Opposition Brief — HK Systems, Inc. v. Eaton Corp (No. 08-1488)

FILED

Y JUL 6 - 2008

No. 08-1488 ORFIOE OF THE CLERK

In The

Supreme Court of the Anited States

HK SYSTEMS, INC.,

Petitioner,

V.

EATON CORPORATION,

Respondent.

On Petition for Writ of Certiorari to the United

States Court of Appeals for the Seventh Circuit

BRIEF IN OPPOSITION

MICHAEL H. KING

Counsel of Record

SPENCER Woop

ERIN ZIAJA

Dewey & LEBorur LLP

Two PRUDENTIAL PLAZA

180 N. Stetson AVENUE

SUITE 3700

CHICAGO, ILLINOIS 60601

(312) 794-8000

, Counsel for Respondent

July 6, 2009

Becker Gallagher + Cincinnau, OH - Washington, D.C. + 800.890.5001

i

QUESTION PRESENTED

Whether Petitioner, HK Systems, Incorporated

(“Petitioner”) has presented compelling reasons to

grant the Petition, where the Seventh Circuit Court of

Appeals’ (the “Seventh Circuit”) decision affirming

summary judgment in favor of Respondent Eaton

Corporation (“Respondent”) does not conflict with a

decision of this Court or another Court of Appeals, and

where the Seventh Circuit’s opinion does not implicate

an important federal question.

il

CORPORATE DISCLOSURE STATEMENT

Eaton has no parent corporation, nor are there any

publicly traded companies that own more than ten

percent of the stock of Eaton.

11]

TABLE OF CONTENTS

Page

QUESTION PRESENTED ....................

CORPORATE DISCLOSURE STATEMENT .... ii

INTRODUCTION .................-20--00-- 1

STATEMENT OF THE CASE ................ 2

A. Factual Background — The District Court

WUUROE i- 5 6 5 Oe eee 4

1. Petitioner misstates the origins of its

obligation to build the IBP material

WIT WPBNOTE. ec ee es 2

nN

Petitioner misrepresents the claims

asserted in the Nebraska Litigation. ... 6

3. Petitioner misstates the basis of the

District Court’s decision. ..... Ree tos 7

B. Factual Background — The Seventh Circuit

Proceedings. here ee eae ee ee 12

REASONS FOR DENYING THE PETITION 14

A. The Decision Of The Seventh Circuit Does

Not Conflict With The Decisions Of Any

Other Courts of Appeals 14

C.

iv

1. The Petition is premised on the incorrect

assertion that the District Court ruled on

Respondent’s Rule 50 motion rather than

the reality that the District Court

reconsidered Respondent’s request for

summary judgment. ............... 14

2. A district court may reconsider a denial]

of summary judgment at any time prior

to the entry of a final judgment. ...... 19

3. The lower courts’ actions did not

preiudice Petitioner. .........<ecesss 23

. Petitioner Waived Its Right To Argue The

Applicability of Reeves and the Seventh

Pe go. oe ye 3 eds oe ee 25

The Decision Of The Seventh Circuit Does

Not Conflict With Reeves. .............. 26

. The Decision Of The Seventh Circuit Does

Not Infringe Upon Petitioner's Seventh

Amendment Hignts. 2. 5 we ee ea es 27

The Seventh Circuit’s Decision Properly

Affirmed The District Court’s Order

Granting Summary Judgment. ......... 29

Ce te os oe ee ke ee ee ee 33

V

TABLE OF AUTHORITIES

Page

Cases

American & Foreign Ins. Co. v. Bolt,

Pre Fe 2 Cr 0. TOT) Cw oe ek 21

Avitia v. Metro. Club of Chicago, Inc.,

49 F.3d 1219 (7th Cir. 1995) ........... 18, 19

Braxton v. United States,

DU Ate, ONE) occ ccc ce bas ewecees 28

Brooks v. O’Leary, No. 93-3559,

1994 U.S. App. LEXIS 23942 (7th Cir. Aug. 30,

SE a ee oe ee ee ae eee

Celotex Corp. v. Catrett,

Te SPT PA oc sew ee whe va wwe 29

Chemetall GMBH v. ZR Energy, Inc..,

320 F.3d 714 (7th Cir. 2003) .. ye tipeciee te eaheeys 18

Conkling v. Turner,

18 F.3d 1285 (5th Cir. 1994) .............. 20

Doe v. Celebrity Cruises, Inc.,

304 F.3a 89] (lith Cir. 2004) ............. 2]

Dykstra v. Arthur G. McKee & Co.,

301 N.W.2d 201 (Wis. 1981) ........... 52

Fidelity & Deposit Co. v. Linited States,

Ear cs. Ga Chee) . ca ek ves. 29

a

Foskett v. Great Wolf Resorts, Inc.,

518 F.3d 518 (7th Cir. 2008) .............. 32

Geffon v. Micrion Corp.,

ee oe ee et Ce. F001) on ke ene 20

Gramercy Mills, Inc. v. Wolens,

63 F.3d 569 (7th Cir. 1995) ............... 24

Grupo Mexicano De Desarrollo v. Alliance Bond

PU. OT UA. COOL LOOO) cc cheer veer 25

Hortman v. Otis Erecting Co.,

322 N.W.2d 482 (Wis. Ct. App. 1982) ....... 30

Indiana Lumbermens Mut. Ins. Co. v. Timberland

Pallet & Lumber Co., Inc.,

ioe foe ooo toen Cir, 1980) ... 6c ec ewe cee 24

Krueger Int'l, Inc. v. Royal Indem. Co.,

461 F.oG 99s (ith Cir. 2007) ow ce ees 31

Kutner Buick, Inc. v. American Motors Corp.,

Boo #20 O64 (o0 Cir, 1968)... wc cee 2]

McKethan v. Texas Farm Bureau,

996 F.2d 734 (5th Cir. 1993) a 20

Microsoft Corp. v. United States,

530 U.S. 1901 (2000) ........... 26

Mozingo v. Correct Mfg. Corp.,

Toe Fae boo (oun Gir. 1965) ..........6008 ZI

Murphy v. City of Long Beach,

914 F.2Za 183 (Sth Cir. 1990) .............. 21

Vll

Oulds v. Principal Mut. Life Ins. Co.,

© Fae 2468 CR UP. BBO on ct de evan 20

Parts and Elec. Motors, Inc. v. Sterling Elec., Inc.,

See ee FE Clee RAE, BOE) iis ec ces eens 22

Patrick v. Burget et al.,

486 U.S. 94 (1988) 25

Quick v. American Steel & Pump Corp.,

397 F.2d 561 (2nd Cir. 1968) ............ 24

Reeves v. Sanderson Plumbing Prods., Inc.,

See GF. BO CD vc cce ee en 25, 26, 27

Rice v. Sioux City Mem. Park Cemetery,

ee ee Fae CE ona oe Oe re as 28

Ross v. Hotel Employees & Rest. Employees Int'l

Union, 266 F.3d 236 (3d Cir. 2001) 20

United States v. Mitchell,

445 U.S. 535 (1980) Zo

United States v. O'Hagan,

521 U.S. 642 (1997) 25

United States v. United Foods, In«

533 U.S. 405 (2001) yt

Whitsell v. Alexander,

229 F.2d 47 (7th Cir. 1956)

9Q

Statutes

Fed. R. Civ. P.

Fed. R. Civ. P. !

Fed. R. Civ. P.

Sup. Ct. R. 10

Vill

ene gir passim

19

11,12, 20, 22, 26

14, 28

INTRODUCTION

Petitioner fundamentally mischaracterizes the

Jower court proceedings by suggesting that this case

implicates sweeping civil procedure concerns and

presents an unsettled conflict between the Courts of

Appeals. Petitioner contends that the Seventh

Circuit’s decision:

[S)tands for the principle that a district court is

entitled to raise a new issue that Rule 50(b)

would bar ae party from raising and,

furthermore, that a district court can decide

that new issue based on an earlier pre-trial

summary judgment record, not the trial record

(Pet. at 21.) The Seventh Circuit, however, merely

held that after a jury verdict a district court may

reconsider its earlier denial of Summary judgment

when such a ruling involves a pure question of law

The Seventh Circuit found

{I]n revisiting the issue of causation after the

trial [the judge] was not depriving [Petitioner]

of the benefit of any of the evidence presented at

the trial, because that evidence did not bear on

the judge’s decision. He had denied summary

judgment on the basis of his reading of the

indemnification clause, and in reconsidering the

denial after the trial he continued to treat the

meaning of the clause as a pure issue of law

unrelated to anything that had gone on at the

trial

(Pet App at 5a.)

2

Accordingly, once the District Court properly

construed the contract, no jury issue existed because

all material undisputed facts demonstrated that

Petitioner's claim failed as a matter of law. Thus, this

case is not about whether the District Court for the

Eastern District of Wisconsin (“District Court”)

infringed Petitioner’s Seventh Amendment rights. Nor

is it about the District Court’s authority to examine

“new” legal theories when deciding a Rule 50 motion,

or even the sufficiency of the trial evidence. Rather,

this case is about nothing more than the interpretation

and application of a contractual indemnification

provision —a question that was properly decided under

state law by the District Court and rightly affirmed by

the Seventh Circuit.

STATEMENT OF THE CASE

A. Factual Background —- The District Court

Proceedings.

1. Petitioner misstates the origins of its

obligation to build the IBP material

handling system.

Petitioner asserts that it “acquired from Eaton

Kenway’ a construction project, but the undisputed

facts platnly show that Petitioner did not assume any

construction contract when it purchased Eaton

Kenway. (Pet. at 9.) Rather, Petitioner solicited and

negotlated such a contract after buying Faton-Kenway

fn 1994, Petitioner and Respondent began

negotiations for Petitioner's acquisition of Eaton

Kenway, a division of Respondent primarily engaged

inthe construction of material handling systems. (Pet

at 8.) On January 12, 1995, Petitioner, Respondent

and Eaton-inenway entered into an Asset Purchase

Agreement under which’ Petitioner acquired

Respondent’s business unit See Statement of

Uncontested Facts at J 4, United States District Court

for the Kastern District of Wisconsin Docket Index 97

filed Aug. 22, 2005.'. The transaction closed on

February 13, 1995, after the parties completed a

month-long due diligence period. (Ud. at ¥ 1.)

While Petitioner and Respondent’s negotiations for

the Eaton-Kenway assets were under way, IBP

Corporation (“IBP”) issued a request for proposals to

several companies that constructed material handling

systems. (Ud. at ¥4 18, 20, 21.) Petitioner and

Respondent were two of the companies that received

IBP’s request. In the fall of 1994, Respondent and

Alvey Corporation (“Alvey”) decided to jointly submit

a bid to IBP. Ud. at J 23.) IBP rejected that joint bid

Ud. at J 91.) Petitioner chose not to submit a bid. Ud

at 149 18,21, 35,62.) However, because Petitioner was

in the same business as Respondent prior to the

acquisition, it was well aware of the bid process and

the subject matter of IBP’s request. (Ud. at | 16

Respondent and Alvey further discussed their joint

bid with IBP and resubmitted their proposal. (/d. at

W149 23, 42, 80.) In December 1994, IBP issued a two

sentence letter of intent stating that it intended to buy

a material handling system from Respondent and

Alvey. (/d. at J 25.) However, no contract would be

entered into until there was further system design,

Hereafter the United States District Court for the Fastern

District of Wisconsin's Docket Index is referred to as “DI

4

completion of a system simulation, and neyotiation of

the contract’s terms and conditions. (/d. at |4 32

34.) By the close of the Eaton-Kenway sale on

February 13, 1995, however, Respondent and Alvey

had not entered into a contract with IBP and

significant terms remained unsettled. (/d. at | 93.)

After Petitioner purchased Katon-Kenway, it took

over the extensive negotiations with IBP and

submitted a revised bid for the material handling

system. (/d. at | 62.) IBP rejected Petitioner's bid.

Petitioner also changed the structure of Respondent’s

previously proposed deal. (Ud. at 9 65, 66.)

Specifically, Petitioner notified IBP that Alvey, who

had anticipated contracting directly with IBP, would

now act as a_ subcontractor under Petitioner's

supervision. (/d. at J] 42, 43, 122.) By late February

1995, however, Petitioner and IBP were expressing

concern that a contract had not yet been reached and

that a number of issues remained unresolved. (/d. at

4 59.)

Petitioner submitted a second revised bid to IBP in

early March 1995. (Ud. at J 46.) IBP asked Petitioner

to provide assurance that the proposed system would

achieve a specified throughput rate (.e., the speed at

which the system could process cases of product). Ud

eat | 70.) After Petitioner conveyed such assurance

(and convinced IBP to forego a simulation), IBP

accepted Petitioner's bid. (/d. at 4] 71-78.) Petitioner

and IBP agreed upon the terms and conditions of the

proposed contract, and executed a 550-page highly

detailed contract on March 23, 1995 (the “March 23rd

Contract”). Ud. at 49 75-78.) Petitioner executed a

separate subcontract with Alvey two months later

(ld. at q 19.)

5

As the above facts demonstrate, no contract existed

between Petitioner and IBP at the time of the Eaton-

Kenway acquisition. (Pet. at 9.) It is undisputed that

Respondent: (1) had no control over the negotiation of

the March 23" contract; (2) was not a party to the

March 23” contract; (3) did not perform any aspect of

the March 23” contract; (4) did not interfere with the

performance of the March 23™ contract; and (5) did not

receive any payment or compensation from IBP. (DI

97 at TJ 2, 28, 36, 52, 69, 74, 75, 77-83.) Therefore,

rather than “acquiring” a construction project from

Eaton-Kenway, Petitioner bid for the work and

negotiated the terms of an agreement well after it

purchased Eaton-Kenway.

For more than two years, Petitioner attempted to

perform the March 23rd contract. Ultimately,

however, IBP became dissatisfied with Petitioner’s

work and the work of its subcontractor, Alvey. Of

particular concern to IBP was its belief that the

material handling system did not operate at the

specified throughput rate. (Ud. at J 41.) The March

23rd contract, however, failed to specify what criteria

to use when testing the material handling system to

ascertain its throughput capacity. (Ud. at [J 40, 41.)

As a result, two years into the performance of the

March 23rd contract, Petitioner and IBP could not

agree on how to conduct a final acceptance test to

confirm whether the system that Petitioner built

operated at the specified throughput rate. (Ud.)

Consequently, IBP took the position that the system

was incomplete and unacceptable, and hired another

company to complete the job. This ultimately led IBP

to sue Petitioner in Nebraska (the “Nebraska

Litigation”) for breach of the March 23rd contract,

breach of express and implied warranties, negligence,

6

fraud, and deceptive trade practices. (Ud. at J 98,

100.) On July 20, 2001, Petitioner and IBP settled the

Nebraska Litigation. (/d. at J 3.)

2. Petitioner misrepresents the claims

asserted in the Nebraska Litigation.

Petitioner incorrectly asserts that IBP based the

Nebraska Litigation on claims grounded largely on

statements made by Eaton-Kenway before Petitioner

purchased Eaton-Kenway. (Pet. at 10.) Four of the

seven counts asserted by IBP, however, arose under

the March 23rd contract to which Respondent was

never a party. (DI 97 at J 100.) Of the remaining

three Counts IBP asserted (1) Petitioner conceded that

the negligence claim (Count V) was not covered by the

indemnity provision (id. at J 128); (2) the Nebraska

court dismissed the fraudulent inducement claim

(Count VI) because the statements Respondent made

prior to Petitioner’s purchase of Eaton-Kenway were

not fraudulent or deceptive (id. at J] 102, 103); and (3)

the Nebraska deceptive trade practices act claim

(Count VII) could not have been based on Respondent’s

conduct prior to the sale of Eaton-Kenway because the

Nebraska court found that such conduct was not

fraudulent or deceptive. (/d.) Accordingly, the entire

Nebraska Litigation was premised on a dispute as to

whether Petitioner fulfilled its obligations and

warranties under the March 23rd contract, and

whether Petitioner was negligent and deceptive during

its performance of such contract. There was no claim

that survived judicial scrutiny for which Petitioner

could have been lable as a result of Respondent’s acts

or omissions prior to the sale of Eaton-Kenway.

Indeed, the Nebraska Litigation proceeded for over six

months before IBP asserted in an amended complaint

7

that Eaton-Kenway’s actions were relevant; an

assertion that the Nebraska court dispatched on

summary judgment. (/d. at {7 98, 99, 100.) In fact,

Petitioner aggressively sought summary judgment on

the grounds that Eaton-Kenway’s conduct created no

legal obligations or rights of IBP. Petitioner’s

arguments persuaded the Nebraska court which held:

“As [Petitioner/HK] aptly argues, the representations

advanced by IBP either predate the written contract

and are barred by the parol evidence rule, or the

representations constitute expressions of opinion or

sales pitches and not statements of fact upon which

IBP has shown that it reasonably relied.” (Ud. at J

103.)

3. Petitioner misstates the basis of the

District Court’s decision.

After setthng the Nebraska Litigation, Petitioner

sought indemnification from Respondent under the

1995 Asset Purchase Agreement. Respondent refused

the request, asserting that Petitioner’s losses were not

covered by the indemnity because the losses resulted

solely from Petitioner’s conduct after it bought Eaton-

Kenway. After Respondent's refusal, Petitioner filed

a lawsuit in the District Court seeking

indemnification.

In August 2005, Respondent and Petitioner filed

cross-motions for summary judgment with the District

Court. See DI 95-103 filed Aug. 22, 2005. Respondent

argued that it was entitled to judgment as a matter of

law because there was no contract between Eaton-

Kenway and [BP atthe time of Petitioner's acquisition.

The crux of Respondent’s argument, therefore, was

that Petitioner’s subsequent lability to IBP resulted

8

solely from Petitioner’s voluntary acts of bidding for,

negotiating and entering into a contract with LBP, acts

for which Eaton-Kenway could have no culpability.

See DI 96 at pp. 14-22 filed Aug. 22, 2005.

In an order entered February 9, 2006, the District

Court denied Respondent’s motion and granted

Petitioner partial summary judgment on liability. See

DI 133 filed Feb. 93,2006. Respondent filed a motion to

reconsider, arguing that the District Court erred in

finding that Petitioner had proven that Respondent

potentially caused Petitioner’s losses. Respondent

also argued that the District Court applied an

incorrect standard and that Petitioner must prove that

its losses were actually caused by Respondent. See DI

136 at pp. 2-6, 8-11 filed Feb. 24, 2006. On May 24,

2006, the District Court granted Respondent’s motion

for reconsideration, and held that the potential

lability standard was not applicable. As such, the

District Court required Petitioner to show that an act

or omission of Respondent actually caused Petitioner’s

losses. See DI 147 at pp. 4-6 filed May 24, 2006. The

District Court failed, however, to accept Respondent’s

argument that the indemnification provision onlv

allowed Petitioner to recover if Respondent had

directly caused Petitioner’s losses.

Respondent repeatedly asserted, in both pretrial

motions and at trial, that no duty to indemnify could

exist because, as a matter of law, Respondent could not

have caused the losses Petitioner incurred when it

settled the Nebraska Litigation. Respondent also

asked for an order finding that no contract existed

between Eaton-Kenway and IBP. See DI 163 filed July

10, 2006; DI 165 filed July 10, 2006; DI 183 filed July

11, 2006; DI 352 at 603:2-17, 605:7-25 filed Feb. 15,

9

2007; DI 325 filed Sept. 14, 2006; DI 326 filed Sept. 13,

2006; DI 361 filed Mar. 19, 2007; DI 376 filed Apr. 23,

2007. The District Court declined to rule on this

question of law prior to trial. (DI 352 at 612:11-

613:17.)

Trial began on September 11, 2006. The jury was

not asked to determine whether a contract existed

between Eaton-Kenway and IBP. (Ud. at 603:2-17,

605:7-25.) Nor was the jury instructed that no such

contract existed or that Petitioner voluntarily entered

into a contract with IBP. Ud. at 603:2-17, 605:7-25.)

Rather, Petitioner asked the jury to award it the costs

it incurred to settle the Nebraska Litigation. At trial,

and over Respondent’s objection, Petitioner relied

extensively upon the Eaton-Kenway comments

Petitioner successfully argued were non-actionable to

the Nebraska court. See DI 178 filed July 11, 2006; DI

351 at 494:20-23 filed Feb. 15, 2007; DI 352 at 647:12-

19, 657:12-21, 659:20-22, 660:4-7, 660:13-22, 661:9-16

filed Feb. 15, 2007. The jury found in Petitioner’s

favor and awaraed it approximately $3 million.

Pursuant to Rule 50, Respondent filed a motion for

judgment as a matter of law at the close of Petitioner’s

case. See DI 326 filed Sept. 13, 2006. Respondent

renewed its motion at the close of the evidence. See DI

325 filed Sept. 14, 2006. At the conclusion of trial, the

District Court gave Respondent the opportunity to

supplement its motion after the trial transcripts were

produced to the parties. See DI 353 at 730:5-733:11

filed Feb. 15, 2007. Accordingly, Respondent filed a

supplemental Rule 50 brief in March 2007. See DI 361

filed Mar. 19, 2007. When Petitioner asked the

District Court to enter judgment on the verdict the

court refused, asserting that there were issues

10

remaining that should be addressed in post-trial

briefing. See DI 353 at 730:20-731:24.

Following trial, Respondent also filed a motion to

reconsider the February 9, 2006 Order denying

Respondent’s motion for summary judgment. See DI

358-359 filed Mar. 19, 2007. Ina June 18, 2007 Order

(the “June 18th Order”), the District Court determined

that it erred in denying Respondent’s request for

summary judgment and that the majority of

Petitioner’s indemnification claims should have been

dismissed. (Pet. App. at 1-23.) Citing its fundamental

obligation to “get the matter right,” the District Court

granted Respondent’s summary judgment motion and

vacated the jury verdict. (/d. at 2.) The District Court

recognized that the interpretation and application of

the contractual indemnification provision was a

question of law that should have never been submitted

to the jury and, therefore, the Court denied as moot

Eaton’s Rule 50 motions. (/d. at 23.)

In its June 18th Order, the District Court

determined it had been “clearly wrong” in its prior

interpretation of the causation standard contained in

the parties’ indemnification agreement. (qd. at 12.)

The District Court found that its. original

interpretation—the interpretation urged by

Petitioner—fostered “absurd results” by making

Respondent liable for “virtually any claim related to a

transferred asset.” (Ud. at 12, 15.) Thus, the June

18th Order corrected this error by holding that

Respondent’s obligation to indemnify Petitioner arose:

[Olnly where [Respondent] or Eaton-Kenway’s

act or omission (or a pre-closing occurrence)

directly [gave] rise to a claim against

1]

[Petitioner].... [However,] if a significant

intervening and superseding event separated

the act, omission or occurrence from the claim,

a loss ensuing from the claim could not be fairly

said to result from the claim.

(Id. at 13.)

Applying this standard to Petitioner’s claim, the

District Court entered judgment for Respondent

pursuant to Rule 56, concluding no reasonable jury

could find that IBP’s breach of contract and breach of

-xpress and implied warranty claims against

Petitioner resulted from Eaton-Kenway’s conduct. (/d.

at 18.) This was because the “integrated contract

between [Petitioner}] and IBP and [Petitioner’s] partial

performance of the contract broke any casual link

between any act or omission of Eaton-Kenway, or any

pre-closing occurrence and IBP’s contract and

warranty claims.” (Pet. App. at 34a.) Additionally, the

District Court found Petitioner “was not entitled to

indemnification for costs associated with IBP’s fraud

in the inducement claim because the Nebraska court

found that [Respondent’s| statements were not

fraudulent or admissible.” (Jd. at 19-20.)

* The June 18th Order left one remaining issue unresolved,

namely whether Petitioner was entitled to indemnification in

relation to IBP’s deceptive trade practices claim. Respondent

moved for a partial reconsideration arguing that liability should

be resolved as a matter of law. On October 12, 2007, the District

Court granted Respondent’s motion and entered summary

judgment in its favor.

12

B. Factual Background - The Seventh Circuit

Proceedings.

On January 11, 2008, Petitioner filed its brief with

the Seventh Circuit challenging the District Court’s

decision. In its appeal, Petitioner largely ignored that

the District Court granted summary judgment

pursuant to Rule 56. Instead, as it does here,

Petitioner attempted to frame the appealable issue as

one implicating Rule 50, asking whether “the district

court abused its discretion when, without notice, it

raised new legal theories never raised or preserved by

[Respondent] at trial and then vacated the jury verdict

on that basis.” See I{K Systems, Inc.’s Seventh Circuit

Court of Appeals Brief and Appendix at p. 1 filed Jan.

11, 2008.

The Seventh Circuit disagreed with Petitioner’s

characterization and noted that the “substantive issue”

on appeal was one of Wisconsin law — namely, the

proper scope of an indemnification clause contained

within a contract for the sale of a business. (Pet. App.

at la.) The Seventh Circuit found that while the

District Court’s reconsideration of summary judgment

after a jury verdict may seem “odd,” it was entirely

permissible when the basis for the ruling was a pure

question of law (u.e., the proper construction of a

contract). Ud. at 3a.) Thus, Petitioner

mischaracterizes the basis of the Seventh Circuit’s

decision when it asserts that the Seventh Circuit

permitted an improper Rule 50 ruling.

Dissatisfied with the Seventh Circuit’s decision, on

February 18, 2009, Petitioner filed a petition for

rehearing en banc asserting that the District Court

improperly considered legal arguments not presented

13

within the Rule 50 motions. It also for the first time

challenged the actions of the District Court as

infringing upon its Seventh Amendment rights.

Further, as Petitioner does here, it claimed that the

Seventh Circuit’s decision caused an obvious and

dramatic split among jurisdictions. Yet, the Seventh

Circuit’s opinion, which unanimously upheld the

District Court’s decision, makes no suggestion that

anything done by the District Court caused the

slightest bit of controversy or concern. Nor docs the

opinion by Judge Posner indicate the court perceived

its decision as causing a split within the circuits or,

more remarkably, directly conflicting with United

States Supreme Court jurisprudence.”

° Petitioner repeatedly states that Respondent “waived” its

causation argument by fatling to ask the District Court to

interpret the phrase “resulting from” in its Rule 50 motions. Such

a statement is categorically incorrect, as is the suggestion that

Respondent had to throw itself at the “mercy” of the District

Court. Respondent’s Rule 50 motion argued a direct causation

standard extensively. Respondent argued that as a matter of law

it could not have caused IBP’s claims for breach of contract and

breach of warranty because a contract did not exist until March

23, 1995 — more than a month after Petitioner purchased Eaton-

Kenway. The Seventh Circuit echoed this argument in its opinion

when it said: “{[Petitioner’s] claim is even weaker because it wants

us to rule that Respondent insured it against liability for breach

of a contract that hadn’t been made yet. For all we know, had

Eaton-Kenway not been sold to [Petitioner] the contract between

Katon-Kenway/Alvey and IBP would have looked completely

different from the contract that IIK negotiated.” (Pet. App. at 9a.)

Respondent also argued a direct causation standard when it

asserted it was entitled to judgment as a matter of law on the

fraud and deception claims because Respondent’s conduct had

been found non-actionable by the Nebraska court. See DI 325

filed Sept. 14, 2006; DI 326 at p. 8 filed Sept. 13, 2006.

14

On March 3, 2009, the Seventh Circuit summarily

denied the petition for rehearing, noting “all the judges

on the original panel have voted to deny the petition,

and none of the active judges has requested a vote on

the petition for rehearing en banc.” March 3, 2009

Order of the United States Court of Appeals for the

Seventh Circuit Docket Number 07-3596. Accordingly,

every judge sitting on the Seventh Circuit has rejected

the same arguments Petitioner now contends are

worthy of certiorart.

REASONS FOR DENYING THE PETITION

A. The Decision Of The Seventh Circuit Does

Not Conflict With The Decisions Of Any

Other Courts of Appeals.

1. The Petition is premised on the

incorrect assertion that the District

Court ruled on Respondent’s Rule 50

motion rather than the reality that the

District Court reconsidered

Respondent’s request for summary

judgment.

Review on a writ of certiorari is not a matter of

right, but one of judicial discretion. Sup. Ct. R. 10. As

such, a petition for a writ of certiorari will be granted

only when a_ petitioner demonstrates that a

“compelling reason” exists for such action. ld.

Petitioner presents no compelling reason for this Court

to exercise discretionary jurisdiction over a district

court’s grant of summary judgment on a matter of

state law. Instead, in a vain attempt to create a

federal issue, Petitioner predicates its entire Petition

on a straw argument — a contorted characterization of

15

what happened in the lower courts designed solely to

obfuscate the real issues of this case. Specifically, the

Petition is premised on the legal fiction that the

District Court ruled on Respondent's Rule 50 motions.

The record could not be more clear, however, that the

District Court reconsidered and ruled solely upon

Respondent’s summary judgment motion and denied

Respondent’s Rule 50 motions as moot. (Pet. App. at

39a.)

As discussed supra, in August 2005, Respondent

filed a motion for summary judgment in which it

argued that Respondent could not be required to

indemnify Petitioner because Petitioner’s liability to

IBP necessarily resulted from Petitioner’s voluntary

act of entering into a contract with IBP and its

attempted performance of that contract. See DI 96 at

pp. 14-22 filed Aug. 22, 2006. At that time, the

District Court denied RKespondent’s motion for

summary judgment based largely on its interpretation

of the indemnification provisions contained within the

Asset Purchase Agreement. Specifically, the

provisions provided in relevant part:

10.1 Indemnification of the Buyer.

[Respondent] shall indemnify [Petitioner]

(collectively, the “Buyer Indemnified Parties”)

and hold each of the Buyer Indemnified Parties

harmless from and against any and _ all

damages, losses, deficiencies, actions, demands,

judgments, costs and expenses (including

attorneys’ and accountants’ fees) of or against

any of the Buyer Indemnified Parties resulting

from . . . (iii) any act or omission of

[Respondent] or any occurrence of a matter with

respect to the Subject Assets or the Subject

as)

Business relating to or arising out of the period

on or before the Closing Date

10.2 Indemnification of the Seller. [Petitioner]

shall indemnify [Respondent] (collectively, the

“Seller Indemnified Parties”) and hold each of

the Seller Indemnified Parties harmless from

and against any and all damages, losses,

deficiencies, actions, demands, judgments, costs

and expenses (including attorneys’ and

accountants’ fees) of or against any of the Seller

Indemnified Parties resulting from... (iii) any

act or omission of |Petitioner] or any occurrence

ofa matter with respect to the Subject Assets or

the Subject Business relating to or arising out of

the period after the Closing Date....

(Pet. App. at 22a-23a.)

As the case proceeded, the District Court judge

“began to suspect that in [his] pretrial rulings [he] had

incorrectly or inadequately interpreted’ the

indemnification provision.” (Pet. App. at 13a.)

Specifically, the District Court determined that its

earlier contract interpretation “l[led| to absurd results.”

(Pet. App. at 24a.) Thus, upon further consideration,

the District Court determined that the indemnification

provision required Respondent to indemnify Petitioner

only when Respondent or Eaton-Kenway’s acts or

omissions directly gave rise to a claim against

Petitioner. (Pet. App. at 27a.) If a significant

intervening event separated Respondent’s act from the

claim, a loss ensuing from the claim could not be said

to “result” from Respondent’s act. (/d.)

17

Applying its revised interpretation of the

indemnification provision, the District Court found

that no reasonable jury could find that Eaton-

Kenway’s conduct resulted in any harm to Petitioner.

The District Court concluded that because no contract

existed to build the IBP material handling system

until after Petitioner purchased Eaton-Kenway, any

problems with developing the system could not be

attributable to Respondent. (Pet. App. at 33a-35a.)

Therefore, it vacated the jury verdict and denied

Respondent’s Rule 50 motion for judgment as a matter

of law as moot. (Pet. App. at 38a-39a.)

On appeal, the Seventh Circuit affirmed the

District Court’s decision stating:

[Petitioner] should not have signed the contract

with IBP without first making sure that its new

acquisition, Eaton-Kenway, would be able to

fulfill the duties that the contract placed on its

new parent. Had the sale not taken place ~- had

[Respondent] rather than _ [Petitioner]

contracted with IBP — [Respondent] might have

insisted on terms that would have protected

itself from liability if it could not perform up to

[BP’s expectation. It had no opportunity to do

this. That became [Petitioner’s] opportunity,

and it muffed it.

(Pet. App. at 7a.)

In light of the Seventh Circuit’s decision, all of

Petitioner’s bases for granting certiorari fail. First,

Petitioner is patently incorrect when it states “there is

no question” that the District Court improperly

“vacated the jury verdict and entered judgment as a

13

matter of law based on a ground never advanced by

any party in their pre- or post-verdict |Rule 50]

motions.” (Pet. at 17.) Rather, the Rule 50 motions

were never considered by the District Court because,

in resolving the dispute on a question of law, the trial

and Rule 50 motions became irrelevant.

Second, there is no merit to Petitioner's argument

that the District Court is prohibited from

reconsidering summary judgment when the original

denial was based on an erroneous’ contract

interpretation. While the District Court may have

initially believed that questions of fact required a trial,

this belief stemmed from an interpretation of the

indemnification provision that the District Court

realized was incorrect.

It should be noted that Petitioner cites no case law

to support its assertion that a district court lacks

authority to correct an earlier error in contract

interpretation and, in Ight of the revised

interpretation, enter summary judgment. Instead,

Petitioner mischaracterizes the record and advances

specious claims that the cases relied upon by the

Seventh Circuit are “not on point.” (Pet. at 20.) For

example, Petitioner questions why the Seventh Circuit

relied upon Chemetall GMBH v. ZR Energy, Inc., 320

F.3d 714 (7th Cir. 2003) when “nothing in Chemetall

even suggests that a court of appeals may review after

trial a summary judgment denied on the sufficiency of

evidence . ” (Pet. at 20-21.) Chemetall, however,

stands for the exact proposition underlying this case —

specifically, that an appellate court may review a

summary judgment order after a trial occurred, when

the ruling was based on a pure question of law

Similarly, Petitioner argues that Avitia v. Metro. Club

19

of Chicago, Inc., 49 F.3d 1219 (7th Cir. 1995) is

irrelevant because “nothing in Avitia suggests that a

district court may raise a new issue after trial that

Rule 50(b) bars a party from raising on its own... .”

(Pet. at 21.) Yet, Avitia held that “a judge may

reexamine his earlier ruling. . . if he has a conviction

at once strong and reasonable that the earlier ruling

was wrong, and if rescinding it would not cause undue

harm to the party that had benefitted from it.” Avitia,

49 F.3d at 1227. Thus, the Seventh Circuit cited

Avitia in support of the District Court’s ability to

reconsider its earlier denial of summary judgment, an

issue that is exactly “on point.”

2. Adistrict court may reconsider a denial

of summary judgment at any time prior

to the entry of a final judgment.

Although Petitioner does not raise this issue in its

Petition, it is clear the District Court committed no

error in reconsidering its prior denial of summary

judgment after trial. Absent entry of final judgment,

any “order or other form of decision is subject to

revision at any time before the entry of judgment

adjudicating all the claims and the rights and

liabilities of all the parties.” Fed. R. Civ. P. 54(b). It

is well-established that orders denying motions for

summary judgment are not final orders, but merely

interlocutory orders that may be reconsidered any time

prior to the entrance of a final judgment. The District

Court acted within its discretion in reconsidering its

previous denial of surnmary judgment and Petitioner

wrongly asserts a basis for certiorari when it claims

that the Seventh Circuit allowed the District Court to

“raise a new issue to overturn the jury verdict” thereby

crafting an opinion that “squarely conflicts with

20

published decisions from at least five other circuits.”

(Pet. at 18.)

Even Courts of Appeals that Petitioner contends

are at odds with the Seventh Circuit’s decision have

held that a prior denial of summary judgment may be

reconsidered after trial. For example, the Fifth Circuit

upheld the district court’s sua sponte reconsideration

and granting of summary judgment following a jury

trial, explaining: “|B]ecause the denial of a motion for

summary judgment is an interlocutory order, the trial

court is free to reconsider and reverse its decision for

any reason it deems sufficient, even in the absence of

new evidence or an intervening change in or

clarification of the substantive law.” McKethan v.

Texas Farm Bureau, 996 F.2d 734, 738 n.6 (5th Cir.

1993). Similarly, the Third Circuit found that the

district court committed no error in considering a

motion for summary judgment after a mistrial, noting:

“If there are no issues of material fact and a party is

entitled to judgment as a matter of law, judgment may

be awarded at any time, even after trial, under Rule 56

or under Rule 50.” Ross v. Hotel Employees & Rest.

Employees Int'l Union, 266 F.3d 236, 243 (3d Cir.

2001). See also Geffon v. Micrion Corp., 249 F.3d 29,

38 (1st Cir. 2001) (recognizing that previous denials of

summary judgment, as interlocutory orders, remain

open to trial court reconsideration); Conkling v.

Turner, 18 F.3d 1285, 1296 (5th Cir. 1994) (finding no

impropriety in a district court’s decision to reverse

itself, after having originally denied summary

judgment, then later granting judgment on the same

issues pursuant to its sua sponte reconsideration after

trial); Oulds v. Principal Mut. Life Ins. Co., 6 F.3d

1431, 1435 (10th Cir. 1993) (finding no error when,

after trial, defendant moved the district court to

21

reconsider its earlier denial of summary judgment and,

in doing so, the district court found in favor of

defendants).

Because Petitioner can raise no _ legitimate

challenge to the District Court’s authority to

reconsider its prior interlocutory rulings, Petitioner

attempts to create a circuit split by citing completely

inapposite case law. For example, Petitioner cites Doe

v. Celebrity Cruises, Inc., 394 F.3d 891 (11th Cir. 2004)

fer the proposition that the District Court does not

have the authority under Rule 50(b) to rule sua sponte

on issues not raised by the parties in their briefs.

Celebrity Cruises, however, held that the district court

did rt have authority to grant judgment as a matter

of law “based upon a lack of evidence regarding a

factual issue never raised by any defendant before

the trial and never addressed by anyone in any way

before submission of the case to the jury.” /d. at 904

(emphasis added). Celebrity Cruises is inapplicable to

the instant case because unlike the court in Celebrity

Cruises, the District Court here reconsidered a

question of law, which is entirely appropriate. See also

Kutner Buick, Inc. v. American Motors Corp., 868 F.2d

614 (3d Cir. 1989) (making no mention of a district

court’s authority to reconsider a motion for summary

judgment after trial); Mozingo v. Correct Mfg. Corp.,

752 F.2d 168 (5th Cir. 1985) (same).

Petitioner’s reliance on American & Foreign Ins.

Co. v. Bolt, 106 F.3d 155, 160 (6th Cir. 1997) and

Murphy v. City of Long Beach, 914 F.2d 183, 186 (9th

Cir. 1990) is similarly misplaced. Petitioner cites both

cases for the proposition that a district court may not

consider issues raised in a Rule 50(b) motion that were

not raised in a party’s Rule 50(a) motion. However,

22

these rulings emphasized the necessity to afford

opposing counsel an opportunity to remedy a claimed

evidentiary deficiency. Neither case limited a district

court’s power to enter judgment on a pure question of

law after trial. Accordingly, Petitioner’s contention

that a circuit split exists is purely fiction.

Finally, Petitioner contends that the Seventh

Circuit’s opinion stands for the “principle that a

district court is entitled to raise a new issue that Rule

50(b) would bar a party from raising” and therefore,

creates an issue that “without resolution .. . [will

cause} the lower courts [to] continue to disagree over

a district court’s authority to overturn a jury verdict.”

(Pet. at 21.) Despite Petitioner’s belief that the

Seventh Circuit is unfamiliar with Rule 50’s

application, it should be noted that the Seventh Circuit

regularly recognizes that “a trial judge is authorized to

grant a Rule 50(b) motion for judgment

notwithstanding a jury verdict only if the moving party

has moved previously for a directed verdict under Rule

50(a) at the close of the evidence” and “only on grounds

advanced in the pre-verdict motion.” Brooks v. O'Leary,

No. 93-3559, 1994 U.S. App. LEXIS 23942, at *6-7 (7th

Cir. Aug. 30, 1994) (unpublished opinion). See also

Parts and Elec. Motors, Inc. v. Sterling Elec., Inc. , 826

F.2d 712, 716 (7th Cir. 1987) (recognizing that to

“preserve the issue . . . for judgment n.o.v. purposes,

[party] would have had to identify the point distinctly

and specifically in a motion for directed verdict”). As

such, there is no split between the Courts of Appeals

with respect to the application of Rule 50 or Rule 56

and, therefore, there is no justification for the granting

of certiorari.

23

3. The lower courts’ actions did not

prejudice Petitioner.

Finally, Petitioner argues that it was prejudiced by

the lower courts’ decision in two ways: (1) it was

unfairly surprised by the new theories considered by

the District Court; and (2) the District Court and the

Seventh Circuit failed to consider favorable trial

evidence demonstrating the Respondent’s connection

to Petitioner’s losses. Because the question of law at

issue had been raised and considered by the parties

and District Court throughout the litigation, both

these contentions are without merit.

First, any suggestion that Petitioner was somehow

unduly surprised by the District Court’s interpretation

of the phrase “resulting from” ~— an interpretation

promoted by Respondent throughout the underlying

litigation — is disingenuous at best. It is without

dispute that Petitioner received notice of the District

Court’s intention to reconsider its prior rulings thereby

barring its prejudice assertions. As stated in the

District Court’s October 12, 2007 order:

The issue which |the] decision addressed - the

meaning of the indemnification agreement —

was exhaustively briefed in pretrial motions.

And the decision did not rely on new legal or

factual n.aterial. Also, after |the court] decided

to reverse [itself], [the parties were notified].

[Petitioner] did not ask for an opportunity for

briefing or oral argument, and the parties

indicated that [the court] should issue the

decision and that they would present legal

arguments after its release.

24

See DI 406 at pp. 2-3 filed October 12, 2007. Thus, the

District Court provided Petitioner the opportunity to

argue its contentions regarding the causation

standard. Moreover, when Respondent filed its post-

verdict motion to reconsider denial of its pre-trial

motion for summary judgment, Petitioner chose to

sleep on its rights. Instead of filing a substantive

response, it simply objected to Respondent’s motion

and filed a wholly frivolous Rule 11 motion. See DI

371 filed Apr. 9, 2007. Having passed on its

opportunity to have its day in court, Petitioner cannot

be allowed to now complain that it lacked the

opportunity to be heard.

Second, because HK was never entitled to a jury

trial, any purported failure to consider “trial evidence

favorable to HK” is of noimport. (Pet. at 26.) “Judges,

not juries, decide questions of law” and when a matter

is resolved on a question of law “the jury never gets a

crack at deciding the outcome.” Gramercy Mills, Inc.

v. Wolens, 63 F.3d 569, 571 (7th Cir. 1995).

Accordingly, failure to consider trial evidence is

irrelevant. See also Indiana Lumbermens Mut. Ins.

Co. v. Timberland Pallet & Lumber Co., Inc. , 195 F.3d

368, 375-76 (8th Cir. 1999) (finding no prejudice

despite district court error in declaring jury advisory

because the judgment made clear that the district

court “decide|d] questions of law on the basis of

undisputed facts”); Quick v. American Steel & Pump

Corp., 397 F.2d 561, 564 (2nd Cir. 1968) (holding that

“since the plaintiff {was] entitled to recover as a matter

of law, errors in the admission of evidence .. . are

irrelevant.”).

25

B. Petitioner Waived Its Right To Argue The

Applicability of Reeves and the Seventh

Amendment.

It is well-settled that “ordinarily this Court does

not decide questions not raised or resolved in the lower

court.” Patrick v. Burget et al., 486 U.S. 94, 99 (1988)

(stating “{t]his Court usually will decline to consider

questions presented in a petition for certiorari that

have not been considered by the lower court.”). See

also Grupo Mexicano De Desarrollo v. Alliance Bond

Fund, 527 U.S. 308, 319 (1999) (refusing to consider

respondent’s Erie argument because it “was neither

raised nor considered below”); United States uv.

O’Hagan, 521 U.S. 642, 677 (1997) (refusing to

consider claim neither raised in briefs before appellate

court nor addressed by that court); United States v.

Mitchell, 445 U.S. 535, 546 n.7 (1980) (refusing to

consider several of respondents’ claims because they

had failed to raise them in the court below).

Yet, in arguing that summary judgment was

improperly granted, Petitioner resorts to arguments

and theories that were not advanced below. For

example, Petitioner did not raise any arguments with

respect to violations of its Seventh Amendment rights

until filing its petition for rehearing with the Seventh

Circuit. Nor did it assert the applicability of Reeves v.

Sanderson Plumbing Prods., Inc., 530 U.S. 133 (2000)

in any of the lower court proceedings. As such,

Petitioner should now be precluded from attacking the

lower courts’ decisions on these new grounds. See

United States v. United Foods, Inc., 533 U.S. 405, 417

(2001) (noting that “[a]lthough in some instances [this

Court has] allowed a respondent to defend a judgment

on grounds other than those pressed or passed upon

26

below, it is quite a different matter to allow a

petitioner to assert new substantive arguments

attacking, rather than defending, the judgment when

those arguments were not pressed in the court whose

opinion we are reviewing, or at least passed upon by

it.”) (internal citations omitted); Microsoft Corp. v.

United States, 530 U.S. 1301, 1301 (2000) (recognizing

“(a] court of appeals proceeding would likely narrow,

focus and initially decide the legal issues now

presented here.”) (Breyer, J., dissenting from denial of

direct appeal).

C. The Decision Of The Seventh Circuit Does

Not Conflict With Reeves.

Petitioner’s contention that the Seventh Circuit’s

decision conflicts with Reeves is misguided and too

expansively reads the purported “uniform rule”

adopted by this Court. Petitioners promote an

interpretation of Reeves that would require district

courts to review all evidence in the trial record when

granting any judgment based on a matter of law. (Pet.

at 23.) Reeves, however, did not address Rule 56,

which is the rule implicated in the District Court’s

decision at issue. Rather, Reeves limited its discussion

to the type of evidence that should be considered when

resolving a motion brought pursuant to Rule 50. Thus,

while Petitioner asserts that the District Court and

the Seventh Circuit violated the dictates of Reeves by

failing to draw all reasonable inferences from the trial

evidence in Petitioner’s favor, Reeves requires only

that when courts are resolving a Rule 50 motion,

consideration be given to all factual evidence placed

before the jury that may support the nonmoving

party's position. 530 U.S. at 153.

27

Further, this case is not, as Petitioner contends,

factually similar to Reeves. Although Petitioner

maintains that the “only material distinction between

this case and Reeves is that in Reeves the Court

selectively considered some of the trial evidence, while

in this case the lower courts determined the trial was

an irrelevance,” the distinction is critical. (Pet. at 24.)

In Reeves, the district court was reversed because the

court did not consider all the trial evidence even after

the petitioner established a prima facie case of

discrimination and also “creat[ed] a jury issue as to the

falsity of the employer’s explanation... .” Reeves, 530

U.S. at 151. Thus, in Reeves, because there was a

factual disputc, there was a necessity for a trial and a

function for the jury to perform ~- namcly, to make

credibility determinations, weigh the evidence and

draw legitimate inferences from the facts presented.

Id. at 150. Reeves determined that the plaintiff

presented a legally sufficient evidentiary basis from

which a reasonable jury could conclude that he was a

victim of discrimination. Jd. at 151. Here, because the

only issue to resolve was a question of contract

interpretation -— the resolution of which falls

exclusively to the court — there was no need for a trial,

and therefore, no need to consider trial evidence. As

such, the Seventh Circuit’s opinion does not conflict

with United States Supreme Court precedent.

D. The Decision Of The Seventh Circuit Does

Not Infringe Upon Petitioner’s Seventh

Amendment Rights.

Petitioner's argument that the trial court

improperly dismissed its claims in light of the fact that

it had a triable issue of fact and thereby deprived it of

28

its Seventh Amendment rights, is without merit and is

not a significant issue under Supreme Court Rule 10.

First, it is well-established that the principal

purpose for which certiorari jurisdiction exists is to

resolve conflicts among United States Courts of

Appeals and state courts concerning the meaning of

provisions of federal law. Braxton v. United States,

500 U.S. 344, 347 (1991). To this end, certiorari should

not be granted except in cases involving (1) the

settlement of issues that are of importance to the

public, as distinguished from those issues only of

importance to the parties; and (2) real and

embarrassing conflicts of opinion and authority

between Courts of Appeals. Rice v. Sioux City Mem.

Park Cemetery, 349 U.S. 70, 74 (1955). No such

conflict exists in the instant case because Petitioner

presents no issue of national importance, instead

seeking certiorari solely for the limited purpose of

correcting what it believes to be the District Court’s

misapplication of trial evidence. As such, a ruling by

this Court would not implicate considerations greater

than the limited concerns of the parties at issue.

Second, Petitioner asserts that it was denied its

Seventh Amendment right to trial because the District

Court and the Seventh Circuit improperly weighed, or

failed to consider, trial evidence’ regarding

Respondent’s culpability with respect to the design of

a faulty material handling system. Looking at the

undisputed evidence, however, the District Court and

the Seventh Circuit determined that under no factual

scenario could Respondent be found to have “caused”

Petitioner’s injuries because Petitioner entered into a

contract to build IBP’s system after it acquired Eaton-

Kenway and after engaging in extensive and exclusive

29

negotiations with IBP. Because there was no issue of

fact to be tried, summary judgment was appropriate.

Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986). As

such there can be no Seventh Amendment violation

because under federal standards, “{njeither a

summary judgment nor the direction of a verdict

infringes the right to a jury trial preserved by the

Seventh Amendment to the Constitution where the

question is one of law.” Whitsell v. Alexander, 229 F.2d

47, 49 (7th Cir. 1956) (citing Fidelity & Deposit Co. v.

United States, 187 U.S. 315, 320 (1902)).

E. The Seventh Circuit’s Decision Properly

Affirmed The District Court’s Order

Granting Summary Judgment.

It is telling that Petitioner does not explain the

specific basis for the District Court’s summary

judgment ruling. For example, not once does

Petitioner acknowledge that summary judgment was

granted because Petitioner could not establish, as a

matter of law, that Respondent caused its losses. Nor

does Petitioner attempt to defeat the summary

judgment ruling by directing this Court to disputed

material facts that could support a finding that it met

its burden on causation.

Both the District Court and the Seventh Circuit

determined that summary judgment was the proper

mechanism through which to dispose of this case.

Instead of challenging the legal analysis that led the

lower courts to this conclusion, Petitioner inexplicably

argues that there was sufficient evidence to support

the jury verdict. The issue on appeal was not the

sufficiency of evidence or the integrity of the jury

verdict, however. It was a question of state law

30

namely, whether Petitioner was entitled to

indemnification under the Asset Purchase Agreement

for losses sustained on a contract that it voluntarily

entered into and performed after acquiring Eaton-

Kenway.

To determine whether Petitioner could demonstrate

that Respondent caused its losses, the District Court

and the Seventh Circuit were required to interpret the

phrase “resulting from” as it appears in the Asset

Purchase Agreement. Noting its obligation to avoid a

contract interpretation that leads to absurd results,

the District Court recognized that in the absence of

clear and unequivocal language, an indemnification

agreement should not be construed to require

indemnification for conditions not under the control of

the indemnitor. Hortman v. Otis Erecting Co., 322

N.W.2d 482, 486 (Wis. Ct. App. 1982) (noting an

indemnification agreement should not be construed to

require indemnification for conditions or operation not

under the control of the indemnitor unless clearly

provided). Yet, this is exactly what the District

Court’s original interpretation did. As the court

explained:

Because Articles 10.1 and 10.2 are murror

provisions, “resulting from” must have the same

meaning in each _ provision. And if, as

[Petitioner] contended and in substance |

previously found, one party’s loss must be

indemnified if it would not have occurred “but

for” some action of the other, no matter how

remote the action from the loss and no matter

what intervening acts occurred, Articles 10.1

and 10.2 would swallow one another and lead to

absurd results. Each indemnification provision

3]

would be so inclusive that the parties would

have to indemnify each other for virtually any

loss arising from a claim relating to any asset

transferred by [Respondent] to [Petitioner].

(Pet. App. at 24a-25a.)

Upon reconsideration, the District Court found that

if its previous interpretation stood, there would no

economic incentive for Petitioner to perform its

vbligations in good faith because under almost any

circumstance, Respondent would be required to

indemnify Petitioner. To avoid such consequences, the

District Court properly ruled that Respondent must

indemnify Petitioner “only where [Respondent] or

Eaton-Kenway’s acts or omissions (or a pre-closing

occurrence) directly gives rise to a claim against

[Petitioner].” (Pet. App. at 27a.)

The Seventh Circuit agreed with the District

Court’s analysis, finding that in order to break out of

the “ridiculous circle” Petitioner’s interpretation

created, the indemnification provision must be

narrowly construed. (Pet. App. at 7a.) The Seventh

Circuit further noted that the District Court’s

allocation of responsibility was in accordance with

Wisconsin state law and Seventh Circuit precedent.

For example, in Krueger Int'l, Inc. v. Royal Indem. Co.,

481 F.3d 993, 996 (7th Cir. 2007), the Seventh Circuit

held that under Wisconsin law unless a contract

contains “express language|,] an indemnitor will not be

found to have agreed to indemnify an indemnitee

against the consequences of the breach of a contract

that the latter signs after the indemnity contract ...

goes into effect.” (Pet. App. at 8a.) In so holding,

Krueger sought to avoid the “severe moral hazard” that

32

may arise if an incentive existed to commit the act

indemnified against simply because the cost was

shifted to the indemnitor. (/d.)

Here, the Seventh Circuit found that such a hazard

would exist if Petitioner’s interpretation of the

indemnification provision stood because “[t}hinking

that it would be indemnified for any losses on its

contract with IBP, |[Petitioner| had a diminished

incentive to try to minimize its potential liability for

such losses in negotiating the terms of the contract.”

(Pet. App. at 9a.) Thus, to avoid such consequences,

the Seventh Circuit properly held that indemnification

did not extend to the consequences of activity that are

within the control of the party seeking

indemnification. Because Petitioner, in negotiating

and attempting to perform the March 23rd contract

had the last clear chance to limit its exposure to

lability, Petitioner’s indemnification claim was barred

asa matter of law. Foskett v. Great Wolf Resorts, Inc.,

518 F.3d 518, 524 (7th Cir. 2008) (applying Wisconsin

law); Dykstra uv. Arthur G. McKee & Co., 301 N.W.2d

201, 204 (Wis. 1981). Accordingly, the District Court

rightly granted, and the Seventh Circuit properly

affirmed, summary judgment in favor of Respondent.

33

CONCLUSION

Petitioner fails to establish any compelling reasons

for this Court to grant the Petition. Therefore,

Respondent respectfully requests that the Petition be

Respectfully Submitted,

Michael H. King

Counsel of Record

Spencer Wood

Erin Ziaja

Dewey & LeBoeuf LLP

Two Prudential Plaza

180 N. Stetson Avenue, Suite 3700

Chicago, Illinois 60601

(312) 794-8000

Counsel for Respondent