American Computer v. Jack Farrell Implement Co., Civ. No. 4-89-199

Citation763 F. Supp. 1473
Decision Date05 April 1991
Docket Number4-89-261.,Civ. No. 4-89-199
PartiesAMERICAN COMPUTER TRUST LEASING, Plaintiff, v. JACK FARRELL IMPLEMENT CO., et al., Defendants. AMERICAN COMPUTER TRUST LEASING, Plaintiff, v. BOERBOOM INTERNATIONAL, INC., et al., Defendants.
CourtUnited States District Courts. 8th Circuit. United States District Court of Minnesota

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Craig D. Diviney, J. Thomas Vitt, Margaret M. Zverinova and Dorsey & Whitney, Minneapolis, Minn., for plaintiff and Automatic Data Processing, Inc.

James R. Anderson, Marshall, Minn., for defendants Boerboom and Farrell.

John Q. McShane, Mary E. Bolcom, Lezlie Ott Marek and Bowman and Brooke, Minneapolis, Minn., for Navistar Intern. Transp. Corp.

Bradley G. Clary, and Oppenheimer, Wolff & Donnelly, St. Paul, Minn., Robert A. DuPuy, John F. Hovel, and Foley & Lardner, Milwaukee, Wis., for J.I. Case Co.

ORDER

DOTY, District Judge.

This matter is before the court on the following motions:

1. Plaintiff American Computer Trust Leasing and counterclaim defendant Automatic Data Processing, Inc.'s motion for summary judgment;

2. Counterclaim defendant Navistar International Corporation's motion for summary judgment;

3. Counterclaim defendant J.I. Case Co.'s motion for summary judgment; and

4. Defendants Jack Farrell Implement Co. and Boerboom International's motion to stay entry of any judgment against them.

Based on a file, record and proceedings herein, the motions for summary judgment are granted and defendants' motion to stay entry of judgment is denied.

BACKGROUND

Plaintiff American Computer Trust Leasing ("ACTL") brought suit against defendants Boerboom International, Inc. ("Boerboom") and Jack Farrell Implement Co. ("Farrell") (collectively referred to as the defendants) to collect payments for computer hardware leased from ACTL. Boerboom and Farrell each claim that their obligation should be excused because the hardware did not work properly. The defendants also bring various counterclaims against plaintiff ACTL and counterclaim defendants Automatic Data Processing, Inc. ("ADP"), Navistar International Transportation Corporation (formerly International Harvester) ("IH") and J.I. Case Company ("Case"). The counterclaims may be divided into three main groups. First, the defendants bring computer system claims alleging that they were defrauded in connection with their acquisition of ADP computer systems. They further allege that the computer systems performed poorly and assert claims for breach of contract and breach of express and implied warranties. The breach of contract and breach of express and implied warranty claims are found in Counts I and II of the counterclaims while the fraud claim appears primarily in Count III. Second, the defendants bring various conspiracy claims. Boerboom and Farrell allege that IH, Case and ADP conspired to force the defendants to purchase ADP computer systems. The defendants assert claims based on civil conspiracy (Count III), violation of state and federal antitrust laws (Count IV) and violations of the Racketeer Influenced and Corrupt Organizations Act (Count IV). Finally, the defendants bring software deactivation claims alleging that their computer software was wrongfully deactivated, relying on various statutes. (Counts VI through XI). ADP brings separate claims against Farrell and Boerboom to collect payments due pursuant to their leases for computer services.

Farrell and Boerboom are presently Case agricultural equipment dealers and were IH dealers before the January 1985 sale of IH's farm equipment business to Case. Before 1983, IH furnished computer services directly to all of its farm implement dealers in exchange for a monthly fee. IH decided to outsource the dealer computer services because of the severe financial strain it experienced during the early 1980s as a result of the downturn in the U.S. farm economy.1 IH made the decision in 1982 to stop providing such services to its dealers and began to look for an outside vendor to provide those services. IH discussed its plan with eleven system vendors. One of those companies was ADP. IH communicated to the potential vendors that if selected as a vendor a company would be required to develop a system of hardware and software capable of communication with IH's mainframe. IH also wanted vendors to develop software that would provide dealers with capabilities in the area of parts ordering, inventory tracking, accounting, customer record keeping, warranty records and whole goods ordering.

IH decided to endorse only one vendor, ADP, and ADP and IH entered into a contract on May 16, 1983. The contract required ADP to develop a communications software package called the Dealer Communications Systems ("DCS") which would enable IH and its dealers to communicate with each other through a dealers communications network ("DCN") and also permit dealers to communicate amongst themselves. ADP agreed to develop and provide suitable hardware for both on-line and on-site dealer computer needs. IH further required ADP to modify its existing dealer software products to specifically meet the needs of IH dealers. ADP also agreed to participate in a steering committee which monitored the transition to the ADP system.

IH endorsed only ADP for a number of reasons. ADP was a large stable company and one of the pioneers in the computer services industry.2 Second, ADP agreed to tailor its computer products to meet the needs of IH and its dealers. Third, IH believed that endorsing only one vendor would facilitate a smoother transition to a new system for both IH and its dealers. Fourth, IH's strained financial condition mandated a quick termination of its computer services business and a single endorsement would help streamline that process.

Both the contracts between IH and ADP and between IH and its dealers expressly provide that vendors other than ADP could provide computer services to the dealers. Vendors who wanted to provide the DCN component of the computer services to IH dealers were required to submit to a testing process to ensure that the vendor met DCN specifications. The specifications were made available to vendors early in the conversion process and numerous other vendors developed DCN capability and competed with ADP for sales. Only the DCN component required such certification. Dealers could use any parts managements or accounting system without reference to compatibility with the IH communications center.

IH had a considerable investment in its computerized dealer communication network. It also incurred considerable expense in outsourcing the dealer computer services. It sought to recoup some of this expense in its contract with ADP. During negotiations IH initially sought a lump sum payment of $1,000,000 as consideration for its investment. ADP was reluctant to make such a payment because of IH's uncertain future and insisted on paying a royalty for each dealer sale as a method of defraying IH's costs and investment.3 ADP therefore contracted to pay IH a royalty for each system sold in amounts varying from $500 to $4,250, with an average royalty of $1,700.4

Defendant Boerboom had served as an IH dealer since at least 1980. Boerboom agreed to purchase an ADP system on October 9, 1984. Stephen Boerboom, the general manager and vice president of Boerboom, considered the purchase of another type of computer system before choosing ADP. Boerboom also testified that before the purchase he knew that IH allowed other computer vendors to certify that they met DCN specifications. Boerboom attended an ADP-IH sponsored roll-out meeting on October 9, 1984.5 Although Boerboom at that time was considering the purchase of a different computer system, the roll-out meeting and Boerboom's own investigation caused him to conclude that the ADP system was the equivalent of the other system it was considering. Shortly thereafter, on November 6, 1984, Boerboom entered into an equipment lease for an ADP Series 2000 Model 2020 computer system. IH received a $500 royalty payment as a result of Boerboom's purchase. Case received nothing.

Defendant Farrell had been an IH dealer since 1962. Farrell also attended the rollout meeting sponsored by IH and ADP on October 9, 1984. On January 31, 1985, IH sold its agricultural equipment business to Case. Following a brief transition period which ended in late spring of 1985, IH had no further involvement with its former agricultural dealers, including Boerboom and Farrell, regarding any matters, including those relating to communication and computer services. On May 9, 1985, approximately three months after becoming a Case dealer, Farrell signed an ADP software license agreement and an ADP equipment purchase agreement. In August 1985, the purchase agreement was modified when Farrell signed an agreement to lease rather than buy the equipment. In that contract, Farrell leased a Series 2000 Model 2015 computer system. Steve Farrell, primary operating officer of Farrell, testified that Farrell looked at four or five vendors, narrowed its choice to either ADP or Farm Equipment Association and eventually chose an ADP system. Neither IH nor Case received a royalty payment as a result of this transaction.

The relationship between the defendants, and ADP and ACTL is governed by three contracts: the purchase and maintenance agreement and the software license agreement with ADP, and the equipment lease agreement with ACTL. Under the purchase and maintenance agreement and the software license agreement, Boerboom and Farrell each agreed to purchase computer hardware from ADP, to pay ADP a monthly fee for maintenance and support of the computer hardware and to license several software applications from ADP. Both Boerboom and Farrell decided to exercise their options to lease their computer hardware from ACTL. Their decision to lease the computer hardware...

To continue reading

Request your trial
44 cases
  • Wisdom v. First Midwest Bank, of Poplar Bluff
    • United States
    • U.S. Court of Appeals — Eighth Circuit
    • 9 mars 1999
    ...criminal statute with no support for a private cause of action in the legislative history. See American Computer Trust Leasing v. Jack Farrell Implement Co., 763 F.Supp. 1473, 1497 (D.Minn.1991) (finding no private right of action under extortion statute which is "purely criminal in nature"......
  • Metzger v. Sebek
    • United States
    • Texas Court of Appeals
    • 29 septembre 1994
    ...were. Furthermore, the wrongful act in a civil conspiracy claim must be done to the plaintiff. American Computer Trust Leasing v. Jack Farrell Implement Co., 763 F.Supp. 1473, 1489 (D.Minn.1991), aff'd and remanded, American Computer Trust Leasing v. Boerboom Int'l, Inc., 967 F.2d 1208 (8th......
  • Manufacturas Intern. v. Mfrs. Hanover Trust Co.
    • United States
    • U.S. District Court — Eastern District of New York
    • 27 février 1992
    ...transit or in electronic storage where one party to the communication consented to access. See American Computer Trust Leasing v. Jack Farrell Implement Co., 763 F.Supp. 1473, 1494-95 (D.Mn.1991). The banks, and not the beneficiaries, were parties to the communication and consented to the i......
  • Bajorat v. Columbia-Breckenridge Development Corp., 95 C 50327.
    • United States
    • U.S. District Court — Northern District of Illinois
    • 26 septembre 1996
    ...Inc. v. Siska Constr. Co., Inc., 774 F.Supp. 156, 163 (S.D.N.Y.1991) (involving Hobbs Act); American Computer Trust Leasing v. Jack Farrell Implement Co., 763 F.Supp. 1473, 1497 (D.Minn.1991) (involving Hobbs Act), aff'd and remanded, 967 F.2d 1208 (1992), cert. denied, 506 U.S. 956, 113 S.......
  • Request a trial to view additional results
1 books & journal articles
  • Minnesota. Practice Text
    • United States
    • ABA Antitrust Library State Antitrust Practice and Statutes (FIFTH). Volume II
    • 9 décembre 2014
    ...15.f of this chapter. 111. MINN. STAT. § 325D.51. 112. Id. § 325D.52. 113. Am. Computer Trust Leasing v. Jack Farrell Implement Co., 763 F. Supp. 1473, 1490-91 (D. Minn. 1991), aff’d on other grounds , 967 F.2d 1208 (8th Cir. 1992). Minnesota 26-15 competitors might be viewed as horizontal.......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT