Blockhead, Inc. v. Plastic Forming Company, Inc.

• Decision Date: 31 October 1975
• Docket Number: Civ. No. 14709.
• Citation: 402 F. Supp. 1017
• Parties: BLOCKHEAD, INC., Plaintiff, v. The PLASTIC FORMING COMPANY, INC., Defendant.
• Court: U.S. District Court — District of Connecticut

402 F. Supp. 1017

BLOCKHEAD, INC., Plaintiff, v. The PLASTIC FORMING COMPANY, INC., Defendant.

Civ. No. 14709.

United States District Court, D. Connecticut.

October 31, 1975.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Kiley, Feldmann, Whalen & Devine, Oneida, N. Y., for plaintiff; by James J. Devine, Jr., Spencer G. Feldmann, Oneida, N. Y.

DiSesa & Evans, New Haven, Conn., for defendant; by Frederick W. Danforth, Jr., Gordon A. Evans, New Haven, Conn.

LUMBARD,^* Circuit Judge:

Blockhead, Inc., a New York corporation and former distributor of wig accessories, has brought this diversity action against The Plastic Forming Company, Inc. ("PFC"), a Connecticut corporation involved in blow-molding plastic parts, for breach of warranty in the manufacture of wiglet cases. Blockhead claims that PFC, contrary to express and implied warranties, produced and shipped wiglet cases that were poorly finished and that contained defective handle housings which made the cases unfit for their intended purpose. Blockhead seeks to recover damages allegedly resulting from defendant's breach.

After a seven-day trial, concluded on October 16, 1975, the court finds Blockhead's claim to be without merit and accordingly dismisses the complaint.

I

In 1969, Morris Friedman, a part ownner of Blockhead, served as its president. Friedman had long been involved in the plastics industry and specifically in the manufacture and sale of plastic wig and wiglet cases. He has also held design and mechanical patents for various wig cases and wig accessories. Friedman's familiarity with the wig accessory industry dates back to the early 1960's when he was affiliated with a company that manufactured between five and eight million wig cases. In the mid-1960's, Friedman left this firm to work for Gibbs & Company, a distributor of health and beauty aids. While working at Gibbs & Company, Friedman met Andrew Dembicks and George Wilcox, who worked at the time for W. R. Grace & Co., and who in 1969 were associated with PFC. Friedman and Wilcox designed a wig case that Grace was to manufacture for distribution by Gibbs. These cases were produced through a process invented by Peter Schurman, the current president of PFC.

Friedman left Gibbs and subsequently became associated with Blockhead. In February 1969, Friedman entered into an agreement with Oneida Molded Plastics Corporation ("Oneida") of Oneida, New York, whereby Oneida manufactured another wig case that Friedman had designed for distribution by Blockhead. This wig case consisted of three basic parts: the body of the case, a pedestal which would fit inside the case and support the wig, and a handle that was separately designed and patented by Friedman. Oneida manufactured all the parts using the injection-molding method of making plastic products. Production began in September 1969 and eventually 33,000 wig cases were marketed nationwide.

Friedman also wanted Blockhead to market a wiglet case which would serve as a smaller version of the wig case. Early estimates obtained by Friedman for production of a wiglet case suggested that the manufacture by injection molding was prohibitively expensive. In February 1969, however, Friedman was contacted by Dembicks and Wilcox, who had joined Schurman at PFC. They informed Friedman that they could produce a wiglet case through the relatively inexpensive process of blow-molding. The initial price quoted for a blow-molded wiglet case was approximately seventy-five cents per case and the $5000 cost for tooling the mold was about one-fifth of the price that Friedman would have had to pay for a mold to be used in the manufacture of an injection-molded wiglet case.

Although blow-molding of plastic parts was well established at this time, and Friedman was familiar with the process, PFC's procedure was unique in that it produced plastic parts with both interior and exterior walls. The blow-molding process differs from injection-molding in that the latter system permits control of the thickness of the wall in any given part of the plastic without affecting other parts of the plastic. Both "double wall" and "single wall" blow-molding impose severe limitations on the extent to which the thickness of the wall at one point can be increased without affecting the rest of the product which is molded simultaneously.

Dembicks, Wilcox and Friedman met on February 27, 1969, to discuss further the production of a blow-molded wiglet case. Dembicks submitted drawings, but Friedman rejected them as too dissimilar from the wig case being manufactured by Oneida. He imposed four conditions on the manufacture of a wiglet case: it must be a scaled-down (twelve-inch high) version of the wig case; it must use the same handle — to be supplied by Oneida — as the wig case; it must use the same pedestal — also to be supplied by Oneida — as the wig case; and it must have the same outside texture as the wig case. Between the first meeting in February and the start of production in October 1969, Friedman provided PFC with specific height and width dimensions for the wiglet case and rejected suggestions that the handle housing be broadened to increase the amount of plastic that would be blown into the area supporting the handle.

Dembicks submitted new drawings of the wiglet case for Friedman's approval on April 29, 1969. Friedman insisted on several changes in the drawings and these corrections were incorporated in a final set of blueprints submitted on May 7, 1969. These blueprints provide only height and length measurements for the handle housing; no specification indicates a required thickness between the top of the housing and the hole in which the handle would be inserted. About this same time, PFC made a wooden model of the wiglet case which showed the dimensional details of the case and served as the model for the mold to be used in the manufacture of the cases. The handle housing in the wooden model was solid; thus it has no bearing on the thickness of the housing wall that PFC was to use. Friedman approved both the blueprints and the wooden model.

Problems began to emerge in the summer of 1969 with the first pre-production models of wiglet cases. The lugs on the handles were manufactured with an excessive distance between the stop ledges. Consequently the handles fell out of the handle housing. Oneida was to remedy the problem by reducing the distance between the stop ledges from 2 inches to 1 7/8 inches. After some additional problems with handles that provided insufficient space between the stop ledges, PFC submitted fifteen pre-production wiglet cases for Friedman's inspection on September 29, 1969. Friedman made a thorough inspection of the interior and exterior of the cases and informed PFC of problems, such as uneven trim, which he described as minor. None of these cases had ruptured handle housings and no mention was made of the thickness of the handle housing wall. After receiving assurances from Dembicks that the noted defects would be corrected, Friedman placed an order with PFC for the production of 25,000 wiglet cases. Blockhead was to pay approximately $1.00 per case for manufacture, assembly, and quality control. Friedman sold the cases for various prices, depending on the particular customer, but most cases were sold for $2.52. Some, however, were sold for as much as $4.65. Blockhead suggested a retail price for the case of $8.95.

The run of 25,000 cases was never completed. After PFC had manufactured 10,000 to 11,000 wiglet cases, Friedman requested that production cease. Dembicks and Wilcox, however, persuaded Friedman to continue production for a short period. On Friedman's order PFC finally halted production in mid-December 1969 by which time between 18,000 and 19,000 cases had been manufactured.

The court finds that a combination of factors led Friedman to discontinue PFC's production of the wiglet cases. First, Friedman expressed concern that developments in the manufacture of wiglets with synthetic hair lessened the amount of care necessary for the hair-piece and rendered the cases obsolete. Friedman testified that despite various promotional efforts the cases were not selling and a letter from a distributor indicates that "nothing much is moving on this item (the wiglet cases)." Second, Friedman had received numerous complaints from distributors and customers that the cases suffered from poor trim, rusting of the hinge pin, and improper cleaning. Although Friedman testified that he had seen isolated instances of ruptured handle housings during an inspection of cases at Blockhead's warehouse about October 10, 1969, that defect had not been a factor in his decision to terminate production. Schurman testified that any defective cases were discarded and as Friedman never returned or sought credit for any cases with ruptured handles, the court credits Schurman's testimony.

In January 1970, Wilcox and William Brink, a vice-president of PFC, visited Friedman to request payment of the balance owed by Blockhead for production of the 18,000 to 19,000 cases. Friedman refused to pay because of the problems he said he had encountered with the quality of the goods. At the end of January, the parties reached a settlement whereby PFC agreed to a rebate of ten cents on each of 12,000 cases then held in storage. PFC also agreed to waive rental charges for storage space at its plant, to maintain charges for future runs at the level quoted in May 1969, and to undertake responsibility for tooling and providing a new, injection-molded latch. Upon reaching this settlement, Friedman remitted one-half of the balance due. In late February 1969, PFC further agreed to repair, replace, or issue credit for cases returned by Friedman's customers because of specified defects. Friedman then paid the remainder of the money he owed to PFC. Blockhead, however, never returned any cases for repair, replacement, or credit pursuant to PFC's offer.

Friedman testified that...