Litton Microwave Cooking Products, a Div. of Litton Systems, Inc. v. Leviton Mfg. Co., Inc.
| Decision Date | 05 May 1994 |
| Docket Number | Nos. 93-1121,93-1126,s. 93-1121 |
| Citation | 15 F.3d 790 |
| Parties | 22 UCC Rep.Serv.2d 660 LITTON MICROWAVE COOKING PRODUCTS, A DIVISION OF LITTON SYSTEMS, INC., Appellee/Cross-Appellant, v. LEVITON MANUFACTURING COMPANY, INC., Appellant/Cross-Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Counsel who presented argument on behalf of the appellant/cross-appellee was Eric John Magnuson of Minneapolis, Minnesota. The names of Eric J. Magnuson and Richard J. Nygaard of Minneapolis, Minnesota, and Arthur Richenthal of New York, New York, appear on the brief of the appellant/cross-appellee.
Counsel who presented argument on behalf of the appellee/cross-appellant was Steven L. Severson of Minneapolis, Minnesota. The names of Steven L. Severson and Charles F. Webber of Minneapolis, Minnesota, and DeWitt M. Shy, Jr. of Memphis, Tennessee, appear on the brief of the appellee/cross-appellant.
Before FAGG, Circuit Judge, ROSS, Senior Circuit Judge, and MORRIS SHEPPARD ARNOLD, Circuit Judge.
Litton Microwave Cooking Products ("Litton") brought this action for breach of warranty against Leviton Manufacturing Company, Inc. ("Leviton") for damages resulting from defective component parts manufactured and sold by Leviton to Litton for use in microwave ovens. Leviton now appeals a district court 1 judgment for damages and attorney's fees in favor of Litton. At issue is whether a price quotation letter including detailed terms of sale forms the basis of a contract for the sale of goods listed. We hold that it does not and therefore affirm.
In the 1970s and 1980s, Litton manufactured microwave ovens for sale under its own label, and for other microwave vendors such as Whirlpool, who would sell the ovens under their own brand names. Leviton is a manufacturer of small electrical components such as electrical sockets, light fixtures, and switches. Beginning in the mid-1970s, Leviton supplied electrical components to Litton for a variety of products. By 1984, these included switches for microwave oven fans. In May, 1987, Litton began to receive reports of fires and smoking in some of its microwave ovens. Burned ovens examined by Litton exhibited burn patterns starting at Leviton's fan switch. Litton immediately notified Leviton, where it was discovered that a change in Leviton's manufacturing process caused the switches to arc and smoke. The defective switches were manufactured from January, 1986, to July, 1987, when the process causing the defects was isolated and corrected. These switches, however, had been installed in microwave ovens sold under Litton and Whirlpool brand names.
Litton instituted a program to replace the defective fan switches. Through their dealer and service center networks, Litton and Whirlpool sent service personnel to consumers' homes across the country to make repairs to over 75,000 ovens. The Consumer Products Safety Commission, after Litton notified it of the problem, endorsed the replacement program.
The switches that Leviton supplied were manufactured specially for Litton from stock switches altered to comport with drawings and specifications supplied by Litton engineers. Once the original design was fixed on, Leviton sent a price letter to Litton quoting the price for the switch. After receiving the price letter, Litton selected Leviton as the vendor of the switch. As prices changed from time to time, Leviton sent Litton price letters to advise it of the changes. Every price letter that Leviton sent to Litton had attached to it a copy of Leviton's "Standard Terms and Conditions of Sale."
Among its various terms, Leviton's form included an express warranty that provided that:
Leviton warrants that products sold will, upon shipment, be free of defects of workmanship or material under normal and proper usage. Should any failure to conform to this warranty become apparent during the warranty period (in most cases one year after date of shipment), Leviton shall, upon proper written notice from the Purchaser, correct such non-conformity by repair or replacement of the defective part or parts. Corrections in the manner provided above shall constitute a fulfillment of all liabilities of Leviton with respect to the quality of the products. In no event and under no circumstances shall Leviton be liable to the Purchaser or to any other person for any indirect, special, consequential or incidental losses or damages, including, without limitation, lost profits, except to the extent that liability for personal injury, or property damage may be imposed upon Leviton by law.
Leviton's Terms and Conditions further provided:
No modification of these Terms or Conditions will be recognized by Leviton unless specifically agreed to in writing. Failure of Leviton to object to provisions contained in any purchase order or other communication from a purchaser ... shall not be construed as a waiver of these Standard Conditions of Sale nor an acceptance of any such provisions.
Litton referred to the price letters to prepare purchase orders on its own standard forms. The warranty provision of the purchase order states, in pertinent part:
Seller warrants that the goods described herein shall be free from defects in workmanship and materials.... These warranties shall be in addition to any other warranties expressed or implied.... All warranties shall run to Litton and subsequent purchasers of the goods or end products of which they are a part. Seller agrees, at its expense, to defend or assist in the defense of any action in any court against Litton or such purchaser, at Litton's opinion [sic], insofar as such action is based upon alleged facts which amount or may amount to a breach of the foregoing warranties. Seller agrees to indemnify Litton and such purchasers from all liability, loss, costs, and expense, including reasonable attorney's fees, resulting from any breach of any or all said warranties, expressed or implied.
Litton's purchase order also contained an "acceptance" clause, which provides:
This Purchase Order becomes a binding contract upon the terms and conditions set forth herein when it is accepted either by an acknowledgement or any performance. No revision to this Purchase Order shall be valid or binding unless any such revision is in writing and is signed by an authorized representative of Litton and no condition stated by Seller in accepting, acknowledging, or amending this Purchase Order shall be binding upon Litton if in conflict with, inconsistent with, or in addition to terms and conditions contained herein unless expressly accepted in writing by an authorized representative of Litton.
At trial both parties claimed that their respective forms represented the terms of the contract. Leviton also asserted that industry custom and practice, course of dealing, and usage of trade dictated recognition of its version of the warranty. Litton attempted to anticipate this defense by calling an adverse witness in its case in chief, and then calling a rebuttal witness to refute the testimony of its own witness. The trial court submitted the issue of which form controlled to the jury, which returned a verdict for Litton. Based on this verdict, and the stipulation of the parties as to certain elements of Litton's claimed losses, the district court entered judgment in favor of Litton for $4,009,574, including $710,254 in attorney's fees for this litigation. The court denied additional claims by Litton for attorney's fees and replacement expenses in the amount of $543,000.
Leviton assigns error to three determinations by the district court. First, Leviton asserts that the issue of which form governed the terms of the contract was properly one of law and not of fact. Second, Leviton believes that the district court improperly denied its motion for a new trial given Litton's rebuttal of its own witness and the court's submission of materially conclusory jury instructions. Finally, Leviton maintains that even if Litton's form is found to control the transaction, it does not call for an award of attorney's fees in this case, as the district court found. Litton excepts to the denial of additional fees and expenses. We address each of these claims in turn.
Leviton asserts that the contract that serves as the subject of this dispute was formed through an exchange of forms between the parties; Leviton's price letters and catalogs constituted, its argument runs, the "first shot" in what has come to be known in the language of contract law as "the battle of the forms." See generally Douglas G. Baird & Robert Weisberg, Rules, Standards, and the Battle of the Forms: A Reassessment of Sec. 2-207, 68 Va.L.Rev. 1217, 1218-19 (1982).
It was once the law, under the "mirror image" rule, that an offer had to be accepted exactly "as is" or the response amounted only to a counter-offer. There was no contract unless the original offeror accepted the counter-offer. Section 2-207 changed all this in the case of merchants. This section, adopted in Minnesota as Minn.Stat. Sec. 336.2-207, allows merchants to contract for the sale of goods without having to negotiate and draft formal contracts. With the adoption of Sec. 2-207, a merchant can accept an offer made on the offeror's form by using his own standardized form so long as the response does not "materially alter" the terms of the offer. Section 2-207, therefore, resolves a "battle of the forms" in favor of the first form transmitted.
For a "battle of the forms" to arise and trigger the provisions of Sec. 2-207, there must be conflicting forms to begin with, each of which satisfies the common-law or statutory requirements for an offer. If the first form is not an offer, there can be no battle. Leviton's defense to liability under the contract, therefore, depends upon whether its form--its catalog and price quotation letters--satisfies the requirements of an offer....
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