Appeal from the Judgments of the United States District Court for the eastern District of Wisconsin, Nos. 82-C-1233, 84-C-337-John W. Reynolds, Judge.
Before CUMMINGS, Chief Judge, BAUER, Circuit Judge, and CAMPBELL, Senior District Judge.*fn*
CAMPBELL, Senior District Judge.
Ginsu Products, Inc. appeals a judgment of the United States District Court for the Eastern District of Wisconsin, Judge John W. Reynolds presiding, holding that a binding long-term exclusive dealings contract between it and the West Bend Company never existed. For the reasons set forth below, we affirm the district court ruling.
West Bend Company is a division of Dart Industries, Inc. located in West Bend, Wisconsin. West Bend manufactures household appliances. Ginsu is a Rhode Island corporation with its principal place of business in Rhode Island. Ginsu advertises unique low-cost household items over television which are available exclusively through Ginsu. The items are offered on a mail order or C.O.D. basis. Ginsu depends on the items it markets as being unique. Otherwise, television viewers would find it easier to buy the item locally.
From August, 1981 to June, 1982 Ginsu and West Bend engaged in continuing negotiations in an attempt to establish a business contract whereby Ginsu would sell low-cost woks*fn1 manufactured by West Bend to the general; public. Despite the fact that several issues were never resolved both parties were optimistic a final resolution of all issues could be reached. Both sides anticipated a public demand for the woks. With this in mind and before all issues were resolved, the parties committed funds on a preliminary basis to ascertain the potential popularity of the wok. For West Bend, this translated into the manufacture of an initial 5,000 woks. In return, Ginsu conducted an advertising "test run" over television.
During the ten-month period from August, 1981--June, 1982 and while the test run was being conducted, an exchange of a series of proposed comprehensive contracts occurred. Several issues remained unresolved as of June, 1982, exclusivity provisions being the primary problem. Finally, on June 17, 1982 West Bend expressed its desire to withdraw from the program. Ginsu objected, claiming a binding contract had been formed via a February 15, 1982 letter (significantly, the only document signed by both parties) (see Appendix A). Ginsu believed the February 15 letter, drafted by West Bend, committed West Bend to produce up to 1,000,000 woks on a long-term basis exclusively designed for Ginsu. West Bend rejected such a contention, stating the letter discussed the exclusivity issue but concluded a need to form a comprehensive, binding contract was necessary in the future. After withdrawing in June, West Bend delivered 19,471 woks to Ginsu. This represented the number of orders Ginsu received from its preliminary television test tun. Ginsu, angered by West Bend's withdrawal, failed to pay in full for the woks delivered. Instead, it filed suit in the United States District Court for the District of Rhode Island claiming breach of a long-term exclusive dealings contract. West Bend commenced the instant action in the United States District Court for the Eastern District of Wisconsin and consolidated with west Bend's Wisconsin action. Judge Reynolds presided over a non-jury trial. He heard testimony from officials from both sides and reviewed documents from the August, 1981--June, 1982 time period. He ruled no binding long-term exclusive dealings contract had been created. He also ordered Ginsu to pay West Bend $75,200.77 in damages resulting from its failure to pay the amount due for the 19,471 woks delivered by West Bend. The district court had jurisdiction over the subject matter of this action pursuant to 26 U.S.C. § 1332. Personal jurisdiction was proper in the Eastern District of Wisconsin since Dart Industries (through West Bend) conducts business in the district and the claims arose in the district. This court has appellate jurisdiction pursuant to 28 U.S.C. § 1291.
In reviewing the lower court ruling we are held to the clearly erroneous standard set forth in Rule 52(a) of the Federal Rules of Civil Procedure. This is because the issue of intent to enter into a contract is deemed to be a question of fact. See, for example, Peninsular Carpets, Inc. v. Bradley Homes, Inc., 58 Wis. 2d 405, 206 N.W.2d 408 (1973). Ginsu argues for a broadening of the clearly erroneous standard of review under the circumstances of this case because the district court relied heavily on documentary evidence and drew inferences from undisputed facts. In advancing this argument Ginsu relies on a line of cases such as Clark v. Universal Builders, Inc., 706 F.2d 204 (7th Cir. 1983) and Yorke v. Iseri Produce Co., 418 F.2d 811 (7th Cir. 1969). These cases followed the general rule enunciated in Mayo v. Pioneer Bank & Trust Co., 297 F.2d 392, 395 (5th Cir. 1961):
"Under Rule 52(a) of the Federal Rules of Civil Procedure . . . the trial judge's findings of fact are conclusive unless clearly erroneous, but when the factual determination is primarily a matter of drawing inferences from undisputed facts or determining their legal implications, appellate review is far broader than where disputed evidence and questions of credibility are involved."
The law of Clark, Yorke and Mayo has recently been rejected by the United States Supreme Court in Anderson v. City of Bessemer City, North Carolina, 470 U.S. 564, 105 S. Ct. 1504, 84 L. Ed. 2d 518 (1985). In Anderson the Supreme Court endorsed a view of the clearly erroneous standard which unmistakably limits appellate review to a very limited scope:
Although the meaning of the phrase "clearly erroneous" is not immediately apparent, . . . The reviewing court oversteps the bounds of its duty under Rule 52 if it undertakes to duplicate the role of the lower court. "In applying the clearly erroneous standard to the findings of a district court sitting without a jury, appellate courts must constantly have in mind that their function is not to decide factual issues de novo." Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 123, 89 S. Ct. 1562, 1576, 23 L. Ed. 2d 129 (1969). If a district court's account of the evidence is plausible in light of the record viewed in its entirety, the court of appeals may not reverse it even though convinced that had it been sitting as the trier of fact, it would have weighed the evidence differently. Where there are two permissible views of the evidence, the fact-finder's choice between them cannot be clearly erroneous. United States v. Yellow Cab Co., 338 U.S. 338, 342, 70 S. Ct. 177, 179, 94 L. Ed. 150 (1949); see also Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 102 S. Ct. 2182, 72 L. Ed. 2d 606 (1982).
This is so even when the district court's findings do not rest on credibility determinations, but are based instead on physical or documentary evidence or inference from other facts. To be sure, various Courts of Appeals have on occasion asserted the theory that an appellate court may exercise de novo review over findings not based on credibility determinations. See, e.g., Orvis v. Higgins, 180 F.2d 537 (CA2 1950); Lydle v. United States, 635 F.2d 763, 765 n.1 (CA6 1981); Swanson v. Baker Industries, Inc., 615 F.2d 479, 483 (CA8 1980). This theory has an impressive genealogy . . ., but it is impossible to trace the theory's lineage back to the text of Rule 52, which states straightforwardly that "findings of fact shall not be set aside unless clearly erroneous." That the Rule goes on to emphasize the special deference to be paid credibility determinations does not alter its clear command: Rule 52 "does not make exceptions or purport to exclude certain categories of factual findings from the obligation of a court of appeals to accept a district court's findings unless clearly erroneous." Pullman-Standard v. Swint, 456 U.S. 273, 287, 102 S. Ct. 1781, 1789, 72 L. Ed. 2d 66.
The rationale for deference to the original finder of fact is not limited to the superiority of the trial judge's position to make determinations of credibility. The trial judge's major role is the determination of fact, and with experience in fulfilling that role comes expertise. Duplication of the trial judge's efforts in the court of appeals would very likely contribute only negligibly to the accuracy of fact determination at a huge cost in diversion of judicial resources. . . As the court has stated in a different context, the trial on the merits should be "the 'main event' . . . rather than a 'tryout on the road.'" Wainwright v. Sykes, 433 U.S. 72, 90, 97 S. Ct. 2497, 2508, 53 L. Ed. 2d 594 (1977). . . This is not to suggest that the trial judge may insulate his findings from review by denominating them credibility determinations, for factors other than demeanor and inflection go into the decision whether or not to believe a witness. Documents or objective evidence may contradict the witness' story; or the story itself may be so internally inconsistent or implausible on its face that a reasonable factfinder would not credit it. Where such factors are present, the court of appeals may well find clear error even in a finding purportedly based on a credibility determination. See , e.g., United States v. United States Gypsum Co., supra, 333 U.S. at 396, 68 S. Ct. at 542. But when a trial judge's finding is based on his decision to credit the testimony of one of two or more witnesses, each of whom has told a coherent and factually plausible story that is not contradicted by extrinsic evidence, that finding, if not internally inconsistent, can virtually never be clear error. Cf. United States v. Aluminum Co. of America, 148 F.2d 416, 433 (CA2 1945); Orvis v. Higgins, supra, at 539-540. Id. at 1511-1513. [Emphasis added.]
This language is quite unambiguous and has been followed swiftly by the federal appellate courts. In Planned Parenthood Association/Chicago Area v. Chicago Transit ...