Starbucks Corporation v. Amcor Packaging Distribution, et al.,

Filing 130

MEMORANDUM and ORDER signed by Senior Judge William B. Shubb on 6/23/2016 ORDERING that Starbucks' 119 motion for partial summary judgment on the unenforceability of the Disclaimers in Amcor's 26 Invoices is GRANTED. Amcor's 14 th irteenth and forty-ninth affirmative defenses are STRICKEN and that Amcor be excluded from raising the Disclaimers in the 26 Invoices as a defense to Starbucks' remaining claims for breach of contract, breach of express warranty, breach of th e implied warranty of merchantability, and breach of the implied warranty of fitness for a particular purpose. Amcor's 111 motion for summary judgment on Starbucks' strict products liability and negligence claims is GRANTED. Amcor's 111 motion for summary judgment on Starbucks' claims for breach of contract, breach of express warranty, breach of the implied warranty of merchantability, and breach of the implied warranty of fitness for a particular purpose is DENIED. (Zignago, K.)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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Civ. No. 2:13-1754 WBS CKD

STARBUCKS CORPORATION, a
corporation,

MEMORANDUM AND ORDER RE: MOTIONS
FOR SUMMARY JUDGMENT

Plaintiff,
v.
AMCOR PACKAGING DISTRIBUTION,
a corporation; AMCOR
PACKAGING (USA), INC., a
corporation; and PALLETS
UNLIMITED, LLC, a limited
liability company,
Defendants.

----oo0oo---Plaintiff Starbucks Corporation (“Starbucks”) filed

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this action against defendants Amcor Packaging Distribution,

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Amcor Packaging (USA), Inc. (collectively, “Amcor”), and Pallets

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Unlimited, LLC (“Pallets Unlimited”), alleging that defendants

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supplied it with defective wooden pallets that caused mold to

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develop on its unroasted (“green”) coffee and resulted in losses

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of approximately $5.3 million.

(Compl. ¶¶ 9-11 (Docket Nos. 1,
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6, 7).)

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Rule of Civil Procedure 56, on (1) Starbucks’ motion for partial

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summary judgment against Amcor on certain purportedly invalid

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provisions of the contract between Starbucks and Amcor, (Docket

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No. 119); and (2) Amcor’s cross-motion for summary judgment on

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all of Starbucks’ claims, (Docket No. 111).

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I.

Factual and Procedural Background

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9

The matter is now before the court, pursuant to Federal

Starbucks is an international company that distributes
coffee products.

Starbucks operates a coffee bean roasting

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facility in Minden, Nevada called the Carson Valley Roasting

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Plant (“CVRP”).

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operated a warehouse in Sparks, Nevada (“OHL Warehouse”) where

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Starbucks’ green coffee was stored on wooden pallets before being

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transported to CVRP for roasting.

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December 14, 2011 and February 17, 2012, Starbucks contracted

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with Amcor, a manufacturer and distributor of packaging

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materials, to purchase 9,480 wooden pallets for storing its green

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coffee at the OHL Warehouse.

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specification sheet stating that the wooden pallets must consist

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of lumber that was kiln-dried to a moisture content of less than

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19% (“Specification Sheet”).

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with Pallets Unlimited to manufacture the wooden pallets and

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deliver them to the OHL Warehouse.

Ozburn-Hessey Logistics, LLC (“OHL”) owned and

(Compl. ¶¶ 8-11.)1

Between

Starbucks provided Amcor with a

(Id. Ex. B.)

Amcor subcontracted

(Id. ¶¶ 7-11.)

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Pallets Unlimited filed a third-party claim for
equitable indemnity against OHL, (Docket No. 46), and OHL
subsequently moved for summary judgment on that claim, (Docket
Nos. 104-107). On June 13, 2016, OHL and Pallets Unlimited filed
a notice of settlement and request to take OHL’s summary judgment
motion off the calendar. (Docket No. 128.)
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Upon delivery, OHL, acting on behalf of Starbucks,

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visually inspected the wooden pallets for damage, but did not

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measure the pallets for moisture content.

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shipment of wooden pallets that were found to be wet and returned

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to Pallets Unlimited, OHL accepted all of the pallet deliveries

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on behalf of Starbucks.

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invoices to Starbucks for the sale of the wooden pallets

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(“Invoices”).

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follows:

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Except for one

Following the deliveries, Amcor issued

Each Invoice included a provision at the bottom as

The following is made in lieu of all warranties, express
or implied: seller’s only obligation shall be to replace
such quantity of the product proved to be defective.
Seller shall not be liable for any injury, loss or
damage, direct or consequential, arising out of the use
or inability to use the product.
Before using, user
shall determine the suitability of the product for his
intended use and the user assumes all risk and liability
whatsoever in connection therewith. The foregoing may
not be changed except by agreement signed by an officer
of seller.
(the “Disclaimers”).

(Id. ¶ 8, Ex. A.)

Starbucks paid these Invoices and loaded 68,000 bags of

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green coffee on the wooden pallets it purchased from Amcor for

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storage at the OHL Warehouse and subsequent transportation to

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CVRP for roasting.

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personnel discovered mold growing on some of the wooden pallets

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in the OHL Warehouse.

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mold on green coffee, coffee bags, and wooden pallets that were

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delivered to CVRP from the OHL Warehouse.

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(Id. ¶ 9.)

On February 9, 2012, OHL

Shortly thereafter, Starbucks discovered

(Id.)

Starbucks retained independent surveyors to conduct an

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investigation into the source of the mold.

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determined that many of the wooden pallets Starbucks purchased

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from Amcor did not meet specifications because they were
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The surveyors

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constructed with lumber whose moisture content was considerably

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above the 19% requirement.

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Nos. 111-5 to -27).)

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of mold on the affected Bags [and] Green Coffee Beans was

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apparently due to the release of moisture from the lumber

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materials used in construction of the Pallets, principally due to

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excessive moisture contained within the lumber.”

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5.)

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(Parikh Decl. Exs. 14-15, 19 (Docket

The surveyors concluded that the “formation

(Id. Ex. 19 at

Upon Starbucks’ request, Amcor picked up all of the

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wooden pallets it had sold to Starbucks from the OHL Warehouse

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and sent them back to Pallets Unlimited.

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Ex. 25 (Docket Nos. 111-28 to -32).)

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Amcor reimburse it for the damage to its coffee beans caused by

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the mold.

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Starbucks’ coffee as precluded under the Disclaimers contained in

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the Invoices it issued Starbucks for the wooden pallets.

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¶ 16; Compl. ¶ 12.)

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(Coons Decl. ¶¶ 11-12,

Starbucks demanded that

Amcor disputed its liability for any damage to

(Id.

Starbucks filed this action on August 23, 2013,

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alleging claims against Amcor for (1) breach of contract, and (2)

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breach of the express warranty that the wooden pallets would meet

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Starbucks’ moisture content specifications.

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Starbucks additionally asserted claims against Amcor and Pallets

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Unlimited for (3) breach of the implied warranty of

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merchantability, (4) breach of the implied warranty of fitness

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for a particular purpose, (5) strict products liability, and (6)

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negligence.

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(Compl. ¶¶ 26-34.)

(Id. ¶¶ 13-25, 35-38.)

Starbucks moves for partial summary judgment against
Amcor that the Disclaimers in the Invoices are unenforceable and
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invalid as a matter of law because Starbucks neither bargained

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for nor assented to them.

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ruling that Amcor is precluded from invoking the Disclaimers as a

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defense against Starbucks’ claims.

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strike Amcor’s thirteenth and forty-ninth affirmative defenses,

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which are premised on the Disclaimers.

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(Docket No. 119.)

Starbucks seeks a

Starbucks also seeks to

Amcor’s thirteenth affirmative defense states that

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Amcor “disclaimed, negated and excluded each and every warranty

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of the type and character alleged in the complaint so as to bar

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recovery based on any such warranty.”

(Amcor’s Ans. at 9 (Docket

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No. 14).)

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“the warranties, disclaimers and any other exclusions in the

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invoices or contract between plaintiff and [Amcor] is valid and

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enforceable.”

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summary judgment on all of Starbucks’ claims.

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II.

Amcor’s forty-ninth affirmative defense states that

(Id. at 13.)

Amcor has filed a cross-motion for
(Docket No. 111.)

Legal Standard

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A party may move for summary judgment on a “claim or

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defense.”

Fed. R. Civ. P. 56(a).

Summary judgment is proper if

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there is no genuine issue of material fact and the moving party

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is entitled to judgment as a matter of law.

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Teichert & Son, Inc., 127 F.3d 1150, 1152 (9th Cir. 1997).

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material fact is one that could affect the outcome of the case.

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Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

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genuine issue exists if the evidence produced would allow a

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reasonable trier of fact to reach a verdict in favor of the non-

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moving party.

Id.; Summers v.
A

A

Id.

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The moving party bears the initial burden of

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establishing that no genuine issue of material fact exists as to
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the particular claim or defense.

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party seeks summary judgment on a claim or defense for which it

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bears the burden of proof at trial, it must affirmatively

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demonstrate that no reasonable trier of fact could find for the

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non-moving party on that claim or defense.

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Payless Inc., 509 F.3d 978, 994 (9th Cir. 2007).

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judgment is sought on a claim or defense for which the non-moving

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party bears the burden of proof at trial, the moving party must

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either (1) produce evidence negating an essential element of the

Id. at 256.

Where the moving

Soremekun v. Thrifty
If summary

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non-moving party’s claim or defense, or (2) show that the non-

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moving party cannot produce evidence to support an essential

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element of its claim or defense.

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U.S. 317, 322-23 (1986).

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Celotex Corp. v. Catrett, 477

Once the moving party has met its initial burden, the

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burden shifts to the non-moving party to produce concrete,

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specific evidence establishing a genuine issue of material fact.

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Id. at 324; Anderson, 477 U.S. at 256.

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non-moving may not rely “solely on conclusory allegations

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unsupported by factual data.”

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1045 (9th Cir. 1989).

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evidence beyond the pleadings that would allow a reasonable trier

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of fact to find in its favor.

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does so, then “there is a genuine issue of fact that requires a

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trial.”

To carry this burden, the

Taylor v. List, 880 F.2d 1040,

Rather, it must produce sufficient

Anderson, 477 U.S. at 256.

If it

Id. at 257.

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In ruling on a motion for summary judgment, the court

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may not weigh the evidence, make credibility determinations, or

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determine the truth of the matters asserted, and it must view all

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inferences drawn from the factual record in the light most
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favorable to the non-moving party.

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Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

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“Thus, although the court should review the record as a whole, it

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must disregard all evidence favorable to the moving party” unless

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that evidence is “uncontradicted and unimpeached” and “comes from

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disinterested witnesses.”

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Inc., 530 U.S. 133, 151 (2000) (citation omitted).

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Id. at 249, 255; Matsushita

Reeves v. Sanderson Plumbing Prods.,

Where parties submit cross-motions for summary
judgment, the court must consider each motion separately to

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determine whether either party has met its burden, “giving the

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nonmoving party in each instance the benefit of all reasonable

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inferences.”

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1097 (9th Cir. 2003).

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III. Discussion

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A.

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ACLU of Nevada v. City of Las Vegas, 333 F.3d 1092,

Starbucks’ Motion for Summary Judgment
“[F]ederal courts sitting in diversity apply state

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substantive law and federal procedural law.”

Gasperini v. Ctr.

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for Humanities, Inc., 518 U.S. 415, 427 (1996).

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thus apply California substantive law here.

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of a contract is a question of law.

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Features Entm’t, Inc., 843 F.2d 394, 398 (9th Cir. 1988).

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California Uniform Commercial Code (the “Code”) applies to all

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“transactions in goods.”

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defined as “all things (including specially manufactured goods)

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which are movable at the time of identification to the contract

The court will

The interpretation

United States v. King

Cal. Com. Code § 2102.2

The

Goods are

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All statutory references are to the California Uniform
Commercial Code unless otherwise specified.
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for sale.”

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pallets Amcor sold to Starbucks are “goods” within the meaning of

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the Code.

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Id. § 2105(1).

It is undisputed that the wooden

The Code thus governs the parties’ contract here.
Starbucks argues that the Disclaimers are not part of

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the parties’ contract, are unconscionable, and are invalid

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because they materially alter the parties’ contract.

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the other hand, contends that the Disclaimers are part of the

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parties’ contract because Starbucks had assented to them during

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the parties’ prior course of dealing; thus, Starbucks’ remedy for

Amcor, on

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breach of contract here is limited to the exclusive remedy

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provided in the Disclaimers.

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Amcor argues that Starbucks is precluded from

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challenging the validity of the Disclaimers because Starbucks

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judicially admitted in its Complaint that Amcor’s Invoices were

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part of the parties’ contract for the wooden pallets.

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Mem. at 14-15 (Docket No. 111-1).)

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pleadings . . . are considered judicial admissions conclusively

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binding on the party who made them.”

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Lacelaw Corp., 861 F.2d 224, 226 (9th Cir. 1988).

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alleges in its Complaint that the Specification Sheet and 26

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Invoices Amcor issued to Starbucks for the wooden pallets

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“comprise the contract for the provision and sale of pallets from

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[Amcor] to plaintiff.”

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however, that the Disclaimers in the 26 Invoices are valid and

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enforceable.

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fine print with purported disclaimer language, but the

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disclaimer[s] [are] invalid and ineffective.”

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argument that Starbucks’ judicial admissions preclude it from

(Amcor’s

“Factual assertions in

(Compl. ¶ 8.)

Am. Title Ins. Co. v.
Starbucks

Starbucks does not allege,

Starbucks expressly alleges the “invoices contain

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(Id.)

Amcor’s

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challenging the validity of the Disclaimers is thus

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unpersuasive.3

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1.

Contract Formation

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To determine whether the Disclaimers are a part of the

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parties’ contract for the sale of the wooden pallets, the court

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must evaluate the manner in which the parties formed the

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contract.

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not include the principle that the parties must agree to all

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essential terms in order to form a contract.”

“[T]he rules of contract formation under the [Code] do

Steiner v. Mobil

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Oil Corp., 20 Cal. 3d 90, 105 (1977) (en banc).

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provides that “[e]ven though one or more terms are left open a

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contract for sale does not fail for indefiniteness if the parties

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have intended to make a contract and there is a reasonably

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certain basis for giving an appropriate remedy.”

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§ 2204(3).

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prevent the finding under [§ 2204(3)] that the parties intended

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to make a contract.”

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citation omitted).

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Section 2204

Cal. Com. Code

“[T]he omission of even an important term does not

Steiner, 20 Cal. 3d at 105 (alterations and

To find an enforceable contract, the parties’ conduct

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Amcor’s objections to Starbucks’ reliance on cases
interpreting the UCC and commercial codes of other states is also
unavailing. “Case law from other jurisdictions applying
California’s Commercial Code, the Uniform Commercial Code (UCC),
or the uniform code of other states, are considered good
authority in litigation arising under the California [Code].”
Israel Aerospace Indus., Ltd. v. Airweld, Inc., Civ. No. 2:11-887
WBS CKD, 2012 WL 4834184, at *2 n.3 (E.D. Cal. Oct. 10, 2012)
(quoting Fariba v. Dealer Servs. Corp., 178 Cal. App. 4th 156,
166 n.3 (4th Dist. 2009)); see also U.S. Roofing, Inc. v. Credit
Alliance Corp., 228 Cal. App. 3d 1431, 1443–44 (3d Dist. 1991)
(looking to decisions from other jurisdictions interpreting the
UCC to interpret California’s Code).
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must indicate a consummated process of offer and acceptance--and

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thus, an intent to contract--rather than inconclusive

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negotiations.

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of the contract’s formation are filled in by the Code’s gap-

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filling provisions.

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terms), § 2307 (open delivery terms).

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goods may be made in any manner sufficient to show agreement,

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including conduct by both parties which recognizes the existence

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of such a contract.”

Id. at 104.

Any terms not agreed upon at the time

Id.; e.g., Cal. Com. Code § 2305 (open price

Id. § 2204(1).

“A contract for sale of

An offer to make a contract

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may be accepted “in any manner and by any medium reasonable in

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the circumstances.”

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to buy goods for prompt or current shipment is accepted by the

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seller’s “prompt promise to ship or by the [seller’s] prompt or

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current shipment of conforming or nonconforming goods.”

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§ 2206(1)(b).

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Id. § 2206(1)(a).

A buyer’s order or offer

Id.

It is undisputed that, on December 14, 2011, Kerri

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Hardy, Starbucks’ CVRP distribution supervisor, called Rachel

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Carranza4 of Amcor and placed an order for wooden pallets to be

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supplied in accordance with a Specification Sheet that Hardy

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emailed to Carranza.

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22); Kirsch Decl., May 6, 2016 (“Kirsch I Decl.”), Ex. A

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(“Carranza Dep.”) at 42:11-20 (Docket Nos. 119-23 to -39).)

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constituted an offer by Starbucks “to buy goods for prompt or

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current shipment.”

(Hardy Decl. ¶ 5 (Docket Nos. 119-20 to -

Cal. Com. Code § 2206(1)(b).

This

Carranza

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Amcor provides evidence that Carranza had the authority
to negotiate on Amcor’s behalf regarding any contract between
Amcor and Starbucks for the sale of the wooden pallets.
(Carranza Decl. ¶ 34.) Some of the evidence submitted refers to
Carranza by her former name, Rachel Kennedy.
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acknowledges that, during her conversation with Hardy, Hardy

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“requested [that Amcor] build the pallets per the specification

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sheet” that she later emailed to Carranza.

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51:1-17.)

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requirement that the wooden pallets conform to the Specification

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Sheet.

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(Carranza Dep. at

The terms of Starbucks’ offer therefore included the

Although Hardy and Carranza did not specifically

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discuss the 19% kiln-dry requirement that was contained in the

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Specification Sheet, it is undisputed that Carranza orally

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represented to Hardy that Amcor would supply the wooden pallets

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to Starbucks in accordance with the Specification Sheet.

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Decl. ¶¶ 5-6; Carranza Dep. at 51:1-17.)

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promise to ship the pallets thus constituted an acceptance of

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Starbucks’ offer and created an enforceable contract between the

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parties.

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(Hardy

Carranza’s prompt

See Cal. Com. Code § 2206(1)(b).
Between December 2011 and February 2012, Starbucks

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placed additional orders for wooden pallets pursuant to the

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Specification Sheet.

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-37); e.g., Parikh Decl. Ex. 11 (email dated January 18, 2012

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from Hardy to Carranza requesting confirmation that Starbucks’

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first three orders were for 2,000, 3,800, and 1,000 pallets

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respectively, for a total of 6,800 pallets, and stating that

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Starbucks “will need to order more pallets”).)

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that Amcor agreed here that all of the pallet orders during that

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time would conform to the Specification Sheet.

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¶¶ 5-6.)5

(Carranza Decl. ¶ 25 (Docket Nos. 111-33 to

It is undisputed

(Hardy Decl.

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Carranza also testified that she forwarded the
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Amcor, through Pallets Unlimited, delivered the first

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shipment of pallets to the OHL Warehouse on December 21, 2011--

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one week after Hardy placed the initial order for pallets--and

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continued to deliver the remaining wooden pallets until February

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17, 2012.

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Parikh Decl. Ex. 10.)

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consummated process of offer and acceptance, Starbucks and Amcor

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entered into an enforceable contract here for the sale of 9,480

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wooden pallets made from lumber that was kiln-dried to a moisture

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(McCullough Decl. ¶ 6 (Docket No. 119-17 to -19));
Because the parties’ conduct indicates a

content of less than 19%.

See Steiner, 20 Cal. 3d at 104.

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Both parties refer to the sale of all 9,480 wooden

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pallets as a single contract, and the court will treat their

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transaction as such here.

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contract “which requires or authorizes the delivery of goods in

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separate lots to be separately accepted” as a single contract.

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Cal. Com. Code § 2612(1); see also id. § 2612(3) (“Whenever

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nonconformity or default with respect to one or more installments

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substantially impairs the value of the whole contract there is a

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breach of the whole.”).

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17, 2012, Amcor issued 26 Invoices to Starbucks totaling

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$400,740.

The Code treats an installment

Between December 23, 2011 and February

(Compl. Ex. A.)

It is undisputed that Starbucks

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Specification Sheet to Pallets Unlimited and informed Pallets
Unlimited that the pallets were to be manufactured in accordance
with the Specification Sheet. (Carranza Dep. at 41:13-24, 52:1220.) Though Pallets Unlimited disputes whether Amcor did in fact
provide it with the Specification Sheet, (Anderson Dep. at
158:14-159:23, 350:21-370:20), Amcor does not dispute that it
expected Pallets Unlimited to manufacture the pallets in
accordance with the Specification Sheet, (e.g., Carranza Dep. at
56:18-58:3; Docket No. 119-38 ¶ 7; Docket No. 119-39 ¶ 11).
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approved and paid the Invoices in full.

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¶¶ 6-7; Coons Decl. ¶ 22.)

(McCullough Decl.

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2.

Section 2207

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It is undisputed that the parties never discussed the

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Disclaimers contained in the Invoices and that Starbucks never

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expressly assented to them.

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¶ 6.)

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they materially alter the parties’ contract of sale pursuant to

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§ 2207(2)(b).

(McCullough Decl. ¶ 7; Hardy Decl.

Starbucks argues that the Disclaimers are invalid because

Amcor issued the first Invoice to Starbucks on

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December 23, 2011, after the first shipment of wooden pallets was

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delivered on December 21, 2011.

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contract for the sale of the pallets already existed between the

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parties.

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promise to ship or prompt shipment of goods is an acceptance

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creating an enforceable contract for their sale).

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thus did not constitute letters accepting Starbucks’ offer to

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purchase the wooden pallets.

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the parties’ offer and acceptance establishing the contract of

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sale, the Disclaimers contained in them constitute additional

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terms governed by § 2207.

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By that time, an enforceable

See Cal. Com. Code § 2206(1)(b) (seller’s prompt

The Invoices

Since the Invoices were not part of

See Steiner, 20 Cal. 3d at 99.

California courts treat the application of § 2207 to

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undisputed facts as an issue of law.

Frank M. Booth, Inc. v.

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Reynolds Metals Co., 754 F. Supp. 1441, 1446 (E.D. Cal. 1991)

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(Levi, J.) (collecting cases).

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“definite and seasonable expression of acceptance” or “written

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confirmation which is sent within a reasonable time” operates as

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an acceptance of an offer to purchase goods, even if it “states

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terms additional to or different from those offered or agreed

Under § 2207(1), a seller’s

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upon.”

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merchants, the additional terms in the seller’s acceptance or

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confirmation automatically become part of the contract unless (a)

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the offer expressly limits acceptance to the terms of the offer,

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(b) the additional terms materially alter the contract, or (c)

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the other party has objected to the additional terms or objects

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to them within a reasonable time after receiving the acceptance

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or confirmation.

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and Amcor are merchants here.

Id. § 2207(1).

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If both parties to the transaction are

Id. § 2207(2).

It is undisputed that Starbucks

See id. § 2104(1).

Subsections 2207(1) and (2) do not apply, however, when

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“[c]onduct by both parties . . . recognizes the existence of a

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contract . . . [but] the writings of the parties do not otherwise

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establish a contract.”

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applies.

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contract are those upon which the parties have expressly agreed

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and any supplemental terms incorporated under any other

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provisions of the Code.

18

Co., 46 Cal. App. 4th 502, 515 (2d Dist. 1996); Textile

19

Unlimited, Inc. v. A. BMH & Co., 240 F.3d 781, 788 (9th Cir.

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2001).

21

Id.

Id. § 2207(3).

In such a case, § 2207(3)

Under § 2207(3), the terms of the parties’

Transwestern Pipeline Co. v. Monsanto

Subsections 2207(1) and (2) do not apply here.

The 26

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Invoices did not constitute “definite and seasonable

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expression[s] of acceptance” under § 2207(1) because Amcor’s

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acceptance occurred when it promised to ship the wooden pallets

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to Starbucks.

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“intended by the parties as a final expression of their

27

agreement.”

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Namasco Corp., 382 F. Supp. 2d 874, 884 (S.D. Tex. 2005)

The Invoices were also not written confirmations

Cal. Com. Code § 2202; see Enpro Sys., Ltd. v.

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(“Certainly, not every written communication after an oral

2

agreement need be characterized as a confirmation.

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otherwise, it would be impossible to determine where the process

4

of confirming ended.” (citation omitted)).

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is that an invoice, standing alone, is not a contract, and a

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buyer is ordinarily not bound by statements thereon which are not

7

a part of the original agreement.”

8

v. Kelomar, Inc., 218 Cal. App. 4th 272, 279 (4th Dist. 2013)

9

(citation omitted).

10

Were it

“The prevailing rule

Hebberd-Kulow Enters., Inc.

In addition, the parties here agreed that the wooden

11

pallets would conform to the Specification Sheet.

12

did not mention any of the requirements contained in the

13

Specification Sheet besides indicating that they were for “54x72”

14

pallets.

15

formed by their conduct and “the writings of the parties do not

16

otherwise establish a contract,” § 2207(3) applies to delineate

17

the terms of the contract here.

18

(See Compl. Ex. A).

The Invoices

Because the parties’ contract was

Cal. Com. Code § 2207(3).6

This conclusion is supported by the official commentary

19

to UCC § 2-207(3), which addresses the precise situation here:

20

“In many cases, as where goods are shipped, accepted and paid for

21

before any dispute arises, there is no question whether a

22

contract has been made. . . . The only question is what terms are

23

included in the contract, and subsection (3) furnishes the

24

governing rule.”

25

Transwestern, 46 Cal. App. 4th at 513 n.1 (noting that California

U.C.C. § 2-207, cmt. 7 (1966); see also

26
27
28

6

As a result, the court need not address Starbucks’
argument that the Disclaimers materially altered the terms of the
contract pursuant to § 2207(2)(b).
15

1

adopted Uniform Commercial Code (“UCC”) § 2-207 without change).

2

3.

The Parties’ Course of Dealing

3

The terms of a contract formed pursuant to § 2207(3)

4

are those terms upon which the parties expressly agreed and any

5

supplemental terms incorporated under any other provisions of the

6

Code.

7

not fall under either of these categories “drop out of the

8

contract.”

9

Textile Unlimited, 240 F.3d at 788 (“Under § 2207(3), the

Transwestern, 46 Cal. App. 4th at 515.

Any terms that do

Reynolds Metals Co., 754 F. Supp. at 1448; see also

10

disputed additional items on which the parties do not agree

11

simply ‘drop out’ and are trimmed from the contract.”).

12

Although it is undisputed that Starbucks did not

13

expressly assent to the Disclaimers, Amcor contends that

14

Starbucks’ assent can be implied from the parties’ course of

15

dealing.

16

Starbucks since the companies started doing business in 2008

17

contained the same disclaimer language at issue here and that

18

Starbucks never raised any objections to those disclaimers.

19

(Amcor’s Mem. at 24-25, 32; Carranza Decl. ¶¶ 7-10; Coons Decl.

20

¶¶ 5, 8.)

21

constituted its assent to the Disclaimers here.

22

It argues that all of the invoices Amcor had issued to

Amcor argues that Starbucks’ failure to object

California courts have recognized that “the

23

‘supplementary terms’ referred to in section 2207(3) may include

24

terms incorporated as a result of the parties’ course of

25

dealing.”

26

defines an agreement as “the bargain of the parties in fact, as

27

found in their language or inferred from other circumstances,

28

including course of performance, course of dealing, or usage of

Transwestern, 46 Cal. App. 4th at 516.

16

The Code

1

trade as provided in Section 1303.”

2

Section 1301, in turn, provides that a “course of performance or

3

course of dealing between the parties or usage of trade in the

4

vocation or trade in which they are engaged or of which they are

5

or should be aware is relevant in ascertaining the meaning of the

6

parties’ agreement . . . and may supplement or qualify the terms

7

of the agreement.”

Cal. Com. Code § 1201(3).

Id. § 1303(d).7

8

“A ‘course of dealing’ is a sequence of conduct

9

concerning previous transactions between the parties to a

10

particular transaction that is fairly to be regarded as

11

establishing a common basis of understanding for interpreting

12

their expressions and other conduct.”

13

inference of the parties’ common knowledge or understanding that

14

is based upon a prior course of dealing is a question of fact.”

15

In re CFLC, Inc., 166 F.3d 1012, 1017 (9th Cir. 1999).

16

dispute surrounding the parties’ course of dealing may therefore

17

preclude summary judgment.

18

Util. Dist., 652 F.2d 1341, 1344 (9th Cir. 1981) (“differing

19

views of the intent of parties [may] raise genuine issues of

20

material fact”).

21

Id. § 1303(b).

“An

A genuine

See United States v. Sacramento Mun.

Amcor argues that the parties “had a three year prior

22

course of dealing [since 2008], which imputed notice to plaintiff

23

of the limited remedy and the limitation of liability provision.”

24

(Amcor’s Mem. at 32.)

Amcor contends that, between 2008 and

25
26
27
28

7

“Course of dealing” consists of the parties’ relations
prior to forming the contract at issue, whereas “course of
performance” consists of the parties’ actions in carrying out the
contract at issue. Nanakuli Paving & Rock Co. v. Shell Oil Co.,
664 F.2d 772, 794 (9th Cir. 1981).
17

1

2012, it issued approximately 250 invoices to Starbucks for the

2

sale of various products, including wooden pallets, and that all

3

of those invoice contained the same disclaimers as those

4

contained in the 26 Invoices here.

5

of any of the invoices it purportedly issued to Starbucks prior

6

to the transaction at issue in this case.

7

two spreadsheets that list the approximately 250 invoices Amcor

8

purportedly issued since 2008.

9

Amcor has not provided copies

Instead, Amcor submits

(See Carranza Decl. ¶ 7, Ex. 28.)

Amcor also states that it had sold wooden pallets to

10

Starbucks once before in July and August 2009.

11

transaction, as here, Starbucks ordered pallets pursuant to a

12

specification sheet it provided that included a 19% kiln-dry

13

requirement, and Amcor subcontracted with Pallets Unlimited to

14

manufacture and deliver the pallets to Starbucks.

15

Decl. ¶¶ 11-13, 17; Kirsch Decl., May 27, 2016 (“Kirsch II

16

Decl.”), Ex. C at 97:1-25, Ex. O (Docket Nos. 122-4 to -19).)8

17

Amcor argues that Starbucks’ failure to object to the disclaimers

18

in the hundreds of invoices it received from Amcor since 2008

19

constituted Starbucks’ implied assent to the Disclaimers in the

20

26 Invoices here.

21

In that

(Carranza

(Amcor’s Mem. at 32.)

California courts have consistently held that “the

22

repeated sending of a writing which contains certain standard

23

terms, without any action with respect to the issues addressed by

24

those terms, cannot constitute a course of dealing which would

25

incorporate a term of the writing otherwise excluded under

26
27
28

8

Starbucks states that the 2009 order involved only 357
pallets and amounted to less than 4% of the 9,480 pallets in the
2011 and 2012 transaction at issue. (See id. Ex. O.)
18

1

[§ 2207].”

2

omitted).

3

terms, for however long a period, cannot establish a common

4

understanding between the parties as to which set of conflicting

5

terms is part of their contract.”

6

Unlimited, 240 F.3d at 788 (“[M]odern commercial transactions

7

conducted under the U.C.C. are not a game of tag or musical

8

chairs.”).

9

Transwestern, 46 Cal. App. 4th at 517 (citation
“[T]he mere exchange of forms containing inconsistent

Id. at 516; see also Textile

In Transwestern, the seller added a limitation of

10

liability clause to invoices that it issued to the buyer over a

11

twelve-year period.

12

considered whether the clause became part of the parties’

13

contracts for sale as a result of their twelve-year course of

14

dealing.

15

exchange of forms containing inconsistent provisions as to

16

liability and remedies, over a long period of time, can ‘fairly

17

be regarded as establishing a common basis of understanding’

18

between the parties as to their respective liability and

19

remedies.”

20

the longer such an exchange continues, “the more obvious it is

21

the parties have not reached an agreement over the terms in

22

dispute.”

23

The court found that § 2-207(3) applied and

The court rejected the seller’s argument that “the

Transwestern, 46 Cal. App. 4th at 517.

Additionally,

Id.
Amcor attempts to distinguish Transwestern on the

24

ground that the seller “stated in its invoices its acceptance was

25

conditioned on assent to its liability limiters.”

26

2-207 of the UCC, like Code § 2207, provides that a “definite and

27

seasonable expression of acceptance” containing additional terms

28

operates as an acceptance, unless it is expressly conditioned on
19

Id.

Section

1

the buyer’s assent to the additional terms.

2

Amcor’s argument is unavailing because the seller’s conditioning

3

of acceptance in Transwestern merely led to the conclusion that,

4

as here, the parties did not form a contract under § 2-207(1),

5

but instead, under § 2-207(3).

6

4th at 515.

7

U.C.C. § 2-207(1).

See Transwestern, 46 Cal. App.

In In re CFLC, Inc., 166 F.3d 1012 (9th Cir. 1999), the

8

Ninth Circuit held that, under the UCC, an invoice does not add

9

terms to a contract because “[c]ourse of dealing analysis is not

10

proper in an instance where the only action taken has been the

11

repeated delivery of a particular form by one of the parties” and

12

the parties had not taken any action with respect to the matters

13

addressed by the disputed terms.

14

reasoned that, because a seller in multiple transactions will

15

typically have every opportunity to negotiate the precise terms

16

it seeks, its failure “or inability to obtain a negotiated

17

agreement reflecting its desired terms strongly suggests that

18

those terms are not a part of the parties’ commercial bargain.”

19

Id.

Id. at 1017.

The Ninth Circuit

20

“[P]ayment on an invoice in accordance with an existing

21

oral contract does not in itself establish assent to the addition

22

of terms to the contract.

23

assent to a modification or addition of terms, the performance

24

must be related to the proposed modification or addition and

25

differ from the performance already required of the party by the

26

existing contract.”

27

4th 1483, 1502 (4th Dist. 2012); see also Hebberd-Kulow, 218 Cal.

28

App. 4th at 283 (holding that, absent additional evidence, 33

For a party’s performance to establish

C9 Ventures v. SVC-W., L.P., 202 Cal. App.

20

1

invoices containing a disputed term did not by themselves

2

establish that the term was part of the parties’ contract).

3

It cannot be said here that Starbucks’ payment of

4

Amcor’s prior invoices without objection constituted a course of

5

dealing establishing a common basis of understanding between the

6

parties as to their respective liabilities and remedies.

7

is no evidence that, by paying the prior invoices, Starbucks

8

manifested its affirmative assent to the disclaimers in the

9

Amcor’s prior invoices.

There

Rather, Starbucks was merely performing

10

its obligation to pay Amcor for the goods that it purchased,

11

including the wooden pallets that were delivered in 2009.

12

payment of those invoices, without more, thus does not constitute

13

Starbucks’ assent to the Disclaimers in the 26 Invoices here.

14

See Transwestern, 46 Cal. App. 4th at 517; see also Diamond Fruit

15

Growers, Inc. v. Krack Corp., 794 F.2d 1440, 1444-45 (9th Cir.

16

1986) (holding that to treat the buyer’s acceptance and receipt

17

of the goods as assent to the seller’s additional terms would be

18

inconsistent with UCC § 2-207 and reinstate the “last shot rule”

19

that § 2–207 intended to abolish).9

20

The

To support its argument, Amcor relies on two inapposite

21

cases, neither of which involves the use of a course of dealing

22

to supplement the terms of the parties’ contract under § 2207(3).

23

In Nunes Turfgrass, Inc. v. Vaughan-Jacklin Seed Co., 200 Cal.

24
9

25
26
27
28

Nor did the Disclaimers here modify the parties’
contract. Although the Code does not require consideration to
modify a contract, Cal. Com. Code § 2209(1), “a valid
modification still requires proof of the other elements essential
to the validity of a contract, including mutual assent.” PMC,
Inc. v. Porthole Yachts, Ltd., 65 Cal. App. 4th 882, 887 (4th
Dist. 1998).
21

1

App. 3d 1518 (5th Dist. 1988), the court analyzed whether a party

2

can limit its damages for a statutory violation.

3

(analyzing a violation of California Food and Agriculture Code

4

§ 52482).

5

Moran Seed Co., 44 F. Supp. 3d 974 (S.D. Cal. 2014), a seed

6

company attached a booklet that contained warranty disclaimers

7

and a limitation of liability to seed packets that the company

8

sold to a consumer.

9

held that the warranty disclaimers were unenforceable against the

10

consumer.

11

Id. at 1523

In Agricola Baja Best, S. De. R.L. de C.V. v. Harris

See 44 F. Supp. 3d at 980.

The court there

Id. at 989.
However, the court held that the limitation of

12

liability was enforceable because it was provided in conspicuous

13

large font, capital letters, and bold print.

14

court also observed that “the exterior of the booklet alerted the

15

user it contained important information and directed the user to

16

read the contents before use.”

17

order “specifically allowed [the consumer] to return the unopened

18

seed within 30 days for a full refund if it did not agree to the

19

terms.”

20

Id. at 991.

Id. at 990-91.

The

Moreover, each

Id. at 990.
Unlike Agricola, the Disclaimers here are not

21

conspicuous because they are located at the bottom of the

22

Invoices and are provided in small print.

23

Cal. Com. Code § 1201(10) (“Whether a term is ‘conspicuous’ or

24

not is a decision for the court.”).

25

Starbucks did not have the right to return the wooden pallets for

26

a full refund if it did not agree with the terms of the

27

Disclaimers.

28

involve seed sales.

(See Compl. Ex. A);

And, unlike Agricola,

The cited cases are also inapposite because they
“Seed sales are unique because seed is a
22

1

unique chattel.”

2

(citation omitted).

3

buyer’s recovery to the purchase price of the seed has prevailed

4

in the seed industry for many years.”

5

that it included the Disclaimers in its Invoices because it did

6

not manufacture the wooden pallets, Amcor offers no evidence that

7

doing so is the custom in its industry or trade.

8

Nunes Turfgrass, 200 Cal. App. 3d at 1533
“[T]he custom of nonwarranty or limiting the

Id.

Though Amcor contends

Amcor also contends that, when Starbucks and Amcor

9

first started doing business in 2008, the parties attempted to

10

negotiate the terms of a standard supplier contract to govern

11

Starbucks’ purchase of goods from Amcor.

12

5.)

13

employee, emailed a proposed contract to Amcor for review.

14

Ex. 4 at 004135-36.)

15

proposed revisions, which included the addition of a limitation

16

of liability clause stating: “Neither party will be responsible

17

for any special, incidental or consequential damages arising out

18

of this Agreement.”

19

(Parikh Decl. Exs. 4-

On March 10, 2008, Christopher Silkworth, a Starbucks
(Id.

On March 19, 2008, Amcor sent back its

(Id.; Coons Decl. ¶ 3, Ex. 24.)

On March 24, 2008, Silkworth responded that, with the

20

exception of an arbitration clause that Amcor had added, Amcor’s

21

changes were “acceptable.”

22

Silkworth requested that Amcor make certain additional changes

23

and resubmit their revised contract to Starbucks.

24

undisputed that Silkworth never received those revisions, that

25

there were no further communications between Starbucks and Amcor

26

regarding the proposed supplier contract, and that the parties’

27

negotiations ended without them executing an agreement.

28

Decl. ¶ 4; Silkworth Dep. at 50:22-51:2.)

(Parikh Decl. Ex. 4 at 004151.)

23

(Id.)

It is

(Coons

1

Amcor argues that Silkworth’s March 24, 2008 email

2

accepting Amcor’s revisions indicates Starbucks’ assent to the

3

Disclaimers in the Invoices here.

4

whether he had the authority to execute supplier contracts on

5

behalf of Starbucks, however, Silkworth responded that he “had

6

the authorization to administer the flow of agreements between

7

suppliers and Starbucks,” but “never had authorization to sign on

8

Starbucks’ behalf any agreements or documents that related to a

9

supplier, any supplier.”

When asked at his deposition

(Silkworth Dep. at 21:10-22:6.)

10

As to the proposed revisions that Amcor sent back on

11

March 19, 2008, Silkworth testified that he would not have had

12

the authority to respond to Amcor regarding those changes without

13

first taking them to the proper officials at Starbucks for review

14

and approval.

15

evidence that the supplier contract over which the parties were

16

negotiating in 2008 was product-specific and involved “industrial

17

packaging & janitorial supplies,” not wooden pallets.

18

54:12-18, Ex. 252.)

19

(Id. at 44:7-25.)

Starbucks also provides

(Id. at

Contrary to Amcor’s assertions, the parties’ March 2008

20

negotiation is immaterial because, as Amcor itself acknowledges,

21

no agreement was reached.

22

allows a party to change its position regarding a specific term

23

numerous times before the parties finally reach an agreement.

24

Since the parties failed to reach an agreement in 2008, the

25

emails do not evince Starbucks’ intent to assent to the

26

Disclaimers at issue here.

27

2008 is different from the Disclaimers at issue because it limits

28

both parties’ liability for damages.

The very nature of a negotiation

In addition, the proposed clause in

24

The Disclaimers here, by

1

contrast, limit only Amcor’s liability for damages.

2

the 2008 clause, the Disclaimers here exclude all express and

3

implied warranties, limit the remedy for any defective pallets to

4

the replacement of those pallets, and provide that Starbucks

5

assumes the risk of any loss that arises from the defective

6

pallets.

7

And, unlike

Furthermore, “[u]nder well-established precedent, a

8

single prior transaction cannot constitute a course of dealing.”

9

Trans-Tec Asia v. M/V HARMONY CONTAINER, 435 F. Supp. 2d 1015,

10

1028-29 (C.D. Cal. 2005) (collecting cases), aff’d, 518 F.3d 1120

11

(9th Cir. 2008).

12

dealing as “a sequence of conduct concerning previous

13

transactions between the parties.”

14

(emphasis added); see also id. § 1303(b), U.C.C. cmt. 2 (stating

15

that course of dealing “is restricted, literally, to a sequence

16

of conduct between the parties previous to the agreement” at

17

issue (emphasis added)).

18

“course of dealing” have also emphasized the requirement that

19

there be a “sequence” of previous transactions.

20

This is because the Code defines a course of

Cal. Com. Code § 1303(b)

Courts applying the UCC’s definition of

For instance, in Kern Oil & Refining Co. v. Tenneco Oil

21

Co., 792 F.2d 1380, 1385 (9th Cir. 1986), the Ninth Circuit held

22

that the “negotiation of a single prior contract” did not

23

constitute a course of dealing.

24

courts have echoed this view.

25

2d at 1029 & n.18 (collecting cases); see also id. at 1029

26

(“Thus, Trans-Tec’s course of dealing evidence, even if

27

admissible, fails to raise a triable issue of fact regarding Kien

28

Hung’s surprise or lack thereof.”).

Id. at 1385.

Numerous other

See Trans-Tec Asia, 435 F. Supp.

25

1

Because the parties did not have a course of dealing

2

from which Starbucks’ assent to the Disclaimers may be inferred,

3

there are thus no genuine issues of material fact regarding the

4

absence of Starbucks’ assent to the Disclaimers here.

5

matter of law, therefore, the Disclaimers are not part of the

6

parties’ contract for the sale of the wooden pallets.

7

Accordingly, the court must grant Starbucks’ motion for summary

8

judgment regarding the unenforceability of the Disclaimers and

9

strike Amcor’s thirteenth and forty-ninth affirmative defenses.

10

Amcor is thus excluded from raising the Disclaimers as a defense

11

to Starbucks’ claims.

12

B.

As a

Amcor’s Motion for Summary Judgment

13

1.

Strict Products Liability and Negligence

14

Starbucks does not oppose Amcor’s motion for summary

15

judgment on its strict products liability and negligence claims

16

against Amcor.

17

will thus grant Amcor’s motion for summary judgment on those

18

claims.10

(Pl.’s Opp’n at 2 (Docket No. 122).)

The court

19

2.

Breach of Contract

20

Amcor seeks judgment as a matter of law that Starbucks

21

is precluded from recovering damages on its breach of contract

22

claim and is limited to the exclusive remedy provided in the

23

Disclaimers.11

As discussed above, the Disclaimers are not part

24
10

25
26
27
28

This does not affect Starbucks’ strict products
liability and negligence claims against Pallets Unlimited.
11
Amcor acknowledges that “[t]here is a genuine dispute
of material fact as to whether the failure to comply with the
moisture content in the specifications provided by Starbucks
caused the resultant mold, as well as a dispute as to whether the
moisture content of the pallets was the cause of the mold.”
26

1

of the parties’ contract as a matter of law.

2

court must deny Amcor’s motion for summary judgment on Starbucks’

3

breach of contract claim.

Accordingly, the

4

3.

Breach of Express Warranty

5

Amcor does not dispute that the “disclaimer in the

6

invoices is ineffective as to the implied warranty of

7

merchantability and any express warranties.”

8

5.)

9

express warranty fails because no express warranty exists here.

(Amcor’s Opp’n at

Amcor argues, rather, that Starbucks’ claim for breach of

10

Section 2313 of the Code provides that “[a]ny

11

affirmation of fact or promise made by the seller to the buyer

12

which relates to the goods and becomes part of the basis of the

13

bargain creates an express warranty that the goods shall conform

14

to the affirmation or promise.”

15

“Any description of the goods which is made part of the basis of

16

the bargain creates an express warranty that the goods shall

17

conform to the description.”

18

necessary to the creation of an express warranty that the seller

19

use formal words such as ‘warrant’ or ‘guarantee’ or that he have

20

a specific intention to make a warranty.”

21

Cal. Com. Code § 2313(1)(a).

Id. § 2313(1)(b).

“It is not

Id. § 2313(2).

Starbucks contends that “Amcor expressly warranted that

22

the pallets would be 19% kiln dried when it accepted the order

23

for pallets.”

24

contained the requirement that the wooden pallets be constructed

25

with lumber that was kiln-dried to a moisture content of less

26

than 19%.

(Pl.’s Mot. at 7.)

(Compl. Ex. B.)

It is undisputed that Starbucks

27
28

The Specification Sheet

(Amcor’s Opp’n at 1 n.1.)
27

1

provided Amcor with the Specification Sheet and that Carranza, on

2

behalf of Amcor, orally agreed to provide Starbucks with wooden

3

pallets in accordance with the Specification Sheet.

4

¶¶ 5-6; Carranza Dep. at 51:1-17.)

5

(Hardy Decl.

Amcor’s promise that the pallets will conform to the

6

Specification Sheet thus created an express warranty that the

7

pallets would be 19% kiln dried.

8

Supp. at 1448 (the terms of a contract include express warranties

9

of conformity with standard specifications).

See Reynolds Metals, 754 F.

Accordingly, the

10

court must deny Amcor’s motion for summary judgment on Starbucks’

11

claim for breach of express warranty.

12
13
14

4.

Breach of Implied Warranty of Fitness for a
Particular Purpose

Amcor argues that Starbucks’ claim for breach of the

15

implied warranty of fitness for a particular purpose fails

16

because no such warranty exists here.

17

time of contracting has reason to know any particular purpose for

18

which the goods are required and that the buyer is relying on the

19

seller’s skill or judgment to select or furnish suitable goods,

20

there is . . . an implied warranty that the goods shall be fit

21

for such purpose.”

22

Starbucks has failed to establish that Amcor knew Starbucks was

23

relying on its skill or judgment in furnishing the pallets in

24

accordance with the Specification Sheet.

25

“Where the seller at the

Cal. Com. Code § 2315.

This argument is without merit.

Amcor argues that

It is undisputed that

26

Amcor was aware of the particular purpose for which Starbucks

27

would use the wooden pallets.

28

that the wooden pallets would be used to store green coffee

Carranza states that she “knew

28

1

beans” and that “the ordinary use of wooden pallets was to hold

2

goods for storage, moving, and/or shipping.”

3

¶¶ 28-29.)

4

relying on Amcor to furnish the pallets in accordance with the

5

Specification Sheet.

6

[that Amcor] build the pallets per the specification sheet,” and

7

that Amcor represented to Starbucks it would furnish the pallets

8

in accordance with the Specification Sheet.

9

51:1-17.)

10

(Carranza Decl.

It is also undisputed that Amcor knew Starbucks was

Carranza testified that Hardy “requested

(Carranza Dep. at

Amcor’s own undisputed evidence also establishes that

11

Amcor expected Pallets Unlimited to manufacture the pallets in

12

accordance with the Specification Sheet.

13

58:3; Amcor’s Resp. to Pl.’s Interrog. No. 7 (“[Amcor] expected

14

that the specifications and quality of the Starbucks pallets

15

would meet the . . . Specification Sheet requirements.”) (Docket

16

No. 119-38); Amcor’s Resp. to Pl.’s RFAs, Set Two, No. 11

17

(“[Amcor] expected the pallet manufacturer to manufacture the

18

pallets as per the specification sheet it had provided.”) (Docket

19

No. 119-39).)

20

Amcor knew the particular purpose for the wooden pallets and that

21

Starbucks relied on Amcor to furnish the pallets in accordance

22

with the Specification Sheet, the court must deny Amcor’s motion

23

for summary judgment on Starbucks’ claim for breach of the

24

implied warranty of fitness for a particular purpose.

(E.g., id. at 56:18-

Because a reasonable factfinder could find that

25

5.

Breach of Implied Warranty of Merchantability

26

Amcor argues that Starbucks’ claim for breach of the

27

implied warranty of merchantability fails because there was no

28

breach of that warranty.

The Code implies a warranty of
29

1

merchantability that goods are “fit for the ordinary purposes for

2

which such goods are used.”

3

implied warranty provides for a “minimum level of quality.”

4

Birdsong v. Apple, Inc., 590 F.3d 955, 958 (9th Cir. 2009)

5

(citation omitted).

6

product conformed to the standard performance of like products

7

used in the trade.”

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198 (2d Dist. 1983).

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depend on testimony of persons familiar with the industry

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standards and local practices and is a question of fact.”

Cal. Com. Code § 2314(2)(c).

The

“Crucial to the inquiry is whether the

Pisano v. Am. Leasing, 146 Cal. App. 3d 194,
This is a factual determination that “may

Id.

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A plaintiff claiming breach of the implied warranty of

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merchantability must show that the product “did not possess even

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the most basic degree of fitness for ordinary use.”

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Alfa Leisure, Inc., 114 Cal. App. 4th 402, 406 (4th Dist. 2003).

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“Such fitness is shown if the product is in safe condition and

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substantially free of defects.”

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Cal. App. 4th 1297, 1303 (4th Dist. 2009) (internal quotation

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marks and citation omitted).

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Mocek v.

Mexia v. Rinker Boat Co., 174

Starbucks provides evidence here that the mold

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discovered on the pallets could pose a health hazard to humans

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working with them and a quality hazard to any products stored on

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them.

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that the wooden pallets Starbucks returned to Amcor several weeks

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or months after they were delivered to the OHL Warehouse were not

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moldy.

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pallets’ moisture content decreased over time as a result of

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natural air drying.

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Decl. Ex. N.)

(Kirsch II Decl. Ex. I at 177:17-179:17.)

Amcor argues

However, the evidence submitted indicates that the

(Anderson Dep. at 169:21-171:12; Kirsch II

This would support a reasonable inference that the
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pallets may not have been able to support mold growth at the time

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Amcor took them back.

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Amcor also disputes whether the particular mold that

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was found on the pallets was dangerous to human health and to

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products because “some types of mold are not hazardous to humans

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and would not impact products not meant for consumption.”

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(Amcor’s Reply at 5.)

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cause of the mold may need to be resolved before the court may

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determine if the implied warranty of merchantability was

Amcor acknowledges, however, that the

10

breached.

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disputed fact and cannot be resolved without weighing the

12

evidence and credibility of the parties’ witnesses and experts.”

13

(Id.)

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It also acknowledges that the cause of the mold “is a

Because genuine issues of material fact exist as to

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whether the wooden pallets here posed a health and quality hazard

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and because the determination of this issue may require the

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resolution of the causation issue, the court must deny Amcor’s

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motion for summary judgment on Starbucks’ claim for breach of the

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implied warranty of merchantability.

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IT IS THEREFORE ORDERED that:

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(1) Starbucks’ motion for partial summary judgment on

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the unenforceability of the Disclaimers in Amcor’s 26 Invoices,

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(Docket No. 119), be, and the same hereby is, GRANTED;

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(2) Amcor’s thirteenth and forty-ninth affirmative

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defenses, (Docket No. 14), be, and same hereby are, STRICKEN and

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that Amcor be excluded from raising the Disclaimers in the 26

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Invoices as a defense to Starbucks’ remaining claims for breach

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of contract, breach of express warranty, breach of the implied
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1

warranty of merchantability, and breach of the implied warranty

2

of fitness for a particular purpose;

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(3) Amcor’s motion for summary judgment on Starbucks’

4

strict products liability and negligence claims, (Docket No.

5

111), be, and the same hereby is, GRANTED; and

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(4) Amcor’s motion for summary judgment on Starbucks’

7

claims for breach of contract, breach of express warranty, breach

8

of the implied warranty of merchantability, and breach of the

9

implied warranty of fitness for a particular purpose, (Docket No.

10

111), be, and the same hereby is, DENIED.

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Dated:

June 23, 2016

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