Gruber v. S-M News Co.
United States District Court for the Southern District of New York
126 F. Supp. 442 (S.D.N.Y. 1954)
Gruber (plaintiff) contracted with S-M News (defendant), which had never sold Christmas cards before, to exclusively sell up to 90,000 Christmas-card sets Gruber manufactured at $0.84 per set; S-M refused to sell any of them, and Gruber eventually sold 40,000 sets himself years later at only $0.06 each. After a first trial ended in dismissal on statute-of-frauds grounds and was reversed on appeal, a second trial produced conflicting testimony over how many sets S-M could realistically have sold, and the court found S-M liable for breach, turning to the question of damages.
Whether a manufacturer whose exclusive dealer breaches the dealership agreement is entitled to damages for expected lost profits or, alternatively, its out-of-pocket expenses.