LiiON, LLC v. Vertiv Grp. Corp.

• Decision Date: 26 October 2021
• Docket Number: 18-cv-6133
• Parties: LiiON, LLC, Plaintiff, v. VERTIV GROUP CORPORATION et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

LiiON, LLC, Plaintiff, v. VERTIV GROUP CORPORATION et al., Defendants.

No. 18-cv-6133

United States District Court, N.D. Illinois, Eastern Division

October 26, 2021

MEMORANDUM OPINION AND ORDER

MARY M. ROWLAND, United States District Judge.

This case arises from a failed business relationship. Plaintiff LiiON, LLC, supplied lithium-ion battery cabinets to Defendants Vertiv Group Corporation, Vertiv Corporation, and Liebert Corporation (collectively, Vertiv), who themselves use those cabinets to make uninterruptible power supply systems to help their clients maintain a constant power supply. After working well together for a brief duration, the parties' relationship eroded and the parties began litigation. LiiON sued Vertiv for breach of a non-disclosure agreement the parties entered at the beginning of their relationship and for trade secret misappropriation under the federal Defend Trade Secrets Act (DTSA) and the Illinois Trade Secrets Act (ITSA). In turn, Vertiv countersued for breach of contract, breach of the implied covenant of good faith and fair dealing, and tortious interference with business expectancy.

After years of contentious litigation, the parties have both now moved for summary judgment. [424]; [431]. Vertiv has additionally moved for sanctions under Federal Rule of Civil Procedure 11 against LiiON. [440]. And LiiON has moved to alter a prior order awarding Vertiv fees as a sanction for Liion's discovery violations. [436]. For the following reasons, this Court grants Vertiv's motion for summary judgment [424]; grants in part and denies in part LiiON's motion for summary judgment [431]; denies Vertiv's motion for sanctions [440]; and grants in part LiiON's motion to alter judgment [436].

SUMMARY JUDGMENT STANDARD

Summary judgment is proper where “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Celotex Corp. v Catrett, 477 U.S. 317, 322 (1986). A genuine dispute as to any material fact exists if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248 (1986). The substantive law controls which facts are material. Id. After a “properly supported motion for summary judgment is made, the adverse party must set forth specific facts showing that there is a genuine issue for trial.” Id at 250 (internal quotations omitted).

The Court “consider[s] all of the evidence in the record in the light most favorable to the non-moving party, and [] draw[s] all reasonable inferences from that evidence in favor of the party opposing summary judgment.” Skiba v Ill. Cent. R.R. Co., 884 F.3d 708, 717 (7th Cir. 2018) (internal citation and quotations omitted). The Court “must refrain from making credibility determinations or weighing evidence.” Viamedia, Inc. v. Comcast Corp., 951 F.3d 429, 467 (7th Cir. 2020) (citing Anderson, 477 U.S. at 255). In ruling on summary judgment, the Court gives the non-moving party “the benefit of reasonable inferences from the evidence, but not speculative inferences in [its] favor.” White v. City of Chicago, 829 F.3d 837, 841 (7th Cir. 2016) (internal citations omitted). “The controlling question is whether a reasonable trier of fact could find in favor of the non-moving party on the evidence submitted in support of and opposition to the motion for summary judgment.” Id. (citation omitted).

BACKGROUND^[1]

I. The Parties

Plaintiff LiiON, LLC is a Nevada limited liability company that maintains its principal place of business in Dundee, Illinois; all of its members are Illinois residents. [429] ¶ 1. Defendant Vertiv Group Corporation is a Delaware corporation with its principal place of business in Columbus, Ohio. Id. ¶ 2. Defendant Vertiv Corporation is an Ohio Corporation with its principal place of business in Columbus, Ohio, and is wholly-owned by Vertiv Group. Id. ¶ 3. Defendant Liebert Corporation is incorporated and maintains its principal place of business in Columbus, Ohio. Id. ¶ 4. The parties refer to the Defendants collectively as “Vertiv, ” so this Court will here, too.

II. UPS Systems and Lithium-Ion Battery Cabinets

Vertiv is a leading supplier of uninterruptible power supply (UPS) systems. Id. ¶ 8. UPS systems function as a backup battery cabinet power source in case the electric grid goes down, and companies use them to ensure a constant power supply to information technology (IT) and other equipment. Id. ¶ 9. The back-up power source typically comprises a battery solution such as lead acid or lithium-ion. Id. ¶ 10.

Lithium-ion battery cabinets involve batteries using lithium chemistry to provide power. Id. ¶ 11. Such lithium chemistries include lithium iron phosphate (LFP), lithium manganese oxide (LMO), lithium nickel manganese cobalt (NMC), and a combination of LMO and NMC. Id. ¶ 12. Each chemistry possesses different characteristics such as power and energy. Id. ¶ 13. LiiON supplies lithium-ion battery cabinets for UPS systems. Id. ¶ 17.

III. The Parties' Relationship

In July 2014, LiiON shipped lithium-ion battery cabinets to Vertiv to test their compatibility with one of Vertiv's UPS models. Id. ¶ 18. Vertiv and LiiON also entered into a mutual nondisclosure agreement (NDA) on July 31, 2014. Id. ¶ 19; [429-4] at 88. The NDA “applie[d] to [contractually defined] Confidential Information provided between the Parties from the Effective Date [July 31, 2014] through twelve (12) months thereafter.” [429] ¶ 20; [429-4] at 88. It also provides that the “obligations of each Party shall continue for a period of five (5) years from the date of disclosure of any Confidential Information with the exception that Confidential Information specifically identified as a trade secret shall be held in confidence for as long as the Confidential Information remains a trade secret.” [429-4] at 88. Finally, as relevant here, it states that in “no event will either Party be liable for consequential, indirect, incidental, punitive, special, reliance, or similar damages, losses or expenses (including lost profits, competitive advantage, or goodwill) under or in connection with this Agreement, even if such Party has been advised of their possible existence.” [429] ¶ 21; [429-4] at 89.

Vertiv and LiiON completed testing and installed one of LiiON's lithium-ion battery cabinets with Vertiv's UPS systems at a customer in May 2015. [429] ¶ 23; [453] ¶ 3. Vertiv then re-engaged LiiON in late 2016 to test LiiON's lithium-ion battery cabinet with other Vertiv's UPS systems. [456] ¶ 3. The testing lasted several months. Id.

IV. The Purchase Orders

Between December 2016 and December 2017, Vertiv placed multiple purchase orders for LiiON's battery cabinets. [429] ¶ 26. LiiON supplied some, but not all, of the lithium-ion battery cabinets Vertiv ordered. Id. ¶ 27. Vertiv also ordered lithium-ion battery cabinets from LiiON's competitor, Samsung. Id. Despite contemplating it, Vertiv never actually entered into a volume commitment with LiiON. [432] ¶ 20.

Vertiv placed one purchase order (PO) on December 8, 2016, for eight of LiiON's lithium-ion battery cabinets at $20, 000.00 apiece for a total of $160, 000.00. [456] ¶ 7. LiiON responded with a confirmation email on the same date and fulfilled the December 8 order in March 2017. Id. ¶¶ 8-9.

Vertiv placed another PO for two of LiiON's lithium-ion battery cabinets at $20, 000.00 apiece for a total of $40, 000.00 on July 26, 2017. Id. ¶ 10. LiiON fulfilled this PO in August 2017. Id. ¶ 11. On August 18, 2017, Vertiv placed another PO for four of LiiON's cabinets at $20, 000.00 apiece for a total of $80, 000.00. Id. ¶ 12. LiiON shipped two of the four cabinets in September 2017 and the remainder in October 2017. Id. ¶ 13.

On November 2, 2017, to fulfill an order its customer QTS made for LiiON lithium-ion battery cabinets, Vertiv sent LiiON an email attaching a PO for fifty lithium-ion battery cabinets at a price of $26, 250.00 per cabinet for a total of $1, 312, 500.00 and requesting a December 15, 2017 ship date. Id. ¶¶ 16-17. The PO included the following commercial terms and conditions:

BUYER EXPRESSLY OBJECTS TO AND EXPRESSLY REJECTS ANY PROVISIONS ADDITIONAL TO OR DIFFERENT THAN THE TERMS OF THAT MAY APPEAR IN SELLER'S … ACKNOWLEDGMENT, CONFIRMATION, INVOICE OR IN ANY OTHER PRIOR OR LATER COMMUNICATION FROM SELLER TO BUYER UNLESS SUCH PROVISION IS EXPRESSLY AGREED TO BY BUYER IN WRITING SIGNED BY BUYER; . . .

Time is of the essence. If delivery is not expected to be made on-time, Seller will notify Buyer and will take all reasonable steps at Seller's own cost to expediate delivery; provided, however, Buyer reserves the right, without liability, in addition to its other rights and remedies, to cancel this Purchase Order by notice to Seller and arrange for completion and/or purchase of substitute items elsewhere and to charge Seller with any loss or additional costs incurred; . . .

Buyer reserves the right to cancel all or any part of the undelivered portion of this Purchase Order. This Purchase Order may be terminated by Buyer or by Seller at any time immediately upon written notice in the event of the other party's material breach of any term or provision of this Purchase Order or upon the occurrence of any of the following events … (b) such other party makes any materially false statement, representation or claim; [and] (c) such other party fails to prosecute the work so as to endanger the performance of this Purchase Order…. Buyer will not be responsible for any specific cancellation fees or charges; . . .

This Purchase Order shall be governed by the laws of the State of Missouri.

Id. ¶ 18.

On November 2, 2017, LiiON responded to...