Northstar Sourcing, LLC et al v. Rocket Dog Brands, LLC et al

Filing 28

ORDER granting plaintiff's 16 Motion for Summary Judgment by Judge Richard A Jones.(RS)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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NORTHSTAR SOURCING, LLC,

ORDER GRANTING
PLAINTIFF’S MOTION FOR
SUMMARY JUDGMENT

Plaintiff,

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v.
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CASE NO. C16-0405RAJ

ROCKET DOG BRANDS, LLC,
Defendant.

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I.

INTRODUCTION

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This matter comes before the Court on Plaintiff Northstar Sourcing, LLC’s

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(“Northstar”) Motion for Summary Judgment. Dkt. # 16. Defendant Rocket Dog

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Brands, LLC (“Rocket Dog”) opposes the motion. Dkt. # 19. For the reasons stated

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below the Court GRANTS the motion.

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II.

BACKGROUND

Plaintiff Northstar is a company headquartered in Bellevue, Washington that
contracts with Chinese factories to manufacture shoes, sometimes also designing and

ORDER - 1

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selling shoes directly to retailers. Mot. at 1; Guess Decl. (Dkt. # 20) ¶ 3, Ex. B (“Perkins

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Dep.”) at 16:18; 21:2-10. Defendant Rocket Dog is a Delaware Limited Liability

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Company doing business in California and Washington that wholesales and sometimes

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designs shoes. Answer ¶3; Resp. at 3 (citing Guess Decl., Ex. A (“Taylor Dep.”) at

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9:16-20).

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In 2009, Northstar and Rocket Dog began working together. Compl. ¶ 9; Answer

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¶ 9. Pursuant to their arrangement, Northstar manufactured shoes for Rocket Dog in

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China and then shipped them to the various ports identified in Rocket Dog’s purchase

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orders. Compl. ¶9-10; Answer ¶9-10. Northstar then issued invoices to Rocket Dog for

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the fulfilled purchase orders. Compl. ¶10; Answer ¶10.

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Northstar alleges that in 2015, Rocket Dog fell behind on its payments. Compl.

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¶11-15. Nevertheless, Northstar continued to accept purchase orders from Rocket Dog

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while Rocket Dog committed to paying down its debt. Perkins Decl. ¶ 5; Guess Decl. ¶4,

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Ex. C (“Briskie Dep.”) at 17:22-18:7. According to Northstar, despite efforts to negotiate

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Rocket Dog’s debt, Rocket Dog made little effort to pay down the outstanding balance.

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Mot. at 2. In September, 2015, Northstar’s CEO, Robert Perkins, warned Rocket Dog

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that Northstar would withhold future shipments if Rocket Dog did not start paying its

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past-due invoices. Perkins Decl., Ex. 4. In January, 2016, after Rocket Dog promised

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and then failed to make a $150,000.00 payment on its debt, Northstar declared Rocket

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Dog in default and took possession of all goods that had been produced by Northstar but

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not yet received by Rocket Dog. Perkins Decl., Ex. 5-6.

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ORDER - 2

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In particular, Northstar retained possession of shoes that Northstar had

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manufactured for Rocket Dog in fulfillment of an order from Rocket Dog’s customer,

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Payless Shoes. Perkins Decl. ¶15. In order to mitigate damages, Rocket Dog agreed to

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transfer ownership of the existing orders from Payless to Northstar, with the effect that

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Northstar was paid directly by Payless Shoes for the order originally arranged by Rocket

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Dog. Bay Decl., (Dkt. # 17) ¶ 2, Taylor Dep. at 43:14-17; 44:12-45:3; Resp. at 6.

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While the parties were negotiating the logistics of the Payless order, Mr. Perkins

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called several Payless representatives. See Guess Decl., Exs. E-G; id., Perkins Dep. at

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70:12-75:23. The parties disagree about the content and effect of Mr. Perkins’ calls. See

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id., Perkins Dep. at 72:18-73:12; Resp. at 9-16. Mr. Perkins testified that his

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conversations with the Payless representatives were solely about the logistics of

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transferring the Payless shipment, and that he did not discuss Rocket Dog’s financial

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status during these calls. Guess Decl., Perkins Dep. at 72:18-73:6. In contrast, one

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Payless employee testified that Mr. Perkins told him Rocket Dog “potentially . . . [was]

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bought out by a different company in the prior summer.” Guess Decl., Ex. E (“Steinhardt

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Dep.”) at 13:6-8. Another Payless employee testified that Mr. Perkins told him Rocket

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Dog was in “financial distress.” Id., Ex. F (“Underhill Dep.”) at 19:10-13. A third

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Payless employee, who did not talk to Mr. Perkins but was told about Mr. Perkins’ calls,

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characterized Mr. Perkins’ behavior as “unprofessional” and “unusual” and characterized

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Mr. Perkins’ comments about Rocket Dog as “derogatory,” although this employee was

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unable to recall anything specific he was told about Mr. Perkins’ calls. Id. Ex. D

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(“Kapcar Dep.”) at 10:14-25.

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The Payless employees also testified that Mr. Perkins’ phone calls did not affect

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Payless’ ongoing decisions about doing business with Rocket Dog. See Bay Decl., Ex. B

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(“Hitch Dep.”) at 17:19-18:11; 35:17-19 (testifying that the “style sensibility of Rocket

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Dog wasn’t really aligned with where [Payless] was headed”); id., Steinhardt Dep. at

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17:7-12 (testifying that Mr. Perkins’ phone call and alleged disclosure of information

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about Rocket Dog did not affect Rocket Dog’s relationship with Payless); id., Kapcar

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Dep. at 18:1-4 (same); Underhill Dep. at 15:14-18 (testifying that Payless remains open

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to doing business with Rocket Dog, assuming Rocket Dog addresses issues with vendor

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performance and product assortment). In contrast, Rocket Dog claims that Mr. Perkins’

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phone calls harmed Rocket Dog’s relationship with Payless and resulted in a substantial

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loss of business. Resp. at 9-16.

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In addition to the Payless order, Northstar also claims that Rocket Dog owes an

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outstanding debt of $2,094,326.00 from orders that Northstar had already produced and

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shipped on behalf of Rocket Dog. Perkins Decl. ¶ 15; Hofmann Decl., Exs. 1-3. The

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parties briefly attempted to negotiate a payment plan for this amount, but ultimately did

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not reach an agreement. Perkins Decl. ¶ 19, Ex. 3 at 14; id., Taylor Dep. at 29:11-12.

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On March 18, 2016, Northstar filed suit against Rocket Dog, alleging causes of

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action for breach of contract and unjust enrichment, seeking “no less than

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$2,185,947.93.” Compl. (Dkt. # 1). Rocket Dog asserted counterclaims for breach of

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contract and for tortious interference with contract/business expectancy. Answer (Dkt.

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# 5). Northstar now moves for summary judgment on its affirmative claims and on

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Rocket Dog’s counterclaims. See Mot.

ORDER - 4

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Following a review of the motions and evidence, the Court found that the amount

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Northstar was claiming in damages varied between its Complaint, Motion for Summary

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Judgment, and the evidence cited in support thereof. Compare Compl. ¶¶ 15, 21

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($2,185,947.93), with, Mot. at 3 n. 1 ($2,094,325.64), Bay Decl., Taylor Dep. at 43:18-20

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($2,343,000.00). The Court ordered oral argument and offered Northstar an opportunity

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to cite relevant portions of the record and support its damages and interest calculations

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with additional evidence, if necessary. Dkt. # 23. Rocket Dog was also offered the

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opportunity to support its objections to Northstar’s damages claim with citations to the

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record and additional evidence. Id. Both parties submitted additional evidence

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supporting their arguments regarding damages. See Dkt. #24-26. On May 25, 2017, the

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Court held oral argument on the subject of damages. Dkt. # 27. No party requested an

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evidentiary hearing.

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III.

ANALYSIS

On a motion for summary judgment, the Court must draw all inferences from the

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admissible evidence in the light most favorable to the non-moving party. Addisu v. Fred

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Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir.2000). Summary judgment is appropriate

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where there is no genuine issue of material fact and the moving party is entitled to a

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judgment as a matter of law. Fed.R.Civ.P. 56(c). The moving party bears the initial

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burden of showing the absence of a genuine issue of material fact. Celotex Corp. v.

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Catrett, 477 U.S. 317, 323 (1986). Once the moving party has met its burden, the

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opposing party must show that there is a genuine issue of fact for trial. Matsushita Elect.

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Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The opposing party must

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present significant and probative evidence to support its claim or defense. Intel Corp. v.

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Hartford Accident & Indem. Co., 952 F.2d 1551, 1558 (9th Cir.1991). When confronted

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with purely legal questions, the Court does not defer to the non-moving party.

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A.

Northstar’s Affirmative Claims

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Northstar moves for summary judgment on its breach of contract claim. See Mot.

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at 6-8. Specifically, Northstar contends that it fulfilled purchase orders from Rocket Dog

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by manufacturing and delivering shoes for which Rocket Dog now owes Northstar

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$2,094,326.00 in principal and another $374,241.66 in interest. Id. at 6; Bay Supp. Decl.

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at 2. Rocket Dog counters that Northstar’s records regarding the amount owed do not

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match Rocket Dog’s. Resp. at 17; Briskie Supp. Decl. ¶¶ 3-5. Rocket Dog claims that it

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“made a payment at some point in December/January to that balance.” Resp. at 17

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(citing Taylor Dep. at 42:19-25). Rocket Dog also argues that, even if it is liable for the

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amount at issue, its damages based on Northstar’s alleged tortious interference with

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Rocket Dog’s Payless relationship “vastly outweigh Northstar’s” damages, and therefore,

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Rocket Dog contends that it owes Northstar nothing. Id. at 16. Finally, for the first time

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in its supplemental submissions, Rocket Dog argues that it was owed a 10% commission

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on the Payless order and cancelled several orders at issue, which offsets Northstar’s

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claimed damages. Briskie Supp. Decl. ¶¶ 3-5, 9-11, Ex. D-F.

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Article 2 of the Washington Uniform Commercial Code governs this dispute

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because the parties are merchants and the shoes Northstar delivered are “goods.” RCW

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62A.2-102, 104-05; see also Alpacas of Am., LLC v. Groome, 317 P.3d 1103, 1105

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(Wash. App. Ct. 2014). The parties do not dispute the existence of a contract, or that

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Northstar performed under the contract and Rocket Dog accepted the shoes as

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conforming goods. See Perkins Decl. ¶ 20; Answer (Dkt. #5) at ¶¶ 12, 13, 15; RCW

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62A.2-301, 507, 607. Rather, the parties’ dispute is limited to the issue of damages.

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1. Principal

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Northstar claims Rocket Dog owes $2,094,326.00 in principal, supporting its

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claim with its responses to Rocket Dog’s interrogatories and corresponding business

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records. Perkins Decl., Ex. 7 at 27-31; Hoffman Decl., Exs. 1-3. The business records

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and accompanying spreadsheets include order numbers, associated purchase orders, dates

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of invoices, and the balance owed for the outstanding shipments of shoes totaling

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$2,094,326.00. Id. Northstar also cites the testimony of Rocket Dog’s CFO, Scott

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Briskie, who testified that he has “no reason to dispute” “that [Rocket Dog] owed

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Northstar about $2 million in March of 2015.” Guess Decl., Briskie Dep. at 15:4-8.

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Rocket Dog raises several arguments in opposition, contending that (1) it does not

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owe Northstar damages for breach of contract because Rocket Dog’s damages from its

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tortious interference claim dwarf Northstar’s damages, Resp. at 16-17; (2) Northstar owes

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Rocket Dog a commission on the Payless order that offsets Northstar’s damages, Briskie

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Supp. Decl. ¶¶ 5-8, Ex. C-E; (3) Rocket Dog cancelled some of the invoices that make up

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Northstar’s damages calculation, id. ¶¶ 9-10, Ex. E-F, and; (4) Northstar’s damages

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figure fails to subtract $900 worth of shoes that had factory errors and a further $5,227.00

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that Rocket Dog cannot account for in its own records, id. ¶¶ 12-13. During oral

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argument, Northstar conceded the last category, and the Court will therefore subtract

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$6,127.00 from Northstar’s total damages award.

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First, Rocket Dog contends that it does not owe Northstar the principal or interest

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for the shoes because Rocket Dog is entitled to damages from its tortious interference

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with contract/business expectancies counterclaim that outweigh Northstar’s damages

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claim. Resp. at 16-17. Because Rocket Dog’s tortious interference claim is dismissed for

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the reasons explained below, Rocket Dog’s first argument is moot. See Section III.B.

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Second, Rocket Dog argues that its business records do not match Northstar’s,

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creating an issue of material fact. Resp. at 17. In support of its argument, Rocket Dog

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cites the testimony of Ms. Taylor: “[I]t’s my understanding . . . you have to check with

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the CFO, Scott Briskie, we made a payment at some point in December/January to that

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balance. I don’t know—I can’t remember what it was.” Guess Decl., Taylor Dep. at

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42:19-25. No more certain, Mr. Briskie testified: “I believe that there is about a $300,000

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discrepancy, today between [Northstar’s] $2 million rough number and [Rocket Dog’s]

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$1.8 million number, on paper, of what the difference is.” Id., Briskie Dep. at 48:7-13.

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Mr. Briskie then testified that he has not investigated the discrepancy himself. Id. at

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48:14-18. The ambivalent and apparently uninformed testimony of Rocket Dog’s CEO

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and CFO is not significant and probative evidence capable of combatting Northstar’s

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evidence or establishing a genuine issue of material fact. Intel Corp., 952 F.2d at 1558.

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While Rocket Dog’s CEO and CFO initially testified that the potential $300,000

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discrepancy was from a payment Rocket Dog made to the balance, in its supplemental

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submission ahead of oral argument, Rocket Dog raised a new argument, claiming it was

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owed commission on the shoes Northstar sold to Payless. Briskie Supp. Decl. ¶¶ 3-5. In

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support of this argument, Rocket Dog has provided invoices it claims that it sent to

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Northstar demanding payment for the commission; invoices allegedly sent on June 28,

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2016—three months after Northstar filed the current action. Id. ¶ 6, Ex. C.

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At oral argument, the parties informed the Court that they had come to an

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agreement regarding a portion of the commission. Northstar has agreed to pay Rocket

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Dog a 10% commission on the Payless orders. Id.; Briskie Supp. Decl. ¶ 5, Ex. C-E.

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There is no apparent disagreement that Northstar owes Rocket Dog commission on the

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Payless order, but the parties disagree on the scope of the order, and therefore disagree on

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the total commission. Rocket Dog has submitted evidence demonstrating the scope of the

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commission: (1) Mr. Briskie’s Supplemental Declaration, Briskie Supp. Decl. ¶ (2) the

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Master Purchase Agreement between Northstar and Payless, id., Ex. D, (3) a spreadsheet

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allegedly showing the orders for which Rocket Dog is owed commission, and (4)

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invoices Rocket Dog Sent to Northstar for the commission on the orders, id., Ex. C.

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Northstar contends that Rocket Dog’s evidence demonstrates that the total

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commission is approximately $138,000.00, or 10% of the orders listed in the Master

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Purchase Agreement between Northstar and Payless. Id., Ex. D at 16-17. The Court

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agrees. None of Rocket Dog’s additional evidence demonstrates an agreement that

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Northstar would pay commission on any orders beyond those listed. See Id. ¶ 5 (stating

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that as part of the Payless order negotiated in January 2016, Northstar owed Rocket Dog

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a 10% commission); id., Ex. D at 16-17 (listing the total orders from the agreement). The

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Court therefore finds that Rocket Dog is entitled to $138,000.00 in commission on the

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Payless order, which offsets Northstar’s total damages claim.

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ORDER - 9

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Finally, Rocket Dog claims that Northstar’s records do not account for $23,036.00

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in cancelled invoices. Id. ¶10, Ex. D-F. As evidence, Rocket Dog has submitted

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cancelled purchase orders dated January 11, 2016. Id., Ex. F. As Northstar noted in the

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oral argument, these cancelled invoices are all dated one week after the orders were

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shipped. See Bay Supp. Decl., Ex. 3 (part 1 of 4) at 189-90 (freight forwarder’s cargo

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receipts listing a January 4, 2016 shipment date for these orders). Under the Washington

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UCC, unless the goods are nonconforming—which Rocket Dog does not allege here—

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tender “entitles the seller to acceptance of the goods and to payment according to the

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contract.” RCW 62A.2-507(1). Accordingly, Rocket Dog’s evidence merely shows that

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it cancelled the purchase orders after they were delivered. Even granting Rocket Dog all

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inferences in the most favorable light, its evidence does not demonstrate a material issue

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of fact regarding these orders. Addisu, 198 F.3d at 1134.

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2. Interest

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Northstar also seeks interest on the unpaid invoices, alleging that this amount was

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agreed to by the parties. Mot. at 8. In the alternative, Northstar argues that it is entitled

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to 12% prejudgment interest because its claim is liquidated. 1 Id. Northstar has produced

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“Prejudgment interest may be awarded on liquidated claims or readily determinable
claims.” King Aircraft Sales, Inc. v. Lane, 68 Wn. App. 706, 720, 846 P.2d 550, 558 (1993).
“A claim is liquidated if it may be readily determined by a fixed standard without the exercise of
discretion or reliance on expert opinion.” Id. “The fact that a claim is disputed does not render
the claim unliquidated, so long as it may be determined by reference to an objective source.” Id.
“This rule governs claims for prejudgment interest under the UCC as well.” Id. “Prejudgment
interest is favored in the law because it promotes justice.” David K. DeWolf & Keller W. Allen,
16 Wash. Practice Series, Prejudgment Interest § 6:13 (4th ed. 2016). In Washington, the rate of
prejudgment interest is 12% in the absence of a written agreement specifying a different rate.
RCW 4.56.110; 19.52.020.

ORDER - 10

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ample evidence that Rocket Dog agreed to pay interest at a rate of one percent per month

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on the outstanding balance, evidence Rocket Dog has not contested. See Perkins Decl.,

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¶¶ 8-9; id. Ex. 2-3; Bay Decl., Taylor Dep. at 43:21-44:11. This reflects an annual

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interest rate of 12% and a daily rate of .03288%, resulting in a total interest sum of

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$374,241.66 on Northstar’s original damages claim. See Bay Supp. Decl. ¶ 1-7, Ex. 2.

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Northstar has now agreed to reduce its damages by $6,127.00 in factory errors and

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missing purchase orders, and an additional $138,000.00 to account for commission

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payments, resulting in a total sum of $144,127.00 that should be subtracted from the

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principal damages award. The resultant total principal award is $1,950,199.00.

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Finding that there is no genuine issue of material fact as to Northstar’s damages

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claim or the agreed upon interest rate, the Court awards Northstar interest in the amount

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of $348,487.22 on its principal damages of $1,950,199.00.

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B.

Rocket Dog’s Counterclaim for Tortious Interference
Northstar next moves to dismiss Rocket Dog’s counterclaim for tortious

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interference with contract and business expectancies. 2 Mot. at 13-17. Rocket Dog

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contends that Mr. Perkins’ calls to Payless interfered with the Payless-Rocket Dog

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relationship and led to a loss of more than eight million dollars in business. Resp. at

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9-15.

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Rocket Dog appears to have abandoned its counterclaim for breach of contract, which
was based on an alleged agreement between the parties that Rocket Dog would repay Northstar
over the course of a year, a period of time that has now ended. Resp. at 16 n. 9. Rocket Dog has
also withdrawn its counterclaim alleging that Northstar interfered with Rocket Dog’s relationship
with factories in China. Id. at 9 n. 5.

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In order to demonstrate a claim for tortious interference with a business

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expectancy, Rocket Dog must prove: “(1) the existence of a valid contractual relationship

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or business expectancy, (2) that defendants had knowledge of that relationship, (3) an

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intentional interference inducing or causing a breach or termination of the relationship or

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expectancy, (4) that defendants interfered for an improper purpose or used improper

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means, and (5) resultant damage.” Manna Funding, LLC v. Kittitas Cty., 295 P.3d 1197,

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1207 (Wash. App. Ct. 2013), as amended on denial of reconsideration (Apr. 9, 2013).

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Here, the Court need not address each element of Rocket Dog’s tortious interference

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claim because Rocket Dog has submitted no evidence to support causation; its claim

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therefore fails as a matter of law.
Rocket Dog contends that its business relationship with Payless “changed

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dramatically” after Mr. Perkins’ phone calls to Payless. Resp. at 10. However, four

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Payless employees testified that Mr. Perkins’ phone calls did not affect Payless’ ongoing

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decisions about doing business with Rocket Dog. See Bay Decl., Hitch Dep. at

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17:19-18:11; 35:17-19; id., Steinhardt Dep. at 17:7-12; id., Kapcar Dep. at 18:1-4; id.,

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Underhill Dep. at 15:14-18. Payless representatives also testified that Payless was not

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doing additional business with Rocket Dog because Rocket Dog’s shoes no longer fit

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Payless’ needs. See Bay Decl., Kapcar Dep. at 17:2-25 (testifying that either the style of

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shoes Rocket Dog offered or the price point did not fit Payless’ needs); id., Underhill

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Dep. at 13:24-14:10 (“[Rocket Dog’s] product assortment [] which they showed us really

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didn’t fit with the direction of the department . . . [a]nd then the second reason is just

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ORDER - 12

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based off of vendor performance. So for the past two years that I’ve been with the

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company we’ve seen a decline in [Rocket Dog’s] margin performance.”).

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To counteract this testimony, Rocket Dog offers the testimony of its CEO, who

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plans to testify at trial that “based on her experience, Payless had no choice but to ‘move

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away . . . to protect one’s company and self.’” Resp. at 15 (quoting Guess Decl., Taylor

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Dep. at 57:12-25). “[Ms. Taylor] would have made the same move if Rocket Dog were

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in Payless’ position.” Id. In short, to rebut the testimony of four Payless representatives

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with direct knowledge of Payless’ business decisions, Rocket Dog offers testimony that,

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had their CEO worked for Payless, she would have made different decisions. Id. Such

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speculative testimony is insufficient to raise a genuine issue of fact to defeat summary

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judgment. Anheuser–Busch, Inc. v. Natural Beverage Distributors, 60 F.3d 337, 345 (9th

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Cir.1995).

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Rocket Dog also submits a spreadsheet of 2015 orders from Payless, totaling $9.4

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million, to compare with purchase orders from 2016, which total only $238,321.00.

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Guess Decl., Ex. I at 5-17. However, the fact that two events occurred near each other in

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time—Mr. Perkins called Payless and Rocket Dog’s business with Payless declined—is

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not evidence of causation. Mesa v. ZymoGenetics, Inc., No. C10-1486JLR, 2011 WL

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13124668, at *3 (W.D. Wash. June 6, 2011) (“That correlation proves causation,

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however, is a well known logical fallacy, and one this court will not entertain.”). Rocket

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Dog has not submitted any expert testimony or any testimony from Payless that links Mr.

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Perkins’ calls to Rocket Dog’s decline in business. See generally Resp.; Guess Decl.

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ORDER - 13

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Finally, Rocket Dog contends that “Northstar has as much as conceded that its

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‘derogatory’ and ‘unprofessional’ calls to Payless would damage Rocket Dog.” Resp. at

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14. But Rocket Dog supports this allegation by misinterpreting the testimony of

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Northstar’s CEO. Mr. Perkins testified at length regarding his belief that Ms. Taylor

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should have handled the situation with Payless differently after Mr. Perkins’ calls alerting

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Payless that Rocket Dog was in default:

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I mean, it’s not for me to tell [Ms. Taylor] how to manage her relationship with
Payless, but that would have mitigated those phone calls . . . [if] she would have
gone in, said, look, we’re going to take care of this. We’re going to pay Northstar.
They’re going to ship the shoes. She would have come back to me, I’m going to
open up letters of credit on these goods, and you’re going to get paid. I would
have been fine. No problem. That’s how she should have managed the
relationship, but she didn’t. She actually went weak. She went to Payless and
said, look, can you take this over for me because I just can’t take care of it. And if
Payless sees that, that in itself is probably the kiss of death.

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Bulthuis Decl. ¶ 4, Perkins Dep. at 84:15-85:4. Instead of testifying that his calls were

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the “kiss of death” for the Rocket Dog-Payless relationship, as Rocket Dog contends, Mr.

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Perkins’ “kiss of death” comment refers to the manner in which Ms. Taylor

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communicated with Payless and cannot be construed as a concession that Mr. Perkins’

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Payless calls harmed Rocket Dog. See Resp. at 14.

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Because Rocket Dog has failed to submit any evidence that connects Mr. Perkins’

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phone calls to a decline in Rocket Dog’s business with Payless, Rocket Dog’s tortious

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interference claim fails as a matter of law. The Court also finds that Rocket Dog has

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abandoned its other counterclaims. Resp. at 9 n. 5, 16 n. 9. Accordingly, all of Rocket

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Dog’s counterclaims are dismissed.

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ORDER - 14

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IV.

CONCLUSION

For the reasons stated above, the Court GRANTS Plaintiff’s Motion for Summary
Judgment. Dkt. # 16.

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Dated this 26th day of May, 2017.
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A

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The Honorable Richard A. Jones
United States District Judge

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ORDER - 15