Continental Vineyard LLC v. Randy Dzierzawski ( 2020 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
Nos. 19-2089 & 19-2173
CONTINENTAL VINEYARD, LLC, and INDECK-PASO ROBLES LLC,
Plaintiffs-Appellants, Cross-Appellees,
v.
VINIFERA WINE CO., LLC, and RANDY DZIERZAWSKI,
Defendants-Appellees, Cross-Appellants.
____________________
Appeals from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 12 C 3375 — Thomas M. Durkin, Judge.
____________________
ARGUED JUNE 1, 2020 — DECIDED SEPTEMBER 2, 2020
____________________
Before RIPPLE, WOOD, and SCUDDER, Circuit Judges.
WOOD, Circuit Judge. This case pits two wine enterprises
against one another. In one corner, we have Gerald Forsythe,
who formed Indeck-Paso Robles, LLC (“Indeck”) for the pur-
pose of creating and managing a wine-grape vineyard. In the
other, we have Randy Dzierzawski, who started out as For-
sythe’s business associate and vice-president and later
branched out on his own. In time, Forsythe became convinced
2 Nos. 19-2089 & 19-2173
that Dzierzawski and his company stole valuable business op-
portunities from Forsythe’s operations. Litigation ensued,
with an ultimate outcome largely favoring Dzierzawski, but
also giving Forsythe’s company $285,731 as disgorgement.
Forsythe and his related companies have appealed from
the judgment in favor of the Dzierzawski parties, largely on
the ground of allegedly fatal inconsistencies in the jury’s ver-
dict. Dzierzawski has cross-appealed from the disgorgement
order. Forsythe argues that Dzierzawski stole a corporate op-
portunity from his company, but we agree with the district
court that the evidence does not support such a finding. As
for the verdicts, we are left to make the best of a bad thing.
They are hard to reconcile at first glance, but neither party
made any objection until several weeks after the jury was dis-
banded. Without such a contemporaneous objection, the court
was left on its own. It resolved the uncertainties in a way that
respected what the jury said. Finally, with respect to the cross-
appeal, we see no reversible error in the disgorgement order.
Although the case is something of a procedural mess, we con-
clude in the final analysis that the judgment of the district
court should be affirmed.
I
We begin with a closer look at the events leading up to this
litigation, as the issues on appeal are largely factual. In 2006,
Indeck purchased Shimmin Canyon Vineyard in Paso Robles,
California. Forsythe later established Continental Vineyard,
LLC (“Continental”), as a wholly-owned subsidiary of In-
deck, for the purpose of operating Shimmin Canyon. Forsythe
appointed himself chairman and CEO and named Dzier-
zawski president. In that capacity, Dzierzawski was in charge
of all of Continental’s day-to-day operations.
Nos. 19-2089 & 19-2173 3
At first, Forsythe and Dzierzawski wanted Continental to
operate Shimmin Canyon exclusively as a grape-growing en-
terprise. Later, however, they decided to get into the business
of winemaking. Continental’s first step was to hire Chris
Cameron, an experienced vintner, as Director of Winemaking.
In 2010, Cameron and Dzierzawski, on behalf of Continen-
tal, met with Mark Esterman, a wine buyer for the Meijer gro-
cery store chain, to discuss developing custom wine for the
store. This was an ambitious plan: fulfilling Meijer’s need
would have required Continental to purchase wine from
other suppliers, because Shimmin Canyon’s crop was too
small and did not include all the right varieties for Meijer’s
desired wines. After the Esterman meeting, Dzierzawski in-
formed Forsythe about the Meijer opportunity. Forsythe was
uninterested; he stated that Shimmin Canyon was already a
money-loser and that he did not want to invest additional
capital into buying “juice” from other suppliers. A week or
two later, Dzierzawski again urged Forsythe to pursue the
Meijer opportunity, but Forsythe again declined.
Only then did Dzierzawski decide to take matters into his
own hands. Along with Cameron, he formed Vinifera Wine
Company (“Vinifera”) and, working with Meijer, he obtained
his wines (Zinfandel and Moscato) from third parties. In time,
Vinifera began to source some of its wine from Continental. It
paid Continental to bottle, store, and ship wine under Vinif-
era’s label. Continental also worked with at least two other
companies. Cameron provided some winemaking services to
these companies, but he worked primarily for Vinifera. His
services to Vinifera were extensive, and he became concerned
that Vinifera was not compensating Continental properly for
the use of its resources.
4 Nos. 19-2089 & 19-2173
At trial, Cameron testified that Dzierzawski concealed the
extent of Vinifera’s operations from Forsythe during this pe-
riod. In addition, Cameron accused Dzierzawski of using his
position as Continental’s president to sell the same wine un-
der both the Continental and Vinifera labels and to assign
lower prices to the Vinifera wines, thereby siphoning sales
away from Continental. Cameron also reported that Dzier-
zawski instructed Continental employees to enter these iden-
tical wines in the same wine contests to enhance the reputa-
tion and market share of the cheaper Vinifera-labelled wines.
In 2012, in anticipation of an audit of Continental, Dzier-
zawski disclosed the scope of Vinifera’s operations to For-
sythe. Forsythe responded angrily, stating that he had made
it clear that Continental was not to purchase wine from other
vineyards. He demanded that Dzierzawski shutter operations
at Vinifera. Dzierzawski initially agreed but quickly thought
better of it and resigned from Continental and Indeck. In short
order, Continental and Indeck (to which we refer collectively
as Continental) sued Dzierzawski and Vinifera, alleging that
Dzierzawski had injured them by starting a competing busi-
ness while he was still serving as Continental’s vice president.
II
Continental raised five theories in its complaint against
Dzierzawski and Vinifera: (1) breach of fiduciary duty for fail-
ing to act in good faith; (2) breach of fiduciary duty of loyalty
for self-dealing; (3) unfair competition; (4) unjust enrichment;
and (5) usurpation of a corporate opportunity. The district
court granted summary judgment in favor of the defendants
on the corporate opportunity theory but allowed the other
four counts to proceed to trial. A jury found the defendants
liable on the unfair competition contention, but it ruled in
Nos. 19-2089 & 19-2173 5
their favor on the other three theories. But its verdict with re-
spect to unfair competition was opaque: despite rendering a
verdict seemingly in Continental’s favor, the jury left the
damages section on the verdict form blank. After the jury re-
turned its verdict, the court suggested that it should poll the
jury members individually to ensure that the blank damages
section indicated that they intended to award no damages.
Counsel agreed, and so the court polled the jurors, who unan-
imously responded that this was, in fact, their intention.
Continental did not object to the jury’s verdict at the time
that it came down. Several weeks after the jury was dis-
charged, however, it filed a timely motion for a new trial un-
der Federal Rule of Civil Procedure 59. It argued that the
jury’s verdict was inconsistent in two respects: first, it con-
tended that it is impossible to reconcile the finding that Dzier-
zawski was liable for unfair competition with its verdict that
he was not liable for breach of the fiduciary duty of loyalty;
and second, it argued that the jury’s decision not to award
damages for Continental could not be squared with its finding
that Dzierzawski was liable for unfair competition.
The district court denied the motion for a new trial. It
found that Continental had waived its opportunity to raise
the argument that the jury’s verdict was inconsistent, because
it had failed to make an objection to the jury instructions. See
FED. R. CIV. P. 51. The court did, however, grant Continental’s
request for disgorgement as alternative relief, and ordered
Dzierzawski to pay $285,731 to Continental. The court ob-
served that “the jury’s verdict is merely advisory on the issue
of equitable disgorgement, as it is an equitable remedy to be
imposed by the Court as opposed to the jury.” (internal quo-
tation marks omitted). Continental and Indeck appealed both
6 Nos. 19-2089 & 19-2173
from the denial of their motion for new trial and from the ad-
verse ruling on summary judgment on their claim under the
corporate-opportunity doctrine. Vinifera and Dzierzawski
filed a cross-appeal challenging the disgorgement award.
III
A
Before turning to the main event, we briefly touch on ju-
risdiction and choice of law. Continental filed its complaint in
the Northern District of Illinois; it relied on diversity jurisdic-
tion under 28 U.S.C. § 1332. The two plaintiffs, Continental
Vineyard, LLC and Indeck-Paso Robles LLC, are both Dela-
ware limited-liability companies. Continental’s sole member
is Indeck-Paso Robles LLC, and Indeck’s sole member is In-
deck Energy Services, Inc., an Illinois corporation with its
principal place of business in Illinois. That means that both
Continental and Indeck are Illinois citizens for purposes of
section 1332. Wise v. Wachovia Sec., LLC, 450 F.3d 265, 267 (7th
Cir. 2006). Vinifera is a Michigan limited-liability corporation
whose sole member at the time of suit was Dzierzawski. He is
a citizen of Michigan. Finally, the amount in controversy ex-
ceeds $75,000 (by a comfortable margin).
Personal jurisdiction is a bit of a puzzle, but the time for
making an objection passed and it is now too late to raise one.
See FED. R. CIV. P. 12(b)(2), (h)(1). Continental chose the Illi-
nois forum and contended that Illinois’s courts have specific
personal jurisdiction over Vinifera and Dzierzawski based on
Vinifera’s sale of wine in Illinois and the harms Continental
suffered in that state because of those sales. Given the waiver
of this point, we make no comment on the adequacy of these
Nos. 19-2089 & 19-2173 7
allegations under cases such as Walden v. Fiore, 571 U.S. 277(2014).
The choice-of-law principles of the forum state, Illinois,
govern here. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S.
487, 496 (1941). The parties agree that Illinois directs us to the
laws of Michigan and Delaware.
B
1
Moving on to the heart of the appeal, we begin with the
district court’s handling of Continental’s motion for a new
trial. We need to clear away some underbrush before we
tackle that issue head-on. As we noted earlier, Continental as-
serted that a new trial was necessary because of inconsisten-
cies in the jury’s verdict, which took the form of a general ver-
dict with answers to written questions, as contemplated by
Federal Rule of Civil Procedure 49(b).
The district court, in an order issued December 12, 2018,
concluded that the jury had returned irreconcilably incon-
sistent verdicts when it found Dzierzawski liable for unfair
competition, implying that he injured the plaintiffs, yet at the
same time it exonerated him on the charge that he owed and
breached a fiduciary duty to Continental “and/or” Indeck.
Faced with this conflict, it turned to the question whether
Continental waived the inconsistency argument “by failing to
raise it at the instruction conference or immediately after the
jury’s verdict,” as required by Rule 51. In this connection, it
noted that three circuits take the position that a failure to raise
this type of argument before the jury is discharged leads to
waiver. See Kosmynka v. Polaris Indus., Inc., 462 F.3d 74, 83 (2d
Cir. 2006); Oja v. Howmedica, Inc., 111 F.3d 782, 790 (10th Cir.
8 Nos. 19-2089 & 19-2173
1997); Home Indem. Co. v. Lane Powell Moss & Miller, 43 F.3d
1322, 1331 (9th Cir. 1995). The Seventh Circuit, however, while
acknowledging the value of a waiver rule, see Strauss v.
Stratojac Corp., 810 F.2d 679, 683–84 (7th Cir. 1987) (Rule 49(a)
special verdicts), has never formally adopted this position for
general verdicts under Rule 49(b). The district court then
found that Continental had waived its objection to the incon-
sistencies among the general verdict answers when it failed to
seek a jury instruction forbidding the jury to return a verdict
in the plaintiffs’ favor on unfair competition while ruling for
the defendants on breach of fiduciary duty. It then ordered
additional briefing on the question whether plaintiffs’ failure
to preserve their objection to the inconsistent verdicts affected
the outcome of the trial.
The court also preliminarily addressed Continental’s other
concern, which was the finding of liability for unfair competi-
tion coupled with a finding of no damages. It ruled that these
two findings were not necessarily inconsistent. Instead, they
might have reflected a failure of proof on Continental’s part.
Continental had introduced evidence of Vinifera’s profits and
Dzierzawski’s share of that pot, but it failed to show how
those profits damaged Continental or Indeck. Before finally
ruling, however, the court also called for further briefing on
this point.
Finally, the court allowed Continental to proceed with its
claim for equitable disgorgement, if further research indi-
cated that Michigan law permits such a remedy.
After the court received the requested supplemental
briefs, it resolved the remaining issues in an order of May 10,
2019. First, it found that the outcome of the trial had not been
affected by the conflict between the unfair-competition and
Nos. 19-2089 & 19-2173 9
breach-of-fiduciary-duty verdicts. Although it had been in-
clined otherwise in the December 12 order, it stated that its
earlier “reasoning failed to account for the fact that Plaintiffs
brought unjust enrichment as a stand-alone claim, and the
jury issued a separate verdict in Defendants’ favor on unjust
enrichment.” There was no material difference, the court
found, “between the jury’s consideration of the unjust enrich-
ment instruction and the damages the jury would have con-
sidered if it had reached damages under the instruction for
breach of fiduciary duty.” The court also declined to revisit its
conclusion that plaintiffs waived any inconsistency argument
when they failed to object to the jury instructions.
Looking at the zero-damage award on the unfair-competi-
tion count, the court found support in the record for this out-
come in the defendants’ expert’s report, which pointed out
that Vinifera provided considerable benefits to Continental,
even while it was engaged in the objectionable operations.
Last, noting that the jury’s verdict was only advisory with re-
spect to the equitable disgorgement issue, the court found it
appropriate to follow the Restatement (Third) of Unfair Com-
petition § 37 (Am. Law Inst. 1995), which permits disgorge-
ment of net profits, when ascertaining the probable content of
Michigan law. Examining the evidence and excluding sales
that were unaffected by the unfair competition, the court
awarded a total of $285,731 as net profits that Vinifera and
Dzierzawski had to return to Continental and Indeck.
2
Continental first attacks the district court’s finding that it
waived its objection to the inconsistent verdicts, relying on
three cases from this court: Gordon v. Degelmann, 29 F.3d 295(7th Cir. 1994); Timm v. Progressive Steel Treating, Inc., 137 F.3d
10 Nos. 19-2089 & 19-2173
1008 (7th Cir. 1998); and Turyna v. Martam Construction Com-
pany, Inc., 83 F.3d 178 (7th Cir. 1996). None of those, however,
is directly on point, nor for that matter is Rule 51. We begin
with the question of the time when an objection to incon-
sistent verdicts should be made, and we then turn to the de-
tails of this case.
In Gordon, a jury found a municipality liable under state
law, but it absolved an individual defendant. The parties filed
no contemporaneous objections, but the district court granted
judgment as a matter of law to the municipality on the ground
that vicarious liability required primary liability. With respect
to the inconsistent verdicts, we wrote: “If the problem is not
caught before the jury disbands (and no one noticed this con-
flict until post-trial motions), the proper thing to do is to hold
a new trial with respect to all affected parties.” 29 F.3d at 298–
99. We ultimately upheld the district court’s grant of judg-
ment as a matter of law on other grounds.
Gordon differs from the present case, however, in that it
concerns inconsistent verdicts for multiple defendants. The
jury’s verdict was irreconcilably inconsistent, because resolv-
ing the inconsistency would have required either imposing li-
ability on a defendant the jury had absolved or freeing a de-
fendant from liability in the face of the jury’s finding to the
contrary—and as we said, “there is no priority among incon-
sistent verdicts.” Id. at 298.
Pertinent differences also exist between our case and
Timm. There, we commented in dicta that “[a] judge cannot
treat one verdict … as the jury’s ‘true’ disposition to which the
other verdict must be conformed … If inconsistency escapes
notice until after the jury has disbanded, the proper thing to
do is to hold a new trial.” 137 F.3d at 1010. In Timm, however,
Nos. 19-2089 & 19-2173 11
we ultimately found that an award of punitive damages was
not inconsistent with a lack of compensatory damages, and so
no new trial was needed.
Turyna is also distinguishable in several pertinent respects.
The district judge there asked the lawyers to stay within five
minutes of the courtroom while the jury deliberated, because
he “hated to have the jury wait once it was ready with a ver-
dict.” 83 F.3d at 180. The jury thus came back to an empty
room: defense counsel waived his right to be present while
the verdict was read, and plaintiff’s counsel was absent for
unknown reasons. Thus, “no one with any incentive to take
action was present” when the jury returned its verdict. Id. Un-
fortunately, the jury returned a hopelessly muddled verdict
that this court determined could not be salvaged. We did not
address waiver because the jury verdict was so inconsistent
that only a new trial could fix it.
That leaves the question what to do when a litigant fails to
object to an apparently inconsistent general verdict with writ-
ten questions before the jury disbands. We flagged this issue
but did not resolve it in Fox v. Hayes, 600 F.3d 819, 844 (7th Cir.
2010), and as we noted earlier, three of our sister circuits fol-
low the rule that the failure to lodge a contemporaneous ob-
jection to an inconsistent verdict constitutes a waiver. See
Kosmynka (2d Cir.); Oja (10th Cir.); and Home Indem. Co. (9th
Cir.).
We find the reasoning of our sister circuits to be sound,
and thus now adopt the position that a party wishing to chal-
lenge a jury’s general verdict on the ground of inconsistent
verdicts must normally make a contemporaneous objection
before the jury disbands. Without such an objection, the
court’s option to fix the problem by resubmission to the jury
12 Nos. 19-2089 & 19-2173
as contemplated by Rule 49(b)(3)(B), vanishes. Indeed, this is
implicit in Rule 49(b), which strikes us as a better match for
guidance in this situation than Rule 51. But we realize that this
rule will not fit all situations. Two in particular come to mind.
The first, exemplified by our decision in Turyna, arises when
a party had no meaningful opportunity to object to the jury’s
verdict. If there was no way a party reasonably could have
recognized the inconsistency, because counsel was compelled
to be out of the room or otherwise unable to object, then there
is no waiver. The second situation — the one at issue in Gordon
— arises if the jury’s verdict resists all efforts at reconciliation,
such that the grant of a Rule 59 motion for new trial is the only
remedy possible.
Neither of those exceptions to the contemporaneous objec-
tion rule applies here. Continental had ample opportunity to
object to the inconsistent verdict. When the jury announced
its verdict, the court polled each juror individually. The court
also held a sidebar to address the jury’s decision to leave
blank the line for damages attributable to the unfair competi-
tion it had found. With the input of counsel, the court again
polled each jury member to ensure that he or she intended to
award no damages. Each juror stated that this was, in fact, his
or her intent. After that, the jurors left the courtroom but were
instructed to remain in the jury room. The court then asked
the parties if there was anything more they wished to put on
the record, and both parties declined the opportunity.
Continental thus had many opportunities to object to the
verdict. This is not a case like Turyna, where counsel could not
object because of a bizarre confluence of circumstances. Here,
counsel was in the room, understood the situation, and was
expressly invited by the court to raise any concerns.
Nos. 19-2089 & 19-2173 13
Nor does the second exception fit this case. Neither of the
two alleged inconsistencies that Continental invokes is truly
impossible to reconcile, as were the vicarious liability findings
in Gordon. Indeed, though we have proceeded on the assump-
tion that inconsistencies exist, the district court’s own treat-
ment of the case suggests otherwise. A careful look at both the
answers and the record shows that any clumsiness in the
jury’s responses was not so serious as to prevent harmoniza-
tion or to affect anyone’s substantial rights. See FED. R. CIV. P.
61 (“Unless justice requires otherwise, no error … by the court
or a party … is ground for granting a new trial [or] for setting
aside a verdict. … At every stage of the proceeding, the court
must disregard all errors and defects that do not affect any
party’s substantial rights.”).
The alleged inconsistencies stem from the apparent con-
trast between the jury’s findings on Questions 1 and 2 (fiduci-
ary duty of loyalty) and its finding in Question 3 to the effect
that Dzierzawski “engaged in unfair competition with respect
to Continental Vineyards, LLC and/or Indeck-Paso Robles,
LLC,” though he did not do so through fraud, with willful or
reckless disregard of the plaintiffs’ rights, or with malicious
intent. Here is how the jury answered Questions 1 and 2:
1a. Have Plaintiffs proven that Randy Dzierzawski
owed a fiduciary duty of loyalty to Continental Vine-
yards, LLC and/or Indeck-Paso Robles, LLC and that
Randy Dzierzawski breached his fiduciary duty of loy-
alty to Continental Vineyards, LLC and/or Indeck-Paso
Robles LLC by failing to act in good faith?
Yes____________ No _____X______
If you answered “Yes” proceed to Question 1b.
14 Nos. 19-2089 & 19-2173
If you answered “No” proceed to Question 2.
2a. Have Plaintiffs proven that Randy Dzierzawski
owed a fiduciary duty of loyalty to Continental Vine-
yards, LLC and/or Indeck-Paso Robles, LLC and that
Randy Dzierzawski engaged in self-dealing by appear-
ing on both sides of any transactions between Vinifera
Wine Co., LLC and Continental Vineyards, LLC
(and/or between Vinifera Wine Co., LLC and Indeck-
Paso Robles, LLC)?
Yes____X______ No _____________
If you answered “Yes” proceed to Question 2b.
If you answered “No” proceed to Question 3.
2b. Has Randy Dzierzawski proven that all self-dealing
transactions with Continental Vineyards, LLC and In-
deck-Paso Robles, LLC were entirely fair?
Yes ____________ No _____X_______
Proceed to Question 2c.
2c. Has Randy Dzierzawski proven that the Acquies-
cence Defense applies to all self-dealing transactions
with Continental Vineyards, LLC and Indeck-Paso Ro-
bles, LLC?
Yes _______X______ No _____________
Proceed to Question 3 [Unfair Competition].
What are we to make of these answers? Unfortunately,
several are not as clear as they might be, because they respond
to compound questions, and so it is difficult to know which
part of the question prompted the jury’s choice. Take
Nos. 19-2089 & 19-2173 15
Question 1a. The jury might have concluded that Dzierzawski
did not owe a fiduciary duty of loyalty to either Continental,
Indeck, or both. That would have supported its “no” answer.
Or the jury might have thought that Dzierzawski did owe a
fiduciary duty to one or both of the plaintiffs, but that he did
not breach any such duty by failing to act in good faith. In
Question 2a, the jury answered the compound question in the
affirmative, thus implicitly finding both that Dzierzawski
owed a fiduciary duty to the plaintiffs and that he engaged in
self-dealing “by appearing on both sides of [a] transaction[].”
The jury then found in Question 2b that Dzierzawski had
failed to prove that all self-dealing transactions were “entirely
fair,” but it concluded in Question 2c that he did show that
the “Acquiescence Defense” applied to all the self-dealing
transactions.
Those findings do not necessarily conflict with the jury’s
reaction to the unfair-competition count. There it found that,
while Dzierzawski did engage in unfair competition with
Continental and Indeck, he did not do so fraudulently, with
willful or reckless disregard of plaintiffs’ rights, or mali-
ciously. (The jury was also asked in Question 8a whether Vi-
nifera engaged in unfair competition with respect to either
plaintiff, but it answered in the negative.)
In Question 4, it found that Dzierzawski had not been un-
justly enriched at Continental’s or Indeck’s expense, and in
Question 9, it made the same finding with respect to Vinifera.
The finding with respect to Dzierzawski can stand as long as
it is correct that acts of unfair competition may not necessarily
inflict damage on the victim, or (as the district court found)
the plaintiffs simply failed to prove the amount of damage
they suffered.
16 Nos. 19-2089 & 19-2173
Even if some residual tension remains among these find-
ings, we agree with the district court that Continental cannot
show that its substantial rights were affected by the court’s
refusal to grant a new trial. A party’s substantial rights are af-
fected only when an error is “of such great magnitude that it
probably changed the outcome of the trial.” Lewis v. City of
Chi. Police Dep’t, 590 F.3d 427, 434 (7th Cir. 2009) (quoting
United States v. Noel, 581 F.3d 490, 499 (7th Cir. 2009). The dis-
trict court offered sound reasons for why Continental’s sub-
stantial rights were not affected by its decision not to start
over again. We describe the district court’s action that way be-
cause, as we already have noted, it was no longer possible for
the judge to instruct the first jury to resolve any possible in-
consistencies, because it had been disbanded. We reiterate
that we do not agree with the district court that the source of
this problem lay in the failure of the jury instructions to warn
against inconsistent verdicts, nor do we see Rule 51 as partic-
ularly helpful here. The problem lay in the use of compound
questions, which ultimately led to confusion when the verdict
was received. The latter confusion should have been ad-
dressed by reference to Rule 49. Once the moment for using
Rule 49 passed, all that was left was a possible motion under
Rule 59(a) for a new trial. Normally, however, it is Rule
49(b)(3)(C) and (4) that govern whether a new trial must be
ordered in this situation.
In addition to the reasons we already have given, there are
other grounds for finding that plaintiffs’ substantial rights
were not affected by the apparent inconsistency in the jury’s
verdicts. The instructions for both breach of fiduciary duty
and unfair competition told the jury that it could award dam-
ages for lost profits. Yet only the instruction for breach of fi-
duciary duty (not the one on unfair competition) directed the
Nos. 19-2089 & 19-2173 17
jury to consider whether Dzierzawski was unjustly enriched
by the breach. The district court also noted that the jury inde-
pendently had considered whether Dzierzawski was unjustly
enriched when in response to Question 4 it found him not li-
able on Continental’s stand-alone unjust-enrichment count.
The jury thus necessarily considered whether unjust enrich-
ment had occurred and determined that it had not. In the fact
of these findings, Continental cannot show that its substantial
rights were affected by the alleged inconsistencies in the jury’s
verdict.
Continental also alleges that it is impossible to reconcile
the jury’s decision to find Dzierzawski liable for unfair com-
petition with its decision to award $0 in damages. Continental
argues that by awarding $0 in damages, the jury necessarily
found that Continental was not injured, making the verdict
irreconcilably inconsistent as a matter of law. See Thomas v.
Stalter, 20 F.3d 298, 303 (7th Cir. 1994) (granting a motion for
a new trial where the jury instructions specifically required
the jury to find damages before it could find liability).
The district court rejected this contention, and so do we.
The damages available for unfair competition are (1) lost prof-
its and (2) expenses incurred. Looking to the defendants’ ex-
pert, the court concluded that there was a sufficient basis for
the jury to find that Continental had lost $0 in profits. The ex-
pert’s report stated that the minimum amount of expenses
that Continental incurred as a result of the defendants’ con-
duct was $5,000. At the same time, there was evidence that
Continental actually profited from Dzierzawski’s conduct.
Continental’s controller testified that Vinifera brokered sales
of Continental wine and that Dzierzawski’s promotion of Vi-
nifera created opportunities for the distribution and sale of
18 Nos. 19-2089 & 19-2173
Continental wines. Further testimony indicated that Conti-
nental may have benefited by as much as $180,000 in sales.
The jury could have concluded that the $5,000 in expenses
that Continental incurred at a minimum was offset by benefits
that Vinifera created for Continental.
Mindful of the great respect owed to jury verdicts, we
agree with the outcome reached by the district court. Alt-
hough the verdicts at first glance appear to be inconsistent, a
closer look shows that they can be reconciled. The jury appar-
ently concluded that, although Dzierzawski through Vinifera
had competed with Continental unfairly, Continental ulti-
mately gained more than it lost from Dzierzawski’s conduct.
That conclusion could have been reinforced by the lack of con-
crete proof of loss from Continental. The jury thus could have
determined that the amount of lost profits was negative; that
is to say, that Continental’s profits grew rather than declined
as a result of Dzierzawski’s conduct. Because the verdicts can
be resolved, the district court was correct to uphold the jury’s
verdict and deny Continental’s motion for a new trial.
IV
Continental and Indeck also ask us to reverse the district
court’s finding that the defendants were entitled to summary
judgment on the claim that Dzierzawski illegally usurped a
corporate opportunity from Forsythe and Continental. Dela-
ware law supplies the rule of decision for this claim. Under
the corporate-opportunity doctrine, the officer of a corpora-
tion may not take a business opportunity for himself if: (1) the
corporation of which he is an officer is financially able to ex-
ploit the opportunity; (2) the opportunity is within the corpo-
ration’s line of business; (3) the corporation has an interest or
expectancy in the opportunity; and (4) by taking the
Nos. 19-2089 & 19-2173 19
opportunity for his own, the corporate fiduciary will thereby
be placed in a position inimical to his duties to the corpora-
tion. Broz v. Cellular Info. Sys., Inc., 673 A.2d 148, 155 (Del.
1996). Under Delaware law, “the determination of [w]hether
or not a director has appropriated for himself something that
in fairness should belong to the corporation is a factual ques-
tion to be decided by reasonable inference from objective
facts.” Id. (internal quotation marks omitted). Delaware also
recognizes a safe harbor, in which a corporate director or of-
ficer may pursue an opportunity otherwise covered by the
primary doctrine if he first presents the opportunity to the
corporation and the corporation declines to pursue it. Id. at
157 (“[P]resenting the opportunity to the board creates a kind
of ‘safe harbor’ for the director, which removes the specter of
a post hoc judicial determination that the director or officer has
improperly usurped a corporate opportunity.”).
The district court held that the Meijer contract qualified as
a corporate opportunity for this purpose, but that Dzier-
zawski took the necessary steps to fall within the safe harbor.
We agree. Dzierzawski approached Forsythe twice with the
opportunity to source wines for Meijer. Both times, Forsythe
explicitly and emphatically declined the opportunity, believ-
ing that the vineyard was already a money-loser. Dzierzawski
thus fulfilled his duty to disclose the opportunity.
Lastly, Continental argues that a corporate officer must
not only disclose the opportunity itself to the corporation; he
must also disclose his intention personally to take advantage
of the opportunity if the corporation turns it down. Because
Dzierzawski did not make the latter disclosure, Continental
contends, he is not eligible for the safe harbor. We are not per-
suaded. First, the weight of authority is not on Continental’s
20 Nos. 19-2089 & 19-2173
side. Continental has mustered in its support only one unre-
ported case from the Delaware Chancery Court. Grove v.
Brown, No. CV 6793-VCG, 2013 WL 4041495 (Del. Ch. Aug. 8,
2013). But even this case does not hold that an officer must
disclose his intention to pursue an opportunity in order to
avail himself of the safe harbor. In Grove, the court found that,
while officers of a home-health agency may have discussed
possible opportunities with their co-officers, they never made
a formal presentation of the opportunity to the corporation.
Because “[p]resenting an opportunity to [their partners was]
not the same as presenting an opportunity to [the corpora-
tion],” the defendants could not avail themselves of the safe
harbor. Id. at *10. Other than Grove, there appears to be noth-
ing in Delaware law supporting the idea that an officer may
not take advantage of the safe harbor of the corporate-oppor-
tunity doctrine unless he discloses both the opportunity and
his intention to pursue it.
The district court correctly granted summary judgment on
this count. Dzierzawski brought the Meijer opportunity to
Forsythe, not once but twice. He was not required to do any-
thing more under standard principles of corporate law.
V
Dzierzawski and Vinifera may have felt that they won the
battles but lost the war: after defeating in one way or the other
Continental’s theories at the jury trial, they found themselves
subject to equitable disgorgement in the amount of more than
$285,000. This is the subject of their cross-appeal. We review
a district court’s grant of equitable relief in the form of dis-
gorgement for abuse of discretion. Fed. Trade Comm’n v. Febre,
128 F.3d 530, 534 (7th Cir. 1997). Once again, the district court
looks to Illinois choice of law rules, see Klaxon. Illinois follows
Nos. 19-2089 & 19-2173 21
the most-significant-contacts approach of the Restatement
(Second) of Conflict of Laws for tort actions. See Wreglesworth
v. Arctco, Inc., 316 Ill. App. 3d 1023, 1031 (2000). For unfair-
competition claims, that approach dictates that “the principal
location of the defendant’s conduct … will usually be given
the greatest weight in determining” controlling state law. Re-
statement (Second) of Conflict of Laws § 145 cmt. F (1971). In
this case, both parties agreed that Michigan was that state, be-
cause Vinifera earned most of its allegedly unjust profits
there.
Dzierzawski offers two reasons why the district court
abused its discretion in granting disgorgement. First, he ar-
gues that Michigan law does not recognize disgorgement as a
remedy for unfair competition. Second, he argues that the dis-
trict court made a commitment not to order disgorgement
when it stated earlier that it planned to handle the equitable
portion of the case strictly according to the determination of
the jury.
It appears that no Michigan appellate court has upheld an
award of disgorgement for unfair competition. In fact, no
Michigan appellate court has ever addressed the issue. In the
absence of guidance from Michigan’s judiciary, the district
court turned to the Restatement (Third) of Unfair Competi-
tion, which states that disgorgement is an appropriate rem-
edy for unfair competition where “the actor engaged in the
conduct with the intention of causing confusion or deception;
and the award of profits is not prohibited by statute and is
otherwise appropriate” based “upon a comparative appraisal
of all the factors of the case.” Id. § 37.
Dzierzawski argues that the district court’s reliance on the
Restatement was misplaced, because no Michigan court has
22 Nos. 19-2089 & 19-2173
ever explicitly adopted section 37. That is not the way things
work, however, when a district court is faced with silence
from the state courts. In such a situation, the district court
must make an educated guess about the likely content of state
law. Here, it made sense to use the Restatement as a guide.
Michigan courts have often relied on the Restatement in ad-
dressing novel issues of unfair competition. See, e.g., Janet
Travis, Inc. v. Preka Holdings, L.L.C., 306 Mich. App. 266, 285–
86 (2014) (relying upon section 21 of the Restatement); Movie
Mania Metro, Inc. v. GZ DVD’s Inc., 306 Mich. App. 594, 611
(2014) (citing section 33 of the Restatement). We cannot say
that the district court abused its discretion in relying upon the
Restatement to establish the content of Michigan’s law.
Dzierzawski next points to an order in which the district
court stated that it would “be bound by [the jury’s] liability
finding across all of Plaintiffs’ claims, whether seeking dam-
ages or equitable relief.” Dzierzawski argues that this state-
ment was binding law of the case and must prevail over any
later decision by the district court about how to calculate
monetary relief. But that makes no sense: of course district
courts have the power to correct their own missteps, as Rule
59 underscores; the only question on appeal is whether the
court landed in the right place. That is why we have held that
the law-of-the-case doctrine does not prevent a district court
from exercising its discretion to reconsider earlier interlocu-
tory orders. Williams v. C.I.R., 1 F.3d 502, 504 (7th Cir. 1993).
In any event, the court’s earlier order is not at odds with
its later disgorgement decision. Although the court did state
that it would be bound by the jury’s liability finding, it also
stated, under a separate heading on “disgorgement,” that
“[d]isgorgement is an equitable remedy to be imposed by the
Nos. 19-2089 & 19-2173 23
Court as opposed to a jury,” and that the court might “order
Dzierzawski to disgorge … money if the Court were to find
that Dzierzawski acquired [it] as a result of his breach of fidu-
ciary duties.” The district court thus never made an unambig-
uous commitment not to award equitable remedies if the jury
found the defendants not liable. We see no abuse of discretion
in the court’s decision to grant disgorgement.
VI
We AFFIRM the decision of the district court.