## Facts

- R.R. Donnelley & Sons Company, a commercial printer and distributor, contracted with Vanguard Transportation Systems, Inc., an interstate motor carrier, to transport advertising brochures.
- The shipment consisted of brochures announcing a Macy’s post-Christmas sale in Florida; the brochures were time-sensitive and intended to be mailed before the sale.
- Vanguard was required to deliver the load to Donnelley’s Atlanta, Georgia distribution center by a specified date and time (before 2:00 p.m. on a Friday in December 2005).
- The load was delivered on December 27, 2005, approximately eleven days late, after the brochures no longer had commercial value for their intended purpose.
- Donnelley credited its customer the full printing cost of $81,650 due to the shipment’s loss of value.
- Vanguard admitted the late delivery but asserted Donnelley contributed by not permitting unloading during an initial attempt and argued it lacked specific notice that the brochures would become worthless after a particular date.
- Donnelley sued for breach of contract and sought damages and attorney’s fees under a contractual indemnification clause; Vanguard asserted, among other defenses, failure to mitigate damages.
- The case was tried to the court in a bench trial, resulting in post-trial findings of fact and conclusions of law.

## Issues

1. Whether Vanguard breached the transportation agreement by failing to deliver the shipment by the contractually required time.
2. Whether Donnelley’s conduct (including the unloading dispute) caused or materially contributed to the delivery failure.
3. Whether Donnelley failed to mitigate damages, and whether that failure limited recoverable damages.
4. Whether the loss from late delivery of time-sensitive promotional materials was foreseeable to Vanguard without a specific “drop-dead” date notice.
5. Whether the contract’s indemnification clause shifted attorney’s fees in a first-party dispute between the contracting parties.

## Decision

- The court found Vanguard breached the contract by failing to deliver the brochures on time.
- The court found the harm from late delivery of post-Christmas sale advertising materials was foreseeable to a carrier, even absent specific notice of the precise date after which the materials would be worthless.
- The court reduced Donnelley’s recovery because Donnelley did not take reasonable steps to mitigate damages after learning of the delay, despite conceding mitigation would have been easy and inexpensive.
- The court addressed Donnelley’s claim for attorney’s fees under the indemnification clause by construing the contract in light of the American Rule and the distinction between third-party indemnity and first-party fee shifting.

## Legal Principles

- A party breaches a transportation services contract by failing to make delivery within the agreed time, where timely delivery is a contractual requirement.
- Loss of value from delayed delivery can be foreseeable when the goods are commercially time-sensitive (such as promotional advertising for a fixed sales period), even without express notice of an exact cutoff date.
- Failure to mitigate damages is an affirmative defense; the breaching party bears the burden to prove (1) reasonable mitigation steps were available and (2) the amount of loss that would have been avoided.
- The non-breaching party must take reasonable, ordinary-prudence measures to limit losses and may not recover damages that could have been avoided with reasonable effort.
- Reliance on a breaching party’s assurances may affect what mitigation is reasonable, but it does not justify inaction when avoidance measures are readily available and low-cost.
- Attorney’s fees are not recoverable absent a valid contractual or statutory basis; indemnification language is construed carefully and is commonly read to cover third-party claims unless it clearly provides for first-party fee shifting.

## Conclusion

The court held the carrier liable for breach based on an undisputedly late delivery of time-sensitive advertising materials and treated the resulting loss as foreseeable, but it limited the plaintiff’s damages because the plaintiff failed to take reasonable, inexpensive steps to mitigate after learning of the delay, while separately analyzing whether the contract’s indemnity language supported first-party attorney’s fees.


R.R. Donnelley & Sons Co. v. Vanguard Transp. Sys., Inc., 641 F. Supp. 2d 707 (N.D. Ill. 2009)