## Facts

- Amway marketed a product-and-service package called the TeleCharge phone, intended for installation in hotels and restaurants to generate shared long-distance calling revenue.
- All-Tech Telecom, Inc. was formed to act as an Amway distributor of TeleCharge phones and associated service.
- Beginning in 1988, All-Tech purchased many TeleCharge phones.
- The venture failed due to equipment problems, regulatory impediments, and eventual obsolescence; Amway withdrew TeleCharge in 1992.
- All-Tech alleged Amway induced it to enter and remain in the venture through statements about, among other things, prior research, expected revenue per phone, regulatory approval, technical compatibility, service quality, and the carrier relationship.
- Some asserted statements were corrected before All-Tech’s purchases; other statements were made by independent distributors at meetings rather than by Amway itself.
- All-Tech sued in the Eastern District of Wisconsin for intentional misrepresentation, negligent misrepresentation, promissory estoppel, and breach of warranty.
- The district court granted summary judgment for Amway on the misrepresentation and promissory estoppel claims; the breach-of-warranty claim went to trial, and the jury found a breach but awarded no damages (not appealed).

## Issues

1. Whether Wisconsin’s economic loss doctrine barred intentional and negligent misrepresentation claims seeking only commercial economic loss arising from a sales relationship governed by contract/UCC warranty law.
2. Whether promissory estoppel was available when an express contractual relationship existed and the alleged “promises” functioned as warranty-type representations about the product/service.

## Decision

- The Seventh Circuit affirmed summary judgment for Amway on intentional misrepresentation and negligent misrepresentation.
- The court held the alleged losses were purely economic and the dispute was, in substance, a product-quality/expectations claim addressed by contract and warranty remedies.
- The court affirmed summary judgment for Amway on promissory estoppel, rejecting its use as a substitute for, or workaround around, warranty proof and UCC limits.
- The court noted additional defects in the alleged misrepresentations, including nonactionable sales talk, lack of reasonable reliance where statements were corrected before purchase, and attribution problems for statements made by independent distributors.

## Legal Principles

- Under Wisconsin law, the economic loss doctrine generally bars tort recovery (including misrepresentation theories) for purely economic loss in commercial transactions where the alleged wrong is indistinguishable from a warranty/contract claim.
- Contract and UCC warranty law are the primary means for allocating risk and enforcing product-performance expectations between commercial parties.
- Generalized superlatives about product or service quality are typically nonactionable puffery and do not support reasonable reliance by sophisticated commercial actors.
- Promissory estoppel ordinarily addresses reliance on a promise of future conduct and is not available to repackage warranty-type representations or to avoid the evidentiary and remedial structure governing warranty claims.
- Where an express contract governs the parties’ relationship, promissory estoppel is generally unavailable absent a genuine contractual gap for equity to fill.

## Conclusion

The court treated All-Tech’s claims as an attempt to convert a failed commercial product venture into tort and equitable liability, holding that Wisconsin’s economic loss doctrine and the UCC’s warranty framework foreclosed misrepresentation and promissory estoppel theories seeking only economic damages.


All-Tech Telecom, Inc. v. Amway Corp., 174 F.3d 862 (7th Cir. 1999)