Breach of Contract

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7^th Circuit Court of Appeals

Case Name: Prime Choice Services, Inc. v. Schneider Logistics Transloading and Distribution, Inc.

Case No.: 16-4197

Officials: POSNER, MANION, and KANNE, Circuit Judges.

Focus: Breach of Contract

Defendant Schneider is a logistics firm—a firm that manages the flow and storage of goods, in order to meet a customer’s requirements. A branch of Schneider’s business was and we assume still is located near Savannah, Georgia. Freight entering the port of Savannah was trucked to Schneider’s building, unloaded on one side, sorted, and then reloaded on the other side of the building onto outgoing trucks; such reloading is called in the trade “cross docking.” Prime, the plaintiff, sought to do the cross‐ docking work and after multiple discussions was hired by Schneider to do so. Prime was to be paid for what it moved. It was paid, but for the most part not paid timely and not paid enough to break even, let alone make a profit, and it complained about that and also about a lack of communication from Schneider concerning assignments to Prime and support for its labors. The final straw for Prime was Schneider’s failure—without explanation—to pay Prime $82,464.71 for services that Prime had rendered to it. Not being paid, Prime removed its employees from Schneider’s Savannah building; and eventually brought this suit for the money it claimed to be owed, which had now climbed, according to Prime and not contested by Schneider, to $289,059.95. Schneider responded that Prime’s repudiation of the con‐ tract by removing its employees from Schneider’s building had caused Schneider damages of $853,401.49, amounting to a net loss to that company of $564,341.54 ($853,401.49‐$289,059.95).

Notice too that dealing with a much smaller firm (Prime’s quarterly revenues most likely never exceeded $1 million, while Schneider’s parent company had operating revenues of $1 billion in the first quarter of 2017, see “Schneider National, Inc. Reports First Quarter 2017 Results,” Business Wire, May 11, 2017, www.business wire.com/news/home/20170511005293/en/), Schneider had undoubtedly hurt little Prime more by failing to pay on time the $289,059.95 it owed Prime than Prime had hurt Schneider by causing it to pay $853,401.49 more for the cross‐ docking work than it would have had Prime not repudiated the contract, spread out over a few months—peanuts to such a large firm. And finally in the second trial the judge had arbitrarily excluded evidence favorable to Prime, such as Schneider’s failure to make timely payment of the money owed Prime, and the relative size and financial condition of the two firms. In short, the first verdict, awarding no dam‐ ages to Schneider, was reasonable, and we hereby instruct the district court to reinstate it and order the second verdict and the judgment entered in conformity with it vacated.

Vacated and Remanded

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.