Hillside Enterprises v. Carlisle Corp. (69 F.3d 1410, 1995)

DIANA E. MURPHY, Circuit Judge.

Hillside Vineyards, Inc. (Hillside) entered into a contract with Continental Carlisle, Inc. (Continental) to manufacture disposable plastic wine glasses for a new product Hillside planned to put on the market. Hillside was disappointed in the way its new business venture developed and sued Continental for breach of contract and misrepresentation. Continental counterclaimed for payment for glasses accepted by Hillside and for interest. The case was tried to a jury which returned verdicts for Hillside in the amount of $465,-000 on its claims and for Continental in the amount of $164,948.17 on its counterclaim. Both parties appeal from the judgment entered by the district court. Hillside seeks a new trial on damages because of what it views as erroneous evidentiary rulings at trial, and Continental seeks entry of judgment in its favor on Hillside’s claims, prejudgment and postjudgment interest, and costs on its counterclaim.

I.

William Murray, president of Hillside, conceived of selling wine in disposable plastic wine glasses with fliptop lids. Murray wanted to market the wine in cardboard carriers containing four glasses. Apparently no one had ever packaged wine in this way, and Murray expected the product to fill a market niche. In order to get the product on the market it was necessary either to modify existing products or to design and manufacture the glass, the carrier, and the lid. Murray chose an existing cap and carrier and found a plastic glass made by Rubbermaid to serve as a model. He could not use that glass, however, because the plastic did not meet government regulations.

Murray approached several companies, including Continental, about manufacturing the glasses. The project presented several unique challenges. First, the glasses needed to be able to form a vacuum seal with the lid. Second, they needed to be made from one of two plastics approved by the Food and Drug Administration for the sale of wine. Murray eventually chose PET plastic, which is clearer than the alternative but is considered difficult to mold, especially using the injection process required by Hillside to provide the necessary thickness in the walls of the glasses. Throughout several months of discussion, Continental expressed some confidence that it would be able to overcome these technical obstacles and meet Hillside’s ambitious production schedule.

On August 18, 1988, Continental and Hillside executed a purchase agreement in which Hillside agreed to purchase not fewer than 100 million glasses over a two-and-one-half year period. Continental was required to pay all development costs for the glasses and “to employ its expertise and best efforts to manufacture said product in such quantities as may be required by Hillside.” On the same day, Hillside submitted its first purchase order for five million glasses. On August 22, 1988, a Continental vice president responded in writing:

We also acknowledge receipt of your Purchase Order #34951 for five million (5,000,-000) PET wine glasses at seventeen cents (17