Whitesell Corporation v. Whirlpool Corporation et al

Filing 715

MEMORANDUM OPINION ON PLAINTIFF'S BENCH MEMORANDUM REGARDING SSA PROVISIONS 4.6 v. 4.8 ; signed by Judge Robert Holmes Bell (Judge Robert Holmes Bell, kcb)

UNITED STATES DISTRICT COURT F O R THE WESTERN DISTRICT OF MICHIGAN S O U T H E R N DIVISION

W H I T E S E L L CORPORATION, P l a in tif f , C a se No. 1:05-CV-679 v. H O N . ROBERT HOLMES BELL W H I R L P O O L CORPORATION, W H IR L P O O L MEXICO S.A. de C.V., a n d JOSEPH SHARKEY, D e f e n d a n ts , and W H I R L P O O L CORPORATION, C o u n te r- P l a in tif f , v. W H I T E S E L L CORPORATION, C o u n ter -D e f e n d a n t. / M E M O R A N D U M OPINION ON PLAINTIFF'S BENCH MEMORANDUM R E G A R D I N G SAA PROVISIONS 4.6 v. 4.8 P la in tif f seeks to claim lost profits for items under Section 4.8 of the agreement, or the "meeting competition" clause. (Dkt. No. 711 Ex. 2.) A claim for lost profits for any part c a n arise only when a specific contractual provision confers on Plaintiff the right to supply th e part. The central issue presented by Plaintiff's memorandum is whether Section 4.8 a c tu a l ly confers on Plaintiff the right to supply any parts. Section 4.8 states:

M e e tin g Competition: If Whirlpool is offered the opportunity to purchase a g ro u p of Comparable Items 1 constituting at least 50% of Whirlpool's total a n n u a l forecasted dollar volume of Items and having at least as many Items w h o s e forecasted annual purchase volume is below 100,000 pieces as Items w h o s e forecasted annual purchase volume is over 100,000 pieces at an a g g re g a te price less than that which Whirlpool could realize under this A g ree m en t (taking into account all pricing factors set forth herein), or if a third p a rty offers Whirlpool a technology or quality advantage not provided by S u p p lie r, Whirlpool may so notify Supplier in writing and submit written proof o f such offer. If Supplier fails to notify Whirlpool of its election to meet the th ird party offer within ten (10) days after Whirlpool notifies Supplier of the o f f e r, Whirlpool may buy the Comparable Items from the third party. Any C o m p a ra b le Items purchased by Whirlpool hereunder shall be deemed to have b e e n purchased from Supplier for purposed [sic] of determining whether or not W h irlp o o l has met the purchase commitments set forth in Section 3 of this A g re e m e n t. In applying the foregoing provision, it is the intent of both parties to this A g re e m e n t that Supplier shall not be asked to meet a quotation: (a ) from a supplier which does not have total supplier capabilities equal to those of Supplier; or, (b ) not including a representative cross-section of Items and/or volumes (i.e. - Supplier is not to be asked to meet "Cherry-Picking" quotations). W h i rl p o o l agrees to waive its right to enforce this clause in the Agreement u n til July 1, 2005. Section 4.8 creates rights in favor of Defendant, not Plaintiff. It excuses Defendant f r o m purchase obligations created by other provisions of the agreement in the event that c e rta in conditions are met.2 Section 4.8 does not itself require that Defendant purchase any

The agreement defines "Comparable Items" as "a model of Goods of comparable kind, quality and performance characteristics." (2002 SAA § 4.7.) Some of the "other conditions" include that the quoted items be "comparable" to items Defendant is purchasing under the agreement, be offered at a price lower than that provided by (continued...) 2
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it e m s from Plaintiff, or standing alone confer any rights on Plaintiff to supply any parts to D e f e n d a n t. Defendant's obligation to purchase parts from Plaintiff, an obligation that S e c tio n 4.8 is created to excuse, must arise from a different provision in the contract, such a s Section 4.6 or Exhibit B. Section 4.8 and evidence pertaining to the parameters it creates would be relevant to p r o v e that Defendant was not, in fact, excused from satisfying the obligations to purchase item s from Plaintiff created by other provisions of the contract. For example, Plaintiff could p re se n t evidence that parts supplied by a third party did not represent a cross section of the p a rts supplied by Plaintiff in order to show that Defendant was not, in fact, allowed to p u rc h a se parts from a third party under Section 4.8. However, this evidence would do n o th i n g more than work to negate a defense available to Defendant. To be entitled to lost p ro f its Plaintiff would still need to demonstrate that it was contractually permitted to supply th e parts in the first place. In short, for every part for which Plaintiff seeks lost profits, a threshold question is w h a t contractual provision vests Plaintiff with supply rights for that part. Section 4.8 may n o t serve as the right-conferring provision, because Section 4.8 merely operates to excuse

(...continued) Plaintiff, have an annual forecasted purchase volume above and below a certain quantity, that the third-party supplying the quote have "total supplier capabilities substantially equal" to those of Plaintiff, and that the quoted items represent a cross-section of the items that Defendant is obligated to purchase from Plaintiff. Though these "other conditions" restrict Defendant's ability to rely on Section 4.8 as justification for purchasing items from suppliers other than Plaintiff, they do not vest Plaintiff with any substantive rights, such as the right to supply certain items. 3

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D e f en d a n t from purchase obligations that have been created by other provisions. In addition, S e c tio n 4.6 may not serve as the right-conferring provision, at least to the extent Section 4.6 allo w s Plaintiff to supply new parts created to circumvent the agreement, because the Court h a s previously granted summary judgment in favor of Defendant on Plaintiff's claim for lost p ro f its on this basis. (Dkt. No. 621.)

Dated: February 3, 2010

/s/ Robert Holmes Bell ROBERT HOLMES BELL UNITED STATES DISTRICT JUDGE

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