Court Reverses $100 Million Jury Verdict Against Caterpillar Because Damages Were Uncertain

While there is more to the case than this, the damages were awarded on a claim by International Construction Products, LLC. (ICP) that Caterpillar, Inc. (Caterpillar) had tortiously interfered with its contract with IronPlanet, an e-commerce website for selling used construction equipment. Caterpillar and ICP are competitors in the construction equipment industry. In March 2014, ICP’s online store for selling new Chinese construction equipment opened on IronPlanet’s site. At that time, an entity in which Caterpillar owned a 30% stake was seeking to acquire ICP in a merger transaction.

One month after ICP’s site opened on IronPlanet, it was shut down. ICP alleged and a jury believed that the shutdown was a result of Caterpillar’s tortious interference in the relationship between ICP and IronPlanet. The jury found for ICP on the tortious interference claim and awarded ICP $100 million in damages. In International Construction Products, LLC. v. Caterpillar, Inc., the U.S. District Court for the District of Delaware considered Caterpillar’s motion for judgment as a matter of law.

The Court first found that Caterpillar had not met its burden to justify judgment as a matter of law on the issue of liability. As to damages, Caterpillar argued, based on the new business rule, that the award of damages could not be sustained. Applying Illinois law, the Court found that Illinois has rejected the new business rule, treating it as just a species of the general rule that the non-breaching party bears the burden of establishing damages with reasonable certainty. While there is no set formula or set of considerations that may be used to establish such reasonable certainty, the Court here found that ICP had not proven its damages with reasonable certainty.

This seems to be obviously true. At the time of the alleged tortious interference, ICP had sold one piece of equipment through the IronPlanet website. IronPlanet had no experience selling new items over the Internet, and the business model was novel. The Chinese manufacturer had no history in the American market, and ICP had never sold equipment from the Chinese manufacturer before, nor had it ever previously sold through on online store. While ICP provided expert reports and evidence of its principals’ experience in the industry, it was done in by its boast that its online platform was a “new and disruptive approach to selling construction equipment. At last, a context in which someone recognizes that claim that one is being “disruptive” is not always good.

There is more to the case, but it does not touch on the interests of the Blog. This is a potential teaching case for people looking for a good discussion of how the general requirement that damages be calculable with reasonable certainty interacts with the new business rule.