Eureka Water Company v. Nestle Waters North America Inc

Filing 482

ORDER re 468 plaintiff's Brief-in-Chief in Support of Its Remanded Promissory Estoppel Claim; finding that defendant is entitled to judgment asto plaintiffs promissory estoppel claim (as more fully set out in order). Signed by Honorable Vicki Miles-LaGrange on 6/6/2013. (ks)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
EUREKA WATER COMPANY,
an Oklahoma corporation,
Plaintiff,
vs.
NESTLÉ WATERS NORTH AMERICA
INC., a Delaware corporation,
Defendant.

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Case No. CIV-07-988-M

ORDER
Before the Court is plaintiff’s Brief-in-Chief in Support of Its Remanded Promissory
Estoppel Claim, filed December 14, 2012. On January 15, 2013, defendant filed its response brief.
On February 8, 2013, plaintiff filed its reply, and on March 15, 2013, defendant filed its surreply.
Based upon the parties’ submissions, the Court makes its determination.
I.

Background
Plaintiff alleged that a 1975 agreement grants it the exclusive license in 60 Oklahoma

counties to sell spring water and other products using the Ozarka trademark. Plaintiff sued
defendant, the current owner of the Ozarka trademark, to obtain a declaratory judgment of that right
and to obtain monetary relief under several theories, including breach of contract, tortious
interference with business relations, unjust enrichment, and promissory estoppel. A jury found for
plaintiff on its contract and tortious interference claims, and this Court entered a judgment declaring
that the 1975 agreement granted plaintiff the exclusive right that it claimed in the Ozarka trademark.
In a post-verdict order, this Court denied as duplicative plaintiff’s equitable claims based on unjust
enrichment and promissory estoppel. Defendant appealed the declaratory judgment and the money

judgment on the breach of contract and tortious interference claims, and plaintiff cross-appealed on
the dismissal of its equitable claims.
On appeal, the Tenth Circuit:
REVERSE[D] the district court’s denial of Nestle’s motion for
judgment as a matter of law on Eureka’s contract and tortiousinterference claims, REVERSE[D] the declaratory judgment, and
REMAND[ED] to the district court with instructions to enter
judgment in favor of Nestle on the contract and tortious-interference
claims. We REVERSE the district court’s denial of Eureka’s
promissory-estoppel claim and REMAND that claim to the district
court for further consideration in light of this opinion. We AFFIRM
the district court’s denial of relief on Eureka’s unjust-enrichment
claim.
Eureka Water Co. v. Nestle Waters N. Am., Inc., 690 F.3d 1139, 1156 (10th Cir. 2012).
On October 23, 2012, this Court directed the parties to advise the Court as to whether they
wished to submit further briefing to the Court on plaintiff’s promissory estoppel claim or wished to
rely on the prior briefing submitted in relation to that claim. The parties advised the Court that they
wished to provide further briefing, and the Court set a briefing schedule. All briefing has been
submitted, and plaintiff’s promissory estoppel claim is now ripe for determination.
II.

Discussion
In relation to plaintiff’s promissory estoppel claim, the Tenth Circuit stated:
Eureka’s promissory-estoppel claim is based on Nestle’s alleged
failure to fulfill two promises. First, Eureka claims that in 1997
Nestle agreed to compensate Eureka for each case of Ozarka product
that Nestle shipped directly into Eureka’s territory – 50 cents for PET
products and 30 cents for bulk products. Over the next 10 years
Nestle sent Eureka 67 checks totaling about $2.5 million. But Eureka
claims that Nestle still owes it $1,056,474 because in late 2003 Nestle
unilaterally reduced the royalty rates for both PET and bulk cases to
25 cents a case. Nestle never paid as originally promised, even
though Eureka sent invoices for the difference. Second, in the early
1990s Eureka began invoicing Nestle for pickup allowances,
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billbacks, promotions, and trade discounts, and up until 2007 Nestle
reimbursed Eureka for those fees. But Eureka claims that Nestle has
refused to reimburse it for 29 invoices totaling approximately
$298,000.
A claim for promissory estoppel has four elements: “(1) a clear and
unambiguous promise, (2) foreseeability by the promisor that the
promisee would rely upon it, (3) reasonable reliance upon the
promise to the promisee’s detriment and (4) hardship or unfairness
can be avoided only by the promise’s enforcement.” Garst v. Univ.
of Okla., 38 P.3d 927, 931 (Okla.Civ.App.2001) (internal quotation
marks omitted). Nestle does not contend that Eureka failed to
establish any of the four elements listed above. Instead, it argues that
Eureka cannot recover under promissory estoppel because Eureka’s
evidence failed to satisfy a fifth element – that Nestle made false
representations or concealed facts. But, as Eureka points out, Nestle
failed to raise its “misrepresentation” argument below. Therefore, we
will not consider it, see ClearOne, 653 F.3d at 1182, and we remand
for further proceedings on the claim.
Eureka Water Co., 690 F.3d at 1155-56.
A.

Whether defendant is precluded from challenging the merits of plaintiff’s promissory
estoppel claim

In its response brief, defendant asserts that plaintiff can not satisfy the four elements of
promissory estoppel under Oklahoma law. Because defendant did not assert plaintiff’s inability to
satisfy the four elements of a promissory estoppel claim on appeal, plaintiff contends, based upon
the law of the case and the mandate rule, that defendant is foreclosed from challenging the merits
of plaintiff’s promissory estoppel claim on remand.
The law of the case doctrine posits that when a court decides upon a
rule of law, that decision should continue to govern the same issues
in subsequent stages in the same case. The doctrine of law of the
case comes into play only with respect to issues previously
determined. Furthermore, the law of the case doctrine is solely a rule
of practice and not a limit on the power of the court.

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Mason v. Texaco, Inc., 948 F.2d 1546, 1553 (10th Cir. 1991) (internal quotations and citations
omitted). Further, “[t]he mandate rule is a corollary to the law of the case requiring trial court
conformity with the appellate court’s terms of remand; . . . .” United States v. West, 646 F.3d 745,
748 (10th Cir. 2011).
Having carefully reviewed the Court’s August 25, 2010 Order denying plaintiff’s promissory
estoppel claim and the parties’ submissions, the Court finds that defendant is not precluded by either
the law of the case or the mandate rule from challenging the merits of plaintiff’s promissory estoppel
claim. Specifically, the Court finds that this Court has never decided whether plaintiff has satisfied
the four elements of a promissory estoppel claim. In its August 25, 2010 Order, the Court never
ruled on the issue of whether plaintiff satisfied the four elements of a promissory estoppel claim but
instead held that based upon the duplicative nature of the damages claimed, plaintiff was not entitled
to judgment on its promissory estoppel claim. Further, because the Court made no ruling on the
issue of whether plaintiff satisfied the four elements of a promissory estoppel claim, the Court finds
there was no need for defendant to pursue this issue on appeal and defendant did not waive any
future argument regarding the merits of plaintiff’s promissory estoppel claim by failing to raise this
issue on appeal. Finally, a review of the Tenth Circuit’s decision reveals that the Tenth Circuit has
also made no ruling on the issue of whether plaintiff has satisfied the four elements of a promissory
estoppel claim.
The Court, therefore, finds that defendant may challenge the merits of plaintiff’s promissory
estoppel claim.

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B.

Merits of promissory estoppel claim

As set forth above, “[a] claim for promissory estoppel has four elements: ‘(1) a clear and
unambiguous promise, (2) foreseeability by the promisor that the promisee would rely upon it, (3)
reasonable reliance upon the promise to the promisee’s detriment and (4) hardship or unfairness can
be avoided only by the promise’s enforcement.’ Garst v. Univ. of Okla., 38 P.3d 927, 931
(Okla.Civ.App.2001) (internal quotation marks omitted).” Eureka Water Co., 690 F.3d at 1156.
In its brief-in-chief, plaintiff states that its promissory estoppel claim is based upon the following
three circumstances: (1) underpaid royalties/invasion fees that defendant promised to pay to plaintiff
at the rate of $0.50 per case for PET products and $0.30 per case for bulk products, totaling
$1,056,474.30 (for a time period of late 2003 through October 2007); (2) unpaid royalties/invasion
fees for two Sam’s Club stores, totaling $215,176.00 (for a time period of 2001 through 2007)1; and
(3) unpaid amounts owed to plaintiff for pick-up allowances, billbacks and other payments, totaling
$298,393.24 (for a time period of February 2007 through February 2008).
1.

Underpaid royalties/invasion fees

Plaintiff bases this claim upon defendant’s promise that it would pay royalties, also known
as invasion fees, for all of defendant’s direct sales to Sam’s Club and Walmart stores within
plaintiff’s territory in the amounts of $0.50 per case for PET products and $0.30 per case for bulk
products. For 13 years, plaintiff received 67 invasion fee checks from defendant, totaling
approximately $2.5 million. However, in late 2003, defendant advised plaintiff that it would be

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In its response, defendant asserts that plaintiff can not bring its “Sam’s Club” claim because
plaintiff previously sought recovery for this claim under its unjust enrichment claim and not its
promissory estoppel claim. Because this Court finds that this claim fails on its merits, the Court
finds no need to address whether plaintiff can properly bring this claim under its promissory estoppel
theory.
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reducing the amount of the per case invasion fee payments and ultimately did reduce the invasion
fee rate to $0.25 per case for both PET products and bulk products. Plaintiff did not agree to this
reduction and began routinely invoicing defendant for the difference between the original fee rate
and the new fee rate. Through its promissory estoppel claim, plaintiff seeks the amount it claims
defendant underpaid when it unilaterally reduced the invasion fee rate.
Having carefully reviewed the parties’ submissions, the Court finds that plaintiff has not
satisfied all four elements of a promissory estoppel claim. Specifically, the Court finds that plaintiff
has not shown that it reasonably relied upon the promise to its detriment. Because defendant gave
plaintiff notice that it would be reducing the invasion fee rate, the Court finds that plaintiff could no
longer reasonably rely upon defendant’s prior promise to pay an invasion fee in the amounts of
$0.50 per case for PET products and $0.30 per case for bulk products. Accordingly, the Court finds
that defendant is entitled to judgment as to plaintiff’s promissory estoppel claim based upon
underpaid royalties/invasion fees.
2.

Unpaid royalties/invasion fees

Plaintiff bases this claim upon defendant’s alleged promise that it would keep plaintiff
informed of all actual and potential developments that will result in direct shipments into plaintiff’s
territory and that it would compensate plaintiff for any additional stores at the same invasion fee rate
of $0.50 per case for PET products and $0.30 per case for bulk products. Two additional Sam’s
Club stores opened in plaintiff’s territory in 2001 and 2005. Defendant did not inform plaintiff of
the opening of either store and did not pay plaintiff any invasion fees for these stores. Through its
promissory estoppel claim, plaintiff seeks the amount of unpaid royalties/invasion fees for the two
additional Sam’s Club stores.

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To succeed on a promissory estoppel claim, “the alleged promise must be reasonably certain
and definite, and a claimant’s subjective understanding of the promissor’s statements cannot,
without more, support a promissory estoppel claim.” Lantec, Inc. v. Novell, Inc., 306 F.3d 1003,
1021 (10th 2002) (internal quotations and citations omitted). Further,
A proposal is quite different than an unambiguous promise. By its
very nature, a proposal is tenuous – subject to review, negotiation, or
outright rejection. Unlike an unambiguous promise, there is nothing
inherently trustworthy about a proposal which a party could
reasonably rely upon.
Prime Northgate Plaza Ltd. P’ship v. Lifecare Acquisitions Corp., 985 F. Supp. 815, 819 (N.D. Ill.
1997).
Having carefully reviewed the parties’ submissions, and particularly having reviewed the
March 5, 1997 letter from Dave Evans in which the alleged promise was made, as well as Dave
Raupe’s response letter of March 12, 1997, the Court finds that plaintiff has not satisfied all four
elements of a promissory estoppel claim. Specifically, the Court finds that plaintiff has not shown
a clear and unambiguous promise. The statement in the March 5, 1997 letter regarding additional
stores, particularly when viewed in conjunction with the March 12, 1997 response letter, is clearly
a proposal rather than an unambiguous promise. The parties were in negotiations, and no reasonably
certain and definite promise was made regarding the additional stores.
Accordingly, the Court finds that defendant is entitled to judgment as to plaintiff’s
promissory estoppel claim based upon unpaid royalties/invasion fees.
3.

Pick-up allowances, billbacks, and other expenses

Plaintiff bases this claim upon defendant’s alleged promise to pay certain pick-up
allowances, billbacks, and other expenses. Plaintiff does not direct the Court to any specific promise

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defendant made to pay these expenses but instead relies upon the fact that defendant had paid other
invoices for these expenses in the past when they were submitted with supporting backup and
documentation. Having carefully reviewed the parties’ submissions, the Court finds plaintiff has
not satisfied all four elements of a promissory estoppel claim. Specifically, the Court finds that
plaintiff has not shown a clear and unambiguous promise. The fact that defendant had paid invoices
in the past does not establish that defendant made a clear and unambiguous promise to pay any and
every invoice that might be submitted by plaintiff for pick-up allowances, billbacks, or other
expenses or to pay the specific invoices at issue in this claim.
Accordingly, the Court finds that defendant is entitled to judgment as to plaintiff’s
promissory estoppel claim based upon pick-up allowances, billbacks, and other expenses.
III.

Conclusion
For the reasons set forth above, the Court FINDS that defendant is entitled to judgment as

to plaintiff’s promissory estoppel claim.
IT IS SO ORDERED this 6th day of June, 2013.

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