TAS Distributing Company Inc v. Cummins Inc

Filing 357

ORDER & OPINION Entered by Judge Joe Billy McDade on 1/18/13: IT IS THEREFORE ORDERED that Defendant's Renewed Motion for Summary Judgment 305 is DENIED and Plaintiff's Motion to Strike 306 is DENIED. (See written order) (TK, ilcd)

E-FILED

Friday, 18 January, 2013 12:57:18 PM
Clerk, U.S. District Court, ILCD

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS
PEORIA DIVISION
TAS DISTRIBUTING COMPANY, INC., )
)
Plaintiff,
)
)
)
v.
)
CUMMINS, INC.,
)
)
Defendant.
)

Case No. 07-cv-1141

ORDER & OPINION
This matter is before the Court on Defendant Cummins’ Renewed Motion for
Summary Judgment as to Counts I and III of the Fifth Amended Complaint (Doc.
305), filed on November 22, 2011, and Plaintiff TAS’ Motion to Strike (Doc. 306),
filed November 28, 2011. Both motions have been fully briefed. For the following
reasons, both motions are denied.
BACKGROUND
Many prior orders in this case have laid out the background of the parties,
claims, and facts involved in this litigation; familiarity with the case and the facts is
presumed. On December 22, 2011, this case was stayed pending the decision on
appeal of an order in a related case, Cummins, Inc. v. TAS Distributing Co. (TAS
III), No. 09-cv-1096 (C.D. Ill. 2009). (See Doc. 313). The Court of Appeals for the
Federal Circuit affirmed this Court’s order in the related case, in a decision dated
December 5, 2012. Cummins, Inc. v. TAS Distributing Co., 700 F.3d 1329 (Fed. Cir.

2012). As a result, Defendant Cummins’ potential patent-related defenses and
counterclaims are foreclosed, and this case will proceed without them.
The Motions before the Court deal with the two claims related to Cummins’
ISF Plus System1: Count III, and the portion of Count I asserting that ISF Plus
contained TAS technology and is subject to royalties (hereinafter “Count I–ISF
Plus”). Because the analysis of these counts and the arguments related to them in
the pending motions differ, they will be analyzed separately.
DISCUSSION
Count III
In its October 28, 2011, Order (Doc. 300), this Court denied Cummins’ Motion
for Summary Judgment as to Count III of the Fifth Amended Complaint.2 The
Court held that a reasonable jury could find that Cummins’ use of its ISF Plus
System to the exclusion of the Temp-A-Stop product constitutes a breach of the “all
reasonable efforts” clause of the License Agreement. (Doc. 300 at 16). In coming to
this conclusion, the Court determined that the question of whether Cummins made
all reasonable efforts to market and sell TAS’ royalty-generating products was a
question for the jury. (Doc. 300 at 16).
In its discussion, the Court also provided an extraneous analysis of a
different fact pattern—that is, how the Court would have considered the issue had

This is the term used by the Court as shorthand for Cummins’ idle shutdown
feature contained within the Electronic Control Module (ECM) of an engine that has
the capability to shut down some vehicle accessories in addition to the engine,
through a relay activated by a signal from the ECM. (See Doc. 146 at 9).
2 Count III is explicitly an alternative to Count I-ISF Plus, and assumes ISF Plus is
not subject to royalties because it does not contain any TAS technology. (See Fifth
Am. Compl., Doc. 205 at ¶ 66).
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the ISF Plus System been implemented before Cummins had signed the License
Agreement with TAS. If Cummins had already been using ISF Plus in its engines at
the time the contract was signed, the replacement of ISF Plus with Temp-A-Stop
would be a “drastic measure”—something that, the Court believes, any reasonable
party would have “included in the express terms of the contract.” (Doc. 300 at 13).
Nowhere in this analysis was the date on which the License Agreement became
effective—or non-contingent—at issue. Nor was the Court concerned about the date
on which the royalty obligations began. What mattered to the Court was when the
Agreement was signed. Because ISF Plus had not been implemented when the
Agreement was signed, the Court determined that it could not hold that Cummins
was entitled, as a matter of law, to use ISF Plus to the exclusion of Temp-A-Stop
despite Section 6(f)’s “all reasonable efforts” clause.
It is this section of the Order on which Cummins focuses its arguments. In
Defendant’s “Renewed Motion for Summary Judgment,” Cummins argues that
because most of the terms of the License Agreement were not in effect until
sometime in 1998, and ISF Plus was first part of an engine delivered to an OEM as
early as July 1997, the Court’s counterfactual analysis should be expanded and
judgment on Count III should be awarded in Cummins’ favor. (See Doc. 305 at 1-2).
Even if, as Cummins argues, the Court provided a new ground upon which
Cummins would be entitled to judgment, Cummins does not demonstrate that it
comes within this ground, but rather argues that the reasoning should be modified.
As a result, TAS is correct that Cummins’ Renewed Motion for Summary Judgment
is more accurately a motion for reconsideration.

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TAS argues, in its Motion to Strike, that Cummins’ Motion should be
stricken, as a “cumulative and untimely effort to re-litigate issues that have already
been decided.” (Doc. 306 at 1). The Court does not find striking Cummins’ Motion to
be the appropriate action. However, Cummins’ Renewed Motion for Summary
Judgment with respect to Count III is deemed a motion for reconsideration, and is
analyzed accordingly.
“Motions for reconsideration serve a limited function: to correct manifest
errors of law or fact or to present newly discovered evidence.” Caisse Nationale de
Credit Agricole v. CBI Indus., Inc., 90 F.3d 1264, 1269 (7th Cir. 1996) (quoting
Keene Corp. v. Int'l Fidelity Ins. Co., 561 F. Supp. 656, 665 (N.D. Ill. 1982), aff'd,
736 F.2d 388 (7th Cir. 1984)). As Cummins notes, a motion for reconsideration is
also appropriate where “the Court has patently misunderstood a party . . . or has
made an error not of reasoning but of apprehension.” Bank of Waunakee v.
Rochester Cheese Sales, Inc., 906 F.2d 1185, 1191 (7th Cir. 1990) (internal quotation
marks omitted).
Cummins has not shown any of these grounds to exist. The Court’s
understanding of the facts in the prior Order was not mistaken. The License
Agreement was signed by both parties on February 22, 1997, before the ISF Plus
System was implemented by Cummins. Cummins argues the Court made an error
of apprehension regarding the date the License Agreement became effective. (Doc.
307 at 1). Cummins is wrong: the Court did not misapprehend the date the License
Agreement became effective; it did not even address the issue, because it was not
relevant to the analysis. Defendant Cummins points to nothing that changes the

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analysis of Count III in the Court’s prior Order. It simply argues that the relevant
point should be the date the License Agreement went into effect, not the date it was
signed. It misconstrues the Court’s counterfactual analysis, and attempts to twist it
to encompass the existing undisputed facts, of which the Court was aware when the
previous Order was issued. This issue has been fully considered, and was not even
necessary to the Court’s prior ruling on Count III. Cummins has not shown a need
for reconsideration. Thus, its Motion is denied.
Count I–ISF Plus
Though it was over three and a half years ago, and the Order perhaps did not
explain this conclusion in great detail, the Court has also already ruled on a motion
for summary judgment by Cummins that argued TAS did not have sufficient
evidence to maintain Count I with respect to Cummins’ ISF Plus System. Cummins
first made the argument that ISF Plus was created without the use of TAS
technology, and before any agreement with TAS was entered into, in a prior
summary judgment motion. (Doc. 54 at 20-30). TAS responded, pointing to
numerous factual disputes. (Doc. 80 at 11-28). In an Order dated March 31, 2009,
which may seem like ages ago, and indeed came before several other Orders that
would come to shape the case as it stands today, the Court held: “It is clear from the
parties’ voluminous briefs and mounds of evidence (in addition to ongoing discovery
disputes) that there exist questions of fact that precludes summary judgment on
Count I.” (Doc. 146 at 15). Though discovery has now long been over, that statement
otherwise remains true. Because the Court has already ruled on a motion for

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summary judgment on this ground, Cummins’ current motion will be treated as a
motion for reconsideration with respect to this claim, as well.
In the previous Order on this motion, the Court did focus heavily on
explaining the rejection of the judicial estoppel argument advanced by TAS, and
some of the language was more geared toward the ICON portion of Count I.
However, the issue was fully, even abundantly, briefed, and the arguments and
evidence submitted by the parties at that time were considered by the Court in
reaching its ruling. Though TAS has failed to re-raise much of the evidence it
submitted to the Court in the previous round of briefing, it has previously
demonstrated to the Court the existence of genuine disputes of material fact. The
Court stands by its conclusion that TAS has raised issues of fact that are
appropriate for resolution at trial and preclude summary judgment on this claim.
For example, as TAS emphasizes, there are credibility issues concerning Cummins’
prior contradictory statements, and TAS has put forth evidence that various
suggestions and information TAS shared with Cummins regarding implementation
of accessory shutdown were later used to make ISF Plus functional. Having viewed
all the evidence in the light most favorable to TAS and drawing reasonable
inferences in its favor, the Court found that a reasonable jury could find Cummins’
ISF Plus System could be considered an Original ECM Product under the contract,
and that Cummins could owe royalties as a result.
Cummins has demonstrated no basis for reconsideration of this prior Order.
Though Cummins points to some new factual information—for example, focusing
heavily on the fact that apparently at least one engine was produced in 1996 that

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had ISF Plus code within the ECM—there is nothing new to indicate that TAS’
evidence is insufficient to maintain its claim. Cummins has shown they have
marginally more evidence to combat TAS’ claim, but not that the other factual
disputes and credibility issues no longer exist.
Thus, TAS’ claim that the ISF Plus System,3 which operates to shut down
vehicle accessories in addition to the engine when an engine idles for a specified
period of time, is an Original ECM Product as defined in the Master Agreement and
that they are therefore entitled to royalties on engines sold by Cummins that
include this system, is left for resolution at trial. There are genuine issues of
material fact that must be resolved by the jury.
CONCLUSION
IT IS THEREFORE ORDERED that Defendant’s Renewed Motion for
Summary Judgment (Doc. 305) is DENIED and Plaintiff’s Motion to Strike (Doc.
306) is DENIED.

Entered this 18th day of January, 2013.

s/ Joe B. McDade
JOE BILLY McDADE
United States Senior District Judge

The Court acknowledges that the term ISF Plus, though valuable for simplifying
the claims at hand, may do a disservice when the complexities and nuances of the
feature are important. At trial, the parties may wish to describe the accessory
shutdown features at issue in this case in a different manner.
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