Teradyne, Inc. v. Teledyne Industries, Inc.

Facts

On July 30, 1976, Plaintiff entered into a contract to sell a T-347A transistor test system (“the T-347A”) to Defendant at a contract price of $94,000 with a $984 discount. Defendant subsequently canceled its order for the T-347A when it was already packed and ready for shipment scheduled to occur two days later. Plaintiff refused to accept Defendant’s cancelation and also refused Defendant’s offer to purchase a $65,000 Field Effects Transistor System (“the FET”) instead of the T-347A. Plaintiff would later sell the T-347A to another purchaser but maintained that as a lost volume seller, had Defendant not canceled its order, it would have been able to fulfill both orders and would have had two sales instead of one. When the case was referred to a special master by the district court, Plaintiff introduced a document called the Inventory Standards Catalog prepared by its officers for tax purposes to argue what its lost profits had been, and what counted as costs saved by the breach. Plaintiff’s witness, the company’s controller, admitted that the tax document did not include as costs saved the labor costs of employees associated with the testing, shipping, installing, servicing, or fulfilling 10-year warranties on the T-347A, nor did it include fringe benefits which amounted to 12% in the case of both included and excluded labor costs. Defendant introduced Plaintiff’s 10K form filed with the SEC to arrive at different lost profits and statement of costs. The master agreed with Plaintiff’s assessment in its report.