Budnick Converting, Inc. v. Nebula Glass Int'l, Inc., Case No. 09–cv–646–DRH.

• Decision Date: 30 March 2012
• Docket Number: Case No. 09–cv–646–DRH.
• Citation: 866 F.Supp.2d 976
• Parties: BUDNICK CONVERTING, INC., Plaintiff/Counter-defendant, v. NEBULA GLASS INTERNATIONAL, INC., d/b/a Glasslam, Defendant/Counter-plaintiff, Nebula Glass International, Inc., d/b/a Glasslam, Third Party Plaintiff, v. Tesa Tape, Inc., Third Party Defendant.
• Court: U.S. District Court — Southern District of Illinois

866 F.Supp.2d 976

BUDNICK CONVERTING, INC., Plaintiff/Counter-defendant,

v.NEBULA GLASS INTERNATIONAL, INC., d/b/a Glasslam, Defendant/Counter-plaintiff,Nebula Glass International, Inc., d/b/a Glasslam, Third Party Plaintiff,

v.Tesa Tape, Inc., Third Party Defendant.

Case No. 09–cv–646–DRH.

United States District Court,

S.D. Illinois.

March 30, 2012.

William J. Niehoff, Deanna Leigh Litzenburg, Mathis, Marifian & Richter, Ltd., Charles L. Joley, Jennifer L. Dickerson, Joley, Nussbaumer, et al., Belleville, IL, for Plaintiff/Counter–defendant.

Jason Winslow, Mark D. Bauman, Hinshaw & Culbertson LLP, Belleville, IL, for Defendant/Counter–plaintiff/Third Party Plaintiff.

Michelle L. Corrigan, Andrew J. Scavotto, John C. Grellner, Stinson, Morrison et al., St. Louis, MO, Third Party Defendant.

ORDER

HERNDON, Chief Judge:

This case is sticky. Nebula Glass International, Inc., d/b/a/ Glasslam (“Glasslam”) sought to create a new product—the “Air–Tight”—that required, among other things, a specialized double-sided tape that could withstand certain conditions. Accordingly, Glasslam considered several products and ultimately decided to look into a tape—the 4965—provided by Budnick Coverting, Inc. (“Budnick”) but manufactured by Tesa Tape, Inc. (“Tesa”). Glasslam tested the tape to ensure it was suitable for its application but then decided the tape, which had a red liner, needed a different liner with a different color and thickness. Accordingly, Glasslam worked with Budnick in finding a solution and ultimately decided upon a variation of the 4965 with the red liner (the “red tape”) called the 4965 PV2 which had a white liner (the “white tape”). The white tape was represented to Glasslam as the same tape as the red tape with a different liner. As a result, Glasslam decided not to expend the resources to put the white tape through the same testing it had put the red tape through and ordered the tape from Budnick with plans to go into production. After the “Air–Tight” went into production, it was discovered that the white tape was not suitable for its intended use as it was failing Glasslam's customers' testing. As a result, Glasslam refused to pay for the white tape and this lawsuit involving Glasslam, Budnick, and Tesa ensued. Now before the Court are four motions for summary judgment, two by Budnick, two by Tesa, and Glasslam's appeal of magistrate judge decision. For the reasons that follow, Glasslam's appeal is denied, Budnick's motions for summary judgment are granted, and Tesa's motions for summary judgment are granted.

I. Background

Glasslam is a Florida company involved in the window glass industry as a supplier of component parts to other manufacturers. (Doc. 7). Glasslam is owned half by Steve Howes and half by Violet Howes. (Doc. 97–2, p. 2). During the time period relevant to this lawsuit, Mr. Howes was the CEO/president and Mrs. Howes was the vice president/secretary-treasurer of Glasslam. (Doc. 97–2, p. 3). In 2007, Glasslam was working to create the “Air–Tight,” a spacer for separating two pieces of glass for insulated glass for windows. (Doc. 97–25, p. 2). The “Air–Tight” was composed of three main parts: 1) a rubber gasket; 2) a double-sided adhesive tape that would go on both sides of the gasket; and 3) a mylar or moisture barrier tape on top of the gasket. (Doc. 99–5, p. 5). At issue here, is the double-sided adhesive tape.

To help it find the right products for the “Air–Tight” Glasslam worked with Budnick, whom it had done business with for years. (Doc. 97–1, p. 23). Budnick, an Illinois company, is a converter of adhesive tape products. Tape converting is the die cutting, slitting, and spooling of tape materials to customer-specific sizes. (Deterding p. 9). Glasslam primarily dealt with Budnick employees Ronald Miaskiewicz and Tom Birch. Birch did sales and business development for Budnick and was the primary day-to-day contact with Glasslam. (Doc. 97–4, p. 3, 5). Miaskiewicz was responsible for the sales, marketing, and the application engineering function of Budnick. (Doc. 97–11, p. 12). Ultimately, Glasslam became interested in the 4965 or red tape manufactured by Tesa. Tesa manufactures various types of tape, including adhesive acrylic tapes, and sells its products to distributors such as Budnick. (Doc. 33). Glasslam never dealt directly with Tesa, but went through Budnick to get Tesa's products. (Doc. 97–1, p. 23).

In August of 2007, after Budnick sent Glasslam a quote containing its terms and conditions of sale, which was customary between the parties, Glasslam purchased twenty-four spools of the red tape for testing purposes. (Docs. 97–8, 97–9). Those terms and conditions, which will be set forth more specifically where applicable below, contained nine provisions governing: 1) “Prices”; 2) “Shipments”; 3) “Payments”; 4) “Cancellations, Returns, and Assignments”; 5) “Limited Warranty, Inspection and Claims”; 6) “Limits on Liability”; 7) “Force Majeure and Shortages”; 8) “Other Provisions”; and 9) “Exclusive Terms and Conditions.” (Doc. 97–17, p. 2).

Testing that summer consisted of Steve Howes independent testing or “SHIT” testing.¹ Mr. Howes is deemed an expert and owns several patents in the window and glass industry. (Doc. 104–3, p. 9). While Mr. Howes does not consider himself to be an expert with respect to adhesives used in the manufacture of insulated glass windows, he does consider himself to be “an expert in using the products and then testing the finished product to see whether or not it outgasses ... and at what degree.” (Doc. 104–3, p. 9–10). Outgassing is a well known problem in the glass industry (Doc. 104–3, p. 4). It can cause a window to fog and can affect the coating on the glass itself. (Doc. 95–1, p. 19–20). Howes testified that SHIT testing is more stringent than industry standard testing. (Doc. 97–1, p. 22). Generally, Glasslam did not use a product unless Mr. Howes approved it first through testing. (Doc. 97–1, p. 20). The adhesive of the Tesa 4965 or the red tape passed Mr. Howes' testing, but he did not like the red liner because of its color and weight and because it wrinkled. (Doc. 104–3, p. 18). Accordingly, Glasslam discussed with Budnick about finding a solution.

Budnick contacted Tesa and discovered that Tesa made the 4965 with a white liner. (Doc. 97–11, p. 18). On September 25, 2007, Miaskiewicz spoke with Mr. Howes regarding his concerns about the liner, including his concerns about emissions of volatiles or out-gassing. (Doc. 97–11, p. 43). On September 26, 2007, Miaskiewicz sent Mr. Howes an email stating in relevant part:

tesa 4965 concerns about emission of volatiles. I am in touch with an Application Engineer and the VP of New Business Development at tesa regarding this subject. They provided me with a NASA test report that shows tesa 4965 performance vs other tesa tapes. I do not know if you will ever find a tape that has zero emissions. The report details that the collected volatile condensable materials measured for tesa 4965 was 0.02%, far less than any of their other products, and I would guess at worst in line with any other product that we could identify as a competitive option. The report is dated back to 1993 and I have asked tesa to provide a letter stating that the product does not emit volatiles and that the construction of tesa 4965 remains the same to this day as when this report was written. In all my years at tesa I know the product has remained unchanged and I am confident that they will report the same. I hope to have that letter Monday the latest.

(Doc. 97–12, p. 1).² Attached to the email was an “analytical test report” dated October 25, 1993, which showed that the 4965 had a 0.02% collected volatile condensable materials (“CVCM”), which relates to the amount of outgassing. (Doc. 97–12, p. 2).

On September 27, 2007, Miaskiewicz sent Mr. Howes an email stating that he would have a letter from Tesa no later than tomorrow. He also noted that Tesa had asked him “to make sure the report [he] sent yesterday is not used for verification at the customer as it is outdated. They will explain the results in the letter.” (Doc. 97–14).

On September 28, 2007, Miaskiewicz sent Mr. Howes an email attaching a letter from Tesa and stating:

Please see the attached letter from tesa. I hope this alleviates any concerns regarding the out gassing of volatiles.

We received the 4965 with the PET liner today. We will receive the other rolls soon enough. The results of the 4965 were extremely promising. We laminated the material to one of your gaskets and bent the extrusion to and beyond the 6? core size. The liner performed as well as the blue in our eyes and far better than the red tesa PP liner. Alex is working with production to spool the material that we have onto a core for you to run through the equipment. We assume you will need 2 spools to run through the equipment.

(Doc. 97–14, p. 1). The attached letter was from Tesa to Budnick and stated as follows:

Pursuant to the question of outgassing and our tesa® 4965, please be advised that the test data on file with tesa tape inc. indicates a CVCM (Collected Volatile Condensable Materials) level of 0.02%. Tests were conducted in accordance with ASTM Standards E–595–77 and are derived in accordance with NASA Reference Publication 1124.

The tesa® 4965 test results generated the lowest CVCM levels amongst other products tested, and according to our experience, no known reported issues involving the outgassing of tesa® 4965 exist.

All information is provided in good faith, and as always, tesa recommends the user conducts additional testing to determine the suitability of the product under intended conditions.

(Doc. 97–14, p. 2). On November 19, 2007, two spools of the 4965 PV2 ³ or the white tape were sent to Glasslam as a sample. (Exhibit 15).

On November 30, 2007, Budnick sent Mr. and Mrs. Howes an email attaching a new quote with a price increase for the spools because the liner of the 4965 had...