Gage Products Co. v. Henkel Corp., 03-2362.

• Decision Date: 09 December 2004
• Docket Number: No. 03-2362.,03-2362.
• Citation: 393 F.3d 629
• Parties: GAGE PRODUCTS CO., Plaintiff-Appellant, v. HENKEL CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

393 F.3d 629

GAGE PRODUCTS CO., Plaintiff-Appellant, v. HENKEL CORPORATION, Defendant-Appellee.

No. 03-2362.

United States Court of Appeals, Sixth Circuit.

Argued: September 15, 2004.

Decided and Filed: December 9, 2004.

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ARGUED:

Jeffrey C. Gerish, Plunkett & Cooney, Bloomfield Hills, MI, Robert M. Horwitz, Dykema Gossett, Detroit, MI, for Appellant.

ON BRIEF:

Jeffrey C. Gerish, Plunkett & Cooney, Bloomfield Hills, MI, Robert M. Horwitz, Kyle R. Dufrane, Dykema Gossett, Detroit, Michigan, for Appellee.

Before: BOGGS, Chief Judge; CLAY, Circuit Judge; HAYNES, District Judge.^*

OPINION

CLAY, Circuit Judge.

Plaintiff Gage Products Company, a chemical supplier to DaimlerChrysler Corporation's Jefferson North Assembly Plant, appeals the September 8, 2003 order of the district court granting summary judgment in favor of Defendant Henkel Corporation and the September 23, 2003 order denying Gage's motion for reconsideration. On May 29, 2001, Henkel became the sole Tier I supplier of chemical products to the plant pursuant to Chrysler's Total Chemical Management Program ("TCM Program"). As a consequence, Gage, which previously had been one of several Tier I suppliers to the plant, became a Tier II supplier and began selling its chemical products directly to Henkel instead of Chrysler. Henkel insisted on paying Gage the prices Gage had been charging Chrysler for chemical products prior to May 29, 2001 ("the current prices"). Gage insisted that it would sell its products to Henkel only if Henkel paid the prices Gage had proposed to Chrysler in November 2000, but that Chrysler had not yet approved ("the higher prices"). Despite the parties' apparent disagreement over price, Henkel ordered, and Gage shipped, chemical products in response to those orders. The district court held that Gage did not create a genuine issue of material fact as to whether Henkel breached a contract to pay Gage the higher prices for its chemical products, which Chrysler eventually approved in August 2001. The district court also held that there was no genuine issue of material fact as to whether Henkel's promise to honor Gage's higher prices upon Chrysler's approval amounted to fraud. For the reasons that follow, we AFFIRM, in part, and REVERSE, in part, the judgment of the district court.

I.

A. Substantive Facts

In early 2001, pursuant to its newly-instituted TCM Program, DaimlerChrysler ("Chrysler") issued a Request for Quotation ("RFQ") for the position of Chemical Manager at its Jefferson North Assembly Plant ("the Plant" or "JNAP") in Detroit, Michigan. Under this new TCM Program, Chrysler would contract directly with the Chemical Manager as opposed to contracting directly with numerous ("Tier I") chemical suppliers. The TCM Program would make the Chemical Manager the sole Tier I supplier and put the burden on the Chemical Manager to minimize waste and reduce costs through its direct dealings with the chemical suppliers. The RFQ required bidders to identify all of its proposed suppliers on whom the quotation price would be based and to divide the total cost of all of the chemicals supplied to the Plant by the total number of vehicles ("units") produced at the Plant, yielding a cost per unit, or "CPU," figure. Each bidder would then submit its respective cost per unit figure, which Chrysler would use to determine the low bidder. Each bidder would be required to propose cost per unit pricing for each of the three years of the contract, with the cost per unit price declining from year to year.

Both Gage Products Company ("Gage") and Henkel Corporation ("Henkel"), direct competitors and chemical suppliers to the Plant, bid for the Chemical Manager contract. To prepare its bid, Henkel solicited prices from Gage for various chemical products to be used for paint spraybooth maintenance, purge solvent, equipment cleaning, windshield solvent, floor cleaning, paint spraybooth coatings, and other specialty chemical products. On March 13, 2001, Gage submitted a quotation of $11.55 per unit, and attached a list of its products reflecting the price per gallon of each product.¹

Gage claims that its March 13, 2001 quote was based on the prices that Gage had quoted and that Chrysler had been reviewing since November 2000.² Four months earlier, on November 9, 2000, Gage had informed Chrysler by letter that it would be raising its prices effective November 15, 2000 due to market conditions. As of March 13, 2001, Chrysler had yet to respond to Gage's plan to raise its prices.³ In the meantime, Gage continued to invoice Chrysler at its current prices. Unbeknownst to Gage, Henkel disregarded the higher prices quoted on March 13, 2001, and instead submitted its Chemical Manager bid to Chrysler with what it believed to be Gage's current prices that it had obtained from Chrysler's computer system.

On April 1, 2001, Chrysler named Henkel the Chemical Manager. On April 26, 2001, Henkel complained about Gage's prices and requested Gage to provide its current pricing for Chrysler.⁴ Gage refused to quote Henkel its current prices, instead offering to supply its products at the prices based on the November 9, 2000 letter to Chrysler. Gage believed that these higher prices, which were to have taken effect the preceding November 15, 2000, represented its current pricing for Chrysler, even though Chrysler had not yet approved the new prices.

On May 16, 2001, representatives from Gage and Henkel met and again discussed Gage's pricing. At that meeting, Charles Schilling, Henkel's Sales Director, asked Jay Hohauser, Gage's Business Manager for Chrysler Accounts, to quote Gage's current Chrysler pricing. Hohauser responded that Gage was expecting Chrysler to authorize its higher prices. Schilling responded that if Chrysler awarded Gage the increased pricing, Henkel "will pay that."

On May 18, 2001, Joe Farren, Henkel's Chemical Manager at the Plant, sent an e-mail to Hohauser stating, "Jay, perhaps I wasn't emphatic enough at our meeting the other day.... You were to have the current pricing used at [the Plant] to Chuck Schilling and myself yesterday. If purchasing OK's a price increase we will certainly honor it. Until then please provide the current pricing in effect for [the Plant.]" A few days later, Hohauser told Farren by e-mail, "[Chrysler Purchasing has] confirmed a path forward for our price adjustments which will be in effect next Tuesday, May 29th. Therefore, the original pricing we submitted in March, which reflects our price adjustments plus our manpower at [the Plant], is our pricing." Id.⁵

On May 21, 2001, Schilling sent an e-mail to Chrysler, requesting verification of Hohauser's claim about an authorized price increase effective May 29, 2001. Chrysler responded that Gage's increases had not been authorized and that any changes that may occur with Gage in the future would not affect the launch of the TCM Program on May 29, 2001.

When the TCM Program launched on May 29, 2001, Henkel needed to order chemical products from Gage to avoid shutting down the Plant. Henkel argues that, as of the launch date, Gage still had "refused to divulge" the prices it was charging Chrysler at the time and that it "was forced to obtain [the prices] through its access to Chrysler's computers." Def.'s Br. at 9, 10 and 12. As noted, however, Henkel already knew Gage's Chrysler pricing because it had accessed that information in March 2001 in order to prepare its bid for the Chemical Manager contract. Again, it appears that Henkel was not seeking pricing information from Gage, but a price quotation (a so-called blanket purchase order) from which Henkel could order Gage's products. This view is supported by the fact that, beginning on May 29, 2001, Henkel issued individual purchase orders to Gage using the prices Henkel had accessed from Chrysler's computer system.

Henkel sent its first purchase order to Gage on May 29, 2001. This purchase order, as well as all subsequent orders, stated at the top:

Confirm receipt of PO by fax, verifying price and advising firm ship date. HENKEL WILL ONLY PAY CHARGES LISTED ON THIS PO.

Upon receipt, Yelena Paykina, who processed Gage's orders, spoke with Vicki Erdem at Henkel, who confirmed that the parties did not have a signed blanket purchase order contract. When Paykina stated that Gage could not ship any products to Henkel without a contract, Erdem said that Gage "can't do that" and that Gage needed to continue shipping until the issue was settled to avoid shutting down the Plant. Daniel Logan, Gage's Director of North American Automotive Operations, was concerned about keeping the Plant running and maintaining Gage's cash flow. Logan also was under the impression that Chrysler soon would approve Gage's requested price increases and that Henkel would honor those increases. He therefore instructed Ms. Paykina "to put in the old pricing in order to get cash coming in, with the understanding that Henkel had told [Gage] that when [Gage] received the increases, [Henkel] would honor them."

Between May 31 and June 19, 2001, Gage shipped products to Henkel in response to Henkel's purchase orders and invoiced Henkel approximately 50 times according to Gage's then-current pricing with Chrysler. On 12 occasions, Henkel issued purchase orders to Gage listing prices for various products that were not, in fact, Gage's current Chrysler prices; some prices on Henkel's purchase orders were too high, and some were too low. On each of those occasions, Gage acknowledged Henkel's purchase order by faxing a copy of the original purchase order back to Henkel with the correct Chrysler pricing handwritten on the purchase order. Upon receipt of the price acknowledgments from Gage, Henkel sent Gage a cancellation of the original purchase order, followed by a new purchase order confirming the correct price. Gage then shipped the products to the Plant and issued invoices to Henkel that referenced the...