Bright Harvest Sweet Potato Company, Inc. v. H.J. Heinz Company, L.P.

Filing 179

MEMORANDUM DECISION AND ORDER Bright Harvest's Motion (Dkt. 165 ) to Alter the Judgment is DENIED, but Bright Harvest's Motion for New Trial is GRANTED. The motions related to attorney fees (Dkts. 155 , 171 and 172 ) are DENIED WITHOUT PREJUDICE. The motions may be re-filed depending upon the outcome of the new trial. The Court will enter a separate notice of hearing for the purpose of choosing a date for the new trial. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (jp)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
BRIGHT HARVEST SWEET POTATO
COMPANY, INC., an Oregon
corporation,

Case No. 1:13-cr-00296-BLW
MEMORANDUM DECISION AND
ORDER

Plaintiff,
v.
H. J. HEINZ COMPANY, L.P., a
Pennsylvania limited partnership
Defendant.

INTRODUCTION
Pending before the Court is Plaintiff Bright Harvest Sweet Potato Company's
(Bright Harvest) Rule 59 Motion to Alter or Amend Judgment or, in the alternative for
New Trial (Dkt. 165). Having reviewed the Motion, Defendant H. J. Heinz Company’s
(Heinz) Response (Dkt. 169), and Bright Harvest’s Reply (Dkt. 173) the Court finds that
the parties have adequately identified the issues and that a hearing is not necessary.
Following that review, the Court enters the following Order denying the Motion to Alter
or Amend Judgment, but granting the Motion for New Trial.

MEMORANDUM DECISION AND ORDER - 1

BACKGROUND
This case involves a breach of contract claim brought against Heinz by Bright
Harvest. Bright Harvest alleges Heinz breached the Co-Pack Agreement when they
stopped purchasing sweet potato fries prior to its expiration.
Bright Harvest and Heinz signed the Co-Pack Agreement on December 7, 2009.
The Co-Pack Agreement set terms, conditions, and prices for Bright Harvest to produce
sweet potato fries under Heinz’s Ore-Ida label. (Dkt. 45-2, p. 1). The Agreement set forth
that Heinz “shall place purchase orders with Co-Packer [Bright Harvest], and Co-Packer
shall sell and deliver to Heinz, quantities of the products [sweet potato fries] under the
terms of this Agreement.” (Dkt. 10-1, p. 4). The term of the Agreement was from
December 1, 2009 until November 30, 2015. (Dkt. 10-1, p. 4). The Agreement
established a “non-binding planning target of 10 million pounds of sweet potato fries per
year,” and indicated that it was “the intent of the Parties that Heinz will deliver to CoPacker purchase orders for such Products as hereinafter provided, subject to the current
capacity of Co-Packer to produce such Products.” (Dkt. 10-1, p. 5).
In addition, Heinz was to provide rolling weekly demand files with 5 weeks of
firm production orders and 8 weeks of forecast. (Dkt. 10-1, p. 5). No purchase order
could exceed 50% of Bright Harvest’s current forecasted volume without mutual consent.
(Dkt. 10-1, p. 5). Further, Heinz was to provide Bright Harvest 12 to 18 month rolling
forecasts quarterly for operational management and capacity planning. (Dkt. 10-1, p. 6).

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Bright Harvest began supplying Heinz with sweet potato fries in 2009. In the first
year of the contract, Bright Harvest produced approximately half of the requested
400,000 pounds of sweet potato fries, and in 2010, they produced 6 million pounds for
Heinz. (Dkt. 45-1, p. 5). While the Agreement was still in effect, Heinz began producing
sweet potato fries in its Ontario, Oregon facility. (Dkt. 45-1, p. 5). And, in March 2011, it
submitted a 13-month rolling forecast to Bright Harvest requesting only 4.1 million
pounds of sweet potato fries between April 2011 and 2012. (Dkt. 45-1, p. 6). Sweet
Harvest claimed that this drop in requested production constituted a breach of the CoPack Agreement. To settle this dispute, Heinz drafted a letter revising its forecast from
4.1 million pounds to over 7 million pounds, which Bright Harvest signed. (Dkt. 45-1, p.
6). However, beginning in July of 2011, Heinz provided Bright Harvest with 12-18
month forecasts showing zero volume for all products after September 2012. (Dkt. 45-1,
p. 8). Regarding this as a breach of the Co-Pack Agreement, Bright Harvest filed a breach
of contract claim against Heinz in July 2011.
A jury trial was held in March 2015. At the conclusion of the trial, the jury was
given a special verdict form containing three questions. (Dkt. 153-1). The first question
required the jury to determine whether or not the Co-Pack Agreement was an enforceable
contract. The jury answered that it was. The second question asked the jury to decide
whether or not Heinz had breached the Co-Pack Agreement. The jury answered that it
had not. As a result, the third question regarding the amount of damages was not

MEMORANDUM DECISION AND ORDER - 3

answered by the jury. Bright Harvest has now filed a motion under Rule 59 of the Federal
Rules of Civil Procedure to amend the judgment, or, in the alternative, for a new trial.
LEGAL STANDARD
The standard for altering or amending a judgment is found in Rule 59(e), while the
standard for granting a new trial is found in Rule 59(a).
1. Rule 59(e) Motion to Alter or Amend Judgment
District courts have “considerable discretion” when addressing motions to amend
a judgment under Rule 59(e). Turner v. Burlington Northern Santa Fe R. Co., 338 F.3d
1058, 1063 (9th Cir. 2003). However, “a Rule 59(e) motion is an ‘extraordinary remedy,
to be used sparingly in the interests of finality and conservation of judicial resources.’”
Wood v. Ryan, 759 F.3d 1117, 1121 (9th Cir. 2014). (Citing Kona Enters., Inc. v. Estate
of Bishop, 229 F.3d 877, 890 (9th Cir.2000)). “There are four grounds upon which a Rule
59(e) motion may be granted: 1) the motion is necessary to correct manifest errors of law
or fact upon which the judgment is based; 2) the moving party presents newly discovered
or previously unavailable evidence; 3) the motion is necessary to prevent manifest
injustice; or 4) there is an intervening change in controlling law.” Turner v. Burlington N.
Santa Fe R. Co., 338 F.3d 1058, 1063 (9th Cir. 2003) (Internal citations and quotation
marks omitted).
2. Rule 59(a) Motion for New Trial
Rule 59(a) states that the Court may grant a new trial on all or some of the issues,
and to any party, “after a jury trial, for any reason for which a new trial has heretofore

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been granted in an action at law in federal court.” Fed. R. Civ. P. 59(a). From this
language, the Ninth Circuit has held that the trial court, in considering a motion for new
trial “is bound by those grounds that have been historically recognized.” Molski v. M.J.
Cable, Inc., 481 F.3d 724, 729 (9th Cir. 2007)(Internal citation and quotation omitted).
Those “grounds include, but are not limited to, claims that the verdict is against the
weight of the evidence, that the damages are excessive, or that, for other reasons, the trial
was not fair to the party moving.” Id. (Internal quotation and citation omitted). Thus,
“[t]he trial court may grant a new trial only if the verdict is contrary to the clear weight of
the evidence, is based upon false or perjurious evidence, or to prevent a miscarriage of
justice.” Id. (Internal quotation and citation omitted). Thus, “[u]pon the Rule 59 motion
of the party against whom a verdict has been returned, the district court has the duty . . .
to weigh the evidence as [the court] saw it, and to set aside the verdict of the jury, even
though supported by substantial evidence, where, in [the court’s] conscientious opinion,
the verdict is contrary to the clear weight of the evidence.” Id. (Brackets in original)
(Internal quotation and citation omitted). The determination of “the clear weight of the
evidence” is a fact-specific endeavor, and there must only be some “reasonable basis” for
the jury's verdict. U.S. v. 4.0 Acres of Land, 175 F.3d 1133, 1139 (citations omitted).
ANALYSIS
1.

Bright Harvest’s Motion for a New Trial is Not Barred by Procedural Issues.
Heinz initially raises two procedural objections to Bright Harvest’s motion. The

Court is not persuaded by either objection.

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First, Heinz argues that the Court should follow the rule of the First Circuit that
objections challenging the consistency of a special verdict must be made before the jury
is discharged. However, the Ninth Circuit has ruled that a party is free to raise the claim
of an inconsistent jury verdict even after the jury has been discharged. See Guy v. City of
San Diego, 608 F.3d 582, 586 (9th Cir. 2010). Thus, there is no reason to consider a
contrary rule suggested by another circuit.
Second, Heinz argues that Bright Harvest did not request a new trial on any issue
except its claim that there was an improper jury instruction. However, Bright Harvest’s
request for a new trial was not limited to its claim of an improper jury instruction. The
relief requested in the Motion clearly states that Bright Harvest seeks a new trial if the
Court does not alter the judgment. It does not limit that request to a specific issue.
Therefore, Heinz’s contention that a new trial can only be granted based on the claim of
an improper jury instruction is incorrect.
2.

The jury’s determination that the contract was enforceable but had not been
breached is against the clear weight of the evidence.
The main thrust of Bright Harvest’s argument is that the jury’s answers are

“irreconcilably inconsistent and [are] against the clear weight of the evidence.” Motion to
Alter Judgment at 3, Dkt. 165-1. Generally, of course, there is nothing inconsistent about
a jury finding that an enforceable contract existed, but then concluding that it was not
breached. However, citing Jury Instruction No. 14, Bright Harvest contends that the
contract was only enforceable if it was a requirements contract under Idaho Code § 28-2306. Bright Harvest argues that, given the evidence at trial, the jury had no choice but to

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conclude that Heinz breached the contract if it was a requirements contract. In essence,
Bright Harvest claims that Heinz’s actions, as the evidence established at trial, clearly
breached its obligations under a requirements contract. Therefore, the jury’s contrary
conclusion was against the clear weight of the evidence. The Court agrees.
a. The jury found that the contract was enforceable either because of exclusivity
or because the planning target was a “stated estimate.”
Jury Instruction No. 14 stated that the jury could find the Co-Pack Agreement
enforceable under either of two circumstances: (1) if it contained a term which measures
the quantity of sweet potato fries to be sold by a stated estimate of what Heinz required,
or (2) if it contained a term which required Heinz to obtain its sweet potatoes exclusively
from Bright Harvest. Jury Instructions at 18, Dkt. 152. Bright Harvest argues that under
either finding, the jury’s verdict that the contract was not breached is against the clear
weight of the evidence.
Heinz responds by suggesting a third alternative which would explain the jury’s
finding. Specifically, Heinz’s theory is that the jury may have determined that the rolling
12 to 18 month forecasts were stated estimates and made the contract enforceable.
Response to Motion to Alter Judgment at 13, Dkt. 169. Heinz argues that the evidence at
trial made it possible to conclude that the planning target was a non-binding estimate of a
promised future estimate and that Heinz retained the ability to “self-manufacture
Products without restriction or limitation.” Id. at 12.
Heinz argument fails, however, because it would require the jury to have ignored
the jury instructions and would have made the Agreement unenforceable as a matter of

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law. Heinz’s theory fails because it would require the jury to ignore the plain text of Jury
Instruction No. 14 that the estimate must be stated. A stated estimate creates an
enforceable requirements contract when an agreement is not exclusive because the
estimate acts as consideration. See City of Louisville v. Rockwell Mfg. Co., 482 F.2d 159,
164 (6th Cir. 1973); cf. Amber Chemical, Inc. v. Reilly Industries, Inc., No.
106CV06090OWWSMS, 2007 WL 512410, at *8 (E.D. Cal. Feb. 14, 2007) (Stating that
“[i]t is not essential that a requirements contract containing a minimum purchase quantity
also be for exclusive dealings.”). If the Co-Pack Agreement only obligated Heinz to
submit 12-18 month forecasts and Heinz was free to vary the forecasts even to zero
without limitation or restriction, then the Agreement was nothing more than an openended offer to sell and lacked consideration. See City of Louisville, 482 F.2d at 164. For
the parties’ agreement to be an enforceable contract, it must have contained a benchmark
number to which the buyer and seller were bound, subject only to modifications made in
good faith. The planning target is the only estimate of an actual quantity contained in the
Agreement. As a result, the jury must have concluded that the planning target was a
stated estimate of Heinz’s actual requirements. Otherwise, they could not have
determined that the contract was enforceable under the Court’s instructions.
b. The jury’s verdict that the requirements contract was not breached is against
the clear weight of the evidence.
If the contract was enforceable because the planning target was a stated estimate,
then Heinz breached the contract if its decision to reduce its orders from Bright Harvest
was made in bad faith. See Idaho Code § 28-2-306. Upon reviewing the relevant case law

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and Idaho Code § 28-2-306, the Court instructed the jury that “[a] buyer in a
requirements contract acts in good faith if it has a valid business reason for varying its
requirements other than dissatisfaction with the contract, even if it results in no further
orders.” Jury Instructions at 21, Dkt. 152. Thus, the jury had no choice but to find that
Heinz acted in bad faith if its business reason for not reducing the quantity of orders to
zero was dissatisfaction with the contract.
The evidence at trial points to only one conclusion – that Heinz reduced its orders
because of its dissatisfaction with the contract. The evidence at trial was clear that the
determinative, and perhaps sole, reason for Heinz’s decision to reduce the quantity of
orders to zero, was its belief that it could produce the sweet potato fries more profitably
at its own facility. A buyer expresses dissatisfaction with the contract, and acts in bad
faith, when it terminates a requirements contract solely to increase profitability. See
Empire Gas Corp. v. Am. Bakeries Co., 840 F.2d 1333, 1341 (7th Cir. 1988) (Stating that
good faith “requires at a minimum that the reduction of requirements not have been
motivated solely by a reassessment of the balance of advantages and disadvantages under
the contract to the buyer.”) See also Park Electrochemical Corp. v. Delco Electronics
Corp., 65 F. App'x 602, 607 (9th Cir. 2003). (Tallman, J., dissenting)1 (Stating that “the

1

Judge Tallman’s dissent states that, contrary to the majority’s opinion, failing to add a clarifying
sentence to a jury instruction defining legitimate business reasons was prejudicial error. Judge Tallman’s
definition of a legitimate business reason is not contradicted by the majority. Rather the majority
concludes that the additional sentence did not clarify but simply restated the definition already in the jury

(Continued)

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buyer's desire for greater profitability, standing alone, is insufficient to establish that the
buyer acted in good faith in terminating the requirements contract.”). Heinz reduced its
demand from Bright Harvest because it determined that it would be more economically
advantageous to self-manufacture the sweet potato fries when it had sufficient open
capacity in its own manufacturing facilities to do so. TT, p. 888, L10 – p. 890, L19. In
other words, Heinz simply reassessed the advantages and disadvantages of the
Agreement, determined that it was not as economically advantageous to order from
Bright Harvest as it had originally believed, and therefore reduced its orders to zero.
Under the Court’s instructions, such a decision necessarily added up to bad faith.
The Court’s decision does not mean that Heinz had no choice but to slavishly
continue ordering fries at, or near, the original contract estimates. Certainly, there are a
number of reasons which would have justified a decision by Heinz to substantially
decrease its orders – even to zero. For example, if Heinz had reduced its orders in
response to the lower consumer demand for sweet potato fries, it would have been acting
in good faith. See Empire Gas Corp. 840 F.2d at 1339. (Stating that a reduction in
consumer demand can be a valid business reason to reduce requirements.). However, a
reduction in consumer demand cannot be used to justify a significantly disproportionate

instruction. Therefore, the Court finds Judge Tallman’s commentary regarding good faith and legitimate
business reasons persuasive even though it is contained in a dissenting opinion.

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reduction in orders, since that would indicate dissatisfaction with the contract, rather than
a mere response to the market. Here, Heinz conceded that there continued to be lower but
substantial consumer demand even after it reduced its orders to zero. Response to Motion
to Alter Judgment at 6, Dkt. 169. Therefore, the trial evidence showed that the reduction
was not made in good faith because it was significantly disproportionate to the
fluctuation in consumer demand.
CONCLUSION
Under these circumstances, the Court concludes that altering the judgment is
inappropriate. The Court does not find that Bright Harvest has presented the Court with
newly discovered or previously unavailable evidence, or that there is an intervening
change in controlling law.” Turner v. Burlington N. Santa Fe R. Co., 338 F.3d 1058,
1063 (9th Cir. 2003). Thus, in order to alter or amend the judgment in favor of Bright
Harvest, the Court would need to conclude that the jury correctly found that a contract
existed, but then incorrectly found that Heinz did not breach the contract. The Court
simply cannot parse the jury’s verdict that closely. That the jury’s verdict was internally
inconsistent and at odds with the evidence, could also mean that the jury was mistaken in
reaching its first conclusion – that the parties had entered into a binding requirements
contract.
Instead, the Court can confidently find that the jury’s conclusion that Heinz’s
reduction of orders from Bright Harvest to zero was made in good faith is not supported
by the evidence at trial. Thus, weighing the evidence as the Court saw it, the Court’s

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conscientious opinion is that the verdict is contrary to the clear weight of the evidence.
Molski v. M.J. Cable, Inc., 481 F.3d 724, 729 (9th Cir. 2007). Therefore, the Court will
order a new trial.
ORDER
IT IS ORDERED:
1. Bright Harvest’s Motion (Dkt. 165) to Alter the Judgment is DENIED, but
Bright Harvest’s Motion for New Trial is GRANTED.
2. The motions related to attorney fees (Dkts. 155, 171 and 172) are DENIED
WITHOUT PREJUDICE. The motions may be re-filed depending upon the
outcome of the new trial.
3. The Court will enter a separate notice of hearing for the purpose of choosing a
date for the new trial.

DATED: August 24, 2015

_________________________
B. Lynn Winmill
Chief Judge
United States District Court

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