In an unpublished decision, Whitsell Corporation v. Whirlpool Corporation, the Sixth Circuit affirmed a $33 million judgment arising out of a contractual dispute in which the plaintiff argued that Whirlpool breached their agreement by purchasing parts from suppliers which should have been purchased from it. The bulk of the damage award was attributable to lost profits based on the alleged breach of the agreement, and that was the only issue on which Whirlpool sought appellate review. Whirlpool’s lead argument was that a limitation of liability clause effectively precluded the lost profit claim. In interpreting that clause, however, the Sixth Circuit construed it to eliminate any remedy, rather than simply limiting consequential or other damages. Because it deprived the plaintiff of any remedy, the Sixth Circuit upheld the district court’s decision that the clause was void.
This case is notable for two reasons. First, the case highlights the need for precision and care in drafting limitation of liability clauses because it shows the risks of going too far with such clauses. In this case, it appears that a more modestly drafted clause would likely have averted a substantial judgment. Second, this is one of the rare instances that the Sixth Circuit confronts a substantial multi-million dollar judgment. For our prior post on such judgments, click here.
