## Facts

- Glenn Distributors Corp. (Glenn) bought consumer goods from manufacturers for resale, including “Ruffies” brand trash bags made by Carlisle Plastics, Inc. (Carlisle).
- Glenn placed a large order for Ruffies trash bags (the record reflects an order value around \$250,000), expecting to resell the goods for profit.
- Carlisle failed to deliver the full order of trash bags.
- Glenn did not pay Carlisle for the undelivered goods and attempted to find substitute trash bags to reduce its losses.
- Glenn sued Carlisle for breach of contract and sought damages, including consequential damages measured by lost profits on the undelivered bags.
- At trial, Glenn’s president, Glenn Segal, testified that he tried to locate Ruffies or comparable supermarket-brand trash bags through trade shows and contacts with salespeople.
- Segal testified he could not find suitable supermarket brands at the close-out prices Glenn wanted and claimed Glenn’s practical choices were to buy from Carlisle or buy at higher retail/supermarket prices.
- Segal did not identify the salespeople he contacted and could not provide specific details on pricing, quantities available, or concrete substitute offers.
- Glenn presented evidence of its selling history and margins to support the amount of profits it claimed it would have earned on the missing goods.
- A jury found for Glenn and awarded \$230,000 in lost profits, finding Glenn proved its lost profits to a reasonable degree of certainty.
- Carlisle moved for judgment as a matter of law (Rule 50), challenging (among other things) the lost-profits award on the ground that Glenn failed to show reasonable efforts to “cover” by obtaining substitute goods.

## Issues

1. Whether Glenn presented legally sufficient evidence that it made reasonable efforts to cover (obtain substitute goods) so it could recover consequential damages in the form of lost profits for Carlisle’s failure to deliver.
2. Whether generalized testimony about unsuccessful attempts to find substitutes, without supplier names, price/availability details, or comparable concrete evidence, can support a jury finding of reasonable cover efforts under the UCC.
3. Whether the jury’s lost-profits award could stand when Glenn proved the amount of expected profits but did not present enough evidence that the loss was unavoidable despite reasonable mitigation.

## Decision

- The court denied Carlisle’s Rule 50 motion as to the jury’s breach finding; liability for failure to deliver was left in place.
- The court granted Carlisle’s Rule 50 motion as to consequential damages and vacated the \$230,000 lost-profits award.
- The court reasoned that, even if Glenn’s proof was adequate to calculate profits with reasonable certainty, Glenn failed as a matter of law to show reasonable efforts to cover or otherwise mitigate the claimed consequential loss.
- The court found Segal’s mitigation testimony too conclusory and lacking in concrete supporting detail (such as identified sources, prices, quantities, and availability) to permit a reasonable jury to find that Glenn undertook reasonable cover efforts.

## Legal Principles

- A buyer seeking consequential damages for nondelivery under the UCC must show that the damages were reasonably foreseeable and could not reasonably be avoided by cover or other reasonable mitigation.
- “Cover” means a buyer’s good-faith, reasonable purchase of substitute goods; a buyer’s recovery of consequential damages may be limited if the buyer does not show reasonable efforts to obtain substitutes when substitutes are reasonably available.
- Lost profits may be recoverable as consequential damages if proved with reasonable certainty and causally tied to the breach, but the buyer must also show the loss was not avoidable through reasonable mitigation.
- On a Rule 50 motion, the court may set aside a jury award when the evidence, viewed in the light most favorable to the verdict winner, is legally insufficient for a reasonable jury to find the required elements.

## Conclusion

In this post-trial decision, the district court left the jury’s breach finding intact but removed the \$230,000 lost-profits award, concluding that Glenn’s proof of mitigation was too general to support a finding that it made reasonable efforts to cover; without legally sufficient evidence of reasonable cover efforts, Glenn could not recover consequential damages for lost profits arising from Carlisle’s failure to deliver.


Glenn Distributors Corp. v. Carlisle Plastics, Inc., 2000 U.S. Dist. LEXIS 12350 (2000)