Jgr, Inc. v. Thomasville Furniture Industries, Inc.

*The Honorable H erman J. W eber, Senior United States District
Judge for the Southern District of Ohio, sitting by designation.
1
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2004 FED App. 0163P (6th Cir.)
File Name: 04a0163p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
JGR, INC.,
Plaintiff-Appellee/
Cross-Appellant,
v.
THOMASVILLE FURNITURE
INDUSTRIES, INC.,
Defendant-Appellant/
Cross-Appellee.
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Nos. 02-3640/3731
Appeal from the United States District Court
for the Northern District of Ohio at Cleveland.
No. 96-01780—Ann Aldrich, District Judge.
Argued: January 29, 2004
Decided and Filed: June 3, 2004
Before: MARTIN and MOORE, Circuit Judges; WEBER,
Senior District Judge.*
2 JGR, Inc. v. Thomasville
Furniture Industries, Inc.
Nos. 02-3640/3731
_________________
COUNSEL
ARGUED: Michelle J. Sheehan, REMINGER &
REMINGER, Cleveland, Ohio, for Appellant. Marvin L.
Karp, ULMER & BERNE, Cleveland, Ohio, for Appellee.
ON BRIEF: Michelle J. Sheehan, Roy A. Hulme,
REMINGER & REMINGER, Cleveland, Ohio, for Appellant.
Marvin L. Karp, ULMER & BERNE, Cleveland, Ohio, for
Appellee.
_________________
OPINION
_________________
BOYCE F. MARTIN, JR., Circuit Judge. In this diversity
breach of contract action, Thomasville Furniture Industries,
Inc. appeals a $1,500,000 judgment in favor of JGR, Inc., and
JGR cross-appeals the denial of pre-judgment interest. We
note at the outset that although it is unclear whether “JGR,
Inc.” is the actual, formal name of the plaintiff company – as
opposed to an abbreviation – we refer to it as such because
the parties have done so. For the reasons discussed below, we
hold that the district court abused its discretion in permitting
a JGR witness to give lay opinion testimony about JGR’s lost
profits and loss of business value, and that the improper
admission of this testimony requires vacature of the damages
award and remand for a new trial solely on the issue of
damages.
I. FACTUAL AND PROCEDURAL BACKGROUND
The contract at issue in this case is a written agreement
called the “Thomasville Furniture Industries, Inc.
‘Thomasville Gallery’ Program” – which we will refer to as
the “Gallery Agreement” – that governs the relationship

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Nos. 02-3640/3731 JGR, Inc. v. Thomasville
Furniture Industries, Inc.
3
between Thomasville, a furniture manufacturer, and furniture
retail establishments that Thomasville approves as
“Thomasville Galleries.” Pursuant to the Gallery Agreement,
Thomasville Galleries were “expected to” abide by certain
rules and requirements, such as maintaining a high quality
store, allowing Thomasville to exercise control over
personnel training, signage and other aspects of the business,
and – most importantly for purposes of this appeal –
displaying Thomasville products in an area that conformed to
detailed specifications. In exchange, Thomasville offered its
Thomasville Galleries assistance with interior design,
advertising and research, as well as a non-exclusive license to
use Thomasville trademarks in connection with product
promotions.
If a retailer wished to be designated a Thomasville Gallery
and agreed to the terms set forth in the Gallery Agreement, its
representative would sign the last page of the program
description and submit it to Thomasville for approval. This
is what Gerald Yosowitz, JGR’s main principal, did on behalf
of JGR in April 1990, and Thomasville approved JGR as a
Thomasville Gallery the following month. The version of the
Gallery Agreement that was in effect at that time provided,
among other things, as follows:
2. Expectations of Retailers. Retailers designated as
Thomasville Galleries will be expected to:
(a) Set aside a physically separate and distinct area of
its selling floor space with a minimum of 5,000
square feet for the sole and exclusive purpose and
function of arranging, selling, and displaying
Thomasville furniture products, including both
Thomasville wood furniture and Thomasville
upholstery.
On September 15, 1990, JGR opened a furniture store in
Mentor, Ohio, called “Gerald’s,” with a 5,000-square foot
4 JGR, Inc. v. Thomasville
Furniture Industries, Inc.
Nos. 02-3640/3731
1Prior to forming the JGR business, Yosowitz worked with Baker at
Furniture Land. According to Yosowitz, his relationship with Baker
deteriorated following his departure from Furniture Land.
display area devoted solely to Thomasville products, as
specified in the 1990 Gallery Agreement. Gerald’s was
located across the street from another furniture store, called
“Furniture Land,” which was owned and operated by an
individual named Mike Baker.1 Despite a promising
beginning, Gerald’s eventually began to lose money and JGR
became unable to pay Thomasville for the products that it
purchased for its Gerald’s store. Thomasville provided credit
counseling services to JGR, but was forced to begin holding
orders until JGR could pay for them.
In March 1992, Thomasville revised its Gallery Agreement.
The most significant change, for purposes of this case, was
the addition of an “expectation” that Thomasville Galleries
would “[d]isplay Thomasville product covering at least 7,500
sq. ft. of selling floor space of which a physically separate and
distinct area of no less than 5,000 sq. ft. (the “Gallery”) is set
aside for the sole and exclusive purpose and function of
arranging, selling, and displaying Thomasville wood,
upholstery, and other Thomasville home furnishings
products.” (Emphasis added.) A March 10, 1992, letter
written by Thomasville Vice President Daniel Grow
highlights this change and states that Thomasville Galleries
“should establish a plan to be at this new minimum square
footage level of 7,500 sq. ft. by January 1, 1993. Any new
Galleries will be at the 7,500 sq. ft. level when they open.”
Yosowitz, on behalf of JGR, signed and returned the
revised Gallery Agreement to Thomasville with handwritten
notes on the back. These notes state, in relevant part:
. . . I sign this agreement under the condition that all
other Thomasville dealers in my marketing area are held

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Furniture Industries, Inc.
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to the same conditions . . . . If I correctly understand the
letter from Dan Grow (dated 3/10/92) which spells out
Thomasville’s new guidelines (including square footage
requirements) all Thomasville dealers existing or new
will be held to the same requirements. If this is in fact
the case my concearns [sic] have been addressed . . . .
In a letter dated August 4, William Carrico, also a
Thomasville Vice President, acknowledged Yosowitz’s notes
and stated that Thomasville would “review the matter by
July 1, 1993,” after letting “matters settle out.”
In the meantime, in the fall of 1992 Thomasville negotiated
with Furniture Land, JGR’s competitor, a different marketing
agreement, called the “Thomasville Home Furnishings Store
Agreement.” Pursuant to this agreement, the name of the
Furniture Land chain would be changed to “Baker’s” and the
chain would carry the Thomasville line in seven stores,
including the one across the street from Gerald’s, as well as
in a brand new 10,000 square foot store devoted solely to
Thomasville products. In November 1992, pursuant to the
Home Furnishings Agreement, Furniture Land changed the
name of all its stores in the Cleveland area to “Baker’s” and
kicked off a “grand re-opening” of the store across the street
from Gerald’s. Baker’s advertised this grand opening with a
circular featuring its new “Thomasville Gallery” line of
furniture. JGR alleges that Baker’s displayed only a few
isolated pieces of Thomasville furniture at its grand opening.
According to JGR, Baker’s employees urged its customers to
view the entire line of Thomasville furniture at Gerald’s, but
to purchase the items at Baker’s. Baker’s customers allegedly
were handed cards that stated: “Go to Gerald’s. Bring back
a price and we’ll beat it by five percent.”
The day after the Baker’s grand opening, in light of JGR’s
mounting financial problems and debts, Thomasville placed
JGR’s credit on hold and refused to process or ship any orders
from Gerald’s until JGR sent full payment for those orders.
6 JGR, Inc. v. Thomasville
Furniture Industries, Inc.
Nos. 02-3640/3731
2On July 1, 1996, Thoma sville filed suit in the district court against
JGR to collect approximately $665,000 for furniture and service charges
that JGR owed to Tho masville. JGR subsequently filed suit against
Thoma sville in Ohio state court, alleging that Thomasville’s breach of the
1992 Gallery Agreement and fraudulent misrepresentation caused JGR to
go out of b usiness. T homasville removed that suit to federal court and
filed a motion for summary judgment on all of JGR’s claims. On
September 7, 1999, the district court granted Thomasville’s motion for
summary judgment in its entirety. JG R then filed a motion for
reconsideration, arguing that the district court had misinterpreted the
nature of its claim for breach of the 1992 Gallery Agreement. The district
court denied the motion and JGR appealed. On appeal, this Court
reversed and remanded the case for further pro ceed ings with respect to
that claim. This appeal relates solely to the proceedings on remand
concerning that breach of contract claim.
Ultimately, no longer able to continue doing business,
Gerald’s closed its doors on October 2, 1993.
Although each party in this case has asserted various claims
against the other,2 the sole claim with which we are
concerned in this appeal is JGR’s claim that Thomasville
breached the 1992 Gallery Agreement. The essence of that
claim is that Thomasville breached the Agreement by
permitting Baker’s to sell Thomasville furniture without
requiring Baker’s to “[d]isplay Thomasville product covering
at least 7,500 sq. ft. of selling floor space of which a
physically separate and distinct area of no less than 5,000 sq.
ft. (the “Gallery”) is set aside for the sole and exclusive
purpose and function of arranging, selling, and displaying
Thomasville wood, upholstery, and other Thomasville home
furnishings products.” This claim was the subject of a jury
trial featuring the testimony of several witnesses. JGR
presented the only damages witness, a certified public
accountant and lawyer named James Gornik. Gornik testified
as to the amount of lost profits and loss of business value that
JGR suffered as a result of Thomasville’s alleged breach of
the 1992 Gallery Agreement. Thomasville filed a motion in
limine to exclude Gornik’s testimony on the ground that it

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Nos. 02-3640/3731 JGR, Inc. v. Thomasville
Furniture Industries, Inc.
7
was properly the subject of expert testimony, not lay opinion
testimony, but that he was not qualified to give expert
testimony. The district court denied Thomasville’s motion,
and Gornik proceeded to testify about projections that he had
prepared showing what JGR’s net income would have been in
each year from 1991 through 2005 and what the net worth and
value of the business would have been at the end of each of
those years.
The jury determined that Thomasville had, in fact, breached
the 1992 Gallery Agreement and that JGR was entitled to a
damages award of $0 for lost profits and $1,500,000 for loss
of business value. Thomasville subsequently filed a Rule 50
motion for judgment as a matter of law, arguing that the jury
verdict had no basis for an award of loss of business value.
The district court denied the motion. JGR filed a motion for
pre-judgment interest pursuant to Ohio Revised Code section
1343.03(A). While the district court initially granted the
motion and awarded pre-judgment interest at the rate of
3.73%, Thomasville filed a motion for reconsideration of that
award, which the district court granted. On reconsideration,
the district court changed its original ruling and declined to
award any pre-judgment interest. Judgment was entered for
JGR in the amount of $1,500,000. Thomasville appealed the
district court’s $1,500,000 judgment in favor of JGR, and
JGR cross-appealed the denial of its motion for pre-judgment
interest.
II. ANALYSIS
A. Testimony of James Gornik
The primary issue in this case concerns the admissibility of
testimony by JGR witness James Gornik, a certified public
accountant and lawyer who testified about the amount of lost
profits and loss of business value that JGR allegedly suffered
as a result of Thomasville’s breach of contract. We review a
district court’s evidentiary rulings for abuse of discretion.
8 JGR, Inc. v. Thomasville
Furniture Industries, Inc.
Nos. 02-3640/3731
3The district court’s apparent assumption that Gornik was a “factual
witness” who “does [JGR ’s] books” is false. In fact, Gornik was never an
accountant for JGR and never did its books. His first experience with
JGR was in March 1999, when he was contacted by JGR’s trial counsel
for the purpose of “putting down on paper what the financial statements
of Gerald’s Furniture would have looked like had the Thomasville support
to the business continued and had the owners been able to carry through
on how they planned to operate the business.”
Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999); Barnes
v. Owens-Corning Fiberglass Corp., 201 F.3d 815, 822 (6th
Cir. 2000). Thomasville argues that the district court abused
its discretion in permitting Gornik to testify as a lay witness.
JGR, on the other hand, argues that the district court in fact
permitted Gornik to testify as an expert witness, not a lay
witness, and that although no formal hearing was conducted
pursuant to Daubert v. Merrell Dow Pharmaceuticals, Inc.,
509 U.S. 579 (1993), the district court nevertheless properly
determined that he was qualified to give expert testimony.
The first issue that we must resolve is whether the district
court permitted Gornik to testify as a lay witness or as an
expert witness. Fortunately, the record is replete with explicit
statements by the district court indicating that Gornik was a
lay witness and was permitted to testify as such. For
example, in a colloquy with counsel regarding Thomasville’s
motion to exclude Gornik’s testimony, the court reasoned:
“But I don’t remember having Daubert extended to a CPA
who basically is, in this case, a factual witness. He does their
books.”3 The following morning, after conducting additional
research, the district court confirmed that Gornik would not
be characterized as an expert witness and, therefore, “there is
no Daubert analysis to be done.” Moreover, the district court
explicitly stated: “I’m glad nobody is asking me to call this
man an expert . . . I wouldn’t want to have a Daubert hearing
on his methodologies.”

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Nos. 02-3640/3731 JGR, Inc. v. Thomasville
Furniture Industries, Inc.
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4Rule 70 2 provides:
If scientific, technical, or other specialized kno wledge will assist
the trier of fact to understand the evidence or to determine a fact
in issue, a witness q ualified as an expert by knowledge, skill,
experience, training, or education, may testify thereto in the
form of an opinion or otherwise, if (1) the testimony is based
upon sufficient facts or data, (2) the testimo ny is the product of
Thus, the record unequivocally indicates that the district
court permitted Gornik to testify as a lay witness, not an
expert witness, and that no inquiry was made as to Gornik’s
qualifications to testify as an expert witness. Therefore, the
question to which we now turn is whether the district court
abused its discretion in permitting Gornik to testify as a lay
witness. See United States v. Anderskow, 88 F.3d 245, 249
(3d Cir. 1996) (“we review the admission of . . . opinion
testimony under Rule 701 for abuse of discretion”); Doddy v.
Oxy USA, Inc., 101 F.3d 448, 459 (5th Cir. 1996) (admission
of lay testimony under Rule 701 is reviewed for abuse of
discretion).
A lay witness – i.e., one who “is not testifying as an expert”
– may only testify as to:
opinions or inferences which are (a) rationally based on
the perception of the witness, (b) helpful to a clear
understanding of the witness’ testimony or the
determination of a fact in issue, and (c) not based on
scientific, technical, or other specialized knowledge
within the scope of Rule 702.
FED. R. EVID. 701. Subsection (c) was added to this rule in
2000 in order to “eliminate the risk that the reliability
requirements set forth in Rule 702 will be evaded through the
simple expedient of proffering an expert in lay witness
clothing.” FED. R. EVID. 701, Advisory Committee Notes for
the 2000 Amendments.4
10 JGR, Inc. v. Thomasville
Furniture Industries, Inc.
Nos. 02-3640/3731
reliable principles and methods, and (3) the witness has applied
the principles and method s reliably to the facts of the case.
FED. R. EVID . 702 .
The Advisory Committee Notes for the 2000 Amendments
further explain that:
[M]ost courts have permitted the owner or officer of a
business to testify to the value or projected profits of the
business, without the necessity of qualifying the witness
as an accountant, appraiser, or similar expert. Such
opinion testimony is admitted not because of experience,
training or specialized knowledge within the realm of an
expert, but because of the particularized knowledge that
the witness has by virtue of his or her position in the
business. The amendment does not purport to change
this analysis.
Id. (emphasis added) (citation omitted).
The explanation set forth in the Advisory Committee Notes
is reflected in the recent Fifth Circuit case of Dijo, Inc. v.
Hilton Hotels Corp., which is strikingly similar to the case
sub judice. In Dijo, the Fifth Circuit held that the district
court abused its discretion in permitting a “a financial
consultant” to testify as a lay witness regarding the plaintiff
company’s lost profits. 351 F.3d 679, 685-87 (5th Cir. 2003).
Although the witness was the plaintiff’s “primary contact” at
a commercial lending facility with which the plaintiff had a
business relationship, he had not served as an owner or officer
of the plaintiff company. Id. at 685. Additionally, the
witness’s “opinion . . . was based on preliminary income
figures and other information that he had received from [the
plaintiff’s founder],” and his “appraisal was not based upon
his own independent knowledge or observations.” Id. at 686.

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Nos. 02-3640/3731 JGR, Inc. v. Thomasville
Furniture Industries, Inc.
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5Go rnik testified: “Our role was not to verify a whole lot of things
. . . I only verified them against my own experience.”
In considering whether the witness was properly permitted
to give lay opinion testimony concerning lost profits, the Fifth
Circuit reasoned:
It is telling that DIJO responds . . . not with evidence of
[the witness]’s involvement with [the plaintiff] or the
Project, but only emphasizing [his] substantial business
experience. . . Such generic industry experience does not
pass Rule 701 scrutiny. [The plaintiff] never attempted
to qualify [the witness] as an expert; and a lay witness
who was never employed by or directly involved in a
business is unlikely to have the type of first-hand
knowledge necessary to provide reliable forecasts of
future lost profits. The further removed a layman is from
a company’s day-to-day operations, the less likely it is
that his opinion testimony will be admissible under Rule
701.
Id. Thus, in light of the witness’s lack of “the requisite first-
hand, personal knowledge” of the company about which he
testified, the Fifth Circuit held that the district court abused its
discretion in permitting the witness to give lay opinion
testimony under Rule 701. Id. at 686-87.
The same is true in this case. Like the witness in Dijo,
Gornik has never been an owner, officer or director of JGR.
Additionally, the information upon which he relied in making
his calculations of lost profits and loss of business value came
primarily from Yosowitz, and Gornik admitted that he did not
independently verify much of that information.5 Therefore,
Gornik had no basis upon which to offer lay opinion
testimony about JGR’s lost profits or loss of business value,
and the district court abused its discretion in admitting that
testimony.
12 JGR, Inc. v. Thomasville
Furniture Industries, Inc.
Nos. 02-3640/3731
Moreover, the improper admission of Gornik’s testimony
affected Thomasville’s substantial rights. See id. at 687. For
whatever reason, Gornik was the only witness called by either
party to testify as to the issue of damages, and – although he
was subject to cross-examination – Gornik’s testimony about
the amount of JGR’s damages was unchallenged by any other
witness.
For these reasons, we hold that the improper admission of
Gornik’s lay opinion testimony requires vacature of the jury’s
damage award and remand for a new trial solely on the issue
of damages. See id. at 687. In light of this holding, we need
not consider Thomasville’s other arguments concerning the
damages award or JGR’s cross-appeal regarding the denial of
pre-judgment interest. We must, however, consider two
additional arguments that Thomasville has raised.
B. Evidence of Alleged Oral Contract
Thomasville’s remaining two arguments concern the
admission of evidence about an alleged oral contract between
JGR and Thomasville. JGR had previously alleged that
Thomasville orally promised JGR that it would not sell
Thomasville furniture to Baker’s. This alleged oral promise
was the subject of a prior breach of contract claim that is not
at issue here. Nevertheless, the district court permitted
Yosowitz to mention this alleged oral promise in his trial
testimony, over Thomasville’s objection. Thomasville later
submitted proposed jury interrogatories that it claimed were
necessary to ensure that the jury did not focus upon the
testimony concerning the alleged oral contract, but the district
court declined to submit the interrogatories to the jury.
Thomasville argues that the admission of Yosowitz’s
testimony about the alleged oral contract was irrelevant under
Rule 401 and unfairly prejudicial under Rule 403, and that the
district court abused its discretion in refusing to submit
Thomasville’s proposed interrogatories to the jury.

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Nos. 02-3640/3731 JGR, Inc. v. Thomasville
Furniture Industries, Inc.
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The district court recognized that the oral promises at issue
were “not part of the [1992 Gallery Agreement],” but
admitted some evidence of the alleged oral contract as
“background testimony regarding the relationship between
JGR and Thomasville Furniture prior to the 1992 agreement.”
The district court cautioned JGR’s counsel not to “dwell” on
the evidence and explicitly instructed the jury that:
the sole issue in this case is whether Thomasville
breached the 1992 agreement. Should you consider
evidence regarding written or oral statements or acts of
JGR, Thomasville Furniture, or other parties prior to the
1992 agreement, consider it only to the extent that it
helps you understand the intentions of JGR and
Thomasville Furniture with regard to that 1992
agreement.
Based upon our thorough review of the record, we conclude
that the district court committed no abuse of discretion in
admitting some evidence relating to the alleged oral contract
for the limited purpose of background information,
particularly in light of its instruction to the jury, which we
must presume was followed.
We also conclude that the district court did not abuse its
discretion in declining to submit Thomasville’s proposed
interrogatories to the jury. Federal Rule of Civil Procedure
49(b) permits a trial court to submit interrogatories to a jury
on issues of fact that are necessary for a verdict, but the rule
does not require the court to do so. It is well established that
it “is in the [trial] court’s discretion whether to submit written
interrogatories in connection with a general verdict.” Portage
II v. Bryant Petroleum Corp., 899 F.2d 1514, 1520 (6th Cir.
1990). In this case, the district court instructed the jury to
determine whether “Thomasville Furniture breached their
1992 agreement by breaching a representation, or
understanding, that any new Thomasville dealer would be
held to the same square footage requirements that were being
14 JGR, Inc. v. Thomasville
Furniture Industries, Inc.
Nos. 02-3640/3731
imposed on JGR.” This instruction – particularly in
combination with the court’s other jury instructions – was
proper and served the purposes that Thomasville’s proposed
interrogatories were intended to serve.
III. CONCLUSION
For the foregoing reasons, we AFFIRM the district court’s
judgment insofar as it reflects the jury’s verdict as to liability,
but we VACATE the jury’s damages award and REMAND
for a new trial solely on the issue of damages.

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