy:
Teste:

       Clerk of the United States Court of Appeals
       for the Third Circuit

_________________________________________________________________

       The jury heard all of this evidence and was entitled to consider all
       of it, particularly the credibility of witnesses. The jury apparently
       believed Segal’s testimony that the only items that Glenn sold and
       included in the Damages Report had been shipped by Carlisle
       during the relevant time period and that any private-label bags had
       been received from Carlisle. The [sic] apparently concluded,
       therefore, that the Damages Report was sufficiently reliable as to be
       accorded controlling evidentiary weight and that it accurately
       reflected the amount of Glenn’s lost profits. There was sufficient
       evidence to support that finding and no basis to disturb it.

Glenn, 2000 WL 1224941, at *8 (internal citations omitted).

                                16