The 7th Circuit also rejected the bankruptcy trustee’s argument that the investment bank should have foreseen that the decline in technology stocks in March 2000 was the end of a boom which, in turn, should have caused the investment bank to withdraw its opinion and provide a new one. The panel stated:
Inability to see the future differs from “gross negligence.” If [the investment bank] was too optimistic, then so were all of HA-LO’s managers and millions of investors who bought dot-com stocks in 1999 and 2000. . . . And, to repeat, [the investment bank] undertook to deliver an opinion as of one date. Updates require extra work, which must be paid for. HA-LO’s managers not only did not offer to pay [the investment bank] for an updated opinion but also, as the parties stipulated, decided not to request such an opinion even if the [investment bank] had been willing to render one for free.
The 7th Circuit concluded by making it plain that the engagement letter provided the parameters of the duty assumed by the investment bank and throwing out a detailed contract in favor of “duties as if this were tort litigation” would be a mistake. Citing the New York Court of Appeals decision in Wallace v. 600 Partners Co., 658 N.E.2d 715 (N.Y. 1995) (because the engagement letter was governed by New York law), the 7th Circuit concluded:
Intelligent adults can set their own standards of performance, and courts must enforce the deal they have struck … The engagement contract says that [the investment bank] has no duty to double-check the predictions about Starbelly.com’s future revenues and no duty to update its opinion. [The investment bank] did what it was hired to do. The Trust’s belief that [the investment bank] should have been hired to do something different is not a basis of liability.
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