McCoy v. Gamesa Technology Corp. et al

Filing 327

MEMORANDUM OPINION signed by the Honorable Charles P. Kocoras on 6/12/2013: Outland's motion (Doc 297 ) for leave to file an amended complaint is denied. (For further details see Memorandum Opinion.)Mailed notice(sct, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

AARON MCCOY,

)
)
Plaintiff,
)
)
vs.
)
)
GAMESA TECHNOLOGY CORPORATION, INC.,
)
GAMESA WIND US, LLC, IBERDROLA
)
RENEWABLES, INCORPORATED, STREATOR)
CAYUGA RIDGE WIND POWER, LLC,
)
)
Defendants.
)
______________________________________________ )
)
IBERDROLA RENEWABLES, INC., and
)
GAMESA TECHNOLOGY CORPORATION, INC.,
)
)
Third-Party Plaintiffs,
)
)
vs.
)
)
OUTLAND RENEWABLE ENERGY, LLC,
)
OUTLAND RENEWABLE ENERGY FIELD
)
SERVICES, LLC and OUTLAND ENERGY
)
SERVICES, LLC,
)
)
Third-Party Defendants.
)

11 C 592

MEMORANDUM OPINION
CHARLES P. KOCORAS, District Judge.
This matter comes before the Court on Counter-Plaintiffs Outland Renewable
Energy, LLC’s and Outland Energy Services, LLC’s (together “Outland”) motion for
leave to file an amended complaint pursuant to Federal Rule of Civil Procedure 15.

For the following reasons, the motion is denied.
BACKGROUND1
This litigation began in December 2010 as a negligence claim as a result of an
on-the-job injury. It has since spawned a host of crossclaims and counterclaims
among the various parties involved in the suit. The present motion before the Court
involves one discrete set of plaintiffs and one set of defendants. The Court limits its
discussion to the events that relate to its analysis of the instant motion.
On September 22, 2011, Outland filed a twenty-two count counterclaim against
Counter-Defendants Gamesa Wind U.S., LLC and Gamesa Technology Corp. Inc.
(together “Gamesa”). Gamesa moved for judgment on the pleadings pursuant to
Federal Rule of Civil Procedure 12(c), which the Court granted with respect to all but
one count for indemnification. See McCoy v. Gamesa Tech. Corp., No. 11 C 592,
2012 U.S. Dist. LEXIS 138417 (N.D. Ill. Sept. 26, 2012). Outland now seeks leave to
amend the complaint and has attached a seven-count proposed first amended
complaint (“amended complaint”). The Court recounts the claims and allegations
found therein.

I.

Amended Complaint
1

In assessing the complaint’s legal sufficiency, the Court accepts all wellpleaded allegations as true and draws all reasonable inferences in favor of the
plaintiff. Scanlan v. Eisenberg, 669 F.3d 838, 841 (7th Cir. 2012).
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A.

Gamesa-Outland Contracts

Outland was a Minnesota company that provided wind farm operation,
maintenance, and repair services (“O&M Services”) to the wind energy industry in the
United States and abroad. Gamesa manufactures wind turbines (“turbines”). As part
of Gamesa’s standard sales agreements, Gamesa would require purchasers to contract
with it for O&M Services for a specified amount of time. Gamesa did not maintain its
own internal O&M Services group, but instead subcontracted O&M Services work to
independent companies, including Outland. Gamesa subcontracted O&M Services
work to Outland from 2006 to 2012. Outland represents that it furnished superior
services to Gamesa.
Beginning in 2006, Outland performed work on Gamesa’s behalf under a series
of “Purchase Orders,” which set forth a task or a set of specific tasks to perform at a
particular site. Outland’s revenue as a result of performing under various Purchase
Orders grew from $225,000 in 2006 to $6.1 million in 2010.
On October 3, 2008, Outland and Gamesa entered into the Framework Services
Agreement (“FSA”), the first contract that called for Outland to perform O&M
Services over a more prolonged period of time at wind farms owned by Iberdrola
Renewables Inc. (“Iberdrola”), one of Gamesa’s clients. On November 19, 2008,
Outland and Gamesa entered into a new agreement entitled the Maintenance Services
Agreement (“MSA”), which placed additional Iberdrola-operated wind farms under a
long-term agreement. Iberdrola’s wind farm at Cayuga Ridge was one of the sites
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governed by the MSA.
Outland alleges that the MSA revised many of the provisions in the FSA.
Specifically, it revised the contours of the FSA’s noncompetition clause, the
governing law clause, the dispute resolution clause, and the clause dealing with the
solicitation of the other party’s employees. Further, the MSA set forth that Outland
was required to satisfy all of Gamesa’s customers’ needs with respect to O&M
Services, including maintenance, design modifications, and technical support.
Outland was also responsible for training its personnel on safety and technical
standards.

Finally, the MSA obligated Outland to follow site-specific rules and

protocol established by Iberdrola.
B.

Events Leading to the Cayuga Ridge Accident

Outland technicians required its wind turbine technicians to employ a safety
procedure known as the “lock-out tag-out” (“LOTO”) procedure.

The LOTO

procedure complied with industry standards and federal regulations. On September
23, 2010, Gamesa and Iberdrola instructed Outland’s on-site personnel to follow a
modified procedure (“modified LOTO procedure”), which was put in place to increase
maintenance efficiency. No member of Outland’s off-site management was aware of
the modified LOTO procedure’s implementation.

On October 20, 2010, while

working under the modified LOTO procedure, Aaron McCoy (“McCoy”) and several
other Outland technicians were performing repair and maintenance work on wind
turbines at Cayuga Ridge. At one point, an Outland technician radioed an Iberdrola
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technician to power up a particular wind turbine. The Iberdrola technician mistakenly
powered up the wind turbine that McCoy was then scaling. An electrical explosion
occurred, and McCoy sustained injuries as a result.
The United States Occupational Health and Safety Administration (“OSHA”)
conducted an investigation of Cayuga Ridge in response to the accident. Outland’s
personnel cooperated fully with OSHA. On April 8, 2011, OSHA issued six citations
against Outland. Upon learning that only Outland was cited, Gamesa manager Gary
Stansbury (“Stansbury”) stated to Outland executive Steve Scott (“Scott”), “to be
honest, we’re shocked we weren’t cited as well.”
C.

Gamesa’s Plans to Eliminate Outland

In August 2010, Gamesa hired Rick Hammill (“Hammill”) and Stansbury to
lead Gamesa’s services department.

Outland alleges that Hammill decided that

Gamesa would establish its own internal O&M Service group, which would reduce
the amount of work subcontracted to providers like Outland. Gamesa reached this
decision despite promises to Outland that it would continue to tender work to Outland.
Based on Gamesa’s representations, Outland continued to invest in equipment with
the expectation that the work would continue.
Outland alleges that around the end of 2010 and the beginning of 2011, Gamesa
devised a plan to offer to buy out Outland. If Outland refused, Gamesa planned to
destabilize Outland and put it out of business. Specifically, Gamesa would represent
to Outland that it would receive more business from Gamesa, causing Outland to
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make substantial investments in equipment and personnel. After Outland made these
investments, Gamesa would cease providing business to Outland, which would put
Outland out of business and enable Gamesa to staff its nascent internal O&M Services
group with experienced Outland technicians.
In January 2011, Stansbury expressed to Scott Gamesa’s interest in acquiring
Outland. Scott declined, insisting that Outland wished to remain independent. In
January or February, Gamesa secretly decided to cease tendering Purchase Orders to
Outland.
On February 17, 2011, Outland and Duke Energy (“Duke”) entered into an
agreement (the “Acquisition Agreement”) under which Duke would purchase a 25%
share in Outland. As part of the Acquisition Agreement, Outland would receive all of
the O&M Services contracts for Duke’s wind farms (“Duke O&M Agreement”).
Outland informed Stansbury about the Acquisition Agreement a week later, and that
Duke or another party may eventually acquire all of Outland. Gamesa knew that
Duke and Outland would enter into the Duke O&M Agreement, and determined that
Gamesa would be unable to destabilize the company if the agreements were
consummated.
On February 26, 2011, Stansbury called Scott and, after assuring Scott that
Gamesa was happy with Outland’s work, told him that he believed that Iberdrola
would not permit Outland to continue to work on its wind farms, since Iberdrola and
Duke were competitors.

On March 27, 2011, Scott contacted Iberdrola’s Vice
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President of Commercial Operations, who gave the Acquisition Agreement
Iberdrola’s blessing, and stated that the competition issue was not a concern.
Gamesa then contacted Duke directly on April 14, 2011 and attempted to entice
Duke to refrain from entering into the Acquisition Agreement by offering a five-year
warranty extension of O&M Services on one of Duke’s turbine projects in
Pennsylvania. Duke rejected the offer and informed Gamesa that Duke would no
longer tender O&M Services work to Gamesa.
On May 11, 2011, the Acquisition Agreement was amended (the “Amended
Acquisition Agreement”) to add Sterling Partners (“Sterling”), an institutional
investor, as a buyer. Outland alleges that Gamesa knew or had reason to know that
Outland, Duke and Sterling entered into the Amended Acquisition Agreement.
On May 12, 2011, Gamesa sent Outland a letter (the “May 12th letter”) stating
that “Outland has failed to perform O&M Services in accordance with the health,
safety and environmental requirements of the [MSA] and applicable law. This failure
has been noted by OSHA . . . .” According to Outland, the letter raised frivolous
issues and was sent in bad faith. Gamesa then ceased tendering any more Purchase
Orders to Outland. According to Outland, the letter and Gamesa’s refusal to tender
any further transactional work to Outland immediately disrupted the Duke-SterlingOutland deal by causing Duke and Sterling to reduce their offer to purchase Outland

by $15 million and scuttling the Duke O&M Agreement altogether. The cessation of
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Purchase Order business caused 40% of Outland’s technicians to sit idle.
Upon receipt of the May 12th letter, Outland responded with its own letter to
Gamesa rejecting Gamesa’s termination of the MSA. Gamesa followed up with
another letter on May 27, 2011, in which it stated that “Outland was cited by OSHA
for failing to comply with various provisions of 29 C.F.R. § 1926 et seq.” Outland
again responded by rejecting Gamesa’s purported termination of the MSA.
On July 21, 2011, Gamesa sent another letter to Outland asserting a different
basis for claiming that Outland had defaulted under the MSA. It also asserted a
breach of the FSA. Outland again notified Gamesa that it rejected its efforts to
terminate the MSA.
Ultimately, the Duke-Sterling-Outland acquisition was never consummated.
However, on November 1, 2012, Outland transferred substantially all of its business
assets and employees to Duke in order to avoid receivership.
D.

Tying of Gamesa’s Turbine Sales and O&M Services

Outland alleges that at all times relevant to this lawsuit two markets existed in
the United States: one for turbines, the other for O&M Services of Gamesa turbines.
From 2007 through August 2008, there was a shortage of available turbines in the
United States for sale such that demand for turbines far exceeded supply. Further, any
increase in turbine manufacturing would be years away.

At its peak, Gamesa controlled over 10% of the overall turbine market, and
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100% of the market for Gamesa O&M Services. In 2007 through 2008, because of
the scarcity of available turbines combined with high demand, Gamesa was able to
leverage its power by forcing purchasers to enter into agreements that they would not
ordinarily do under normal market conditions. Gamesa allegedly used this power to
force its customers to purchase O&M Services upon purchasing its turbines.
II.

Procedural Posture
McCoy filed a complaint sounding in negligence against Gamesa Technology,

LLC and Iberdrola in Illinois State Court in late 2010. The case was removed to this
Court based on diversity jurisdiction. A series of cross and counterclaims ensued
between Iberdrola, Gamesa and Outland. Relevant to this motion, Outland filed a
twenty-two count complaint against Gamesa, alleging that Gamesa had unlawfully
interfered with Outland’s business relationship with Duke.

Gamesa also filed

counterclaims against Outland, and Outland sought a preliminary injunction seeking a
finding that Gamesa was bound by the MSA to employ Outland at the Big Horn Wind
Farm (“Big Horn”) in Bickleton, Washington past the expiration of the one-year
purchase order issued by Gamesa in connection with the work at Big Horn. The Court
held a five day evidentiary hearing and ultimately denied the motion for a preliminary
injunction. See McCoy v. Gamesa Tech. Corp., No. 11 C 592, 2012 U.S. Dist. LEXIS
38745 (N.D. Ill. Mar. 22, 2012). This Court then dismissed this counterclaim based
on the pleadings pursuant to Federal Rule of Civil Procedure 12(c), except with
respect to one count for indemnification. See McCoy v. Gamesa Tech. Corp., No. 11
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C 592, 2012 U.S. Dist. LEXIS 138417 (N.D. Ill. Sept. 26, 2012). Gamesa and
Outland reached a settlement with respect to the indemnification claim, and this Court
entered an Order of Good Faith Settlement on February 5, 2013. Outland then filed
the instant motion to amend on March 4, 2013, in which it attached a proposed seven
count amended complaint against Gamesa.
LEGAL STANDARD
After dismissal of a complaint, a party must obtain the opposing party’s
consent or obtain leave from the court to amend its pleading. Fed. R. Civ. P. 15(a)(2).
“[District] courts have broad discretion to deny leave to amend where there is undue
delay, bad faith, dilatory motive, repeated failure to cure deficiencies, undue prejudice
to the defendants, or where the amendment would be futile.” Johnson v. Cypress Hill,
641 F.3d 867, 871-72 (7th Cir. 2011) (internal citation omitted). While delay alone
generally will not justify denying leave to amend a pleading, there is a presumption
against granting leave where the delay is so extreme that it prejudices the opposing
party. King v. Cooke, 26 F.3d 720, 723 (7th Cir. 1994).
A proposed amended complaint is futile if it fails to state a claim upon which
relief may be granted. GE Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074,
1085 (7th Cir. 1997). A court analyzes whether an amended complaint is futile under
the same standard as a motion to dismiss under Rule 12(b)(6). Id. at 1085.

A Rule 12(b)(6) motion to dismiss tests the legal sufficiency of the complaint.
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Szabo v. Bridgeport Machs., Inc., 249 F.3d 672, 675 (7th Cir. 2001). The allegations
in a complaint must set forth a “short and plain statement of the claim showing that
the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A plaintiff need not provide
detailed factual allegations; he must only provide enough factual support to raise his
right to relief above a speculative level. Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007). Furthermore, a claim must be facially plausible, a requirement that is
satisfied if the pleadings “allow[] the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009).
DISCUSSION
Gamesa raises two grounds for denying Outland leave to amend the complaint.
First, Gamesa contends that it is unduly prejudiced by Outland’s not having sought
leave earlier.

In the alternative, Gamesa argues that the claims asserted in the

amended complaint are futile because they are not cognizable at law.
I.

The Timing of Outland’s Motion for Leave to File its Amended Complaint
Gamesa contends that Outland’s motion for leave to amend should be denied

because a contrary ruling would delay the resolution of McCoy’s claims against
Outland and Gamesa, thereby prejudicing Gamesa. However, Gamesa fails to specify
how granting the instant motion would in fact delay the resolution of McCoy’s
remaining claims.

Moreover, the Court’s February 5, 2013 Order on Gamesa’s

Motion for Finding of Good Faith Settlement relating to McCoy’s claims expressly
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disclaimed any effect that the settlement would have on the viability of Outland’s
counterclaims and Gamesa’s crossclaims.

Rather than “allowing Outland to

essentially start a new lawsuit now,” as Gamesa contends, the Order indicates that
Gamesa should have expected Outland to attempt to file for leave to amend after its
first complaint was dismissed. Because Gamesa provides insufficient support of
undue delay and resulting prejudice, the Court rejects its argument.
II.

Futility
A.

Choice of Law

Before discussing the merits of Outland’s claims, the Court first addresses the
threshold issue of which state’s laws govern those claims. Outland’s original twentytwo count complaint asserted several Illinois statutory and common law claims. It
now asserts that Minnesota law should govern its non-federal claims.
Courts in Illinois that sit in diversity apply the “most significant contacts test”
to determine which state’s law governs the dispute. Auto-Owners Ins. Co. v. Websolv
Computing, Inc., 580 F.3d 543, 547 (7th Cir. 2009). However, a party waives its
choice of law argument where it fails to timely assert it. See Camp v. TNT Logistics
Corp., 553 F.3d 502, 505 (7th Cir. 2009) (Courts sitting in diversity apply the forum
state’s law where the parties fail to raise the choice of law issue); Vukadinovich v.
McCarthy, 59 F.3d 58, 62 (7th Cir. 1995) (“[C]hoice of law, not being jurisdictional,
is normally . . . waivable.”).
Outland asserts for the first time that its claims arise under Minnesota state law
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despite not having raised a choice of law issue at any time prior to the instant motion’s
briefing. In light of Outland’s failure to raise the issue before now, the Court will
assess Outland’s claims under Illinois law.

See Lexecon Inc. v. Milberg Weiss

Bershad Hynes & Lerach, No. 92 C 7768, 1999 U.S. Dist. LEXIS 917, at *4 (N.D. Ill.
Jan. 15, 1999) (denying the defendant’s motion to dismiss based on choice of law
argument where it failed to raise the issue on a prior motion for reconsideration with
respect to the same claim).
B.

Count I: Tortious Interference with Contractual Relations

Outland alleges that Gamesa’s actions with respect to Duke constitute tortious
interference with contractual relations. Outland alleges that: (i) Gamesa caused Duke
and Sterling to fail to close the acquisition of all the member interests of Outland at
the price set forth in the Amended Acquisition Agreement; (ii) alternatively, that
Gamesa caused Duke and Sterling to fail to proceed to close the acquisition of a
portion of the member interests of Outland at the price set forth in the Acquisition
Agreement; and (iii) Gamesa caused Duke to breach its commitment to enter into the
Duke Fleet Services Agreement (“DFSA”) with Outland for Duke’s fleet of wind
farms.
To state a claim for tortious interference with a contract, a plaintiff must allege:
(i) the existence of a valid and enforceable contract between it and a third party;
(ii) the defendant’s knowledge of that contract; (iii) the defendant’s intentional and
unjustified inducement of the third party to breach the contract; (iv) the third party’s
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breach; and (v) damages. Strosberg v. Brauvin Realty Svcs., Inc., 691 N.E.2d 834,
845 (Ill. App. Ct. 1998).
Outland’s first claim is deficient because it has not pleaded facts that
demonstrate Gamesa’s knowledge of the Amended Acquisition Agreement. Outland
asks this Court to impute knowledge upon Gamesa due to Gamesa’s knowledge of the
Acquisition Agreement; however, Outland’s knowledge of one agreement is
insufficient to demonstrate knowledge of a separate agreement. Though Gamesa
contacted Duke on April 14 and attempted to induce Duke into scuttling its
acquisition of a stake in Outland, Duke not only refused but then entered into the
Amended Acquisition Agreement with Outland.
With respect to Outland’s claim regarding the Acquisition Agreement, Outland
cannot plausibly show a breach of that agreement.

The Amended Acquisition

Agreement altered the Acquisition Agreement; therefore, if Duke were guilty of a
breach, it logically would have to be a breach of the Amended Acquisition
Agreement. As the Acquisition Agreement could not have been breached due to the
amendment, Outland’s claim based upon it also must fail.
Outland’s third claim under this count is deficient because it asserts a breach by
Duke of a “commitment” to enter into the DFSA. The Court notes that Outland does
not use the term “contract.” This Court is unaware of a cause of action for breach of a

commitment, and Illinois law requires there to have been a contract in order for a
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tortious interference with contract claim to survive. See Strosberg, 691 N.E.2d at 845.
C.

Count II: Tortious Interference with Prospective Economic
Advantage

Outland argues that Gamesa’s actions with respect to Duke constitute tortious
interference with prospective economic advantage. Outland alleges that: (i) Gamesa
caused Duke and Sterling to fail to proceed to close the acquisition of all the member
interests in Outland at the price set forth in the Amended Acquisition Agreement;
(ii) alternatively, Gamesa caused Duke to fail to proceed to close the acquisition of a
portion of the member interests of Outland at the price stated in the Acquisition
Agreement; and (iii) Gamesa caused Duke to breach its commitment to Outland to
enter into the DFSA for Duke’s fleet of wind farms.
To state a claim for tortious interference with prospective economic advantage,
a party must allege: (i) the plaintiff’s reasonable expectancy of entering into a valid
business relationship; (ii) the defendant’s knowledge of that expectancy; (iii) the
defendant’s intentional and unjustified interference that caused a breach or
termination of that expectancy; and (iv) damages. Voyles v. Sandia Mortg. Corp., 751
N.E.2d 1126, 1133 (Ill. 2001). “[C]ommercial competitors are privileged to interfere
with one another’s prospective business relationships provided their intent is, at least
in part, to further their businesses and is not solely motivated by spite or ill will.”

Imperial Apparel, Ltd. v. Cosmo’s Designer Direct, Inc., 882 N.E.2d 1011, 1019 (Ill.

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2008).
Outland’s claim pursuant to the Amended Acquisition Agreement is deficient
because this Court does not deem the knowledge prong of the Voyles test to have been
satisfied. Gamesa’s knowledge of a prior agreement does not signify its knowledge of
the Amended Acquisition Agreement. The Court will only hold Gamesa responsible
for any interference regarding the Acquisition Agreement and not the Amended
Acquisition Agreement. Duke could not have breached the Acquisition Agreement
because it was replaced by the Amended Acquisition Agreement.

Furthermore,

Outland has pleaded no facts that demonstrate that its economic relationship with
Duke has been terminated. Rather, Outland claims that the acquisition price that
Duke paid to Outland was less than the price set forth in both agreements. This Court
has thoroughly reviewed Illinois law and can discern no instance in which a claim
based upon interference with prospective economic advantage has survived where
there has been no termination of the economic relations.
Outland avers that the issue of Gamesa’s being a competitor is a question of
fact and hence improper to evaluate at this stage of the proceedings.

Outland,

however, alleges that Gamesa was partially motivated to interfere with Outland’s
prospective economic advantage because Gamesa had the “goal of creating its own
large O&M service group, while at the same time eliminating Outland as a competitor
of [that] group.”

The Court reads this portion of Outland’s proposed amended

complaint as a concession that Gamesa was not wholly motivated by ill will towards
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Outland but rather sought to advance its interests as a competitor. Hence, Outland’s
claim for interference with prospective economic advantage would also fail on this
basis. See Imperial Apparel, 882 N.E.2d at 1019.
D.

Count III: Prima Facie Tort

Outland posits that Gamesa has perpetrated a prima facie tort. “One who
intentionally causes injury to another is subject to liability to the other for that injury,
if his conduct is generally culpable and not justifiable under the circumstances[,] [and]
[t]his liability may be imposed although the actor’s conduct does not come within a
traditional category of tort liability.” Restatement (Second) of Torts § 870 (1965).
Outland cites to the recognition of this tort by the United States Supreme Court. See
Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639, 657 (2008). Outland also cites
to Pennsylvania case law recognizing this tort; however, as this Court has determined
that Illinois law is applicable, Outland’s citations are inapposite.
Illinois courts have never recognized prima facie tort as a cause of action. See
generally Barry Gilberg, Ltd. v. Craftex Corp., 665 F. Supp. 585, 596-97 (N.D. Ill.
1987) (explaining the rationale for lack of recognition of this tort). Outland claims
that the Seventh Circuit has “questioned” Barry Gilberg. See Kirksey v. R.J. Reynolds
Tobacco Co., 168 F.3d 1039, 1042 (7th Cir. 1999).

This Court discerns no

disagreement from the Kirksey court with Barry Gilberg.

Furthermore, Outland

points to no Illinois case law recognizing such a tort since Barry Gilberg and Kirksey
were decided. Hence, amending the complaint to add this cause of action would be
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futile, as no such cause of action exists in Illinois, and this Court denies the
amendment with respect to this count. See GE Capital, 128 F.3d at 1085 (amendment
is futile where it fails to state a claim upon which relief may be granted).
E.

Counts IV & V: Promissory Estoppel and Breach of Fiduciary
Duty

Outland seeks to recover based on promissory estoppel and breach of fiduciary
duty. Outland, however, failed to plead either theory in its original complaint. A
court should not allow an amended complaint that changes the theory of the case
unless the amending party demonstrates a “lack of knowledge, mistake or
inadvertence or some change of conditions over which that party had no knowledge or
control.” Johnson v. Sales Consultants, Inc., 61 F.R.D. 369, 371 (N.D. Ill. 1973).
Though neither party presented this argument in the briefing of the instant case, this
Court, pursuant to its broad discretion in terms of permitting amendments, sua sponte
declines to permit Outland to amend its complaint to add these counts. Ruling to the
contrary would permit Outland to benefit from the dismissal of its insufficient first
complaint by adding multiple new causes of action of which it either knew or should
have known when it filed its first complaint. Additionally, allowing Outland to
proceed with these counts would unfairly burden Gamesa.

Outland’s original

complaint was dismissed over eight months ago. Prior to that, the Court conducted a
five day evidentiary hearing with respect to Outland’s request for a preliminary
injunction. Forcing Gamesa to expend time preparing defenses to claims that could

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have been but were not raised would be unduly burdensome to Gamesa, for in
addition to the resources required for briefing and argument, additional discovery may
need to be procured. The Court declines to facilitate further delay in this already
protracted litigation and thus denies the request to amend with respect to these counts.
F.

Count VI: Indemnification

Outland sought indemnification from Gamesa in its original complaint, and this
Court did not dismiss that count. See McCoy, 2012 U.S. Dist. LEXIS 138417, at *13.
The parties did not dispute the propriety of that count, but Outland now seeks to
expand upon it. Outland seeks indemnification pursuant to Section 7.4 of the MSA
(the “Indemnification Provision”) as well as common law indemnification for: (i) its
payments to OSHA stemming from McCoy’s accident; (ii) losses that occurred as a
result of Duke’s not having proceeded with the Acquisition Agreement or the
Amended Acquisition Agreement and Duke’s not having engaged Outland as a
service provider for its fleet of wind farms; and (iii) costs that Outland incurred for
additional equipment and employees to ramp-up the promised additional work.
This Court’s Order of Good Faith Settlement bars Outland’s indemnification
claim with respect to OSHA costs relating to McCoy’s accident. Those costs were
precisely what the settlement was designed to address, and Outland cannot now obtain
additional compensation pursuant to the Indemnification Provision. The text of the
Indemnification Provision bars Outland’s second and third indemnification claims, for
the Indemnification Provision applies to payments that Outland would have to tender
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to a third party for bodily injury or property damage, not to losses sustained by
Outland. With respect to Outland’s claim for common law indemnification, Outland
could have but did not plead this claim in its original complaint, and the Court
declines to permit Outland to add a claim of which it should have been aware at the
time of the filing of its original complaint. See Johnson, 61 F.R.D. at 371.
G.

Count VII: Unlawful Tying

Outland alleges that Gamesa unlawfully tied O&M Services of Gamesa
turbines to the sale of turbines in violation of Section 1 of the Sherman Act, 15 U.S.C.
§ 1, and Section 3 of the Clayton Act, 15 U.S.C. § 14. This, Outland claims,
precluded it from competing against Gamesa for the provision of O&M Services.
Gamesa argues that the claim fails because Outland failed to allege that Gamesa
retained sufficient market power to be found liable for an unlawful tying scheme. 2
The standards for adjudicating a tying violation under Section 1 of the Sherman
Act and Section 3 of the Clayton Act are the same. Sheridan v. Marathon Petroleum
Co., LLC, 530 F.3d 590, 592 (7th Cir. 2008). The gravamen of a tying claim lies in
the seller’s ability to leverage its market power in the market for the “tying product”
to “force” buyers into purchasing the “tied product.” As the Supreme Court explained
in the seminal case Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2 (1984),

2

Gamesa contends that a viable tying claim must allege that a product – not a service –
was tied to another product. However, the Seventh Circuit has expressly recognized that claims
involving the tying of services to products are viable under the Sherman and Clayton Acts.
Sheridan v. Marathon Petroleum Co., LLC, 530 F.3d 590, 592 (7th Cir. 2008). Gamesa’s
argument is accordingly denied.
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the essential characteristic of an invalid tying arrangement lies in the
seller’s exploitation of its control over the tying product to force the
buyer into the purchase of a tied product that the buyer either did not
want at all, or might have preferred to purchase elsewhere on different
terms. When such “forcing” is present, competition on the merits in the
market for the tied item is restrained . . . .
Id. at 12; see also Sheridan, 530 F.3d at 592 (“The traditional antitrust concern with [a
tying] agreement is that if the seller of the tying product is a monopolist, the tie-in will
force anyone who wants the monopolized product to buy the tied product from him as
well . . . .”). To establish per se tying, a plaintiff must plead that: “(1) the tying
arrangement is between two distinct products or services, (2) the defendant has
sufficient economic power in the tying market to appreciably restrain free competition
in the market for the tied product, and (3) a not insubstantial amount of interstate
commerce is affected.” Reifert v. South Central Wisconsin MLS Corp., 450 F.3d 312,
316 (7th Cir. 2006). A tying claim under the rule of reason also requires a showing
that the seller had sufficient market power in the tying product. See Hardy v. City
Optical, 39 F.3d 765, 767 (7th Cir. 1994) (recognizing that in the Seventh Circuit,
“market power is a threshold requirement of all rule of reason . . . cases.”).
Outland alleges that Gamesa possessed requisite market power to coerce
customers into purchasing unwanted O&M Services. Market power is “the power to
raise price above the competitive level without losing so much business to other
sellers that the price would quickly fall back to the competitive level.” In re Sulfuric
Acid Antitrust Litig., 703 F.3d 1004, 1007 (7th Cir. 2012). Market power, and its

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relation to market share, is crucial to establishing a tying claim. As the Seventh
Circuit explained in Sheridan,
a seller who has a large market share may be able to charge a price
persistently above the competitive level despite the existence of
competitors. Although the price increase will reduce the seller’s output .
. ., his competitors, if they are small, may not be able to take up enough
of the slack by expanding their own output to bring price back down to
the competitive level; their costs of doing so would be too high -- that is
doubtless why they are small.
530 F.3d at 594 (citations omitted); see also Jefferson Parish, 466 U.S. at 17 (stating
that the likelihood that a seller possesses market power if “the seller’s share of the
market is high, or when the seller offers a unique product that competitors are not able
to offer.”).
Outland alleges that Gamesa achieved sufficient market power in the tying
product, turbines, because of a shortage in supply in the turbine market. This, Outland
alleges, gave Gamesa the opportunity to “force” its customers to purchase O&M
Services along with turbines.
The amended complaint alleges that Gamesa possessed a 10% market share in
the U.S. turbine market. Under the reasoning in Sheridan, any attempt by Gamesa to
leverage what little power it possessed in the turbine market would be met by
customers flocking to its competitors. Outland instead advances a novel theory of
market power to justify its claim. It alleges that “a shortage of wind turbines resulted
in sufficient market power for Gamesa” to tie O&M Services to the sale of turbines.
But if Gamesa were the only turbine manufacturer with inventory, it stands to reason
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that its market share would dramatically increase.

Outland thus fails to allege

plausible facts that Gamesa was capable of forcing customers into purchasing
unwanted O&M Services.
In light of the allegations within the amended complaint, it is implausible to
infer that Gamesa unlawfully tied O&M Services to the sale of its turbines. Gamesa
was not in a position to “exploit[] its control over the tying product to force the buyer
into the purchase of a tied product,” because the allegations fail to establish that it
possessed the requisite level of control over the turbine market. See Jefferson Parish,
466 U.S. at 12. Outland’s tying claim is without merit.
CONCLUSION
For the foregoing reasons, Outland’s motion for leave to file an amended
complaint is denied.

_____________________________________
Charles P. Kocoras
United States District Judge
Dated: June 12, 2013

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