In the

        United States Court of Appeals
                      For the Seventh Circuit

No. 12-2210

LYON FINANCIAL SERVICES, INC .,
d/b/a U.S. Bancorp Business
Equipment Finance Group,
                                                         Plaintiff-Appellant,

                                        v.

ILLINOIS PAPER AND COPIER COMPANY,
                                                        Defendant-Appellee.


                 Appeal from the United States District Court
             for the Northern District of Illinois, Eastern Division.
                No. 10 C 7064 — Rebecca R. Pallmeyer, Judge.



       ARGUED DECEMBER 5, 2012 — DECIDED OCTOBER 9, 2013



   Before MANION and SYKES, Circuit Judges, and DARROW ,
District Judge.*


*
    The Honorable Sara L. Darrow, United States District Court for the Central
                                                                (continued...)
2                                                     No. 12-2210

    SYKES, Circuit Judge. This appeal presents a question with
important implications for commercial transactions: When a
representation of law is made in a contract, when (if ever) is it
actionable? The question arises in the context of a commercial
financing arrangement between Illinois Paper and Copier
Company, a seller of office equipment, and Lyon Financial
Services, Inc., a finance firm based in Minnesota. Under a
master contract signed in October 2008 and governed by
Minnesota law, Lyon had a right of first refusal to provide
lease financing for Illinois Paper’s customers. Under the
contract Lyon had the option to purchase office equipment
supplied by Illinois Paper and lease the equipment to Illinois
Paper’s customers who were interested in this form of financ-
ing. Illinois Paper expressly warranted in the contract that “all
lease transactions presented to [Lyon] for review are valid and
fully enforceable agreements.”
     At issue here is a lease of office equipment to the Village of
Bensenville, Illinois. Lyon purchased a copy machine from
Illinois Paper and leased it to the Village for a term of six years.
Under Illinois law, however, the lease was unenforceable; the
Illinois Municipal Code provides that municipal equipment
leases may not exceed five years. When the Village stopped
paying, Lyon sued Illinois Paper for breach of the contractual
warranty. Illinois Paper argued that the warranty was a
representation of law, not fact, and as such was not actionable
in a suit for breach of contract or warranty. The district court



*
 (...continued)
District of Illinois, sitting by designation.
No. 12-2210                                                    3

agreed and granted Illinois Paper’s motion for judgment on the
pleadings.
    Because Minnesota law applies, we are called on to predict
how the Minnesota Supreme Court would answer the central
legal question presented here. We find ourselves genuinely
uncertain about the answer. In the tort context, Minnesota
courts adhere to the maxim that a person may not rely on
another’s representation of law, so where reliance is an element
of a tort claim (as in cases alleging fraud), representations of
law are not actionable. The question has not arisen in the
contract setting, however. The Minnesota Supreme Court has
not addressed the enforceability of representations of law in
contract or warranty law. Furthermore, although federal courts
have predicted that reliance would be an element of a breach-
of-warranty claim in Minnesota, the Minnesota Supreme Court
has not grappled with the issue for more than 60 years, and the
prevailing understanding of warranty has since changed. In
the absence of more recent controlling precedent, the best
course is to ask the state supreme court for a definitive resolu-
tion of these important questions of state law. We respectfully
certify the questions set forth at the end of this opinion to the
Minnesota Supreme Court.


                        I. Background
    Illinois Paper, a Delaware corporation based in
Bolingbrook, Illinois, sells copy machines and other office
equipment. Lyon Financial Services, a Minnesota corporation
headquartered in Marshall, Minnesota, is a financial-services
firm specializing in business-equipment financing. Lyon is a
4                                                     No. 12-2210

subsidiary of U.S. Bancorp and does business as U.S. Bancorp
Business Equipment Finance Group.
    In October 2008 Lyon and Illinois Paper entered into a
master agreement providing that Lyon would have the “first
right of review” of all of Illinois Paper’s “maintenance inclusive
transactions” for customers inquiring about lease financing.
For a period of 90 days from the date of the contract, Illinois
Paper agreed to forward to Lyon any proposed transactions
meeting that description and Lyon had the option to provide
the financing. In the “Representations and Warranties” section
of the agreement, Illinois Paper warranted that “all lease
transactions presented [to Lyon] for review are valid and fully
enforceable agreements.” Any leases financed by Lyon were
nonrecourse to Illinois Paper unless Illinois Paper breached the
legal enforceability warranty or any of its other warranties in
the agreement. Finally, the master contract contains a choice-
of-law clause providing that Minnesota law applies.
   This case centers on a financing arrangement for office
equipment supplied by Illinois Paper to the Village of
Bensenville, Illinois, soon after the master contract was
executed. It’s undisputed that Lyon purchased a copy machine
from Illinois Paper and leased it to the Village, but the parties
disagree about the precise circumstances under which the
transaction was arranged. Lyon insists that the lease agreement
was “presented” by Illinois Paper (in the words of the war-
ranty) and was drafted to Illinois Paper’s specifications. Illinois
Paper contends that the transaction was wholly arranged by
Lyon based on its preexisting relationship with the Village.
Lyon had financed copier equipment for the Village in the past,
No. 12-2210                                                                5

through another supplier. Illinois Paper contends that it was
brought in only to sign the master agreement and supply the
equipment at issue here. Indeed, the master agreement is a
U.S. Bank form contract (recall that Lyon is a subsidiary of
U.S. Bancorp).1
    Either way, it’s clear that Lyon purchased the copier the
Village wanted for a price of $510,658 and in turn leased it to
the Village.2 The lease agreement—signed a week after the
master contract was executed in October 2008—listed the
Village as the “customer,” Lyon as the “owner” of the copier,
and Illinois Paper as the “supplier.” The Village was required
to make monthly payments of $9,500 for 72 months (six years),
and Lyon’s remedy for nonpayment was repossession of the
equipment.



1
 The resolution of this factual dispute is not necessary to decide the legal
questions presented. In any case we could not resolve it now; the district
court entered judgment on the pleadings. Resolving the factual dispute may
be relevant to potential defenses, however. As we have noted, Illinois Paper
asserts that it did not “present” the Bensenville lease agreement to Lyon,
and thus by the master contract’s own terms, the warranty does not apply.
Another m ystery not relevant at this juncture is whether other lease
agreements were presented pursuant to the master contract (or whether
such agreements were even contemplated), or instead whether the master
contract was executed solely to facilitate the lease to the Village.

2
  Another factual twist is that Illinois Paper apparently paid Lyon
approximately $148,200, an amount still owed by the Village to Lyon on a
past copier transaction not involving Illinois Paper. This amount was
apparently incorporated into the 2008 Village lease price. Again, this aspect
of the transaction is not relevant to the legal issue presented here.
6                                                            No. 12-2210

    In mid-2010—less than two years into the lease—the Village
stopped paying, asserting that the lease was unenforceable
under the Illinois Municipal Code, which expressly limits
municipal equipment leases to no more than five years. See
65 ILL. COMP . STAT . 5/11-76-6 (1961). Lyon had no remedy
against the Village, so it filed this suit against Illinois Paper for
breach of contract. The complaint sought damages for Lyon’s
lost lease payments—an amount totaling more than $500,000—
plus interest, attorney’s fees, and costs. Illinois Paper re-
sponded with several affirmative defenses and also disputed
the claimed amount of damages.3 It also counterclaimed for
breach of fiduciary duty and aiding and abetting breach of
fiduciary duty. Finally, Illinois Paper filed a third-party
complaint against the Village and the official who signed the
lease, alleging fraud and breach of contract.
     The district court dismissed Illinois Paper’s counterclaims
and its third-party complaint with prejudice. That left Lyon’s
claim for breach of contract, which was based on the warranty
in the master contract regarding the enforceability of the lease.
Both parties moved for judgment on the pleadings. The district
court granted Illinois Paper’s motion and denied Lyon’s cross-
motion. The court acknowledged that the Minnesota choice-of-
law clause was likely enforceable but analyzed the claim under
Illinois law on the assumption that the two states’ laws were
materially the same. The court then construed Lyon’s claim as


3
 Illinois Paper argues that Lyon’s calculation double-counts the $148,200
that Illinois Paper paid in satisfaction of the Village’s prior debt because
that amount was added into the lease amount and not credited back in the
damages request.
No. 12-2210                                                          7

one for breach of warranty and concluded that Illinois Paper’s
warranty that the leases were “valid and fully enforceable”
was a representation of law. The court explained that reliance
is an element of a breach-of-warranty claim under Illinois law,
and because no one may reasonably rely on a counterparty’s
representation of law, the breach-of-warranty claim necessarily
failed.
     Lyon moved for reconsideration based on the district
court’s decision to apply Illinois rather than Minnesota law and
also challenged the court’s decision to treat the alleged breach
of contract as a breach of warranty. In the meantime, the
district judge assigned to the case died,4 and the case was
administratively transferred to another judge.5 The new judge
denied the motion for reconsideration, but this time considered
the arguments under Minnesota law. The judge construed the
warranty as a representation of law and held that it was not
actionable under either a breach-of-warranty or a breach-of-
contract theory. The court also held that the promise of
enforceability did not function as a guaranty; although Illinois
Paper had agreed to “indemnify and hold [Lyon] harmless
from any loss or claim resulting from [Illinois Paper’s] breach”
of the warranties in the master contract, Illinois Paper had not
guaranteed fulfillment of the Village’s obligations under the
lease agreement. The court entered final judgment in favor of
Illinois Paper, and this appeal followed.



4
    The Honorable William J. Hibbler died on M arch 19, 2012.

5
    The case was reassigned to the Honorable Rebecca R. Pallmeyer.
8                                                    No. 12-2210

                          II. Analysis
     We review de novo the district court’s decision granting
Illinois Paper’s motion for judgment on the pleadings, constru-
ing the facts and drawing reasonable inferences in favor of
Lyon. See ProLink Holdings Corp. v. Fed. Ins. Co., 

,
830 (7th Cir. 2012). The claim arises solely under state law; the
case is in federal court based on diversity of citizenship. See
28 U.S.C. § 1332. “When sitting in diversity, ‘our task is to
ascertain the substantive content of state law as it either has
been determined by the highest court of the state or as it would
be by that court if the present case were before it now.’ ” Craig
v. FedEx Ground Package Sys., Inc., 

, 426 (7th Cir.
2012) (quoting Thomas v. H & R Block E. Enters., Inc., 

, 663 (7th Cir. 2011)).


A. Minnesota Law Applies
    The Lyon-Illinois Paper master contract provides that the
“[a]greement and performance hereunder shall be governed by
the laws of the State of Minnesota.” With exceptions not
relevant here, Illinois generally enforces contractual choice-of-
law provisions so Minnesota law controls. See, e.g., Hofeld v.
Nationwide Life Ins. Co., 

, 458 (Ill. 1975) (“Gener-
ally, the law applicable to a contract is that which the parties
intended, assuming such an intent. When that intent is ex-
pressed, it should be followed.”). We must predict, if we can,
how the Minnesota Supreme Court would resolve the legal
questions presented.
No. 12-2210                                                               9

B. The Warranty Is a Representation of Law
    In the master contract, Illinois Paper warranted that “all
lease transactions presented to [Lyon] for review are valid and
fully enforceable agreements.” The parties dispute whether this
is a representation of fact or law. Lyon argues that it is a
representation of fact—the fact that legal formalities were
satisfied, thus “ensuring the Lease Agreement’s
enforceability.” Illinois Paper contends that the warranty is a
representation of law. Why might this classification matter?
Representations of fact are generally actionable in tort or
contract. But representations of law are not actionable in tort,
and the parties disagree about whether they are actionable in
contract or warranty. Because the fact/law distinction makes a
difference to our decision to certify questions to the Minnesota
Supreme Court, we classify the representation now in order to
highlight the unsettled nature of the legal issue.6
    The Minnesota Supreme Court long ago explained that “it
is not always easy to classify representations as of law or fact.”
Miller v. Osterlund, 

, 919 (Minn. 1923). Representa-
tions are often mixed, and depending on the circumstances, can
be effectively legal or effectively factual. See 

not be too indulgent of defendants who have made
misrepresentations as to matters of which they should be


6
  We note that in the context of mistake, the M innesota Supreme Court once
referred to the fact/law distinction as “useless duffle of an older and more
arbitrary day” and explained that it “refuse[s] to consider always control-
ling the distinction between mistakes of fact and those of law.” Peterson v.
First Nat’l Bank, 

, 55 (M inn. 1925). We think the current court
might consider the distinction relevant in this context.
10                                                  No. 12-2210

expected to have knowledge, and of which the other party
ordinarily would not have knowledge. A misrepresentation
though involving [a] matter of law will be held actionable if it
amounts to an implied assertion that facts exist that justify the
conclusion of law which is expressed.”).
    Minnesota courts have reasoned that a representation of
legal compliance that is breached by way of a misrepresenta-
tion of fact—particularly a fact of which the speaker has better
knowledge than the listener—is effectively a representation of
fact. See, e.g., Parkside Mobile Estates v. Lee, 

(Minn. 1978) (finding that the seller’s warranty that property
was in compliance with all relevant regulations when in truth
it had contaminated water in violation of the health code was
effectively a representation of fact); JEM Acres, LLC v. Bruno,

, 80 (Minn. Ct. App. 2009) (upholding a jury
verdict finding breach of contract and fraud where a property
seller promised that the property’s sewage system was
working and in compliance with applicable laws when in fact
it had not been recently inspected and was actually seeping
sewage); Hoyt Props., Inc. v. Prod. Res. Grp., L.L.C., 

, 372–74 (Minn. Ct. App. 2006) (finding that the defendants’
statement that there wasn’t anything to suggest that the
plaintiff could pierce the corporate veil implied knowledge of
facts and as such was a representation of fact). Generally
speaking, representations of fact are actionable in both tort and
contract. See 

; Pieh v. Flitton,

, 965 (Minn. 1927); 

.
   On the other hand, Minnesota courts recognize that pure
representations of law can be investigated by either party
No. 12-2210                                                    11

simply by reference to legal authority that is a matter of public
record rather than requiring knowledge of information in the
other party’s possession. See, e.g., Northernaire Prods., Inc. v.
County of Crow Wing, 

, 280 (Minn. 1976) (county
officials’ statement that no zoning permit was required for
holding a concert was representation of law); see also 

(explaining that a representation as to the legal
effect of a document—i.e., that it constitutes a contract—would
be a representation of law). Accordingly, representations of
law generally are not actionable in tort. See, e.g., 

–82; 

. Reliance is an
element in tort actions for fraud or deceit, and “[a] misrepre-
sentation of a matter of law … is not a representation on which
the party to whom it has been made has a right to rely, for the
law is presumed to be equally within the knowledge of both
parties.” 

; see also State v. Edwards,

, 495 (Minn. 1929).
     The contractual provision at issue here is a mixed represen-
tation, but as relevant to this dispute, it is a representation of
law. The only significant fact relevant to the alleged breach is
the length of the lease term, known to both parties. The
remaining relevant question—whether a six-year municipal
equipment lease is legally enforceable—is a question of law
answerable by reference to the Illinois Municipal Code. The
Code provision limiting the length of municipal leases is a
public act accessible to all. The parties were thus on equal
footing regarding the matter. Lyon could have determined
whether the lease complied with the law just as easily as
Illinois Paper by checking the Code provision against the plain
and obvious facts; it would not need knowledge of information
12                                                                   No. 12-2210

solely in the possession of Illinois Paper. For purposes of this
claim, the warranty is a representation of law.


C. Is a Representation of Law Enforceable in Contract or
Warranty?
    That brings us to the key question in this case: Is the
contractual warranty actionable even though it is a representa-
tion of law? Although this is a settled question in tort law, it is
not at all clear that the reasoning behind the nonactionability
of legal representations in tort is equally valid as a contract-law
principle or that it applies in the breach-of-warranty context.
    Lyon’s first argument is that it pleaded its claim as a breach
of contract, not a breach of warranty as the district court
analyzed it, and even if a breach-of-warranty claim requires
reliance (more on this in a moment), a breach-of-contract claim
does not. See Briggs Transp. Co. v. Ranzenberger, 

,
200 (Minn. 1974) (listing the elements of a breach-of-contract
action as “(a) the formation of the contract; (b) performance by
plaintiff of any conditions precedent to his right to demand
performance by defendant; and (c) a breach of the contract by
defendant” (quotation marks omitted)).7 Thus, even if the
general rule against relying on representations of law is


7
 Lyon notes that a breach-of-warranty cause of action usually arises in the
sale-of-goods context. M aybe so, but express warranties are “still possible
in any kind of transaction,” 3 D A N B. D O BBS ET AL ., T H E L AW O F T O RTS § 669,
at 661 (2d ed. 2011), and a breach-of-express-warranty theory has been used
outside the context of sales of goods, see, e.g., CBS Inc. v. Ziff-Davis Publ’g
Co., 

(N.Y. 1990).
No. 12-2210                                                   13

applicable outside of tort, Lyon insists that its claim can
succeed because a breach-of-contract claim does not require
reliance.
     The district court did not explain why it chose to analyze
the claim as a breach of warranty instead of more generally as
a simple breach of contract. As an initial matter, there is
nothing in particular about the provision at issue that seems to
require its treatment as a warranty as opposed to a contract
provision like any other. While the representation is labeled a
“warranty,” that term ordinarily applies where a party agrees
to be responsible if a past occurrence or matter outside its
control turns out not to be as warranted. See RESTATEMENT
(SECOND ) OF CONTRACTS § 2 cmt. d (1981). Here, however,
Illinois Paper warranted that future lease transactions would be
valid and enforceable. Promises like this typically belong in the
realm of contract. See 

    It may not make any difference. Illinois Paper contends that
the tort dichotomy between representations of law and fact
carries over to contract, making contractual representations of
law nonactionable, period. For support Illinois Paper relies
heavily on the Minnesota Supreme Court’s decision in Parkside
Mobile Estates v. Lee, but we are not convinced that Parkside
provides clear authority for either party’s position. Parkside
involved a warranty in a contract for the sale of a mobile-home
park; the seller warranted that the property complied with all
relevant 

. The Minnesota Supreme
Court labeled the warranty a representation of fact and found
it actionable. 

The court did not address whether a
representation of law is actionable in contract or warranty—or
14                                                   No. 12-2210

whether there is any distinction between the two theo-
ries—because it didn’t have to. Rather, by classifying the
representation at issue as one of fact, the court quickly rejected
the seller’s argument that the representation was one of law
and thus unenforceable. Moreover, the court cited only a fraud
case and resolved the issue in a few sentences. Parkside there-
fore does not give us clear guidance on Minnesota’s approach
to the enforceability of representations of law in contract or
warranty. Illinois Paper cites other cases pointing to the
distinction between representations of law and fact, but all
involved claims of fraud—a tort—not contract or warranty
claims. See, e.g., 

(fraud defense); 

(same).
    Illinois Paper also argues that representations of law are
unenforceable in the domain of warranty because Minnesota
law holds that reliance on the truth of a warranty is required
to state a claim for its breach. This argument imports the tort
principle we noted earlier: that no one may justifiably rely on
another’s representation of law. Lyon responds that reliance is
not an element of breach of warranty in Minnesota. This legal
dispute actually involves two questions: (1) whether reliance
is an element of a breach-of-warranty claim in Minnesota; and
(2) if so, what type of reliance is necessary: tort-like reliance
(that is, reliance on the substantive truth of the matter war-
ranted) or contract-formation reliance (that is, reliance on the
warranty as a bargained-for part of the agreement as a whole;
in other words, reliance on the other party’s promise to take
responsibility if the matter turns out not to be as warranted).
The Minnesota Supreme Court has not had an opportunity to
address these questions.
No. 12-2210                                                      15

    Illinois Paper’s position that breach-of-warranty claims
require tort-like reliance is based on a 1944 Minnesota Supreme
Court case and a more recent Eighth Circuit opinion predicting
Minnesota law. In Midland Loan Finance Co. v. Madsen,

, 481 (1944), the Minnesota Supreme Court
explained that “[t]o enable a party relying upon a breach of
express or implied warranty to recover, it must be clear and
definite that there was actual reliance upon the warranties
involved.” By “reliance” the court seems to have meant tort-
like substantive reliance on the warranty; that kind of reliance
would be impossible if, for example, the party knew of
information contradicting the warranty. In Hendricks v.
Callahan, 

, 194 (8th Cir. 1992), the Eighth Circuit,
applying Minnesota law, concluded that the Minnesota
Supreme Court would likely require a plaintiff to prove
reliance in a breach-of-warranty case. Hendricks assumed the
continuing validity of the Midland decision, though it noted the
existence of an intervening debate surrounding the proper
characterization of breach-of-warranty claims.
    The true character of warranty law has long been disputed.
Dean Prosser, addressing warranty’s “peculiar and uncertain
nature,” once described it as “a freak hybrid born of the illicit
intercourse of tort and contract.” William L. Prosser, The
Assault Upon the Citadel (Strict Liability to the Consumer),
69 YALE L.J. 1099, 1126 (1960). Breach of warranty was origi-
nally thought of as a species of deceit. Perhaps for this reason
a tort-like element of reliance crept into the warranty cause of
action. See, e.g., Land v. Roper Corp., 

, 449 (10th Cir.
1976) (holding that Kansas law would require reliance as an
element of breach of express warranty in part because of its
16                                                    No. 12-2210

foundation in the law of deceit). At the same time, warranties
were said to arise from the consent of the parties, a principle of
contract law. Warranty thus blurred the distinction between
contract and tort.
    Over time the prevailing understanding of breach of
warranty changed. See, e.g., W. PAGE KEETON ET AL., PROSSER
AND KEETON ON THE LAW OF TORTS § 105, at 727–29 (5th ed.
1984) (describing warranty’s origin in deceit and its eventual
identification with contract); James J. White, Freeing the Tortious
Soul of Express Warranty Law, 72 TUL . L. REV . 2089, 2090 (1998)
(explaining how, in the sale-of-goods context, the replacement
of the Uniform Sales Act with the Uniform Commercial Code
and the adoption of the United Nations Convention on
Contracts for the International Sale of Goods have contributed
to warranty’s gradual shift from tort to contract). While strands
of tort law remained, especially in the realm of implied
warranty, express warranty came to be seen as belonging in the
domain of contract. See 18 SAMUEL WILLISTON , A TREATISE ON
THE LAW OF CONTRACTS § 52:45, at 264–65 (4th ed. 2001)
(explaining that “because an express warranty is a creature of
contract, the buyer may generally enforce it even though he or
she has failed to exercise reasonable care to discern whether
the product was defective”); 

–27; see also
Melody Home Mfg. Co. v. Barnes, 

, 352 (Tex. 1987)
(“Implied warranties are created by operation of law and are
grounded more in tort than in contract.”). But see Peterson v.
Bendix Home Sys., Inc., 

, 52 (Minn. 1982) (explain-
ing the hybrid history of warranties and noting that while
“their central role in sales law led them to be treated more
generally as an element of contract law,” their tort-like nature
No. 12-2210                                                    17

has been emphasized in claims for defective products in order
to permit a buyer to sue a manufacturer despite lack of privity
and recover for consequential harm).
    With this shift in perspective from warranty as tort to
warranty as contract, courts began to hold that reliance is not
an element of a breach-of-express-warranty claim, or if it is, it
is satisfied simply by proving that the express warranty was
relied on in contract formation—in other words, that the
warranty was part of the bargained-for agreement. CBS Inc. v.
Ziff-Davis Publ’g Co., 

, 1002 n.5 (N.Y. 1990)
(requiring reliance only in the sense that “the express warran-
ties are bargained-for terms of the seller”); see also Pegasus
Mgmt. Co. v. Lyssa, Inc., 

, 37–39 (D. Mass. 1998)
(applying Connecticut law and explaining its prediction that
“the Connecticut Supreme Court would hold that reliance is
not a necessary element of proof on a contractual claim based
upon a ‘bargained for’ express warranty,” 

Glacier
Gen. Assurance Co. v. Cas. Indem. Exch., 

, 860 (D.
Mont. 1977) (“The problems of a reliance, and a right to rely,
on the representations do not appear when the action is
grounded in warranty. The warranty is as much a part of the
contract as any other part, and the right to damages on the
breach depends on nothing more than the breach of war-
ranty.”); C.R. Anthony Co. v. Loretto Mall Partners, 

,
246 (N.M. 1991) (explaining that “reliance is not an element of
a claim for breach of an express warranty reduced to writing”);
Shambaugh v. Lindsay, 

, 126–27 (Ind. Ct. App.
1983) (refusing to adopt tort-like reliance requirement). What
is not required, in the view of these courts, is any sort of
18                                                             No. 12-2210

substantive tort-like reliance—that is, a belief that the warranty
will be fulfilled or the warranted facts are true.
    The New York Court of Appeals explained this distinction
well in Ziff-Davis. Instead of importing into warranty law a
tort-like understanding of reliance—again, reliance as a change
in position based on a belief in the truth of the information
warranted—the New York Court of Appeals favored contract-
type reliance, which is satisfied if “the express warranties are
bargained-for terms of the 

n.5. As
the court explained:
        The critical question is not whether the buyer
        believed in the truth of the warranted informa-
        tion, as Ziff–Davis would have it, but whether it
        believed it was purchasing the seller’s promise as
        to its truth. This view of “reliance”—i.e., as
        requiring no more than reliance on the express
        warranty as being a part of the bargain between
        the parties—reflects the prevailing perception of
        an action for breach of express warranty as one
        that is no longer grounded in tort, but essentially
        in contract. The express warranty is as much a


8
  The court did not address whether or what type of reliance is required in
other circumstances, such as proving the existence of an express warranty
in the first place or assessing any sort of waiver of warranty; rather, it
limited its analysis to express warranties that are undisputedly part of a
bilateral contract. See 

. These finer doctrinal
points aren’t at issue here. No one disputes the existence of an express
warranty in this case; nor has Illinois Paper raised any intricacies related to
waiver.
No. 12-2210                                                    19

       part of the contract as any other term. Once the
       express warranty is shown to have been relied
       on as part of the contract, the right to be indem-
       nified in damages for its breach does not depend
       on proof that the buyer thereafter believed that
       the assurances of fact made in the warranty
       would be fulfilled. The right to indemnification
       depends only on establishing that the warranty
       was breached.

(internal quotation marks, citations, and alter-
ations omitted). This reasoning finds support in Corbin and
other authorities, see 1 JOSEPH M. PERILLO , CORBIN ON CON -
TRACTS § 1.14, at 39 (rev. ed. 2002), which have pointed to
Judge Learned Hand’s explanation of the nature of warranty:
       A warranty is an assurance by one party to a
       contract of the existence of a fact upon which the
       other party may rely. It is intended precisely to
       relieve the promisee of any duty to ascertain the
       fact for himself; it amounts to a promise to
       indemnify the promisee for any loss if the fact
       warranted proves untrue, for obviously the
       promisor cannot control what is already in the
       past.
Metro. Coal Co. v. Howard, 

, 784 (2d Cir. 1946).
   In Hendricks the Eighth Circuit acknowledged Ziff-Davis but
declined to import its reasoning into Minnesota law because it
was convinced, based largely on Midland, that Minnesota
would “require some sort of reliance.” 

. The court did not engage with Ziff-Davis’s explanation of
20                                                   No. 12-2210

the different types of reliance or specifically discuss what type
of reliance Minnesota would require.
     We are not certain whether the Minnesota Supreme Court
would require reliance in a breach-of-warranty claim, and if so,
if it would require a type of reliance other than that referred to
in Ziff-Davis. Resort to first principles—specifically, the
foundational principles of tort and contract law—adds to our
uncertainty. These two bodies of law serve different interests
and protect different expectations. See, e.g., Glorvigen v. Cirrus
Design Corp., 

, 584 (Minn. 2012) (explaining the
“fundamental differences between tort and contract” (alter-
ation and internal quotation marks omitted)). Contract law
encourages private ordering and protects parties’ bargained-
for expectations. See, e.g., RESTATEMENT (SECOND ) OF CON -
TRACTS § 344 cmt. a (1981) (“The law of contract remedies
implements the policy in favor of allowing individuals to order
their own affairs by making legally enforceable promises.”);
1 PERILLO , supra, § 1.1, at 2 (explaining that “the main underly-
ing purpose” of contract law is “the realization of reasonable
expectations that have been induced by the making of a
promise”). Tort law establishes and incentivizes a set of default
behavioral norms for society as a whole, allocating losses and
affording compensation for injuries occurring in the course of
human activity. See, e.g., RESTATEMENT (SECOND ) OF TORTS § 4
cmt. c (1965) (explaining that “the actor’s duty in tort is often
to conduct himself in a manner the propriety of which is to be
determined ex post facto by the jury in their determination as
to whether the actor has or has not used reasonable care”); 

(1979) (listing the purposes of tort law, including com-
pensation for harms, punishment and deterrence, rights
No. 12-2210                                                   21

determination, and deterring self-help); KEETON ET AL ., supra,
§ 1, at 5–6.
    Thus, the source of the duty in tort and contract differs. In
tort the law prescribes the duties members of society owe to one
another and establishes remedies for their breach. In contract
the source of the duty is the consent or promise of the contract-
ing parties, who order their own relationship. See RESTATE -
MENT (SECOND ) OF TORTS § 4 cmt. c (contrasting the sources and
purposes of duty in tort and contract); KEETON ET AL., supra,
§ 92, at 655–56. The Minnesota Supreme Court has put it this
way:
       Tort actions and contract actions protect different
       interests. Through a tort action, the duty of
       certain conduct is imposed by law and not
       necessarily by the will or intention of the parties.
       The duty may be owed to all those within the
       range of harm, or to a particular class of people.
       On the other hand, contract actions protect the
       interests in having promises performed. Contract
       obligations are imposed because of conduct of
       the parties manifesting consent, and are owed
       only to the specific parties named in the contract.

(internal quotation marks
omitted).
    These differences—and particularly the distinction between
public and private ordering—help explain why representations
of law like the one at issue here are not actionable as fraud but
may be actionable if contained in a contractual warranty. While
the fact/law distinction may make sense in the tort context,
22                                                  No. 12-2210

there may be no reason to distinguish between the two where
a contractual warranty is at issue.
    Why does the law draw the distinction in tort? Two reasons
are often given: “[F]irst, that every man is presumed to know
the law,” or at least to be evenly situated in terms of access to
information about it, a proposition often untrue with matters
of fact; and second, “that no man, at least without special
training, can be expected to know the law,” and therefore a
representation of the law is merely a statement of opinion.
KEETON ET AL., supra, § 109, at 759. (We note, as does the
treatise, that “[t]he contradiction [between these two justifica-
tions] is sufficiently obvious.” Id.) Whatever the reason for the
distinction, the principle that no one is justified in relying on
another’s representation of law means that representations of
law are categorically not actionable as fraud because that tort
requires a showing of reasonable reliance on another’s misrep-
resentation.
    We cannot be sure whether or how the Minnesota Supreme
Court would adopt this distinction in its modern contract or
warranty doctrine. As a general matter, parties can voluntarily
contract around default principles, allocating rights, duties,
and risks in their contract as they see fit, as long as their
allocation does not violate public policy. While someone must
assume the burden of knowing the law and ensuring that the
parties’ contract and dealings comply with it, we see no
particular reason why the contracting parties cannot allocate
that task to one or the other of them. Even though tort law
assumes that “everyone knows the law,” that doesn’t mean it
is costless to acquire that knowledge; it may be more efficient
No. 12-2210                                                     23

(and create an incentive to get it right) to allocate the task to
one party instead of requiring both parties to shoulder the
costs equally. Why not, then, allow contracting parties to
allocate the task of legal compliance and the corresponding
risk (i.e., the financial cost) of noncompliance? Or from a
different perspective, why not allow one party to hold itself
out as the comparative legal expert and allow both parties to
acknowledge information asymmetry? In tort there may be
good reason to place on everyone the equal duty of knowing
the law, but contracting parties may consent to be bound by a
different allocation of the duty to know the law.
    Without a clearer signal from the Minnesota Supreme
Court, we are reluctant to hold, as the district court did, that a
contractual allocation of the risk of legal noncompliance is
categorically unenforceable under Minnesota law. That holding
is hard to square with the freedom of contracting parties to
define and order their own relationship. At the very least,
reading a tort-like reliance requirement into a claim for breach
of an express warranty blurs the distinction between contract
and tort, a conceptual hazard that Minnesota courts try to
avoid. See Deli v. Univ. of Minn., 

, 782–83 (Minn.
Ct. App. 1998) (recognizing that “[t]he preservation of a
boundary between contract and tort law is necessary to protect
the specific interests and expectations each embodies”). Indeed,
Minnesota enforces the boundary between tort and contract in
several respects. For example, it has a statutory version of the
economic-loss doctrine, see MINN . STAT. § 604.101 (2000); see also
RESTATEMENT (THIRD) OF TORTS: LIABILITY FOR ECONOMIC HARM
§ 3 cmt. b (Tentative Draft No. 1, 2012) (explaining that the
economic-loss doctrine “prevents the erosion of contract
24                                                    No. 12-2210

doctrines by the use of tort law to work around them”), and
Minnesota courts refuse to award damages in tort where a
breached duty arises only by contract, see, e.g., 

(explaining that “a party is not responsible
for damages in tort if the duty breached was merely imposed
by contract and not imposed by law” (internal quotation marks
and alterations omitted)); 

–83 (“Extra-
contractual damages, such as emotional distress, are limited to
those instances in which the breach is accompanied by an
independent tort to insure that contract law is not swallowed
by tort law.”).
    Based on the authorities surveyed above, we find ourselves
genuinely uncertain as to how the Minnesota Supreme Court
would resolve the questions of Minnesota law presented here.
It’s not clear whether the state high court would hold that a
cause of action for breach of an express warranty includes an
element of reliance. If there is no such element, or if there is
and it is fulfilled with contract-like (rather than tort-like)
reliance, then breach of express warranty is properly conceptu-
alized as breach of contract; a warranty, under this view, is a
provision of the contract that, like any other, may be breached
and give rise to an action for damages. If tort-like reliance is
required, then breach of warranty appears to be a different
species than simple breach of contract. If that is the case, we are
not sure what options remain available to a plaintiff, like Lyon,
who claims to be the victim of a breach of a contractual
warranty that consists of a representation of legal compliance.
Perhaps no remedy remains, but that’s not a judgment we’re
comfortable making in the absence of clearer guidance from
the Minnesota Supreme Court.
No. 12-2210                                                     25

    Under these circumstances, we think it prudent to ask for
that guidance. See MINN . STAT. § 480.065 subd. 3 (1998) (“The
Supreme Court of this state may answer a question of law
certified to it by a court of the United States … if the answer
may be determinative of an issue in pending litigation in the
certifying court and there is no controlling appellate decision,
constitutional provision, or statute of this state.”). The parties
have not requested certification, but we may in our discretion
certify a question under Circuit Rule 52. When exercising that
discretion, the most important consideration is whether we
find ourselves genuinely uncertain about a question of state
law that is key to a correct disposition of the case. Certification
is also appropriate when the case concerns a matter of vital
public concern, where the issue likely will recur in other cases,
where resolution of the question determines the outcome of the
case, and where the state supreme court has yet to have an
opportunity to illuminate a clear path on the issue.
    The answers to the questions posed here will resolve the
most serious (and potentially dispositive) legal issue in this
case and will also have significant implications for private
ordering under Minnesota law more broadly. Myriad commer-
cial contracts contain similar provisions allocating the risks and
duties related to compliance with the law. Representations of
legal compliance are common in mortgage-industry contracts,
for example, and will almost certainly feature prominently in
the wave of post-financial-crisis litigation. The answers to the
questions posed here will also clarify for courts applying
Minnesota law whether all contractual warranties are action-
able, or whether instead courts must classify each warranty as
one of fact or of law and find it enforceable or not accordingly.
26                                                    No. 12-2210

Finally, the answers the state high court gives will constitute an
important contribution to the common law regarding the
boundaries between tort and contract.


                        III. Conclusion
   We respectfully ask the Minnesota Supreme Court, in an
exercise of its discretion, to answer the following certified
questions:
       1. Is reliance an element of a breach-of-express-
          warranty claim? If so, what type of reliance is
          required: contract-like reliance or tort-like
          reliance?
       2. If tort-like reliance is required for a breach-of-
          express-warranty claim, is one contracting
          party entitled to rely on the other’s express,
          contractual representation of law? If such
          reliance is not justified and the party’s
          warranty claim therefore fails, is a breach-of-
          contract action based on that same express
          contractual warranty also barred?
    We invite reformulation of the questions presented, and
nothing in this certification should be read to limit the scope of
the inquiry. Further proceedings in this court are stayed while
this matter is under consideration by the Supreme Court of
Minnesota.
                                           QUESTIONS CERTIFIED .