Corinthian Pharmaceutical v. Lederle Laboratories

• Decision Date: 30 October 1989
• Docket Number: No. IP86-1076-C.,IP86-1076-C.
• Citation: 724 F. Supp. 605
• Parties: CORINTHIAN PHARMACEUTICAL SYSTEMS, INC., Plaintiff, v. LEDERLE LABORATORIES, Defendant.
• Court: U.S. District Court — Southern District of Indiana

724 F. Supp. 605

CORINTHIAN PHARMACEUTICAL SYSTEMS, INC., Plaintiff, v. LEDERLE LABORATORIES, Defendant.

No. IP86-1076-C.

United States District Court, S.D. Indiana, Indianapolis Division.

October 30, 1989.

Sherwood P. Hill, Maurer Rifkin & Hill, Indianapolis, Ind., for plaintiff.

John T. Murphy, Ice Miller Donadio & Ryan, Indianapolis, Ind., for defendant.

ORDER ON MOTION FOR SUMMARY JUDGMENT

McKINNEY, District Judge.

This diversity action, which is presently set for trial by jury on December 18, 1989, comes before the Court on the defendant's motion for summary judgment. The issues raised have been fully briefed and the parties have submitted supporting evidence. The issues raised were ripe as of July 21, 1989. For the reasons set forth below, the Court GRANTS the motion.

I. FACTUAL AND PROCEDURAL BACKGROUND¹

Defendant Lederle Laboratories is a pharmaceutical manufacturer and distributor that makes a number of drugs, including the DTP vaccine. Plaintiff Corinthian Pharmaceutical is a distributor of drugs that purchases supplies from manufacturers such as Lederle Labs and then resells the product to physicians and other providers. One of the products that Corinthian buys and distributes with some regularity is the DTP vaccine.

In 1984, Corinthian and Lederle became entangled in litigation when Corinthian ordered more than 6,000 vials of DTP and Lederle refused to fill the order.² That lawsuit was settled by written agreement whereby Lederle agreed to sell a specified amount of vaccine to Corinthian at specified times. Lederle fully performed under the 1984 settlement agreement, and that prior dispute is not at issue. One of the conditions of the settlement was that Corinthian "may order additional vials of vaccine from Lederle at the market price and under the terms and conditions of sale in effect as of the date of the order."

After that litigation was settled Lederle continued to manufacture and sell the vaccine, and Corinthian continued to buy it from Lederle and other sources. Lederle periodically issued a price list to its customers for all of its products. Each price list stated that all orders were subject to acceptance by Lederle at its home office, and indicated that the prices shown "were in effect at the time of publication but are submitted without offer and are subject to change without notice." The price list further stated that changes in price "take immediate effect and unfilled current orders and back orders will be invoiced at the price in effect at the time shipment is made."

From 1985 through early 1986, Corinthian made a number of purchases of the vaccine from Lederle Labs. During this period of time, the largest single order ever placed by Corinthian with Lederle was for 100 vials. When Lederle Labs filled an order it sent an invoice to Corinthian. The one page, double-sided invoice contained the specifics of the transaction on the front, along with form statement at the bottom that the transaction "is governed by seller's standard terms and conditions of sale set forth on back hereof, notwithstanding any provisions submitted by buyer. "Acceptance of the order is expressly conditioned on buyer's assent to seller's terms and conditions."

On the back of the seller's form, the above language was repeated, with the addition that the "seller specifically rejects any different or additional terms and conditions and neither seller's performance nor receipt of payment shall constitute an acceptance of them." The reverse side also stated that prices are subject to change without notice at any time prior to shipment, and that the seller would not be liable for failure to perform the contract if the materials reasonably available to the seller were less than the needs of the buyer. The President of Corinthian admits seeing such conditions before and having knowledge of their presence on the back of the invoices, and Corinthian stipulates that all Lederle's invoices have this same language.³

During this period of time, product liability lawsuits concerning DTP increased, and insurance became more difficult to procure. As a result, Lederle decided in early 1986 to self-insure against such risks. In order to cover the costs of self-insurance, Lederle concluded that a substantial increase in the price of the vaccine would be necessary.

In order to communicate the price change to its own sales people, Lederle's Price Manager prepared "PRICE LETTER NO. E-48." This document was dated May 19, 1986, and indicated that effective May 20, 1986, the price of the DTP vaccine would be raised from $51.00 to $171.00 per vial. Price letters such as these were routinely sent to Lederle's sales force,⁴ but did not go to customers.⁵ Corinthian Pharmaceutical did not know of the existence of this internal price letter until a Lederle representative presented it to Corinthian several weeks after May 20, 1986.

Additionally, Lederle Labs also wrote a letter dated May 20, 1986, to its customers announcing the price increase and explaining the liability and insurance problems that brought about the change. Corinthian somehow gained knowledge of this letter on May 19, 1986, the date before the price increase was to take effect. In response to the knowledge of the impending price increase, Corinthian immediately ordered 1000 vials of DTP vaccine from Lederle. Corinthian placed its order on May 19, 1986, by calling Lederle's "Telgo" system. The Telgo system is a telephone computer ordering system that allows customers to place orders over the phone by communicating with a computer. After Corinthian placed its order with the Telgo system, the computer gave Corinthian a tracking number for its order. On the same date, Corinthian sent Lederle two written confirmations of its order. On each form Corinthian stated that this "order is to receive the $64.32 per vial price."

On June 3, 1986, Lederle sent invoice 1771 to Corinthian for 50 vials of DTP vaccine priced at $64.32 per vial. The invoice contained the standard Lederle conditions noted above. The 50 vials were sent to Corinthian and were accepted. At the same time, Lederle sent its customers, including Corinthian, a letter regarding DTP vaccine pricing and orders.⁶ This letter stated that the "enclosed represents a partial shipment of the order for DTP vaccine, which you placed with Lederle on May 19, 1986." The letter stated that under Lederle's standard terms and conditions of sale the normal policy would be to invoice the order at the price when shipment was made. However, in light of the magnitude of the price increase, Lederle had decided to make an exception to its terms and conditions and ship a portion of the order at the lower price. The letter further stated that the balance would be priced at $171.00, and that shipment would be made during the week of June 16. The letter closed, "If for any reason you wish to cancel the balance of your order, please contact us ... on or before June 13."

Based on these facts, plaintiff Corinthian Pharmaceutical brings this action seeking specific performance for the 950 vials of DTP vaccine that Lederle Labs chose not to deliver.⁷ In support of its summary judgment motion, Lederle urges a number of alternative grounds for disposing of this claim, including that no contract for the sale of 1000 vials was formed, that if one was formed, it was governed by Lederle's terms and conditions, and that the 50 vials sent to Corinthian were merely an accommodation. Before reaching these issues, the relevant summary judgment standards must be set forth.

II. SUMMARY JUDGMENT STANDARDS

Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Further, Rule 56(e) provides:

When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of the adverse party's pleadings, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If the adverse party does not so respond, summary judgment, if appropriate, shall be entered against the adverse party.

Since the Supreme Court's trilogy of decisions on summary judgment, see Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); and Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986), it is clear that the mandatory aspects of Rule 56 must be followed by the district courts, and, as a result, summary judgment must be entered where appropriate. Decisions of the Seventh Circuit reflect this change in attitude as well. See, e.g., Herman v. City of Chicago, 870 F.2d 400, 404 (7th Cir. 1989); Spellman v. Commissioner, 845 F.2d 148, 152 (7th Cir.1988); Collins v. Associated Pathologists, Ltd., 844 F.2d 473 (7th Cir.1988). In short, it is the advocates, not the courts, who must press their claims and vigorously oppose the motion for summary judgment. See, e.g., Herman v. City of Chicago, 870 F.2d 400, 404 (7th Cir.1989) (courts need not scour record to support a party's claim at summary judgment; adversaries are to pursue their cases and courts are to rule accordingly).

Additionally, affidavits submitted at summary judgment must "set forth such facts as would be admissible in evidence," and "must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). The Seventh Circuit has recently interpreted this rule strictly, requiring affidavits to contain more than broad conclusions. See, e.g., Mid-State...