Burlington Graphics Sys., Inc. v. Ritrama, Inc.
| Decision Date | 24 July 2015 |
| Docket Number | Case No. 11-C-0387 |
| Parties | BURLINGTON GRAPHICS SYSTEMS, INC., Plaintiff, v. RITRAMA, INC., Defendant. |
| Court | U.S. District Court — Eastern District of Wisconsin |
DECISION AND ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR PARTIAL SUMMARY JUDGMENT (DOC. 33)
Burlington Graphics Systems, Inc. ("BGS") sues Ritrama, Inc., claiming that adhesive-coated cast vinyl that Burlington bought from Ritrama was defective. Burlington asserts claims for breach of express warranties (count I), breach of implied warranties (count II), breach of contract (count III), and estoppel and waiver (count IV).
Ritrama moves for partial summary judgment, seeking dismissal of Burlington's claim for consequential damages, a limitation on any damages to replacement value of goods, dismissal of count II (breach of implied warranties), and dismissal of count III (breach of contract).
Summary judgment is proper if the depositions, documents or electronically stored information, affidavits or declarations, stipulations, admissions, interrogatory answers or other materials show that there is no genuine dispute of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a), (c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The moving party bears the initial burden of demonstrating it is entitled to summary judgment. Celotex, 477 U.S. at 323. Once thisburden is met, the nonmoving party must designate specific facts to support or defend each element of its cause of action, showing that there is a genuine issue for trial. Id. at 322-24. In analyzing whether a question of fact exists, the court construes the evidence in the light most favorable to the party opposing the motion. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
The mere existence of a factual dispute does not defeat a summary judgment motion; there must be a genuine issue of material fact for the case to survive. Id. at 247-48. "Material" means that the factual dispute must be outcome-determinative under governing law. Contreras v. City of Chicago, 119 F.3d 1286, 1291 (7th Cir. 1997). Failure to support any essential element of a claim renders all other facts immaterial. Celotex, 477 U.S. at 323. To establish that a question of fact is "genuine," the nonmoving party must present specific and sufficient evidence that, if believed by a jury, would support a verdict in its favor. Fed. R. Civ. P. 56(e); Anderson, 477 U.S. at 249.
UNDISPUTED FACTS
The following facts are either undisputed or taken in the light most favorable to BGS as the nonmovant. Unless otherwise noted by reference to the responding paragraph, a proposed statement of material fact was undisputed by the opposing party in its response. Any proposed statements from the parties not referenced by the court were determined to be irrelevant, Ritrama's version of a disputed fact, impermissible argument or a legal conclusion.
Ritrama is a Minnesota corporation with its principal place of business in Minneapolis, Minnesota, and a manufacturing facility in Cleveland, Ohio.1 (Doc. 35, ¶ 1.) The Minneapolis facility manufactures pressure-sensitive flexible films while the Cleveland facility manufactures cast-vinyl films products. (Doc. 35, ¶ 2.) End uses of Ritrama's products include labels for health and beauty products, food and beverage containers, outdoor signage and graphics, promotional graphics, and vehicle graphics. (Doc. 35, ¶ 2.)
BGS is a small, employee-owned, Wisconsin corporation with its principal place of business in Racine, Wisconsin. BGS designs and manufactures products including pressure-sensitive decals used for graphics on motor homes and other recreational vehicles ("RVs"). (Doc. 35, ¶ 3; Doc. 41, ¶ 1.) BGS's expertise includes skill or knowledge in ink; the application of ink; the application of ink to various substrates; and understanding reactions between ink, vinyl, and adhesive. (Doc. 35, ¶ 32; Doc. 45, ¶ 32.)
BGS began purchasing calendared (lower grade) vinyl and polyester products from Ritrama in 1997. These products were manufactured by Ritrama's Minneapolis facility in 1997.
In 2005, BGS's most important customer was Keystone RV Company, located in Indiana. (Doc. 41, ¶ 3.) At that time, BGS was supplying decals for the exterior graphics on approximately eighty percent of Keystone's product line. (Doc. 41, ¶ 4.)
In December 2005, Keystone directed BGS to use Ritrama cast vinyl products to manufacture the decals that Keystone purchased from BGS. (Doc. 35, ¶ 5; Doc. 41, ¶ 5.) Previously, BGS had sourced its cast vinyl adhesive products from Avery Dennison. (SeeDoc. 35, ¶ 9.) It was apparent to BGS, and BGS understood, that it would lose Keystone's business if it did not switch from Avery Dennison to Ritrama for cast vinyl products. (Doc. 35, ¶ 7; Doc. 41, ¶ 7.) Keystone wanted BGS to move away from the Avery-Dennison-supplied material because of adhesion problems that were experienced at Keystone's plants during cold weather. (Doc. 35, ¶ 8; see Doc. 41, ¶ 5.) In connection with its directive, Keystone supplied BGS with a sample of the Ritrama cast vinyl product that it wished to use; Keystone had obtained the sample from a competitor of BGS named Graphix Unlimited. (Doc. 35, ¶ 6; Doc. 41, ¶ 6.)
The cast vinyl products that BGS looked to purchase from Ritrama were comprised of a thin layer of cast vinyl film coated with an adhesive, produced in rolls of various lengths. (See Doc. 35, ¶ 10.) BGS would process the cast vinyl into graphic decals by die-cutting specific shapes and, for color graphics, printing the vinyl with ultra-violet ink, applying a clear coat, and applying a premask product to protect the printed film during installation. (Doc. 35, ¶ 11.)
BGS approached Ritrama with the cast vinyl sample from Keystone and asked to purchase the same product. (Doc. 35, ¶ 12.) BGS reached out to Ritrama sales representative Tom Wenzel, who was located in Illinois, when BGS sought to purchase the cast vinyl product. (Doc. 41, ¶ 8.) Wenzel traveled to Wisconsin to meet with BGS. (Doc. 41, ¶ 8.) BGS informed Wenzel that it was interested in buying the same product as the Graphix sample from Keystone. (See Doc. 36, Ex. A at 16 () BGS told Ritrama that the application was for Keystone andthat the sample had come from Graphix so Ritrama could identify the product. (Doc. 41, ¶ 9; Doc. 47, ¶ 9.) BGS's President, Mark Edwards, told Wenzel that the vinyl material would be printed and used in the RV market. (Doc. 42, ¶ 7.) Ritrama was aware that the material would be used in the RV market and that BGS would print and process the material to manufacture decals. (Doc. 41, ¶ 11; Doc. 47, ¶ 11; Doc. 44, Ex. 4 at 107-08.)
BGS was aware of Ritrama's presence in the RV market and expected to purchase premium cast vinyl. (Doc. 41, ¶ 10.) BGS's Edwards says BGS relied on Ritrama to furnish a vinyl appropriate for use in the RV market, based on Ritrama's superior knowledge of its vinyl products and Ritrama's experience supplying vinyl to the RV market. (Doc. 41, ¶ 11; Doc. 47, ¶ 11; Doc. 43, ¶ 7.)
In response to BGS's requests, Ritrama provided two samples of its 670-series cast vinyl—one with a "480" adhesive and one with a "720" adhesive. (Doc. 35, ¶ 13; Doc. 41, ¶ 12.) BGS conducted a single set of "initial adhesion" tests on both samples at one of the Keystone assembly plants. (Doc. 35, ¶ 14; Doc. 45, ¶ 14; Doc. 41, ¶ 13.) This test measured the strength of the initial bond of the decal to the RV. (Doc. 35, ¶ 15.) The purposes of BGS's initial adhesion testing were to test the bond of the decal to the RV and to confirm that the material BGS was obtaining from Ritrama was the same material Ritrama was supplying to Graphix. (Doc. 35, ¶ 16; Doc. 45, ¶ 16; Doc. 41, ¶ 67; Doc. 47, ¶ 67.)
On December 5, 2005, Ritrama faxed to BGS, from Ritrama's Cleveland facility, a 670 Series Opaque Cast Vinyl Films Spec Guide. The Spec Guide stated that the product's outdoor durability was seven years and mentioned that the product could beprinted and used to make signs and decals. The Spec Guide stated that the cast vinyl was "engineered for use on irregular surfaces with rivets, corrugations, and where extended outdoor durability is required." The Spec Guide listed common uses and stated that the product "is used for recreational vehicles, fleet, marine, and automotive graphics and striping." (Doc. 41, ¶ 15; Doc. 47, ¶ 15; Doc. 42, Ex. 1.)
Ritrama also provided BGS with an Annual Contract Pricing document governing purchases between January 1, 2006, and May 31, 2006. (Doc. 42, ¶ 17, Ex. 2.) The document listed Ritrama's prices, standard upcharges, "F.O.B. Cleveland," and the terms for the contract. (Doc. 41, ¶ 17; Doc. 47, ¶ 17; Doc. 42, ¶ 17, Ex. 2.)
Additional negotiations regarding pricing occurred through emails between Wenzel in Illinois and Edwards in Wisconsin. (Doc. 42, ¶ 29, Ex. 9.) BGS consulted Ritrama to confirm that the cast vinyl was a "seven-year outdoor durable product." (Doc. 44, Ex. 2 at 23; Doc. 41, ¶ 66; Doc. 47, ¶ 66.) Ritrama admits that the 670 Series Opaque Cast Vinyl Films product is warranted for seven years. (Doc. 47, ¶ 59.)
BGS decided to purchase Ritrama's 670 series cast vinyl with 720 adhesive, which was same Ritrama product as the sample that Keystone had given to BGS. (Doc. 35, ¶ 17; Doc. 47, ¶ 17.) BGS negotiated pricing with Wenzel, who was located in Illinois. (Doc. 41, ¶ 18; Doc. 47, ¶ 18.) Edwards of BGS says his company decided to purchase Ritrama's 670 series cast vinyl based on the results of its initial adhesion testing, Ritrama's recommendations, and the Spec Guide received in December 2005. (Doc. 41, ¶ 68; Doc. 42, ¶ 28.)
BGS began purchasing 670 series cast vinyl with 720 or 700 adhesive from Ritrama in January...
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