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All-Tech Telecom, Inc. v. Amway Corp.

United States Court of Appeals for the Seventh Circuit
174 F.3d 862 (1999)


Facts

All-Tech Telecom, Inc. (All-Tech) (plaintiff) contracted with Amway Corp. (defendant) to purchase a large number of TeleCharge phones, which were a new product and service intended for consumers in hotels and restaurants. After facing equipment problems and regulatory hurdles, the TeleCharge program failed, and the phones were withdrawn from the market. All-Tech sued Amway in a Wisconsin federal district court alleging intentional and negligent misrepresentation, promissory estoppel, and breach of warranty. All-Tech claimed that it was induced to enter and stay in the failing venture by Amway’s misrepresentations, including that Amway had thoroughly researched the TeleCharge program, that the service would be the best in the nation, that the service had been approved in all 50 states, that any business phone line could be used with TeleCharge, and that each phone would produce $750 in annual revenue for the distributor. The statements regarding regulatory approval of the service and the compatibility with any business phone line were corrected before All-Tech bought the TeleCharge phones. In addition, some of the statements were made by one of Amway’s distributors at a trade meeting. The district court granted summary judgment for Amway on the claims of intentional and negligent misrepresentation and promissory estoppel. The breach-of-warranty claim was allowed to go to the jury, which found for All-Tech but did not award damages. All-Tech appealed the district court’s grant of summary judgment on the misrepresentation and promissory-estoppel claims to the United States Court of Appeals for the Seventh Circuit.

Rule of Law

Issue

Holding and Reasoning (Posner, C.J.)

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