UFP Ventures II, Inc. v. Viking Polymers, LLC
Filing
60
OPINION & ORDER denying 30 Motion for Partial Summary Judgment. Signed by District Judge James D. Peterson on 11/18/14. (jat)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN
UFP VENTURES II, INC.,
v.
Plaintiff,
OPINION & ORDER
13-cv-586-jdp
VIKING POLYMERS, LLC,
Defendant.
Plaintiff UFP Ventures II, Inc. purchased high-density polyethylene from defendant
Viking Polymers, LLC several times between 2009 and 2011. UFP used the polyethylene to
manufacture wood and plastic composite boards used for constructing decks. In 2010, UFP
began to receive complaints from customers that the deck boards made with Viking’s
polyethylene had formed a haze on the surface, giving the boards a cloudy appearance. In 2013,
UFP filed this lawsuit for breach of warranty of merchantability, breach of warranty of fitness
for a particular purpose, and property damage. UFP invokes this court’s jurisdiction on the basis
of diversity of the parties under 28 U.S.C. § 1332. 1
Now before the court is Viking’s motion for partial summary judgment. Dkt. 30. Viking
asks the court to hold that UFP’s remedies are limited to replacement or a refund as provided in
Viking’s terms and conditions. Viking contends that it sent its standard terms and conditions to
UFP with each order and that because UFP failed to object to them, UFP is bound by those
standard terms and conditions. But whether Viking sent the terms and conditions to UFP is
sharply disputed. UFP contends that it never received the terms and conditions, and Viking
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Early in this case, the court expressed concern regarding its own jurisdiction and the diversity
of the parties. Dkt. 12. UFP filed an amended complaint addressing the court’s concern, Dkt.
15, and the court concluded that, as alleged, it has jurisdiction. Dkt. 18. However, the court
invited Viking to challenge the allegations of citizenship at summary judgment. Id. Viking has
not challenged the amended jurisdictional allegations.
cannot come up with a copy of the order paperwork as sent to UFP. At this point, UFP’s receipt
and acceptance of the terms and conditions is a disputed question of material fact, and Viking’s
motion for partial summary judgment will be denied.
BACKGROUND FACTS
The facts concerning the background to the transactions giving rise to this case are not
disputed. In early 2009, UFP began purchasing high-density polyethylene from Viking to use in
manufacturing wood and plastic composite boards. High-density polyethylene is a plastic
material. To manufacture the boards, UFP uses a method of coextrusion to surround the board
with a thin plastic cap. Coextrusion forces the plastic material through various dies, which
adheres the plastic cap to the boards. After the boards were manufactured, UFP sold them to
distributers and consumers for use in building decks.
Between 2009 and 2011, Viking sold UFP at least 13 orders of polyethylene, collecting a
total of $310,725.31 for the material. In 2010, UFP began to receive complaints from customers
that the boards had formed a haze that gave them a cloudy appearance. On August 19, 2013,
UFP filed this lawsuit against Viking alleging breach of warranty of merchantability, breach of
warranty of fitness for a particular purpose, and property damage.
The facts concerning whether Viking sold the polyethylene to UFP subject to terms and
conditions are disputed. Viking claims that it confirmed every order with a two-sided “Order
Acknowledgement” form, which had its standard terms and conditions on the back. But Viking
has not produced copies of the pertinent order acknowledgment forms. According to Viking, it
does not keep a copy of both sides of the order acknowledgment forms, because the back side is
always the same. Without copies of the order acknowledgment forms, Viking moved for
summary judgment relying on a 1994 document entitled “Terms and Conditions for Sale” (the
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1994 Terms and Conditions). But the 1994 Terms and Conditions document was not dated and
did not include any information that would connect it to a specific customer, transaction, or
other document. UFP challenged the admissibility of this document in its summary judgment
opposition. In its reply, Viking submitted additional declarations and supplemental proposed
findings of fact purporting to establish that the 1994 Terms and Conditions for Sale document
reflected the terms and conditions applied invariably to all Viking orders.
UFP moved to strike the reply evidence, or in the alternative, requested the opportunity
to file a sur-reply. Dkt. 49. The court struck Viking’s supplemental proposed facts and gave UFP
the opportunity to take the depositions of the declarants before filing a sur-reply. Dkt. 53.
UFP’s sur-reply makes it clear that Viking has not established that the 1994 Terms and
Conditions were sent to UFP.
ANALYSIS
To prevail on its motion for summary judgment, Viking must show that UFP was bound
by its terms and conditions. To show that, Viking must show that the terms and conditions
were provided to UFP. Viking must also show that UFP assented to those terms and conditions,
and that the terms and conditions are enforceable. If Viking can show all this, UFP’s remedies
would be limited to replacement or refund, and perhaps not even that because the terms and
conditions also impose deadlines for seeking any remedy.
A. Standard of review
Partial summary judgment limiting UFP’s remedies is appropriate if Viking can show
“that there is no genuine dispute as to any material fact and [it] is entitled to judgment as a
matter of law” on the question of potential remedies. Fed. R. Civ. P. 56(a). The court considers
the facts in the summary judgment record in the light most favorable to UFP, the non-moving
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party, and draws all reasonable inferences in its favor. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 255 (1986). To survive summary judgment, UFP must go beyond its pleadings and
identify specific material facts showing genuine issues for trial “such that a reasonable jury could
return a verdict” in its favor. Id., at 248.
B. The 1994 Terms and Conditions at summary judgment
According to the testimony of its owner, John Ammondson, and its former logistics
coordinator, Tammie English, Viking’s practice was to enter new order information into its
system and then print three copies of a form confirming the order. The first copy would be
printed onto a two-sided “order acknowledgement form,” labeled “customer original” on the
bottom, with the terms and conditions preprinted onto the back. That copy would be sent to
the customer. Viking did not save copies of the two-sided form, presumably because the back
side was always the same. The Viking would print two additional copies, both entitled “order
number.” One of those copies would go to the planning division to prepare the order and the
last copy would go into the customer’s file. Ordinarily, one would expect that Viking would
support its motion for summary judgment with a declaration attaching copies of the order
acknowledgements for each of the disputed transactions. But Viking does not have copies of any
of the order acknowledgments, and it does not have a copy of any order acknowledgement form
showing that the terms and conditions were on the back.
The only copy of the terms and conditions produced by Viking in this case was the 1994
Terms and Conditions document, a single-sided document. Dkt. 41, at 5. The produced copy
was not dated, was not addressed to or signed by UFP, and did not include any other indication
of receipt by UFP. Viking produced only one copy of an “order acknowledgement” form for a
single UFP order (which was in fact a later order not pertinent to this dispute). But that order
acknowledgement example does not refer to any terms and conditions, and did not include the
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back side of the form. Viking contends that because it sent the double-sided order
acknowledgement forms with terms and conditions to customers, the pertinent order
acknowledgement documents should be in UFP’s possession. But UFP maintains that it has no
such forms. UFP was able to produce a copy of one of the “order number” forms, although
according to the Viking process described by Ammondson and English, that copy should have
remained with Viking. The bottom line is that Viking has no documentary evidence that the
purported terms and conditions were sent to UFP.
Viking’s testimonial evidence fails to fill the gaps in its documentary evidence. The
provenance of the terms and condition document is uncertain. The document was not copied
from any actual order acknowledgment form. Ammondson got it from Viking’s former
comptroller, and Ammondson did not know where he got it. Neither Ammondson nor English
knew for sure the title of the document that the terms and conditions were supposed to have
been printed on. Although Ammondson denied that the terms and conditions changed at all
from 1994 to 2014, he admitted that his current law firm reviewed them at some point and may
have changed “a few words here and there.” Ammondson conceded that he did not know if the
1994 terms and conditions document reflected the terms and conditions in use during the
disputed transactions with UFP. Ammondson could not explain how UFP ended up with a copy
of the “order number” document. Ammondson admitted that Viking did not have any copy of
the terms and conditions as they would have been sent to UFP.
Viking must leap several evidentiary hurdles. First, the terms and conditions must be
authentic. Fed. R. Evid. 901; Graffia v. C.I.R., No. 13-cv-3755, 2014 WL 5304906, at *2 (7th
Cir. Oct. 17, 2014) (“Authenticity is a precondition to admissibility.”). Next, the terms and
conditions must fall within an exception to the hearsay rule, which would otherwise prevent
their admissibility. Eisenstadt v. Centel Corp., 113 F.3d 738, 742 (7th Cir. 1997). Viking
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contends that they fall under the business records exception in Rule 803(6). Then, to establish
that they were actually sent to and received by UFP at least once, Viking contends that its
regular business practice was to send the terms and conditions with each order, so it follows that
it must have sent them with UFP’s orders and UFP must have received them. Lastly, Viking
must surmount a legal hurdle: the terms and conditions must have been accepted by UFP.
Viking offers UFP’s silence as proof of assent.
Viking’s argument fails at the first hurdle because the company cannot prove the
authenticity of the terms and conditions. The terms and conditions document that was
produced is not the original two-sided form created for each UFP order. It is not even a copy of
the original two-sided form. It is at best a copy of the preprinted form created in 1994 without
any order-specific information. Further, Viking has no way to prove that the produced copy of
the terms and conditions matches the version that it claims to have sent to UFP on the back of
each order acknowledgement form. Viking has failed to show that the terms and conditions it
produced in discovery is an authentic copy of the version used on Viking’s order
acknowledgments.
Even if the 1994 terms and conditions document were authenticated, Viking cannot
show that they fit in the business records hearsay exception. Under Rule 803(6), hearsay is
admissible within the exception if: it was made at or near the time by someone with knowledge;
it was kept in the course of a regularly conducted business activity; it was a regular practice of
the activity; these conditions are attested to by a qualified witness; and the evidence does not
indicate a lack of trustworthiness. The terms and conditions fail the first requirement. The
produced copy was not created at or near the time of the transactions with UFP. It was created
by Viking’s attorney 20 years ago. It is not admissible as a business record.
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Next, Viking cannot establish that the terms and conditions were actually sent to and
received by UFP. Viking relies on deposition testimony to demonstrate that its regular practice
was to send the terms and conditions on the back of every “order acknowledgement” form that
it sent to customers. But Viking retained an “order acknowledgement” copy in its own records
that, according to its process, should have been sent to the customer. It also sent an “order
number” copy to UFP that it should have retained for its own records. Further, Viking does not
offer any outgoing mail log or receipt proving that it sent any of the forms, let alone the versions
that allegedly included the terms and conditions. UFP claims to have never received the terms
and conditions. Counsel for UFP attests that after a diligent search in the company’s records,
they were not able to find either the order acknowledgement or the terms and conditions.
However, they were able to find the purchase orders, invoices, bills of lading, and proof of
payment for the 13 transactions. Viking’s evidence of its purported practice establishes
confusion and inconsistency. It does not provide a basis to conclude that the 1994 Terms and
Conditions were systematically included on every order acknowledgement, including those for
the 13 transactions at issue.
The final hurdle in Viking’s argument is that it cannot show that UFP accepted the
terms and conditions. Even if Viking could demonstrate UFP’s receipt of the terms and
conditions, Viking fails to articulate a theory under which UFP agreed to be bound. Viking relies
exclusively on the terms and conditions, which (at least in the 1994 version) stated that failure
to object to them within 10 days after receipt constitutes agreement with them. Under
Wisconsin law however, silence does not generally constitute acceptance of a contract. Sell v.
Gen. Elec. Supply Corp., 227 Wis. 242, 278 N.W. 442, 447 (1938). The Restatement (Second) of
Contracts does provide exceptions to the general rule, including the potentially applicable
scenario where the terms themselves state that silence constitutes acceptance. Restatement
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(Second) of Contracts § 69 (1981). However, Viking has not offered any authority
demonstrating that Wisconsin has adopted this exception. Therefore, the court cannot conclude
as a matter of law that UFP accepted the terms and conditions. Viking’s motion for summary
judgment will be denied.
C. The 1994 Terms and Conditions at trial
UFP would like the court to go further. In addition to denying Viking’s motion for
summary judgment, UFP asks the court to (1) hold that the 1994 Terms and Conditions
document is inadmissible at trial; and (2) deem that Viking has waived any argument that the
limitation of liability in the terms and conditions would be enforceable.
As for the admissibility of the 1994 Terms and Conditions: because this issue arises in
the context of Viking’s motion, the court is reluctant to give affirmative relief to UFP without
giving Viking a full opportunity to respond. That said, there is no basis in the record so far for
admitting the 1994 Terms and Conditions (or any other version) at trial. Nevertheless, the
court will entertain this issue on a motion in limine before trial, which will give Viking a chance
to respond to it in writing.
As for the enforceability of the limitation of liability provisions: UFP is correct that
Viking’s response to UFP’s argument is a single, underdeveloped paragraph. Nevertheless,
Viking makes an important point that is not adequately addressed in UFP’s brief, which itself
treats the issue in rather summary form. UFP’s argument is that a remedy limitation is void if it
fails of its essential purpose, which is to make the injured party whole. Citing Phillips Petroleum
Co. v. Bucyrus-Erie Co., 131 Wis. 2d 21, 388 N.W.2d 584 (1986), UFP contends that the refund
remedy would provide only a fraction of the damages to which UFP should be entitled as a
result of the defective polyethylene, which apparently will lead to substantial claims from
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unhappy homeowners who will have to repair their decks. Because a refund fails to make UFP
whole, it fails of its essential purpose, and therefore it is void. But this logic would apply to any
provision that limited consequential damages, and Wisconsin courts have regularly approved
such allocations of risk between parties to a business transaction. “An agreed remedy does not
fail of its essential purpose because it results in the party that bears the risk suffering the risk.”
S. Fin. Grp., LLC v. McFarland State Bank, 763 F.3d 735, 741 (7th Cir. 2014) (applying
Wisconsin’s version of the UCC). Because this issue has not been adequately developed by
either party, I decline to rule that the limitation of liability is unenforceable.
ORDER
IT IS ORDERED that Defendant Viking Polymers, LLC’s motion for partial summary
judgment, Dkt. 30, is DENIED.
Entered this 18th day of November, 2014.
BY THE COURT:
/s/
________________________________________
JAMES D. PETERSON
District Judge
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