Electrolux Home Prod v. Whitesell Corp

Filing 1579

ORDER denying 1526 Motion in Limine to exclude evidence and argument concerning the Substitute Part Provision. Signed by Chief Judge J. Randal Hall on 06/07/2022. (jlh)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF GEORGIA
AUGUSTA DIVISION

WHITESELL CORPORATION,

Plaintiff,
CV 103-050

V.

ELECTROLUX HOME PRODUCTS, INC.,
HUSQVARNA, A.B., and HUSQVARNA
OUTDOOR PRODUCTS, INC.,

*
*
*

Defendants.

ORDER

Before the Court is Defendants Husqvarna AB and Husqvarna
Outdoor
limine

Products,
to

Inc.'s

exclude

any

{''Husqvarna"
evidence

or

hereinafter)
argument

motion

concerning

in
the

"Substitute Part Provision" of the parties' Settlement Memorandum
at the trial of the case.

The

Court

denies

the

motion

for the

relationship

between

reasons that follow.

I.

This

case

involves

BACKGROUND

the

contractual

Husqvarna and Plaintiff Whitesell Corporation, a parts supplier,
which

began in 2000 when

Partnership

Agreement

contractual

obligation

the

parties entered

("SPA").
for

This

Whitesell

to

into a Strategic

motion
provide

involves
"Brunner

the
and

wireform

parts'' to

Husqvarna,

which

arose

upon

the

execution of the Settlement Memorandum of May 28, 2003.

parties'
Paragraph

3 of the Settlement Memorandum provided as follows:

Whitesell will make product supply capability
presentations to [Husqvarna] for any or all of the
Brunner and/or wireform parts.
To the extent that
. [Husqvarna does] not transition the supply of all
Brunner and wireform parts to Whitesell, [Husqvarna]
agrees to transition additional mutually agreed upon
parts for Whitesell to supply in an amount which creates
gross purchases . . . equal to the calendar year .2002
purchase value of the Brunner and wireform parts not
transitioned (hereinafter, ''substitute parts."}
While
the parties will immediately begin the process of
determining which Brunner, wireform and/or substitute
parts to transition to Whitesell, full transition will
not be made until December 31, 2003.

(See generally Sec. Am. Compl., Doc. No. 578, Ex. 2, Settlement
Memo. SI 3.)

For purposes of this Order, Paragraph 3 is called the

"Substitute Part Provision."

It is undisputed that Husqvarna did not transition the Brunner

and wireform parts to Whitesell by December 31, 2003.
also did not transition agreed upon substitute parts.
to

transition

contract

claim

(Second

Am.

alleges

that

parts
in

Count

Compl.
it

forms

SI*]!

made

the

II

of

137-44.)

basis
its

of

More

"significant

This failure

Whitesell's

Second

Amended

specifically,

investments

in

Husqvarna

breach

of

Complaint.
Whitesell
buildings,

equipment, and other infrastructure to supply" the Brunner and

wireform parts and that it "manufactured significant quantities of
these parts based on [Husqvarna's] obligation to transition" the

parts.

(Id. SISl 140-41.)

Thus, Whitesell seeks damages in the

form of operational losses to include payment for its inventory of
these parts.1

(Id. SI 144; see also Parties' Joint Resp. to Court's

Order of Sept.
remaining

30, 2020,

claims

in

the

Doc.

No.

case).)

1415,

at 2 (detailing the

Whitesell

does

not

state

a

specific claim for lost profits or loss of revenue from the failure
to transition substitute parts in Count II. (See Sec. Am. Compl.,
SI 144.)

Indeed, the Court has foreclosed Whitesell's ability to

seek lost profits through its Sanctions Order of February 14, 2019
(doc. no. 1159).

The failure to transition also forms the basis of Husqvarna's

counterclaim for damages ^'based upon Whitesell's alleged refusal
and/or inability to supply all Enforceable Parts to include Brunner
and wireform parts.

(See Husq. Ans., Doc. No. 584, Count III.)

Therein, Husqvarna seeks damages for costs incurred for purchasing

"Safety Stock" parts and for losses in failing to receive pricing
discounts and annual rebates.

(Id. SI 38.)

The parties vehemently disagree as to whose feet the failure
to

transition

rests.

Husqvarna

contends

that

the

failure

to

^ On April 19, 2022, the Court granted Husqvarna's motion in limine
to exclude evidence pertaining to Whitesell's damages claim for
capital expenditures. (Doc. No. 1541.)

2 Husqvarna has also counterclaimed based upon Whitesell's alleged
failure to pay annual rebates and to comply with the phase-out
inventory obligations. (See Husq. Ans., Counterclaims I & II.)
3

transition was due to Whitesell's conduct such as its failure to

timely

locate

capability

sub-suppliers

or

desire

to

for

parts

manufacture;

it

did

failure

not

to

have

the

successfully

complete required qualification processes for parts; failure to
make supply capability presentations; and threatening to cease

supplying parts.
was

the

result

Whitesell contends that the failure to transition
of

Husqvarna's

deliberate

scheme

to

avoid

contract with Whitesell in favor of alternate suppliers.

the

As the

Court has noted, the ''attribution of fault" is a "hotly contested,

fact-intensive inquiry that requires consideration and resolution
by a jury."

(See Order of Sept. 10, 2020, Doc. No. 1410, at 7

n.3.)

At times in this case, however, the parties have sought to

avoid a jury trial on this issue.

Husqvarna has claimed that it

should be excused, as a matter of law, from any obligation under

Paragraph 3 of the Settlement Memorandum based upon Whitesell's
conduct related to the transition efforts.

(See Order of Jun. 8,

2011, Doc. No. 429 (denying Husqvarna's motion for summary judgment
on Whitesell's claims concerning the transition of Brunner and
Matrix parts).)

Whitesell has claimed that it is not liable for

damages on Husqvarna's counterclaims, as a matter of law, because
Husqvarna transitioned neither the Brunner and wireform parts nor

substitute parts under the Substitute Part Provision.

(See Order

of Sept. 10, 2020 (denying Whitesell's motion for summary judgment
4

on liability as to Husqvarna's counterclaims); Order of March 25,
2021, Doc. No. 1462 (granting Husqvarna's motion to strike Neil
Whitesell

as

an

expert

and

his

expert

report).)

On

these

occasions, the Court has declined to enter judgment in favor of

either

party

because

the

disputed

reasons

behind

the

failed

transition of Brunner and wireform parts is the crux of their
affirmative claims against each other.

Now, Husqvarna seeks to exclude ''presentation of evidence and
argument concerning the Substitute Part Provision" because the
remaining damages claim in

Whitesell's Count II - payment for

Brunner and wireform inventory - does not implicate substitute

parts.

Indeed, the parties neither mutually identified nor sought

transition

of

any

substitute

parts

as

provided

for

in

the

Substitute Part Provision.

Husqvarna seizes upon this fact to

argue

Part

that

the

Substitute

Provision

"has

absolutely

relevancy to any of the claims remaining in the lawsuit."

no

(Def.

Husq.'s Mot. in Limine, Doc. No. 1526, at 4.)
The obligation to transition Brunner and wireform parts under
the Substitute Part Provision underpins one of the most important
features of the upcoming trial. This obligation, and the obligation

to provide substitute part revenue in lieu thereof, appear in the
various letters and emails in the case that the parties will use
to present their side of the story to the jury.

As a practical

matter then, it would be nearly impossible to exclude all reference
5

- ''evidence and argument" - pertaining to the Substitute
Provision.

Part

For this reason, the parties will be able to reference

and discuss the Substitute Part Provision and its import on the
parties' course of conduct with the following paramount proviso:
Whitesell

will

not

be

permitted

to

seek

damages

revenue from the failure to identify and

for

any

lost

transition substitute

parts regardless of the determination of fault a^ to the failed
transition of Brunner and wireform parts.

Here, the Court emphasizes once again that Whitesell could
not seek substitute part revenue solely because the Brunner and

wireform parts were not transitioned.

The Court made this clear

in

summary

denying

Whitesell's

motion

Husqvarna's counterclaims.
1410

(rejecting

for

judgment

as

to

(Order of Sept. 10, 2020, Doc. No.

Whitesell's

contention

that

Husqvarna

was

obligated to purchase substitute parts regardless of its conduct
in hindering or preventing the transition of Brunner and wireform

parts).

Thus, if the jury determines that Whitesell is at fault

for the failure to transition Brunner and wireform parts, Whitesell

is not entitled to substitute part revenue.
Court

concludes

that

allowing

Whitesell

(See id. at 8 ("The
to

recover

under

a

provision that it may have breached through its own conduct would
remove

all

mutuality

from

the

provision

and

unjustly

excuse

Whitesell's obligation to qualify parts and to provide its best
efforts to fulfill its requirements.").)
6

But what if the jury determines Husqvarna is at fault for the
failed transition?

In that event, Whitesell has chosen its claim

for damages - the value of unpurchased Brunner and wireform part

inventory.

As explained earlier, this is the only remaining claim

in Whitesell's Count II.

loss of substitute

Whitesell did not assert a claim for the

part revenue.

This

was

reiterated in

the

parties' joint response detailing the remaining claims in the case,
which lists only capital investments and payment for inventory
under Count II of the Second Amended Complaint.^

(See Joint Resp.

to Court Order, Doc. No. 1415, at 2.)

In conclusion, the Court finds that Husqvarna's attempt to

exclude all evidence and argument of the Substitute Part Provision

is overly broad and unduly prejudicial because exclusion would
unfairly undermine Whitesell's ability to present its side of the
story.

The

Substitute

Part

Provision

is

relevant

to

an

understanding of the parties' intent, motive, state of mind, and
their interpretation of their respective obligations under the
Settlement Memorandum for the jury's consideration of fault.

In

so concluding, evidence and argument relating to the Substitute
Part Provision will be allowed to provide necessary background and

3 To be sure, a claim for the inventory of Brunner and wireform

parts is mutually exclusive of a claim for loss of revenue for
substitute parts.
The Substitute Part Provision gave Husqvarna
the choice of transitioning the Brunner and wireform parts or
transitioning mutually agreed upon substitute parts.
7

explanation for the communications and testimony of the parties
and for the inferences to be drawn therefrom.

The Substitute Part

Provision cannot be ignored, as Husqvarna seems to suggest; rather,
it

should

context.

be

presented

to the

jury

as

useful

information

in

But, as forewarned, Whitesell will not be permitted to

use the Substitute Part Provision as a basis for any claim of lost
revenue damages.

Upon the foregoing, Husqvarna's motion in limine to exclude
evidence and argument concerning the Substitute Part .Provision
(doc. no. 1526) is DENIED.

ORDER ENTERED at Augusta, Georgia, this

day of June,

2022.

J. RANDA^HALL,/CHIEF JUDGE

UNi™-^ATES DISTRICT COURT
-SaUT44ERN

DISTRICT OF GEORGIA