Marvin Lumber & Cedar Co. v. PPG Industries, Inc.

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________

No. 02-2833
___________

Marvin Lumber and Cedar Company; *
Marvin Windows of Tennessee, Inc., *
*
Plaintiffs - Appellees, *
*
v. *
* Appeals from the United States
PPG Industries, Inc., * District Court for the
* District of Minnesota.
Defendant - Appellant. *
*
----------------------------------- *
*
American Chemistry Council, *
*
Amicus on Behalf of Appellant. *
___________

No. 02-2869
___________

Marvin Lumber and Cedar Company; *
Marvin Windows of Tennessee, Inc., *
*
Plaintiffs - Appellants, *
*
v. *
*
PPG Industries, Inc., *
*
Defendant - Appellee. *
 ___________

Submitted: June 9, 2003
Filed: March 23, 2005
___________

Before BYE, BOWMAN, and BEAM, Circuit Judges.
___________

BOWMAN, Circuit Judge.

PPG Industries, Inc., appeals from the judgment entered in favor of Marvin
Lumber and Cedar Company and Marvin Windows of Tennessee, Inc. (collectively,
Marvin), on Marvin's claim for breach of express warranty of future performance.
Marvin cross appeals. We affirm in part and reverse in part.

I.

This case is before us for the second time. See Marvin Lumber & Cedar Co.
v. PPG Indus., Inc., 223 F.3d 873 (8th Cir. 2000). As we explained in our first
opinion, Marvin is a family-owned company that manufactures, among other things,
millwork products—wooden doors and windows. PPG sells wood preservatives and
coatings. The genesis of this lawsuit was Marvin's use, from 1985 to 1988, of PPG's
wood treatment PILT (preservative in-line treatment) on Marvin's doors and
windows. PILT replaced the industry standard in wood preservatives, products
containing pentachlorophenol (Penta). Marvin had used Penta products successfully
for years until environmental concerns were raised about the active ingredient.

In 1994, Marvin filed this diversity suit seeking damages on a number of legal
theories, claiming that PILT had failed to prevent premature rot and decay in Marvin's
wood products. The district court dismissed or granted summary judgment to PPG
on all counts. On appeal, we affirmed in large part. But we remanded for trial

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Marvin's claim for breach of an express warranty of future performance, having
concluded that there remained genuine issues of material fact on the claim. The
warranty arose, Marvin said, from representations by PPG to Marvin employees that
wood products treated with PILT would last as long or longer than Penta-treated
products. See id. at 879–80.

On remand, at the request of PPG, the four-month jury trial was bifurcated. In
part one, the jury found that PPG had given Marvin a warranty of future performance
and that such warranty formed part of the basis of the bargain between the parties and
was incorporated into their agreement. In the second phase, the jury found the
warranty was breached and awarded damages: $53.6 million for out-of-pocket costs,
$25.2 million for past lost profits; $27 million for future lost profits; and $30 million
for loss of goodwill. The District Court entered judgment for Marvin, awarding
$156,118,625.92 for damages (including third-party litigation costs) with interest (not
including post-judgment interest). PPG appeals and Marvin cross appeals. We
address the issues in the order presented.

II.

For its first issue on appeal, PPG contends that the District Court erred when
it granted judgment as a matter of law (JAML) in favor of Marvin on the question of
notice.1 Under Minnesota law, after acceptance of goods, a "buyer must within a
reasonable time after the buyer discovers or should have discovered any breach notify
the seller of breach or be barred from any remedy." Minn. Stat. § 336.2-607(3)(a)

1
In the part of the trial transcript where Marvin's motion was argued and
throughout the briefs, the parties repeatedly refer to the decision as a "directed
verdict." That was a term of art in federal civil practice that has been abandoned.
Fed. R. Civ. P. 50 advisory committee notes, 1991 Amendment, subd. (a).

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(2002).2 We review de novo the District Court's decision to grant JAML to Marvin,
applying the same standard as the District Court, that is, Rule 50(a) of the Federal
Rules of Civil Procedure. Arabian Agric. Servs. Co. v. Chief Indus., Inc., 309 F.3d
479, 482 (8th Cir. 2002). The question for us is: PPG having been "fully heard" on
the issue of notice, was there a "legally sufficient evidentiary basis for a reasonable
jury to find for" PPG so that granting JAML in Marvin's favor was error? Id.
(quoting Fed. R. Civ. P. 50(a)(1)).

PPG claims that Marvin had discovered or should have discovered the breach
no later than 1990; that the notice finally given to PPG in April 1993 was inadequate;
and that adequate notice was not given until September 1997. According to PPG,
whether the notice was given in 1993 or 1997, it was not, as a matter of law, given
"within a reasonable time," and so Marvin is not entitled to any remedy for breach.
PPG asks that we order judgment for PPG on the question of notice or at the very
least remand for a new trial so the issue can be decided by a jury.

Initially, PPG asserts in its brief that "this Court held in Marvin I that a
reasonable jury could find that Marvin discovered or should have discovered its claim
for breach" in early 1990, suggesting that our comment foreclosed JAML on the
question of notice. Brief of Appellant at 23. We did note that fact questions existed
on the issue of when Marvin knew or should have known of the breach for purposes
of a statute of limitations issue—was suit filed within four years of the time when the
alleged breach was known or should have been known?3 But the District Court's

2
This provision is found in the Uniform Commercial Code or U.C.C., which
Minnesota has adopted. In this opinion, as a kind of shorthand, we may refer in text
to the U.C.C. section numbers instead of the Minnesota Statutes section numbers, for
example, § 2-607 instead of § 336.2-607.
3
Indeed, on remand that question was submitted to the jury in phase two of the
trial, and the jury found that PPG had not proved by a preponderance of the evidence
that Marvin knew or should have known of the breach before April 22, 1990, four

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conclusion as a matter of law that Marvin gave reasonable notice of breach to PPG
is not in any way inconsistent with our determination in Marvin I, on the record
before the Court at that time, that a jury could find Marvin knew or should have
known of the problems with PILT before April 1990. The language from Marvin I
noting that fact questions made summary judgment inappropriate on the statute of
limitations question on the record before us in that case does not preclude JAML on
the notice issue on the record before us now. The District Court's decision on notice
followed a full-blown trial. Marvin, no doubt having read our opinion in Marvin I
as carefully as did PPG, presumably worked to tighten up its evidence in hopes of
winning a jury verdict—or better yet, JAML—on the question of notice.

It is true that the sufficiency of notice under § 2-607 ordinarily is a question of
fact to be determined by a jury. Church of the Nativity of Our Lord v. WatPro, Inc.,
491 N.W.2d 1, 5 (Minn. 1992), overruled on other grounds, Ly v. Nystrom, 615
N.W.2d 302 (Minn. 2000). But if, as the District Court decided, "no reasonable jury
could have determined" that Marvin failed to give the requisite notice, it was not error
for that court to decide the issue and enter judgment as a matter of law in favor of
Marvin on the issue. Order and Memorandum of June 7, 2002, at 3. We now look
at the evidence before the court on the question of notice.

Under § 2-607, Marvin's duty to give notice to PPG arose when Marvin
discovered or should have discovered the breach—by early 1990, according to PPG.
Marvin's position is that it was unaware of the breach until just before it gave PPG
notice in April 1993. The undisputed evidence at trial showed that Marvin indeed had
some concerns about wood deterioration before 1993 but that company employees did
not know that the rot problems correlated with the switch to PILT until 1993.
Moreover, given the representations about PILT's superior ability to prevent rot, it
was reasonable that Marvin did not come quickly to the realization that the wood

years before suit was filed.

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preservative might be the cause of the problem until it had explored and ruled out
other potential causes—which it had done by 1993. Marvin's duty under the "should
have known" standard, once it became aware of excessive rot problems, was to
investigate further and determine whether PILT was the problem. This it did.

But PPG cites evidence in the record from which, it says, a reasonable jury
would have found (or at the very least, could have found) that Marvin knew or should
have known about the breach of warranty by early 1990. First, PPG identifies a
Marvin document dated December 12, 1989, that lists thirty-five "anticipated
concern[s]," among which is number twenty-nine, "wood rotting complaints," with
"wood treatment systems" under the corresponding "comment." Defendant's Exhibit
624. But the document does not indicate that complaints were escalating or that they
were primarily in the newer, PILT-treated products. And as we have learned from our
review of the trial transcript, wood treatment "systems" would refer not only to the
preservative pretreatment, but also to coatings that go on top of the treated wood (e.g.,
paint) and the method by which the pretreatment and the coatings are applied. In
other words, a reasonable jury could not have found that the Marvin employees who
saw this document knew or should have known—because of the content of this
document—that PILT had failed to live up to PPG's promises regarding its future
performance.

PPG also brings to this Court's attention Marvin's "Wood Deterioration
Project" of 1990. Defendant's Exhibit 1576. Significantly, the bulk of the report lists
the specific millwork products about which complaints had been received and the
location of the deterioration within those products. Exterior finish is noted, but type
of pretreatment is not. Instead, PPG suggests that Marvin should have known PILT
was the problem because the report noted that of the 554 windows and doors with
reported deterioration problems, 139 of the units reported upon were manufactured
from 1985 to 1988, during which time Marvin was using PILT. But the Wood
Deterioration Project is simply a report of raw numbers; no statistical analysis

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accompanied the project. For example, the numbers do not reflect the actual
percentage of production for a given year that was affected with deterioration
problems. In truth, the most dramatic correlation, if there is one, is between
deterioration and geography: 373 of the reports came from the northeast, more than
the other three geographical areas combined. No reasonable jury could find from the
results of this project that Marvin knew or should have assumed in 1990 that the use
of PILT was causing an increase in wood-rot complaints. The report does suggest
that additional inquiry might be in order, and as we have said, Marvin undertook a
further investigation.

In addition, PPG points to an internal Marvin memorandum from a territory
manager to the customer service manager dated September 14, 1990, that notes
rotting problems in its products installed in buildings in southern states. Defendant's
Exhibit 170. But the memo says that the problems are "due to sash separation, which
then leads to a rotting problem." Id. The proposed corrective measures listed in the
memo all relate to the joints and attachments of the sashes; there is no indication that
a failure of wood pretreatment, whether Penta or PILT (we cannot tell from the memo
when the sashes at issue were manufactured), was or should have been suspected as
the root cause of the problem. Indeed, the memo references a wholly unrelated
cause—sash separation.

Finally, PPG notes a report sent to a PPG employee from a Marvin employee
on July 14, 1993, showing that from 1990 through 1992, deterioration complaints
about PILT-treated products had outstripped complaints about the older Penta-treated
products. Plaintiff's Exhibit 1586. The undisputed testimony, however, was that
numerous factors could have contributed to the rot problems. And it was not until a
committee of Marvin employees studied the problem in 1992 and 1993 that a
determination was made that PILT was the common denominator in the products
about which Marvin was receiving complaints.

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 "In deciding whether the notice requirement has been complied with, the jury
must evaluate 'the factual setting of each case and the circumstances of the parties
involved.'" WatPro, Inc., 491 N.W.2d at 5 (quoting Wagmeister v. A.H. Robins Co.,
382 N.E.2d 23, 25 (Ill. App. Ct. 1978)). We must agree with the District Court that,
on these facts, Marvin was entitled to JAML on the issue of § 2-607 notice. Even
taken together, the documents upon which PPG relies in its argument are not
sufficient to show that Marvin knew or should have known that the wood-rot
problems it was experiencing beginning in 1989 through 1992 were the result of
pretreatment with PILT, and no reasonable jury could so find. While PPG receives
the benefit of all reasonable inferences that may be drawn from the evidence, an
inference is not reasonable unless it may be drawn "without resort to speculation."
Arabian Agric. Servs. Co., 309 F.3d at 482 (citations to quoted cases omitted). And
it would be pure speculation for a jury to conclude that the evidence of rot that
Marvin had in its possession in 1990 was such that Marvin knew or should have
known that PILT was the singular or even primary culprit. There was no conceivable
reason for Marvin not to advise PPG as soon as it was confirmed that PILT was the
problem. It was in Marvin's best interests to identify the cause, remedy the problem,
and seek redress from the responsible party as soon as possible. Shortly after Marvin
realized that the pattern of rot complaints it was receiving had only PILT in common,
in spite of the promises of superior performance it had received from PPG regarding
the wood treatment, it notified PPG—well within a "reasonable" time.

PPG contends that even if we agree with the District Court that Marvin was
entitled to JAML because it did not know, nor should it have known, there was a
breach of warranty until 1993, the notice given at that time was inadequate because
it did not mention specifically the warranty upon which Marvin ultimately prevailed.
Marvin did not rely upon an express warranty of future performance for recovery of
damages from PPG until it amended its complaint to add the claim in 1997. The 1993
notice therefore failed as a matter of law, according to PPG. But "[t]he notice
provision is not intended to 'operate as a technical procedural barrier to deny

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claimants the opportunity to litigate the case on the merits.'" WatPro, 491 N.W.2d at
5 (quoting Prutch v. Ford Motor Co., 618 P.2d 657, 661 (Colo. 1980) (en banc)). We
think PPG demands more of the notice than Minnesota law requires. See State v.
Patten, 416 N.W.2d 168, 172 (Minn. Ct. App. 1987) (citing Moosbrugger v.
McGraw-Edison Co., 170 N.W.2d 72, 80 (Minn. 1969)).

On the subject of § 336.2-607 notice and its adequacy, the Minnesota Supreme
Court has said that it "need merely be sufficient to let the seller know that the
transaction is still troublesome and must be watched." WatPro, 491 N.W.2d at 5
(quoting Minn. Stat. Ann. § 336.2-607 U.C.C. cmt. 4 (West 1966)). Marvin's 1993
notice to PPG did just that, advising PPG that the common factor in the spate of rot
complaints it was receiving was wood pretreatment with PILT. In fact, a
December 28, 1993, internal PPG memorandum demonstrates that PPG knew full
well that Marvin was claiming warranty, breach, and damages. That document
summarized a December 14, 1993, meeting "Regarding Rot Claims" and described
Marvin's position as PPG understood it: "In 1984 PILT was sold to Marvin as a
superior product and better than anything previously used [the warranty]. Now they
have rot problems [the breach] and would like PPG to ante up [the damages]."
Plaintiff's Exhibit 1664. As we have said, Marvin had every reason to get notice to
PPG as soon as Marvin knew that PILT was the problem. PPG thus cannot claim
"commercial bad faith" on the part of Marvin, so Marvin should not, on the basis of
the notice given here, be denied its remedy for breach. WatPro, 491 N.W.2d at 5
(quoting Minn. Stat. Ann. § 336.2-607 U.C.C. cmt. 4 (West 1966)).

We affirm the District Court's decision to grant JAML to Marvin on the issue
of notice.

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 III.

PPG next argues that the District Court erred when it declined to enforce a term
that appeared in the order acknowledgments for PILT that PPG sent to Marvin. That
term purports to limit damages to the price Marvin paid PPG for PILT, $1.6 million.

PPG sent Marvin sixty-six acknowledgments of Marvin purchase orders for
PILT. On the face of the form acknowledgment, PPG avers that it accepts the order
with the understanding that the only terms and conditions to which it consents are set
forth in the acknowledgment. Although there is a line for an "authorized signature"
just below this statement, none of the acknowledgments is signed anywhere by
anyone. On the back of the acknowledgment, in fine print, in the last item under
"TERMS AND CONDITIONS," is this language: "In no event shall Seller's liability
for damages in respect to products sold hereunder, or otherwise exceed the purchase
price attributable to the specific product as to which a claim is made." E.g.,
Defendant's Exhibit 7. On its face, this disavowal would seem to limit Marvin's
damages as PPG claims.

Under Minnesota law and the U.C.C., a written order acknowledgment from
one merchant to another that contains terms in addition to those originally agreed
upon by the parties will be considered part of the agreement unless:

(a) The offer expressly limits acceptance to the terms of the offer;
(b) [The new terms] materially alter [the agreement]; or
(c) Notification of objection to them has already been given or is given
within a reasonable time after notice of them is received.

Minn. Stat. § 336.2-207(2) (2002). There is no contention here that Marvin's
purchase order (its offer) expressly stated that acceptance was limited "to the terms

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of the offer" (subsection (a)) nor that Marvin ever objected to the limitation of
damages in the course of its dealings with PPG (subsection (c)). But as for subsection
(b), Marvin contends that the damages limitation was a material alteration to the
contract for purchase and sale.4 PPG disagrees, relying on U.C.C. commentary that
says "a clause . . . limiting remedy in a reasonable manner" (citing U.C.C. § 2-719)
involves "no element of unreasonable surprise" and will become a part of the contract
unless an objection is raised. Minn. Stat. Ann. § 336.2-207 U.C.C. cmt. 5 (West
1966). The "unreasonable surprise" is a reference to a previous comment wherein the
drafters gave examples of clauses that "would normally 'materially alter' the contract
and so result in surprise or hardship if incorporated without express awareness." Id.
cmt. 4. Quoting this Circuit and U.C.C. § 2-207 Comment 4, the Minnesota Court of
Appeals has said, "An agreement is materially altered if an addition would 'result in
surprise or hardship if incorporated without express awareness by the other party.'"
TRWL Fin. Establishment v. Select Int'l, Inc., 527 N.W.2d 573, 579 (Minn. Ct. App.
1995) (quoting N & D Fashions, Inc. v. DHJ Indus., Inc., 548 F.2d 722, 726 (8th Cir.

4
Even if an additional term appearing only in an acknowledgment is
incorporated into a contract under § 2-207, if it is a limitation "on the measure of
damages recoverable," as is the term at issue here, it may not be enforceable. Minn.
Stat. § 336.2-719. An "exclusive or limited remedy" will not stand if it "fail[s] of its
essential purpose." Id. § 336.2-719(2). Likewise, a limitation on consequential
damages will have no effect if it is "unconscionable." Id. § 336.2-719(3). PPG
contends that "the district court apparently applied the 'failed of its essential purpose'
standard to hold under section 2-719 that the damages limitation was unenforceable."
Brief of Appellant at 37. PPG is mistaken. The District Court clearly said that the
"damage provision would constitute a material alteration of the contract," applying
§ 2-207. Order and Memorandum of June 7, 2002, at 5. See Christian v. Sony Corp.
of America, 152 F. Supp. 2d 1184, 1189 (D. Minn. 2001), where the same District
Court judge demonstrated his understanding of the distinction by actually applying
the "failed of its essential purpose" test. Because we hold that the damages limitation
never became a part of the contract under § 2-207, we do not consider whether the
damages limitation clause at issue here either fails of its essential purpose or is
unconscionable under § 2-719.

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1976) (quoting Comment 4 to U.C.C. § 2-207)).5 Likewise, in applying § 2-207, we
have said, "Considerations of surprise and hardship must remain a part of the
[material alteration] analysis." Shur-Value Stamps, Inc. v. Phillips Petroleum Co., 50
F.3d 592, 599 (8th Cir. 1995) (applying Texas law); see Johnson v. Murray, 648
N.W.2d 664, 670 (Minn. 2002) ("Uniform laws are interpreted to effect their general
purpose to make uniform the laws of those states that enact them. Accordingly, we
give great weight to other states' interpretations of a uniform law." (citation
omitted)).6

5
In N & D Fashions, it was unclear whether the laws of Minnesota, Missouri,
or New York applied. The Court determined that it was unnecessary to resolve the
question, as each state had "enacted UCC § 2-207 without modification." N & D
Fashions, 548 F.2d at 724 n.2.
6
Although the Minnesota courts and this Court are not among them, there are
courts that have read U.C.C. § 2-207 Comments 4 and 5 together to exclude hardship
as a factor to be considered in the analysis: that is, material alteration is not defined
by hardship (it does not appear in Comment 5); hardship is a consequence of a
material alteration (it does appear in Comment 4). The Seventh Circuit, for example,
has said that "[h]ardship is a consequence, not a criterion. (Surprise can be either.)"
Union Carbide Corp. v. Oscar Mayer Foods Corp., 947 F.2d 1333, 1336 (7th Cir.
1991). At first blush, that seems a fair reading of the comments, given the way they
are worded. On the other hand, why would the drafters even mention "hardship" if
it were not a factor to be considered in determining materiality? In any event, the
comments do not have the force of law, and courts applying Minnesota law have
declared that a finding of either surprise or hardship will result in a material
alteration.

PPG quotes the Union Carbide language in its brief—but in a discussion of
unconscionability, again blurring the line between § 2-207 material alteration and
§ 2-719 unconscionability. Brief of Appellant at 38. The Seventh Circuit's comments
clearly apply to an analysis of material alteration under § 2-207—indeed, that court
was dealing with an indemnity clause, and § 2-719(3)'s limitation on consequential
damages and the unconscionability thereof would have no relevance.

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 Before we move on to our legal analysis, we must address the matter of our
standard of review. The Minnesota Court of Appeals has said that "[w]hether an
additional term materially alters an agreement is a question of fact which must be
resolved on a case by case basis." TRWL Fin. Establishment, 527 N.W.2d at 579
(citing N & D Fashions, 548 F.2d at 726). In such a case, we would review the
District Court's finding of material alteration only for clear error. But the District
Court itself concluded that the damages limitation term was a material alteration "as
a matter of law." Order & Memorandum of June 7, 2002, at 5. If that is the case, we
should review the decision de novo, as PPG acknowledges in its main brief. See
Salve Regina Coll. v. Russell, 499 U.S. 225, 231 (1991) ("[A] court of appeals should
review de novo a district court's determination of state law."). In its reply brief, PPG
cites TRWL for the first time for the proposition that the question of material
alteration is one of fact but then makes no effort to clarify our standard of review.
Further, PPG does not challenge on appeal the District Court's having usurped the
role of the jury, if indeed TRWL is correct. Marvin ignores the standard of review
altogether. We decline to sort out the difficulties of ascertaining our standard of
review because it is not necessary for us to do so. The result we reach would be the
same if we reviewed the decision for clear error as a question of fact or if we applied
de novo review as though the decision were a conclusion of law.

The facts of this case concerning material alteration, that is, those which go to
prove hardship or surprise, are really without dispute. After considering them, we
conclude that enforcement of the damages limitation provision would result in both
hardship and surprise to Marvin.

Economically, the hardship to Marvin is clear—the $1.6 million PPG says it
owes under the terms of the acknowledgment is a fraction of the out-of-pocket costs
to Marvin resulting from PILT's failure, not even considering any consequential
damages. Under the terms of the boilerplate limitation, the distribution between
Marvin and PPG of risk of the product's failure is dramatically altered, with Marvin

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bearing the brunt of it. The warranty that the jury found was for future performance.
The failure of the product in the future—after it was applied to the wood and the
wood was made into a window and installed in a building—would be, and was,
catastrophic in terms of damages. Given that the warranty was for PILT's future
performance, the damages should remedy a failure of that future performance, not just
refund the money spent for the product. Reimbursing the cost of the
product—essentially "replacing" the product—would not enforce the warranty that
PPG gave to Marvin. Moreover, most of the damages at issue were unquestionably
foreseeable.7

As for surprise, the provision was not negotiated by PPG and Marvin. While
it appeared in all the acknowledgments, it was boilerplate language, in small print, on
the back side of a form that was dense with other small print. Cf. TRWL Fin.
Establishment, 527 N.W.2d at 579 ("If the forum selection clause is contained in the
boilerplate language of a confirmatory memorandum, and is not bargained for, this
presumption [that a party adversely affected by the clause has received consideration
at the time of contracting] is untenable."). Marvin witnesses testified concerning their
surprise that a damages limitation clause may have become part of the contract with
PPG. While this testimony is self-serving, it was uncontradicted and not without
support elsewhere in the record. Marvin also proffered evidence that PPG and other
coatings manufacturers had always made things right when a product of theirs failed
with consequences, not just refunding the purchase price of the product sold but
replacing the Marvin product that was damaged as a result of the failure. Granted,
the catastrophic nature of PILT's failure was new to the relationship between PPG and

7
We recognize the similarity of what we say here to an application of the "fails
of its essential purpose" test of § 2-719. See supra n.4. Nevertheless, we are aware
of the distinction between the two tests. We are simply saying here that catastrophic
failure of PILT, with the distribution of risk shifted dramatically to Marvin by the
form acknowledgment, is a significant hardship to Marvin.

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Marvin, but that would be all the more reason that PPG's refusal to pay consequential
damages would be both a surprise and a hardship.

We have said that "Uniform Commercial Code remedies should be liberally
administered." Soo Line R.R. v. Fruehauf Corp., 547 F.2d 1365, 1373 (8th Cir. 1977)
(applying Minnesota's § 2-719). It is true that Comment 5 to U.C.C. § 2-207 lists "a
clause . . . limiting remedy in a reasonable manner" as one that will "involve no
element of unreasonable surprise" and therefore will "be incorporated in the contract."
Apart from the fact that the commentary does not have the force of law, we conclude
on the facts of this case that the provision in reality did involve "an element of
unreasonable surprise" to Marvin. The damages limitation language from the PPG
acknowledgment forms therefore did not become a part of the contract between PPG
and Marvin and is not enforceable.

IV.

For its next issue, PPG challenges the awards to Marvin of goodwill damages
($30 million) and damages for past and future lost profits ($25.2 million and $27
million, respectively).

A.

In arguing that the damages for lost goodwill should be vacated, PPG raises
three points: the evidence was insufficient to sustain the award, the award duplicated
the damages for future lost profits, and the claim was submitted to the jury without
proper notice to PPG. We are somewhat troubled by the short notice given to PPG
that Marvin was seeking damages specifically for lost goodwill and that the claim
would be submitted to the jury in addition to a claim for future lost profits. But we
reverse because we determine that the record cannot support awards for both $30
million in lost goodwill and $27 million for future lost profits. The fact is, the

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evidence supporting an award of goodwill damages to which Marvin directs our
attention is the very same evidence used to support an award of damages for future
lost profits. We conclude that this evidence warranted an instruction on, and
ultimately an award of, damages for future lost profits, as we will explain, but not an
instruction on (or an award of) damages for lost goodwill in addition.

We review de novo the District Court's decision to submit an instruction on lost
goodwill. Porous Media Corp. v. Midland Brake, Inc., 220 F.3d 954, 961 (8th Cir.
2000). Because we conclude that the court erred in giving the instruction, we will not
consider sufficiency of the evidence per se. Nonetheless, our analysis will entail a
review of the evidence that Marvin claims supports the award. See C.L. Maddox, Inc.
v. Benham Group, Inc., 88 F.3d 592, 601, 602 (8th Cir. 1996) (noting that certainty
of damages and sufficiency of evidence are "very closely related issues" but
"analytically distinct").

Marvin presented evidence of the importance to a wooden window and door
manufacturer of a good reputation among distributors, builders, homeowners, and
others. The undisputed testimony was that damage to reputation would be a serious
problem. Before the problems with PILT, Marvin had an excellent reputation in the
industry. But when the volume of rot problems became so great that Marvin was
unable to continue to replace windows and repair incidental damage that resulted
from the deteriorated millwork, customers became "quite hostile," even threatening
lawsuits, according to Gary Daniels, a Marvin employee who handled PILT-related
complaints. Transcript at 5223. President Susan Marvin testified to spending "hours
on the phone with customers who are so angry and so distressed." Id. at 7333. Susan
attributed stagnant growth at Marvin after the PILT problems "to homeowners telling
friends and neighbors and associates that the product isn't good." Id. at 7462. She
said, "Our reputation has been seriously damaged. And we have lost a lot of loyal
customers." Id. As for specifics, Susan testified that an institutional customer,
having become aware of the problems others were having with Marvin millwork

-16-
products, required Marvin to purchase a performance bond before the customer would
proceed with a project, already underway, to replace existing windows with Marvin
windows.

On the basis of this evidence, the jury was instructed that it could consider
whether Marvin "suffered any measurable loss to its goodwill" and award damages
for such loss. Id. at 10846. The court instructed the jury that "[t]he measure of
Marvin's damage is the difference between such goodwill before and after its
experience with wood rot." Id. at 10847. The problem we see with Marvin's claim
is in the quantification of goodwill damages, translating angry or cautious customers
into dollars and cents. While we are not suggesting that mathematical certainty is
required, the jury's decision that Marvin suffered a $30 million loss of goodwill was
conjecture. Marvin does not—indeed, it cannot—point to any evidence in the record
separate and apart from its evidence of future lost profits to support an award of $30
million in lost goodwill.8 Marvin's trial counsel admitted as much, suggesting to the
jury that goodwill damages are "something that you just have to go into your tummy
and get." Id. at 10814. It was goodwill, not the damages for a loss thereof, that was
described for the jury as an "intangible business value." Id. at 10846. The damages

8
In concluding that the award of damages for lost goodwill should be affirmed,
Judge Bye relies upon our decision in Porous Media Corp. v. Pall Corp., 173 F.3d
1109 (8th Cir. 1999), opining that "the quality and quantity of evidence presented by
Marvin in this extensive case was similar in nature to the quality and quantity of
evidence found sufficient to support the jury's award in Porous Media." Post at 36.
But the sufficiency issue in Porous Media was not whether the same evidence was
used to prove both lost profits and lost goodwill. Indeed, the Court in that case
concluded that the entire Lanham Act (false advertising) award of $1.6 million was
supported by the record "because Porous produced sufficient evidence of loss to its
goodwill." Porous Media, 173 F.3d at 1122. The Court specifically declined to
resolve another question that had been raised in the case: "whether the jury found that
Porous lost any sales as a result of" the defendant's actions. Id.; see also id. at 1123
("[B]ecause Porous produced sufficient evidence of lost goodwill, we need not
resolve the parties' disagreements about the jury's special verdict.").

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must be measurable. The problem is not so much that lost goodwill and future lost
profits are duplicative in this case (in fact, the jury was instructed that they are
different from each other). The problem is that Marvin did not make a submissible
case of lost goodwill damages. There was no testimony that any Marvin entity was
worth less because of the problems with PILT and certainly no evidence giving a
measure of, or a way of measuring, how much less. A loss of goodwill resulting in
a quantifiable diminution in the value of Marvin's millwork businesses was not shown
with sufficient certainty, as a matter of law, to have been submitted to the jury. The
award of goodwill damages must be vacated.

B.

As for lost profits, past and future, PPG also challenges the sufficiency of the
evidence to support those awards. PPG maintains there was only a scintilla of
evidence of past lost profits and no evidence of lost profits from 2002 through 2004.
On appellate review, when the issue is sufficiency, we view the evidence in the light
most favorable to the verdict and will reverse only if a reasonable jury could not have
found as this jury did. United States v. Larry Reed & Sons P'ship, 280 F.3d 1212,
1214 (8th Cir. 2002). Consequential damages such as the lost profits in question
must be proved "with a reasonable degree of certainty and exactness." County of
Blue Earth v. Wingen, 684 N.W.2d 919, 924 (Minn. Ct. App. 2004) (citation to
quoted case omitted). For future losses specifically, Marvin cannot collect damages
that are "remote, speculative, or conjectural." Pietrzak v. Eggen, 295 N.W.2d 504,
507 (Minn. 1980). Absolute exactitude is not required, however. "Instead, the
plaintiff must prove the reasonable certainty of future damages by a fair
preponderance of the evidence." Id. We think the record evidence satisfies these
requirements.

We have carefully reviewed the record (no small task in this case). There most
definitely was evidence that Marvin's profits had suffered since the problems with

-18-
PILT began to surface, and that they likely would remain flat. PPG's quarrel with the
sufficiency of that evidence appears to have its roots in the fact that the evidence
came in largely through the testimony of Marvin senior executives Susan Marvin and
Jake Marvin, who based their testimony on their review of the company's financial
records.9 PPG also complains that the witnesses focused only on selected years,
instead of all years, resulting in skewed calculations of Marvin's projected growth but
for the PILT problems. But PPG had the opportunity to—and did—cross-examine
Marvin's witnesses on these points, using the demonstrative exhibit prepared by
Marvin that noted profits for all the years in question. To the extent that PPG is
challenging the court's admission of the evidence in question, we see no abuse of
discretion. And we think the evidence before the jury proved lost profits, past and
future, and the amounts thereof, with the required degree of certainty. The jury heard
it all and determined an award was in order. We cannot say that no reasonable juror
could have found that Marvin's damages from the failure of PILT to work as
warranted included $52.2 million in past and future lost profits.

V.

PPG contends that Marvin's evidence of breach and causation was not
admissible under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993).
See Kumho Tire Co. v. Carmichael, 526 U.S. 137, 141 (1999) ("We conclude that
Daubert's general holding—setting forth the trial judge's general 'gatekeeping'

9
PPG cites Racicky v. Farmland Industries, Inc., 328 F.3d 389, 397 (8th Cir.
2003), in a letter submitted under Rule 28(j) of the Federal Rules of Appellate
Procedure for the proposition that the award of lost profits was speculative because
it was based only on testimony of the owners and was unsupported by expert
testimony or financial data. PPG is mistaken for at least two reasons. First, the
Racicky Court was interpreting Nebraska law in a tort case, which specifically
requires financial data be admitted in support of a claim for lost profits before such
damages can be awarded. And second, the testimony of Jake and Susan Marvin was
based on financial data.

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obligation—applies not only to [expert] testimony based on 'scientific' knowledge,
but also to [expert] testimony based on 'technical' and 'other specialized' knowledge."
(citing Fed. R. Evid. 702)). According to PPG, the District Court failed in its
gatekeeping role when it allowed testimony regarding the results of statistical studies
that were conducted by one of Marvin's experts, Dr. Frank Martin, which PPG claims
was the only evidence of breach and causation.

PPG's arguments are drawn largely from purported deviations from the Federal
Judicial Center's Reference Manual on Scientific Evidence 2d (2000). It goes without
saying that the Manual does not have the force of law, nor are judges required to
follow it. The reference guides therein, including the one on statistics, "are not
intended to instruct judges concerning what evidence should be admissible or to
establish minimum standards for acceptable scientific testimony." Reference Manual
at vi. We do not review Martin's adherence vel non to the standards recommended
in the guide. Our only question is whether the District Court abused its discretion in
allowing Martin to testify about the results of his studies. Gen. Elec. Co. v. Joiner,
522 U.S. 136, 146 (1997) (standard of review). That is, was the evidence sufficiently
relevant and reliable to be put before the jury. See Kumho Tire, 526 U.S. at 152
("The objective of [Daubert's gatekeeping] requirement is to ensure the reliability and
relevancy of expert testimony.").

Martin was a statistician who was hired by Marvin in 1994 to evaluate the
mounting wood-rot data Marvin was collecting. Over time, he conducted a series of
statistical studies analyzing the information. He was permitted to testify to two
conclusions based on those studies: first, PILT-treated windows did not outlast Penta-
treated windows, and second, the excessive wood-rot problems that Marvin was
experiencing in its products were the result of the failure of PILT as a wood
preservative.

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 PPG challenges Martin's "methodology" and the "reliability" of the studies'
results, invoking these catchwords relating to the admissibility of expert opinion
testimony under Rule 702 of the Federal Rules of Evidence. See, e.g., Bonner v. ISP
Techs., Inc., 259 F.3d 924, 929 (8th Cir. 2001). Specifically, PPG complains that the
studies were done in anticipation of litigation; that data was collected by an employee
of Marvin's legal department who was aware of the purpose of the studies; that the
sample size was too small and the samples were not taken from a representative
geographical cross-section; that "Martin failed to perform elementary tests of
reliability"; and that the studies did not account for factors other than the wood
preservative that could have caused the wood deterioration. Brief of Appellant at 51.
As we see these arguments, PPG's challenge is primarily to the factual basis for
Martin's analysis, not to its evidentiary reliability. Generally, even post-Daubert, "the
factual basis of an expert opinion goes to the credibility of the testimony, not the
admissibility." Bonner, 259 F.3d at 929 (citations to quoted cases omitted). To the
extent PPG's complaints about Martin's studies are well-founded, they go to the
weight to be accorded his opinions by the jury. It was PPG's responsibility at trial,
through careful cross-examination of Martin and direct examination of its own
experts, to alert the jury to the weaknesses in the factual basis of Martin's
opinion—and from our review of the record, PPG attempted to do just that. See
Daubert, 509 U.S. at 596 ("Vigorous cross-examination, presentation of contrary
evidence, and careful instruction on the burden of proof are the traditional and
appropriate means of attacking shaky but admissible evidence."). But the jury
believed Martin and the other Marvin witnesses and it is not for us to second-guess
that reasonable decision.

In sum, we hold that the District Court did not abuse its considerable discretion
in allowing Martin's testimony.

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 VI.

PPG next argues that the jury's decision that Marvin's suit was timely
filed—the statute of limitations issue we mentioned in Part II and footnote 3—was
tainted by the District Court's instruction on equitable estoppel. The jury was
instructed that the statutory period could be "tolled or . . . temporarily suspended" if
Marvin had shown that it reasonably relied on representations made by PPG (such as
a "promise of future action") and that Marvin would be harmed if the statute of
limitations was not tolled. Transcript at 10851. The District Court has broad
discretion in instructing the jury, and absent an abuse of that discretion and an
encroachment upon the substantial rights of PPG, a new trial will not be ordered.
Children's Broad. Corp. v. Walt Disney Co., 357 F.3d 860, 867 (8th Cir. 2004).

We have reviewed the record and conclude that it was not an abuse of
discretion to give the instruction. Although it did not consume many pages of the
voluminous transcript in this case, there was some evidence that PPG early on, when
PILT was suspected as the wood-rot culprit, made representations to Marvin about
making things right. Given the close and long-standing relationship between PPG
and Marvin, and among individual employees of each company, a jury could easily
find that Marvin would rely on those representations.

The District Court did not abuse its discretion in giving the equitable estoppel
instruction.

VII.

Finally, PPG charges that Marvin tried its alleged fraud and general warranty
claims that we dismissed in Marvin I, and the District Court erred in allowing it to do

-22-
so. PPG's argument consists of a laundry list of claims: evidentiary errors,
inflammatory examination of witnesses by Marvin, instructional errors, improper
argument, and sufficiency questions. PPG maintains that the errors require that it be
given a new trial.

We will reverse the District Court's denial of PPG's motion for a new trial only
if the court clearly abused its discretion. Children's Broad. Corp., 357 F.3d at 867.
We decline to enumerate PPG's claims of error and explain for each why PPG is not
entitled to a new trial. Suffice it to say that we have considered each claim of error
and now reject all of them, holding that either the claims were not preserved for
appellate review absent plain error (and there is none), the District Court did not
abuse its discretion in its rulings, or errors the court did make were not prejudicial to
PPG. See, e.g., id. at 864 (noting there must be a clear and prejudicial abuse of
discretion for this Court to grant a new trial based on error in admitting evidence); id.
at 867 (explaining that instructional error must have affected substantial rights to be
reversible); Ratliff v. Schiber Truck Co., 150 F.3d 949, 957 (8th Cir. 1998) (stating
that the district court must have abused its discretion in controlling closing argument
to be reversed on appeal, and that we review only for plain error any issues not
properly preserved).

This was a very long trial, and frankly, we think the District Court on balance
did a fine job of ruling on the potential sources of error. For the asserted errors PPG
pulls together in its sixth and final argument, we have considered each one and see
nothing that requires us to order a new trial.

VIII.

We turn now to Marvin's cross appeal.

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 A.

For its first issue, Marvin contends it was entitled to preverdict interest, as
provided by Minnesota law, on "pecuniary damages" (except awards for future
damages) calculated "from the time of the commencement of the action." Minn. Stat.
§ 549.09 subd. 1(b) (2002); id. subd. 1(b)(2) (noting no preverdict interest is allowed
for "judgments or awards for future damages"). The District Court declined to award
interest from the start of the lawsuit on damage amounts that had not been incurred
at the time the complaint was filed. Marvin contends that the statute is unambiguous
and that the District Court therefore had no choice but to award interest on all
"pecuniary damages" (except awards for future damages) from April 22, 1994, the
date Marvin filed suit, regardless of when the damages were incurred. We review the
District Court's decision on its authority to award damages de novo and any challenge
to the calculation for an abuse of discretion. Children's Broad. Corp., 357 F.3d at
868. We agree with Marvin that the decision here, one interpreting the Minnesota
statute, is reviewed de novo. Because the Minnesota Supreme Court has not decided
the issue before us, we must predict how the state's highest court would rule if faced
with the same question. See Sloan v. Motorists Mut. Ins. Co., 368 F.3d 853, 856 (8th
Cir. 2004).

Because context is critical to our analysis, we set out the applicable statutory
language in its entirety (with a few omissions based on relevance).

Except as otherwise provided by contract or allowed by law,
preverdict . . . interest on pecuniary damages shall be computed as
provided in clause (c) from the time of the commencement of the
action . . . except as provided herein. . . . If either party serves a written
offer of settlement, the other party may serve a written acceptance or a
written counteroffer within 30 days. After that time, interest on the
judgment or award shall be calculated by the judge . . . in the following
manner. The prevailing party shall receive interest on any judgment or
award from the time of commencement of the action . . . , or as to

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 special damages from the time when special damages were incurred,
if later, until the time of verdict . . . only if the amount of its offer is
closer to the judgment . . . than the amount of the opposing party's offer.

Minn. Stat. § 549.09, subd. 1(b) (emphasis added). The statute goes on to explain
how the calculation is made if the losing party's settlement offer was closer to the
judgment.10

Preverdict interest is not conventional "interest" because it cannot be calculated
until after the verdict. Lienhard v. State, 431 N.W.2d 861, 865 (Minn. 1988).
"Rather, it is an element of damages awarded to provide full compensation by
converting time-of-demand . . . damages into time-of-verdict damages." Id. But full
compensation is not the exclusive purpose of preverdict interest in Minnesota. As the
state court of appeals has recognized, in order "to promote settlements," the state
legislature amended the statute in 1984 to omit a previous requirement that damages
be liquidated or readily ascertainable before preverdict interest would accrue.
Skifstrom v. City of Coon Rapids, 524 N.W.2d 294, 297 (Minn. Ct. App. 1994).
Before 1984, "[t]he interest obligation of the common law provided a motivation to
settle with respect to 'ascertainable' damages" but none as to those—such as
unincurred expenses—that were not so readily determined. Id. (explaining legislative
purpose of § 549.09 in applying provision for preverdict interest to damages for pain
and suffering in negligence action). Both purposes are served by starting the clock
running on preverdict interest when suit is filed. The prevailing party is fully
compensated (indeed, more than fully compensated when preverdict interest is
ordered on damages that were not incurred when suit was filed). And the manner of
calculating preverdict interest when settlement offers are made, as set forth in the

10
We express no opinion on whether the damages at issue in this case were
"special" within the meaning of Minnesota law. It is not necessary for us to do so
because there is no indication from the parties that any written settlement offers were
made in this litigation.

-25-
statute, surely should encourage at least good-faith efforts at settlement, especially
when potentially large unincurred special damages may be in play.11

There is a case wherein the Minnesota Court of Appeals has said, "Whether
interest on the judgment accrues from the time the action is commenced or the time
damages were incurred depends upon the nature of the damages." Tyroll v. Private
Label Chems., Inc., 493 N.W.2d 128, 132 (Minn. Ct. App. 1992), rev'd in part on
other grounds, 505 N.W.2d 54 (Minn. 1993). The court went on to quote a part of the
statute as follows: "The prevailing party shall receive interest on any judgment or
award from the time of commencement of the action * * * , or as to special damages
from the time when special damages were incurred, if later, until the time of verdict."
Id. (quoting Minn. Stat. § 549.09, subd. 1(b) (1990)).12 But this quote is out of
context, and the omitted language changes the meaning of the statute altogether. The
reference to interest calculation "when special damages were incurred" applies only
after one or more settlement offers have been made. Minn. Stat. § 549.09, subd. 1(b)
(2000) ("If either party serves a written offer of settlement, the other party may serve
a written acceptance or a written counteroffer within 30 days. After that time,
interest . . . shall be calculated . . . in the following manner."). Reading the statute in
its entirety makes that clear. The statute relieves the losing party, to a degree, from
the obligation to pay preverdict interest on special damages incurred after suit was
filed—that is, such interest does not accrue until special damages are incurred—if,

11
In Minnesota's neighboring state of Iowa, the highest court has held, "We do
not believe the legislature intended to have prejudgment interest assessed on amounts
due on transactions that did not occur until after the litigation commenced." Rowen
v. LeMars Mut. Ins. Co., 347 N.W.2d 630, 641 (Iowa 1984). We do not believe the
Minnesota Supreme Court would follow suit, however, because the Iowa prejudgment
statute at the time made no mention of settlement offers and clearly did not have the
same goal of encouraging settlement as does the Minnesota statute.
12
The 1990 version of § 549.09, subdivision 1(b), has been amended but is the
same in relevant part as the 2002 version.

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and only if, that party has made some legitimate attempt to settle the dispute. While
the statute might not have been artfully drafted, it is not ambiguous in its intention to
allow preverdict interest on all pecuniary damages from the time suit was filed,
assuming no written settlement offers were made in the course of the litigation.

The District Court read "the explicit language of the statute, '[e]xcept as
otherwise provided by contract or allowed by law,' to permit alternative calculations."
Order and Memorandum of June 7, 2002, at 17. The court also cited Minnesota law
that interpreted the 1984 amendments as allowing preverdict "interest in situations
where it was not already provided for by law." Id. (citing Seaway Port Auth. v.
Midland Ins. Co., 430 N.W.2d 242, 252 (Minn. Ct. App. 1988)). The court
recognized § 549.09 as amended in 1984 as expanding a prevailing party's rights to
preverdict interest. Indeed, the statute compels the computation of preverdict interest
from the date suit was filed except as "otherwise . . . allowed by law," not as
otherwise restricted by law. But the court's calculation of such interest on damages
not yet incurred when suit was filed is not true to the Minnesota legislature's intent.
We conclude that the Minnesota Supreme Court would read the plain language of
§ 549.09 and hold that Marvin was entitled to preverdict interest on all pecuniary
damages (except future profits) from the inception of the litigation, regardless of
when the damages were incurred.13

Accordingly, we remand to the District Court for the recalculation of preverdict
interest consistent with this opinion.

13
In its short response to Marvin's argument, PPG argues that awarding
prejudgment interest as Marvin suggests would be illogical, "absurd," and in violation
of Minnesota law on statutory interpretation. Reply Brief of Appellant/Cross
Appellee at 42. The state and federal constitutional arguments put forward by Judge
Beam in his concurring and dissenting opinion never were raised by PPG.

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 B.

In Marvin I, we affirmed the dismissal of Marvin's claims brought under
Minnesota statutory law and held that "[i]n the circumstances of this case, the
Minnesota consumer protection statutes do not apply to a merchant such as Marvin."
223 F.3d at 887. Marvin now says that a case from the Minnesota Supreme Court
decided in January 2001 requires that the claims be reinstated. See Group Health
Plan, Inc. v. Philip Morris, Inc., 621 N.W.2d 2 (Minn. 2001). According to Marvin,
"the jury's verdict establishing PPG's liability for breach of warranty establishes
PPG's liability under Minnesota's consumer protection and anti-fraud statutes." Brief
of Appellee/Cross Appellant at 83.14 Damages would thus be duplicative, but Marvin
contends it is entitled to attorney fees, costs, and expenses under the fee-shifting
provisions of the law, with no further proceedings required. The District Court
denied Marvin's motion to revive the claim before trial. Since Marvin is appealing
the court's interpretation of state law, we review de novo. Salve Regina Coll., 499
U.S. at 231. We will revisit our decision in Marvin I if the intervening decision from
Minnesota's highest court in Group Health "clearly demonstrates the law of the case
is wrong." Madison v. IBP, Inc., 330 F.3d 1051, 1059 (8th Cir. 2003) (quoting
Morris v. Am. Nat'l Can Corp., 988 F.2d 50, 52 (8th Cir. 1993)).

We agree with PPG that Marvin is mistaken on the law. In the first appeal, we
held that Marvin's statutory claims did not survive dismissal because Marvin is a
merchant, not a consumer. In Group Health, no merchants were involved. The
plaintiffs who were seeking to invoke the statutes were HMOs (health maintenance
organizations) that insured consumers of the product in issue (tobacco). "Although
the Minnesota Supreme Court held that a plaintiff need not be a purchaser of the
defendant's product in order to properly plead a claim under the CFA [Minnesota

14
Because it is not necessary for us to do so, we do not decide whether this is
a correct statement of the law.

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Prevention of Consumer Fraud Act], the case involved plaintiffs who were, in effect,
indirect consumers of the defendant's products . . . ." Popp Telecom, Inc. v. Am.
Sharecom, Inc., 361 F.3d 482, 493 n.12 (8th Cir. 2004) (citation omitted). There was
no mention of consumers vis-à-vis merchants in Group Health. The court was
answering the certified question, "[M]ust plaintiffs be purchasers of defendants'
products in order to properly plead a claim under" the provisions in question? Group
Health, 621 N.W.2d at 5. The court answered the question in the negative: "The
HMOs need not be actual purchasers of the tobacco companies' products in order to
properly plead claims under" the statutes. Id. at 11. If the Minnesota Supreme Court
thought we got it wrong in Marvin I, one would expect that the court would have
mentioned it in its opinion in Group Health four months later—the opinion that,
according to Marvin, clearly resolved the question in its favor.

Because Marvin cannot show that the decision in Group Health "clearly
undermines our earlier rulings" on the Minnesota statutory law issues, the law of the
case from Marvin I prevails. Madison, 330 F.3d at 1059. The District Court is
affirmed on this second issue in Marvin's cross appeal.

IX.

The judgment of the District Court is affirmed in part and vacated and reversed
in part. The case is remanded to the District Court for recalculation of damages and
interest in accordance with this opinion.

BEAM, Circuit Judge, concurring and dissenting.

I concur in the court's opinion, except for its conclusion that Marvin is entitled
to preverdict interest on unincurred damages. I very respectfully suggest that a plain
reading of the preverdict interest statute indicates that interest may be assessed on
damages only after they are actually incurred after commencement of the action.

-29-
Accordingly, I dissent on that issue. And, for me this is not just an interesting
analytical exercise. The court's interpretation transfers, according to my calculations,
nearly $14 million of PPG's assets to Marvin simply because PPG had the temerity
to submit an extremely close products liability question to the district court for its
adjudication.

Resolution of the preverdict interest matter turns on the interpretation of
section 549.09 of the Minnesota statutes. Marvin argues that the proper interpretation
is found in the plain language of the statute. I agree. Where I part company with
Marvin and the court is on the issue of what the statute plainly says and how you
properly construe existing Minnesota case law on the subject.

The district court calculated interest on Marvin's out-of-pocket costs, past lost
profits, and third-party litigation costs, declining to assess "interest" for any periods
of time before the damages were actually incurred. I agree with that decision and
would affirm the district court insofar as it assessed interest on damages from the time
they were incurred after commencement of the action.

As the court notes, since the Minnesota Supreme Court has not specifically
decided this issue, it falls to us to predict how that court would interpret the statute.
In so doing, we are bound by Minnesota's rules of statutory interpretation. See
Gershman v. Am. Cas. Co. of Reading, PA, 251 F.3d 1159, 1162 (8th Cir. 2001). "If
statutory language is plain and unambiguous, the court must look only to the plain
meaning of the statutory language." Boutin v. LaFleur, 591 N.W.2d 711, 715 (Minn.
1999). "Words and phrases are to be given their ordinary meaning." State v. Larivee,
656 N.W.2d 226, 229 (Minn. 2003), cert. denied, 540 U.S. 812 (2003); see also Minn.
Stat. § 645.08 (providing, as a canon of statutory construction, that words are to be
construed "according to their common and approved usage"). The statute provides
that preverdict interest on pecuniary damages is to be computed from the time of

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commencement of the action.15 There is nothing ambiguous about the words of the
statute, so I believe the Minnesota Supreme Court would simply apply their ordinary
meaning.

The ordinary meaning of the statute's reference to "pecuniary damages" has
been clearly addressed by Minnesota courts. They are damages that are "'[m]onetary;
relating to money; financial; consisting of money or that which can be valued in
money.'" Skifstrom v. City of Coon Rapids, 524 N.W.2d 294, 295 (Minn. Ct. App.
1994) (quoting Black's Law Dictionary 1131 (6th ed. 1990)). The money damages
Marvin seeks, no matter when they were incurred, are, of course, "pecuniary."

What must be considered, however, is that section 549.09 is an interest statute.
Interest is "a sum paid or charged for the use of money or for borrowing money." The
Random House Dictionary of the English Language 993 (2d ed. 1987) (emphasis
added). Minnesota courts that have examined section 549.09 are in accord. "[P]re-
verdict interest is compensation 'allowed by law as additional damages for loss of use
of the money due as damages.'" Lienhard v. State, 431 N.W.2d 861, 865 (Minn.
1988) (quoting C. McCormick, Law of Damages § 50, at 205 (1935)) (emphasis
added). Clearly, for PPG to have deprived Marvin of its use of the monies included
in the damages award, Marvin must have been entitled to those funds. Marvin was
simply not entitled to those amounts until it incurred damages for which it could hold
PPG responsible. Before damages are incurred, they are only hypothetical, and I can
find no instance of Minnesota law directing that "interest" be assessed on
hypothetical damages. And to interpret section 549.09 to direct otherwise is to flout
Minnesota rules of statutory interpretation. "In ascertaining the intention of the
legislature the courts may be guided by the following presumptions: (1) The
legislature does not intend a result that is absurd, impossible of execution, or

15
Special provisions for calculating interest apply where there have been
written offers of settlement. Since there is no indication from the parties that any
written offers were made in this case, those provisions are not useable.

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unreasonable." Minn. Stat. § 645.17(1). Charging interest on possible damages for
a period of time before they even exist is, at best, unreasonable.

It is true that in Lienhard, the court declared that, in Minnesota, "pre-verdict
interest is not conventional interest on a sum of money." 431 N.W.2d at 865. But the
court explained that this is so only in the sense that "such 'interest' cannot be
calculated until the amount on which interest is allowed has been fixed by verdict."
Id. (emphasis added). Thus, the court in Lienhard recognized that preverdict interest
in Minnesota was unique not because it can be applied to unincurred damages, but
because it can be applied to damages that have indeed been incurred, but remain
unascertained in amount until a jury sets the sum.

The court correctly notes that under Minnesota law, section 549.09 serves two
purposes: "(1) to compensate prevailing parties for the true cost of money damages
incurred, and (2) to promote settlements when liability and damage amounts are fairly
certain and deter attempts to benefit unfairly from delays inherent in litigation." Solid
Gold Realty, Inc. v. Mondry, 399 N.W.2d 681, 683 (Minn. Ct. App. 1987). But
today's decision by the court is not true to the first purpose, and unnecessary for the
second.

As to the first purpose, to award Marvin preverdict "interest" on unincurred
damages does not compensate Marvin "for the true cost of money damages incurred."
Id. (emphasis added). Rather, as the court concedes, Marvin is overcompensated, by
an amount that does not represent any use or deprivation of money.

The second purpose is fully addressed by allowing interest to accrue on
damages from the time they are incurred. All that remains under that scenario is an
ultimate determination of amount. Interest assessed against this currently unknown
and uncertain but ultimately ascertainable element is and will always be a persuasive
factor in the calculus of whether a party wishes to proceed to trial. Thus, I am left

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with no reason to believe that my view of the plain meaning of the statute diminishes
its power to promote early settlement.

The court references Skifstrom to note that the 1984 amendments to section
549.09 were intended to motivate settlement even where the amount of damages was
unascertained. But the damages with which the court in Skifstrom dealt were not
unincurred; they were merely unascertained–that is, incurred, but not yet quantified.
"The interest obligation of the common law provided a motivation to settle with
respect to 'ascertainable' damages, but not as to general damages for pain and
suffering . . . ." 524 N.W.2d at 297 (emphasis added). Pain and suffering damages
are those that have certainly been incurred as a part of the central claim in a case, but
are not quantified until a jury determines their worth. It is that aspect of
"unascertained" to which the court in Skifstrom was referring, and including
unincurred damages under that case's rationale, as the court does here, does not fit
within the plain words of the statutory language.

Indeed, the court's interpretation of section 549.09 exceeds what is necessary
to encourage settlement. The resulting "surcharge" operates either to punish
unsuccessful litigants for having resorted to the courts, or to charge them for use of
the courts in order to discourage litigation. Either result, of course, raises problems
under both the Minnesota and United States Constitutions. In Harrison v. Springdale
Water & Sewer Commission, 780 F.2d 1422 (8th Cir. 1986), we stated that

An individual's constitutional right of access to the courts 'cannot be
impaired, either directly . . . or indirectly, by threatening or harassing an
[individual] in retaliation for filing [or defending] lawsuits. . . . [S]tate
officials may not take retaliatory action against an individual designed
either to punish him for having exercised his constitutional right to seek
judicial relief or to intimidate or chill his exercise of that right in the
future.

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Id. at 1427-28 (first and second alterations in original) (emphasis added). Since
Minnesota case law commands that its courts "interpret statutes in a way that avoids
constitutional problems," Hince v. O'Keefe, 632 N.W.2d 577, 582 (Minn. 2001), it
is difficult to believe that the Minnesota Supreme Court would interpret section
549.09 in a way that raises these very serious concerns.

The Minnesota constitution guarantees that "[e]very person is entitled to a
certain remedy in the laws for all injuries or wrongs which he may receive to his
person, property or character, and to obtain justice freely and without purchase,
completely and without denial, promptly and without delay, conformable to the laws."
Minn. Const. art. 1, § 8 (emphasis added). The First Amendment to the United States
Constitution also guarantees access to the courts. "'The right of petition is one of the
freedoms protected by the Bill of Rights.'" Cal. Motor Transp. Co. v. Trucking
Unlimited, 404 U.S. 508, 510 (1972) (quoting E. R.R. Presidents Conference v. Noerr
Motor Freight, 365 U.S. 127, 138 (1961)). "The right of access to the courts is indeed
but one aspect of the right of petition." Id. "[T]he right to petition is 'among the most
precious of the liberties safeguarded by the Bill of Rights.'" Harrison, 780 F.2d at
1427 (quoting United Mine Workers of America, Dist. 12 v. Ill. State Bar Ass'n, 389
U.S. 217, 222 (1967)). As such, "it has 'a sanctity and a sanction not permitting
dubious intrusions.'" Id. (quoting Thomas v. Collins, 323 U.S. 516, 530 (1945)).
"'[A]ccess to the courts is a fundamental right of every citizen.'" Id. (quoting Inmates
of the Neb. Penal and Corr. Complex v. Greenholtz, 436 F. Supp. 432 (D. Neb.
1976)).

The court's interpretation of the statute also implicates the Fifth Amendment
Takings Clause. Absent any purpose of punishment for bringing a case or charging
for the use of the courts, this surcharge is purely a government-enforced transfer of
property (in this case, money) from one private party to another without any lawful
basis for doing so. "The Fifth Amendment's Takings Clause prevents the Legislature
(and other government actors) from depriving private persons of vested property

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rights except for a 'public use' and upon payment of 'just compensation.'" Lynce v.
Mathis, 519 U.S. 433, 440 n.12 (1997) (quoting Landgraf v. USI Film Prods., 511
U.S. 244, 266 (1994)). "It applies to the States as well as the Federal Government."
Brown v. Legal Found. of Wash., 538 U.S. 216, 232 n.6 (2003). And "one person's
property may not be taken for the benefit of another private person without a
justifying public purpose, even though compensation be paid." Thompson v. Consol.
Utils. Gas Corp., 300 U.S. 55, 80 (1937). Charging interest for damages that do not
exist cannot be justified as either a public purpose or a valid private purpose
enforceable through government action, here the United States Courts.

"We interpret statutes to avoid serious constitutional problems, so long as the
statutory language is fairly susceptible to a constitutional construction." Planned
Parenthood of Mid-Missouri and E. Kan., Inc. v. Dempsey, 167 F.3d 458, 463 (8th
Cir. 1999). The "constitutional construction" of which this statute is "fairly
susceptible" allows preverdict interest to be assessed on damages only from the time
they are incurred, not earlier.

Based on a plain reading of section 549.09 of the Minnesota statutes,
Minnesota's rules of statutory construction, Minnesota preverdict interest case law,
and potential constitutional problems, I believe the correct pre-verdict interest
calculation assesses interest from the time the damage is incurred after
commencement of the action. This comports with the statute's dual purpose while
avoiding constitutional infirmity. It is for these reasons that I would affirm the
district court insofar as it assessed preverdict interest in this manner, and therefore
must respectfully dissent from today's decision by the court on that particular matter.
I concur in all other respects.

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BYE, Circuit Judge, concurring in part and dissenting in part.

I concur in the Court's opinion with the exception of Section IV(A), which
eliminates the jury's finding and award of $30 million for lost goodwill. The Court
vacates the award for such damages after concluding Marvin failed to quantify
adequately the precise amount of its lost goodwill. I believe Marvin adequately
proved this separate element while presenting its evidence on the damages sustained
and would therefore affirm the award to include the loss of goodwill as determined
by the jury, thus reflecting a basic human tendency to do business with a merchant
who takes pride in its business reputation and who offers products of the type and
quality which the customer desires and expects, and of a type which is separate and
distinct from all other categories of business damages.

"Reputational damages are often difficult to quantify." Porous Media Corp. v.
Pall Corp., 173 F.3d 1109, 1122 n.12 (8th Cir. 1999). As a result, a plaintiff alleging
lost goodwill "need not prove such damages with exacting precision." Id. I believe
the quality and quantity of evidence presented by Marvin in this extensive case was
similar in nature to the quality and quantity of evidence found sufficient to support
the jury's award in Porous Media, see id. at 1122 (summarizing evidence of the loss
of, and difficulty with, customers similar to the evidence presented by Marvin), with
one exception. In Porous Media, a witness quantified the loss of goodwill by giving
the jury a general estimate of the amount, "between $5 million and $10 million." Id.
Here, while Marvin presented persuasive and compelling evidence of substantial lost
goodwill, no expert witness was specifically asked to gauge the amount.

Marvin's evidence was, however, clearly sufficient to prove a loss of goodwill.
The company’s principal officers established the importance of the company’s well-
deserved reputation for manufacturing premium, high-quality products spanning a
time period of several decades. For example, Susan Marvin testified "[w]hen [our
customers] purchase Marvin, they purchase what they believe to be [] a premium

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product. It's advertised as best of quality. It's made to be best of quality [and] they
have said, my home is important to me. I'm going to put the best in it." App. 838-39.
Jake Marvin testified to Marvin's product as being a "high-end window" and a
"premium product" frequently specified by architects for both new home construction
as well as the replacement segment of their window business. App. 956. The jury
repeatedly heard about how important it was to Marvin's business plan, reputation,
and success in the industry to stand behind all of its products, App. 516, 854, 602,
a reputation which was confirmed by Marvin's competitors, App. 498.

In addition, the jury heard detailed accounts of the problems Marvin
encountered with its customers and the damage to its goodwill caused by the PILT
problems, as summarized by the Court at pages 16-17 of its opinion. The Court while
not specifically alluding to it does describe how the jury learned about the PILT
problems and the direct effects on Marvin's cash reserves. In 1994, prior to the worst
of the PILT problem, Marvin’s financial statements revealed cash and securities
reserves in the amount of $75,880,369. App. 1320. By 1998, at the height of the
PILT problem, Marvin's cash and security reserves had shrunk by over $40 million
to $34,989,949. Id. Marvin also presented evidence as to how this severe downturn
in its cash reserves negatively impacted upon and affected its ability to obtain
adequate financing so as to continue its detailed plan for complete business
remediation. When Marvin approached a bank with a loan request of $125 million,
the bank responded with only an offer of a $35 million loan. App. 979-81. It is upon
such a basis and record as found here whereby lost goodwill, also known as
reputational damages, are most often proved.

As stated previously, this court has already recognized that "[r]eputational
damages are often difficult to quantify." Porous Media Corp. v. Pall Corp., 173 F.3d
1109, 1122 n.12 (8th Cir. 1999). As a result, a plaintiff alleging lost goodwill "need
not prove such damages with exacting precision." Id. I believe the strength of
evidence presented by Marvin in this case was equal to or exceeded the type of

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evidence found sufficient to support the jury's award in Porous Media. See id. at
1122 (summarizing the evidence presented by the plaintiff to support an award of
damages based on lost goodwill).

This court is in a far less favorable position than is either the district court, or
more to the point, its petit jury, in the determination and/or adequacy of lost goodwill
damages. Here, I would sustain the damages as found and determined by the jury,
which were left intact by the district court as an important, distinct, necessary, and
separate component of Marvin’s overall business damage and loss as established
during the jury trial. I would therefore affirm the jury’s damage award in every
respect.
_____________________________

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