US Paper Mills Corp et al v. Clifford Paper Inc et al
Filing
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ORDER denying 37 Motion for Reconsideration. (cc: all counsel) (Griesbach, William)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
U.S. PAPER MILLS CORP., et al.,
Plaintiffs,
v.
Case No. 17-C-1207
WORLD PAC PAPER LLC, et al.,
Defendants.
DECISION AND ORDER
Plaintiffs U.S. Paper Mills Corporation and Sonoco Products Company brought this suit
against Defendants Clifford Paper Inc. (CPI), World Pac Paper LLC (WPP), WPP Investors LLC,
Edgar L. Smith, Jr., and Richard A. Baptiste. Plaintiffs seek six million dollars in unpaid invoices
for core board and tier paper Defendants ordered on behalf of Procter & Gamble. Currently before
the court is Plaintiffs’ motion for reconsideration of the court’s November 29, 2017 order dismissing
CPI for lack of personal jurisdiction. Because the dismissal of CPI was not in error, Plaintiffs’
motion for reconsideration will be denied.
A motion to reconsider pursuant to Rule 59(e) of the Federal Rules of Civil Procedure allows
a court to correct manifest errors of fact or law. FDIC v. Meyer, 781 F.2d 1260, 1286 (7th Cir.
1986). “A ‘manifest error’ is not demonstrated by the disappointment of the losing party. It is the
‘wholesale disregard, misapplication, or failure to recognize controlling precedent.’” Oto v. Metro.
Life Ins. Co., 224 F.3d 601, 606 (7th Cir. 2000). The purpose of a Rule 59(e) motion is to enable
a district court to correct its own errors and thus avoid unnecessary appellate procedures. Divane
v. Krull Elec. Co., 194 F.3d 845, 848 (7th Cir. 1999). But the motion “is not appropriately used to
advance arguments or theories that could and should have been made before the district court
rendered a judgment.” LB Credit Corp. v. Resolution Trust Corp., 49 F.3d 1263, 1267 (7th Cir.
1995). As a result, relief under Rule 59(e) is an “extraordinary remedy” that should only be granted
in rare cases. See Foster v. DeLuca, 545 F.3d 582, 584 (7th Cir. 2008). The decision to grant a
Rule 59(e) motion “is entrusted to the sound judgment of the district court.” Matter of Prince, 85
F.3d 314, 324 (7th Cir. 1996).
Plaintiffs assert the court made a manifest error in concluding Plaintiffs did not establish
jurisdiction pursuant to Wisconsin’s long-arm statute, Wis. Stat. § 801.05. First, Plaintiffs claim the
court misapplied Wis. Stat. § 801.05(5)(a). This subsection provides that a court has jurisdiction
over any action which “[a]rises out of a promise, made anywhere to the plaintiff or to some 3rd party
for the plaintiff’s benefit, by the defendant to perform services within this state or to pay for services
to be performed in this state by the plaintiff.” § 801.05(5)(a). Plaintiffs contend the court did not
recognize that Plaintiffs supply of the subject product constitute services. But Plaintiffs’ complaint
only characterizes its arrangement with Procter & Gamble and the defendants as one for goods, not
services. See Compl. ¶ 1 (“This action seeks money damages against Defendants, who acted as
intermediaries for the purchase and supply of core board and tier sheets (hereinafter, the ‘subject
product’) supplied by Plaintiffs for use by non-party Procter & Gamble . . . .”); Compl. ¶ 15
(“Defendants acted as intermediaries in the purchase of paper products, specifically the subject
product, between Plaintiffs, as supplier, and Procter & Gamble, as customer.”); Compl. ¶ 16
(“Plaintiffs would receive purchase orders submitted by Defendants and supply the subject product
ordered therein.”); Compl ¶ 22 (“A valid agreement existed between Plaintiffs and Defendants for
the supply of products for valuable consideration.”). Plaintiffs cannot now assert for the first time
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that converting raw materials into some product which meets customer-specified requirements and
supplying that product to the customer constitute services. See Caisse v. Nationale de Credit
Agricole v. CBI Indus., Inc., 90 F.3d 1264, 1270 (7th Cir. 1996) (noting that motions for
reconsideration are “not the appropriate forum for . . . arguing matters that could have been heard
during the pendency of the previous motion”).
Even if the court were to consider this argument, it would not alter the court’s conclusion.
Plaintiffs cite Regal Ware, Inc. v. TSCO Corp., 207 Wis. 2d 538, 558 N.W.2d 679 (Ct. App. 1996)
and Generac Corp. v. Omni Energy Systems, Inc., 19 F. Supp. 2d 917 (E.D. Wis. 1998) for the
proposition that the manufacture and supply of materials constitute a service, but these cases are
inapposite. In Regal Ware, for instance, the plaintiff’s obligation under the brokerage agreement
included “manufacturing and shipping of cookware; approving sales orders submitted by TSCO to
Regal Ware; and sending TSCO commission checks drawn on a Wisconsin bank.” 207 Wis. 2d at
543. The court determined the plaintiff established personal jurisdiction because it performed these
services in Wisconsin. Id.
In Generac Corp., the plaintiff sought a declaratory judgment finding that the distributor’s
territory under the distributorship agreement was not exclusive. 19 F. Supp. 2d at 919. Under the
parties’ contractual arrangement, the plaintiff was responsible for manufacturing and shipping
services in Wisconsin as well as approving all of the defendant’s sales orders in Wisconsin. The
defendant did not dispute that the plaintiff performed services under their distributorship agreement
but instead asserted it had conducted no business in Wisconsin. The court concluded the plaintiff
satisfied the requirement of Wisconsin’s long-arm statute because the plaintiff provided services in
Wisconsin. Id. at 921.
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These cases are distinguishable from the instant one because the additional services the
plaintiffs performed in Regal Ware and Generac transformed the manufacturing and shipping
arrangements into service contracts. In this case, Plaintiffs provided no additional services beyond
manufacturing and shipping. Under Plaintiffs’ proposed construction of the term, any contract for
the sale of goods would turn into one for services. The court declines to construe “services” so
broadly. Simply put, Plaintiffs have not established that this action relates to “services performed
in this state by the plaintiff” as required by Wis. Stat. § 801.05(5)(a).
In addition, Plaintiffs assert the court erred in finding that the Administrative Services and
Raw Material Supply Agreement entered into between CPI and WPP did not benefit Plaintiffs.
Under the Services Agreement, CPI agreed to perform services for WPP, including the management
of WPP’s accounts payable, accounts receivable, finance, invoices, and other administrative functions
in exchange for a negotiated rate of compensation. Plaintiffs assert CPI’s obligation to manage “mill
accounts payable” under the agreement constituted a promise to Plaintiffs that CPI would pay for
the product it supplied to the World Pac enterprise. But the promise to manage mill accounts
payable was a promise CPI made to WPP, not to Plaintiffs. Though Plaintiffs received payments
from CPI for the product it supplied to Procter & Gamble, CPI was obligated to make these
payments on behalf of WPP pursuant to the Service Agreement. As a result, the Service Agreement,
and the promises memorialized therein, were not made for Plaintiffs’ benefit. In sum, it was not err
to conclude the facts do not support a finding of personal jurisdiction under § 801.05(5)(a).
Plaintiffs also take issue with the court’s conclusion that the facts did not support a finding
of personal jurisdiction under Wis. Stat. § 801.05(5)(d). This provision provides that Wisconsin
courts have jurisdiction over any action that “[r]elates to goods, documents of title, or other things
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of value shipped from this state by the plaintiff to the defendant on the defendant’s order or
direction.” § 801.05(5)(d). Although Plaintiffs assert the court must consider the facts supporting
their breach of contract claim as well as their conversion claim to determine whether personal
jurisdiction exists under this provision, Plaintiffs’ allegations do not establish jurisdiction under this
provision because CPI did not order or direct Plaintiffs to ship the products to Procter & Gamble.
Plaintiffs seek six million dollars in unpaid invoices for core board and tier paper delivered to Procter
& Gamble between late-June 2017 and August 29, 2017. But CPI did not order these goods; WPP
did. Any shipments CPI requested before June 2017 are not relevant to the instant litigation, and
Plaintiffs cannot point to these orders to establish jurisdiction under this provision. Because this
lawsuit does not relate to goods that were shipped by Plaintiffs at CPI’s direction, Plaintiffs’
allegations do not support a finding of personal jurisdiction under § 801.05(5)(d).
In sum, Plaintiffs’ arguments do not convince me that I committed an error of law or fact in
this case. Accordingly, their motion for reconsideration (ECF No. 37) is DENIED.
Dated this 27th day of February, 2018.
s/ William C. Griesbach
William C. Griesbach, Chief Judge
United States District Court
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