Court Opinion

ID: 769411
Source: CourtListenerOpinion
Date Created: 2012-04-18 09:58:41+00
Date Added: 2024-06-11T15:25:28.101957
License: Public Domain

218 F.3d 652 (7th Cir. 2000)
MindGames, Inc.,  Plaintiff-Appellant,v.Western Publishing Company, Inc.,  Defendant-Appellee.
No. 98-1879
In the  United States Court of Appeals  For the Seventh Circuit
Argued April 17, 2000Decided June 22, 2000

Appeal from the United States District Court  for the Eastern District of Wisconsin.  Nos. 94-C-552, 94-C-998--Lynn S. Adelman,  Judge.
Before Posner, Chief Judge, and Fairchild  and Diane P. Wood, Circuit Judges.
Posner, Chief Judge.

1
This is a diversity  suit for breach of contract, governed by  Arkansas law because of a choice of law  provision in the contract. The plaintiff,  MindGames, was formed in March of 1988 by  Larry Blackwell to manufacture and sell  an adult board game, "Clever Endeavor,"  that he had invented. The first games  were shipped in the fall of 1989 and by  the end of the year, 75 days later,  30,000 had been sold. In March of 1990,  MindGames licensed the game to the  defendant, Western, a major marketer of  games. Western had marketed the very  successful adult board games "Trivial  Pursuit" and "Pictionary" and thought  "Clever Endeavor" might be as successful.  The license contract, on which this suit  is premised, required Western to pay  MindGames a 15 percent royalty on all  games sold. The contract was by its terms  to remain in effect until the end of  January of 1993, or for another year if  before then Western paid MindGames at  least $1.5 million in the form of  royalties due under the contract or  otherwise, and for subsequent years as  well if Western paid an annual renewal  fee of $300,000.

2
During the first year of the contract,  Western sold 165,000 copies of "Clever  Endeavor" and paid MindGames $600,000 in  royalties. After that, sales fell  precipitously (though we're not told by  how much) but the parties continued under  the contract through January 31, 1994,  though Western did not pay the $900,000  ($1.5 million minus $600,000) that the  contract would have required it to pay in  order to be entitled to extend the  contract for a year after its expiration.  In February of 1994 the parties finally  parted. Later that year MindGames brought  this suit, which seeks $900,000, plus  lost royalties of some $40 million that  MindGames claims it would have earned had  not Western failed to carry out the  promotional obligations that the contract  imposed on it, plus $300,000 on the  theory that Western renewed the contract  for a third year, beginning in February  of 1994; Western sold off its remaining  inventory of "Clever Endeavor" in that  year.

3
The district court granted summary  judgment for Western, holding that the  contract did not entitle MindGames to a  renewal fee and that Arkansas's "new  business" rule barred any recovery of  lost profits. 944 F. Supp. 754 (E.D. Wis.  1996); 995 F. Supp. 949 (E.D Wis. 1998).  Although the victim of a breach of  contract is entitled to nominal damages,  Mason v. Russenberger, 542 S.W.2d 745  (Ark. 1976); Movitz v. First Nat. Bank of  Chicago, 148 F.3d 760, 765 (7th Cir.  1998); E. Allan Farnsworth, Contracts  sec. 12.8, p. 784 (3d ed. 1999),  MindGames does not seek them; and so if  it is not entitled to either type of  substantial damages that it seeks,  judgment was correctly entered for  Western. By not seeking nominal damages,  incidentally, MindGames may have lost a  chance to obtain significant attorneys'  fees, to which Arkansas law entitles a  prevailing party in a breach of contract  case. See Dawson v. Temps Plus, Inc., 987 S.W.2d 722, 729 (Ark. 1999).

4
The rejection of MindGames' claim to the  renewal fee for the second year (and a  fortiori the third) was clearly correct.  The contract conditioned Western's right  to renew the contract for a second year  on its paying a renewal fee of $1.5  million (minus royalties already paid);  it was silent on the terms of a renewal  adopted by a new agreement of the parties  rather than by the exercise of an option  granted by the original contract. If  MindGames hadn't wanted to renew the  contract and Western had insisted, then  Western would have had to pay the fee.  But if Western did not invoke a  contractual right to renew, if instead  the parties entered into a new agreement  to renew the contract, then MindGames had  no right to the renewal fee fixed in the  contract; that right was conditional on  Western's exercising its contractual  right to renew. A conditional right in a  contract does not become an enforceable  right until the condition occurs,  Restatement (Second) of Contracts sec.  225(1) (1981), unless noncompliance with  the condition is excused by agreement,  Uebe v. Bowman, 420 S.W.2d 889 (Ark.  1967); Normand v. Orkin Exterminating  Co., 193 F.3d 908, 912 (7th Cir. 1999),  or by operation of law, Farnsworth, supra  sec. 8.3, p. 526, as where the other  party to the contract wrongfully prevents  the condition from occurring, id., sec.  8.6, pp. 544-45; Restatement, supra, sec.  225, comment b, which is not alleged, for  Western had no duty to exercise its right  of renewal. The condition that would have  entitled MindGames to demand a renewal  fee thus did not occur here; Western did  not invoke its contractual right to  extend the contract; after January 31,  1993, the parties were operating under a  new contract.

5
The more difficult issue is MindGames'  right to recover lost profits for  Western's alleged breach of its duty to  promote "Clever Endeavor." A minority of  states have or purport to have a rule  barring a new business, as distinct from  an established one, from obtaining  damages for lost profits as a result of a  tort or a breach of contract. E.g.,  Lockheed Information Management Systems  Co. v. Maximus, Inc., 524 S.E.2d 420,  429-30 (Va. 2000); Bell Atlantic Network  Services, Inc. v. P.M. Video Corp., 730 A.2d 406, 419-20 (N.J. Super. 1999);  Interstate Development Services of Lake  Park, Georgia, Inc. v. Patel, 463 S.E.2d 516 (Ga. App. 1995); Stuart Park  Associates Limited Partnership v.  Ameritech Pension Trust, 51 F.3d 1319,  1328 (7th Cir. 1995) (Illinois law);  Bernadette J. Bollas, Note, "The New  Business Rule and the Denial of Lost  Profits," 48 Ohio St. L. J. 855, 859 & n.  32 (1987). The rule of Hadley v.  Baxendale, 9 Ex. 341, 156 Eng. Rep. 145  (1854), often prevents the victim of a  breach of contract from obtaining lost  profits, but that rule is not invoked  here. Neither the "new business" rule nor  the rule of Hadley v. Baxendale stands  for the general proposition that lost  profits are never a recoverable item of  damages in a tort or breach of contract  case.

6
Arkansas is said to be one of the "new  business" rule states on the strength of  a case decided by the state's supreme  court many years ago. The appellants in  Marvell Light & Ice Co. v. General  Electric Co., 259 S.W. 741 (Ark. 1924),  sought to recover the profits that they  claimed to have lost as a result of a  five and a half month delay in the  delivery of icemaking machinery; the  delay, the appellants claimed, had forced  them to delay putting their ice factory  into operation. The court concluded,  however, that because there was no  indication "that the manufacture and sale  of ice by appellants was an established  business so that proof of the amount lost  on account of the delay . . . might be  made with reasonable certainty," "the  anticipated profits of the new business  are too remote, speculative, and  uncertain to support a judgment for their  loss." It quoted an earlier decision in  which another court had said that "he who  is prevented from embarking in [sic--must  mean 'on'] a new business can recover no  profits, because there are no provable  data of past business from which the fact  that anticipated profits would have been  realized can be legally deduced." Central  Coal & Coke Co. v. Hartman, 111 Fed. 96,  99 (8th Cir. 1901). That quotation is  taken to have made Arkansas a "new  business" state, although the rest of the  Marvell opinion indicates that the court  was concerned that the anticipated  profits of the particular new business at  issue, rather than of every new business,  were too speculative to support an award  of damages. On its facts, moreover,  Marvell was a classic Hadley v. Baxendale  type of case--in fact virtually a rerun  of Hadley, except that the appellants  alleged that they had notified the seller  of the icemaking machinery of the damages  that they would suffer if delivery was  delayed, and the seller had agreed to be  liable for those damages. The decision is  puzzling in light of that allegation; it  is doubly puzzling because, assuming that  by the time of the trial the ice factory  was up and running, it should not have  been difficult to compute the damages  that the appellants had lost by virtue of  the five and a half month delay in  placing the factory in operation.  Presumably it would have had five and a  half months of additional profits.

7
Marvell has never been overruled; and  federal courts ordinarily take a  nonoverruled decision of the highest  court of the state whose law governs a  controversy by virtue of the applicable  choice of law rule to be conclusive on  the law of the state. E.g., Milwaukee  Metropolitan Sewerage District v.  Fidelity & Deposit Co., 56 F.3d 821, 823  (7th Cir. 1995); C & B Sales & Service,  Inc. v. McDonald, 111 F.3d 27, 29 n. 1  (5th Cir. 1997); New York Life Ins. Co.  v. K N Energy, Inc., 80 F.3d 405, 409  (10th Cir. 1996). But this is a matter of  practice or presumption, not of rule. The  rule is that in a case in federal court  in which state law provides the rule of  decision, the federal court must predict  how the state's highest court would  decide the case, and decide it the same  way. Treco, Inc. v. Land of Lincoln  Savings & Loan, 749 F.2d 374, 377 (7th  Cir. 1984); New Hampshire Ins. Co. v.  Vieira, 930 F.2d 696, 701 (9th Cir.  1991); 19 Charles Alan Wright, Arthur R.  Miller & Edward H. Cooper, Federal  Practice and Procedure sec. 4507, pp.  126-50 (2d ed. 1996). Law, Holmes said,  in a controversial definition that is,  however, a pretty good summary of how  courts apply the law of other  jurisdictions, is just a prediction of  what the courts of that jurisdiction  would do with the case if they got their  hands on it. Oliver Wendell Holmes, "The  Path of the Law," 10 Harv. L. Rev. 457,  461 (1897). Since state courts like  federal courts do occasionally overrule  their decisions, there will be  occasional, though rare, instances in  which the best prediction of what the  state's highest court will do is that it  will not follow its previous decision.  See, e.g., Burgess v. Lowery, 201 F.3d 942, 948 (7th Cir. 2000); Treco, Inc. v.  Land of Lincoln Savings & Loan, supra,  749 F.2d at 377; Lightning Lube, Inc. v.  Witco Corp., 4 F.3d 1153, 1176 (3d Cir.  1993); 19 Wright, Miller & Cooper, supra,  sec. 4507, pp. 141-49.

8
That is the best prediction in this  case. Marvell was decided more than three  quarters of a century ago, and the "new  business" rule which it has been thought  to have announced has not been mentioned  in a published Arkansas case since. The  opinion doesn't make a lot of sense on  its facts, as we have seen, and the  Eighth Circuit case on which it relied  has long been superseded in that circuit.  See, e.g., Central Telecommunications,  Inc. v. TCI Cablevision, Inc., 800 F.2d 711, 727-28 (8th Cir. 1986). The Arkansas  cases decided since Marvell that deal  with damages issues exhibit a liberal  approach to the estimation of damages  that is inconsistent with a flat rule  denying damages for lost profits to all  businesses that are not well established.  Jim Halsey Co. v. Bonar, 683 S.W.2d 898,  902-03 (Ark. 1985); Tremco, Inc. v.  Valley Aluminum Products Corp., 831 S.W.2d 156, 158 (Ark. App. 1992); Ozark  Gas Transmission Systems v. Barclay, 662 S.W.2d 188, 192 (Ark. App. 1983); J.W.  Looney, "The 'New Business Rule' and  Breach of Contract Claims for Lost  Profits: Playing Mindgames with Arkansas  Law," 1997 Ark. L. Notes 43, 46-47. The  Ozark decision, for example, allowed an  orchard farmer to recover for the damages  to a new orchard. The "new business" rule  has, moreover, been abandoned in most  states that once followed it, e.g.,  Beverly Hills Concepts, Inc. v. Schatz &  Schatz, Ribicoff & Kotkin, 717 A.2d 724,  733-35 (Conn. 1998); AGF, Inc. v. Great  Lakes Heat Treating Co., 555 N.E.2d 634,  637-39 (Ohio 1990); No Ka Oi Corp. v.  National 60 Minute Tune, Inc., 863 P.2d 79, 81-82 (Wash. App. 1993); Orchid  Software, Inc. v. Prentice-Hall, Inc.,  804 S.W.2d 208, 210-11 (Tex. App. 1991);  Beck v. Clarkson, 387 S.E.2d 681, 683-84  (S.C. App. 1989); see also McNamara v.  Wilmington Mall Realty Corp, 466 S.E.2d 324, 330 (N.C. App. 1996); International  Telepassport Corp. v. USFI, Inc., 89 F.3d 82, 85-86 (2d Cir. 1996) (per curiam)  (New York law); Restatement, supra, sec.  352, comment b, and it seems to retain  little vitality even in states like  Virginia, which purport to employ the  hard-core per se approach. See Commercial  Business Systems, Inc. v. Bellsouth  Services, Inc., 453 S.E.2d 261, 268-69  (Va. 1995); see generally Eljer Mfg.,  Inc. v. Kowin Development Corp., 14 F.3d 1250, 1256 (7th Cir. 1994).

9
Western tries to distinguish Ozark by  pointing to the fact that the plaintiff  there was an established orchard farmer,  albeit the particular orchard represented  a new venture for him. This effort to  distinguish that case brings into view  the primary objection to the "new  business" rule, an objection of such  force as to explain its decline and make  it unlikely that Arkansas would follow it  if the occasion for its supreme court to  choose arose. The objection has to do  with the difference between rule and  standard as methods of legal governance.  A rule singles out one or a few facts and  makes it or them conclusive of legal  liability; a standard permits  consideration of all or at least most  facts that are relevant to the standard's  rationale. A speed limit is a rule;  negligence is a standard. Rules have the  advantage of being definite and of  limiting factual inquiry but the  disadvantage of being inflexible, even  arbitrary, and thus overinclusive, or of  being underinclusive and thus opening up  loopholes (or of being both over- and  underinclusive!). Standards are flexible,  but vague and open-ended; they make  business planning difficult, invite the  sometimes unpredictable exercise of  judicial discretion, and are more costly  to adjudicate--and yet when based on lay  intuition they may actually be more  intelligible, and thus in a sense clearer  and more precise, to the persons whose  behavior they seek to guide than rules  would be. No sensible person supposes  that rules are always superior to  standards, or vice versa, though some  judges are drawn to the definiteness of  rules and others to the flexibility of  standards. But that is psychology; the  important point is that some activities  are better governed by rules, others by  standards. States that have rejected the  "new business" rule are content to  control the award of damages for lost  profits by means of a standard--damages  may not be awarded on the basis of wild  conjecture, they must be proved to a  reasonable certainty, e.g., Beverly Hills  Concepts, Inc. v. Schatz & Schatz,  Ribicoff & Kotkin, supra, 717 A.2d at  733-34; AGF, Inc. v. Great Lakes Heat  Treating Co., supra, 555 N.E.2d at  638-39--that is applicable to proof of  damages generally. See, e.g., Jones Motor  Co. v. Holtkamp, Liese, Beckemeier &  Childress, P.C., 197 F.3d 1190, 1194-95  (7th Cir. 1999), and cases cited there;  Ashland Management Inc. v. Janien, 624 N.E.2d 1007, 1010 (N.Y. 1993);  Restatement, supra, sec. 352. The "new  business" rule is an attempt now widely  regarded as failed to control the award  of such damages by means of a rule.

10
The rule doesn't work because it manages  to be at once vague and arbitrary. One  reason is that the facts that it makes  determinative, "new," "business," and  "profits," are not facts, but rather are  the conclusions of a reasoning process  that is based on the rationale for the  rule and that as a result turns the rule  into an implicit standard. What, for  example, is a "new" business? What, for  that matter, is a "business"? And are  royalties what the rule means by  "profits"? MindGames was formed more than  a year before it signed the license  agreement with Western, and it sold  30,000 games in the six months between  the first sales and the signing of the  contract. MindGames' only "business,"  moreover, was the licensing of  intellectual property. An author who  signs a contract with a publisher for the  publication of his book would not  ordinarily be regarded as being engaged  in a "business," or his royalties or  advance described as "profits." He would  be surprised to learn that if he sued for  unpaid royalties he could not get  thembecause his was a "new business."  Suppose a first-time author sued a  publisher for an accounting, and the only  issue was how many copies the publisher  had sold. Under the "new business" rule  as construed by Western, the author could  not recover his lost royalties even  though there was no uncertainty about  what he had lost. So construed and  applied, the rule would have no relation  to its rationale, which is to prevent the  award of speculative damages.

11
Western goes even further, arguing that  even if it, Western, a well-established  firm, were the plaintiff, it could not  recover its lost profits because the sale  of "Clever Endeavor" was a new business.  On this construal of the rule, "business"  does not mean the enterprise; it means  any business activity. So Western's sale  of a new game is a new business, yet we  know from the Ozark decision that an  orchard farmer's operation of a new  orchard is an old business.

12
The rule could be made sensible by  appropriate definition of its terms, but  we find it hard to see what would be  gained, given the existence of the  serviceable and familiar standard of  excessive speculativeness. The rule may  have made sense at one time; the  reduction in decision costs and  uncertainty brought about by avoiding a  speculative mire may have swamped the  increased social costs resulting from the  systematically inadequate damages that a  "new business" rule decrees. But today  the courts have become sufficiently  sophisticated in analyzing lost-earnings  claims, and have accumulated sufficient  precedent on the standard of undue  speculativeness in damages awards, to  make the balance of costs and benefits  tip against the rule. In any event we are  far in this case, in logic as well as  time, from the ice factory whose opening  was delayed by the General Electric  Company. We greatly doubt that there is a  "new business" rule in the common law of  Arkansas today, but if there is it surely  does not extend so far beyond the facts  of the only case in which the rule was  ever invoked to justify its invocation  here. There is no authority for, and no  common sense appeal to, such an  extension.

13
But that leaves us with the question of  undue speculation in estimating damages.  Abrogation of the "new business" rule  does not produce a free-for-all. What  makes MindGames' claim of lost royalties  indeed dubious is not any "new business"  rule but the fact that the success of a  board game, like that of a book or movie,  is so uncertain. Here newness enters into  judicial consideration of the damages  claim not as a rule but as a factor in  applying the standard. Just as a start-up  company should not be permitted to obtain  pie-in-the-sky damages upon allegations  that it was snuffed out before it could  begin to operate (unlike the ice factory  in Marvell, which did begin production,  albeit a little later than planned),  capitalizing fantasized earnings into a  huge present value sought as damages, so  a novice writer should not be permitted  to obtain damages from his publisher on  the premise that but for the latter's  laxity he would have had a bestseller,  when only a tiny fraction of new books  achieve that success. Damages must be  proved, and not just dreamed, though  "some degree of speculation is  permissible in computing damages, because  reasonable doubts as to remedy ought to  be resolved against the wrongdoer." Jones  Motor Co. v. Holtkamp, Liese, Beckemeier  & Childress, P.C., supra, 197 F.3d at  1194; see Restatement, supra, sec. 352,  comment a.

14
This is not to suggest that damages for  lost earnings on intellectual property  can never be recovered; that  "entertainment damages" are not  recoverable in breach of contract cases.  That would just be a variant of the  discredited "new business" rule. What is  important is that Blackwell had no track  record when he created "Clever Endeavor."  He could not point to other games that he  had invented and that had sold well. He  was not in the position of the  bestselling author who can prove from his  past success that his new book, which the  defendant failed to promote, would have  been likely--not certain, of course--to  have enjoyed a success comparable to that  of the average of his previous books if  only it had been promoted as promised.  That would be like a case of a new  business launched by an entrepreneur with  a proven track record.

15
In the precontract sales period and the  first year of the contract a total of  195,000 copies of "Clever Endeavor" were  sold; then sales fizzled. The public is  fickle. It is possible that if Western  had marketed the game more vigorously,  more would have been sold, but an equally  if not more plausible possibility is that  the reason that Western didn't market the  game more vigorously was that it  correctly sensed that demand had dried  up.

16
Even if that alternative is rejected, we  do not see how the number of copies that  would have been sold but for the alleged  breach could be determined given the  evidence presented in the summary  judgment proceedings (a potentially  important qualification, of course); and  so MindGames' proof of damages is indeed  excessively speculative. See, e.g.,  Gentry v. Little Rock Road Machinery Co.,  339 S.W.2d 101, 104 (Ark. 1960); Hillside  Enterprises v. Carlisle Corp., 69 F.3d 1410, 1414 (8th Cir. 1995); K & R, Inc.  v. Crete Storage Corp., 231 N.W.2d 110,  115 (Neb. 1975); see also AGF, Inc. v.  Great Lakes Heat Treating Co., supra, 555  N.E.2d at 640. Those proceedings were  completed with no evidence having been  presented from which a rational trier of  fact could conclude on this record that  some specific quantity, or for that  matter some broad but bounded range of  alternative estimates, of copies of  "Clever Endeavor" would have been sold  had Western honored the contract.  MindGames obtained $600,000 in royalties  on sales of 165,000 copies of the game,  implying that Western would have had to  sell more than 10 million copies to  generate the $40 million in lost  royalties that MindGames seeks to  recover. Cf. Boxhorn's Big Muskego Gun  Club, Inc. v. Electrical Workers Local  494, 798 F.2d 1016, 1023 (7th Cir. 1986).

17
When the breach occurred, MindGames  should have terminated the contract and  sought distribution by other means. See  Farnsworth, supra, sec. 12.12, pp. 806-  08. The fact that it did not do so--that  so far as appears it has made no effort  to market "Clever Endeavor" since the  market for the game collapsed in 1991--is  telling evidence of a lack of commercial  promise unrelated to Western's conduct.

18
Although Western in its brief in this  court spent most of its time misguidedly  defending the "new business" rule,  clinging to Marvell for dear life (a case  seemingly on point, however vulnerable,  is a security blanket that no lawyer  feels comfortable without), it did argue  that in any event MindGames' claim for  lost royalties was too speculative to  ground an award of damages for that loss.  The argument was brief but not so brief  as to fail to put MindGames on notice of  a possible alternative ground for  upholding the district court's judgment;  we may of course affirm an award of  summary judgment on any ground that has  not been forfeited or waived in the  district court. United States v. Jackson,  207 F.3d 910, 917 (7th Cir. 2000).  MindGames did not respond to the argument  in its reply brief. It pointed to no  evidence from which lost royalties could  be calculated to even a rough  approximation. We find its silence  eloquent and Western's argument  compelling, and so the judgment in favor  of Western is

19
Affirmed.

20
Fairchild, Circuit Judge, dissenting in  part.

21
I agree that (1) MindGames' claim  for a renewal fee for the year following  the initial term of the Licensing  Agreement was properly dismissed, and (2)  we are not bound by Marvell Light & Ice  Co. v. General Electric Co., 259 S.W. 741  (Ark. 1924) to affirm the dismissal of  MindGames' claim for loss of royalties  caused by breach of contract. I do,  however, respectfully disagree with the  conclusion that, as a matter of law, that  claim is too speculative to support an  award of damages.

22
This was never a claim in which  MindGames sought to recover lost profits  from the operation of a business. The  damages sought would be measured by the  royalties which Western would have been  obliged to pay on sales which did not  occur because of Western's alleged  failure to perform its contract.  Western's obligation to pay royalties  arose from the sales of games  manufactured, promoted and sold by it,  and whether MindGames showed a profit, as  well as MindGames' lack of history, was  wholly irrelevant. The ultimate questions  would be whether there was a breach by  Western and whether the breach caused a  loss of sales.

23
Sales did not meet expectations. In the  period from March 30, 1990 to January  31,1991, 165,000 games were sold; in the  year ending January 31, 1992, 58,113; in the year ending January 31, 1993, 26,394;  and in the year after the initial term,  7,438. The sales in the initial term  totaled approximately $4,000,000 and  royalties $600,000. Soon after January  31, 1993, Western was sufficiently  interested in continuing as licensee to  agree to pay a minimum royalty of $27,500  for the coming year. MindGames' complaint  alleged that a substantial number of  games produced by Western failed to meet  quality standards; Western failed to  promote and make reasonable efforts to  sell; and its efforts did not meet  standards under the agreement or those  recognized in the industry. It is  MindGames' position that these failures  caused loss of sales.

24
Western's motion for partial summary  judgment was premised on the new business  rule which Western perceived as announced  in Marvell, and the district court  granted the motion on that basis. If, as  we all agree, Marvell does not control  this case, then the applicable Arkansas  doctrine is that MindGames is entitled to  recover any royalties on sales which  MindGames can prove to a reasonable  certainty would have been made had  Western carried out the contract. The  rule that damages which are uncertain  cannot be recovered does not apply to  uncertainty as to the value of the  benefits to be derived, but to  uncertainty as to whether any benefit  would be derived at all. Jim Halsey Co.,  Inc. v. Bonar, 284 Ark. 461, 467-68 (Ark.  1985); Crow v. Russell, 226 Ark. 121, 123  (Ark. 1956).

25
In my opinion we cannot say on this  record, as a matter of law, that  MindGames can not prove to a reasonable  certainty that Western's failures to  perform, if proved, caused a loss of  sales.

26
I would not hold that MindGames has  waived or forfeited its opportunity to  produce evidence of damages. It is true  that in responding to Western's motion  for partial summary judgment MindGames  did not provide evidentiary material  tending to show the breaches by Western  nor that such breaches caused a loss of  sales. This should not be deemed a waiver  or forfeiture of an opportunity to do so  because of Western's complete reliance in  its motion on the new business rule and  Marvell, which, if applied, would prevent  proof of breach and causation of loss.  Western's motion did not reach the issue  of breach, and establishing damages would  require MindGames to prove that the  breach occurred and caused loss of sales.  Although Western, in its memorandum in  support of its motion did include a  section making the point that the success  of a new product in the entertainment  industry is especially difficult to  predict, it used that point to support an  argument that the new business rule was  particularly appropriate in this case,  and that the Arkansas Supreme Court would  be unlikely to retreat from the new  business rule under circumstances like  these. Western did not squarely assert,  as an alternative ground, that MindGames  could not prove to a reasonable certainty  that any breach by Western caused loss of  sales. Rather, Western urged that the  district court should strictly apply the  new business rule.

27
In this court, Western again relied on  Marvell and the new business rule, also  arguing, as it had in the district court,  that this type of case, involving a new  product in the entertainment industry, is  not one where the Arkansas Supreme Court  would retreat from its application of the  new business rule. Although at pages 30-  32 of its brief it asserted the  inherently speculative nature of a claim  for lost profits in the entertainment  industry, and cited cases, it failed  squarely to assert, as an alternative  ground, that its alleged failures to  perform, if proved, could not have been  proved to a reasonable certainty to have  caused lost sales. On page 5 of its reply  brief, MindGames referred to pages 29-32  of Western's brief, and challenged as  contrary to Arkansas law "non-Arkansas  cases [cited by Western] in arguing that  businesses in the entertainment industry  are barred per se from claiming lost  profits." Again I do not think it is  appropriate to rely on waiver or  forfeiture.

28
I would remand for further proceedings  on this part of MindGames' complaint.