Mercedes-Benz U.S. Intern., Inc. v. Cobasys, LLC
| Decision Date | 31 March 2009 |
| Docket Number | No. 7:08-CV-01372-LSC.,7:08-CV-01372-LSC. |
| Citation | 605 F.Supp.2d 1189 |
| Parties | MERCEDES-BENZ U.S. INTERNATIONAL, INC., Plaintiff, v. COBASYS, LLC, Defendant. |
| Court | U.S. District Court — Northern District of Alabama |
Austin E. Smith, Ellen T. Mathews, Howard P. Walthall, Jr., Joseph W. Letzer, S. Greg Burge, Burr & Forman LLP, Birmingham, AL, for Plaintiff.
Mary Rose Alexander, Thomas J. Heiden, Latham & Watkins LLP, Chicago, IL, Robert K. Spotswood, Michael Sansbury, Spotswood Sansom & Sansbury LLC, John W. Smith T., Stewart M. Cox, Bradley Arant Boult Cummings LLP, Birmingham, AL, for Defendant.
The Court has for consideration Plaintiff Mercedes-Benz U.S. International, Inc.'s ("MBUSI") Motion for Preliminary Injunction filed on July 30, 2008. (Doc. 2.) MBSI asks this Court to order Defendant Cobasys, LLC ("Cobasys") to specifically perform its purported contractual obligations under its agreements with MBSI. Cobasys also filed a Motion to Transfer Venue on August 15, 2008.1 (Doc. 23.) A hearing was held on these matters on February 24-25, 2009. If the Court were to grant the motion for a preliminary injunction, Cobasys would be ordered to begin preparations for the production of a battery for MBUSI hybrid vehicles until the Court could make a final determination on the merits. Originally, Chevron Technology Ventures, LLC ("CTV") and Ovonic Battery Company, Inc. ("Ovonic") were also parties to this lawsuit, but have been dismissed from this action. Because MBUSI has failed to meet its burden, its motion for a preliminary injunction is due to be denied.
The parties in this matter have submitted hundreds of exhibits and thousands of pages of deposition testimony in support of their respective positions. From these submissions, the Court has constructed the following timeline of the events surrounding the alleged formation of a contract between MBUSI and Cobasys.
In December 2005, Daimler Chrysler AG ("Daimler"), General Motors ("GM") and Bavarian Motor Works ("BMW") created the Joint Sourcing Committee ("JSC") in order to facilitate the development of hybrid systems for use in each company's vehicles. Through the JSC, Daimler developed a relationship with Cobasys. Cobasys is a developer and supplier of hybrid technology, and is jointly owned by CTV and Ovonic.
MBUSI is an affiliate of Daimler. Daimler acts as MBUSI's agent for the purchasing of parts to be used in vehicles manufactured by MBUSI.3 Daimler and MBUSI have been engaged in the development of a new hybrid vehicle for production in MBUSI's Tuscaloosa County, Alabama plant. In 2006, Daimler issued a request for quotation ("RFQ") for the development and supply of a nickel metal hydride ("NiMH") battery pack for that vehicle. Cobasys, one of a few suppliers producing NiMH battery packs, had provided developmental services prior to the RFQ and also submitted a detailed quote in response to the RFQ. Although Cobasys had not submitted the lowest bid, it was nevertheless selected for the project. Daimler then entered into a developmental contract with Cobasys, and the two companies began working to develop a battery pack for use in MBUSI's new vehicle.
Despite having a design contract with Daimler, in the early months of 2007, Cobasys began to indicate that it would not be able to continue work on the project without a full production contract in place. In March, Cobasys and Daimler began negotiating a production supply contract with the intention of putting that contract into place by the end of that month. The parties engaged in a number of negotiations, both over the phone and through face-to-face meetings. These discussions culminated with a meeting in Germany where representatives from Cobasys— Erik Hansen, General Manager for Sales; Scott Lindholm, Vice President of Systems Engineering; and David Okonoski, Senior Account Manager—met with Arnika Gressmann, Hybrid Electric Vehicles Purchasing Liaison; Harald Kroeger, Electronics Platform Manager; and other senior management with Daimler. At the conclusion of this meeting, Daimler presented Cobasys with two options and asked Cobasys to offer MBUSI, in an updated quotation, one of these two options by close of business on April 2. Cobasys decided to incorporate "proposal 1" into future quotations. Proposal 1 incorporated the base price, warranty, shipping terms, and quantity terms that Cobasys had requested in negotiations, while obligating Cobasys to pass on any savings in production to Daimler rather than reducing the price of each battery up front.4
On April 2, Cobasys issued a revised quotation for the NiMH battery packs that included the terms of Proposal 1. Daimler then requested Cobasys make a number of changes to this quotation. Primarily, Daimler noted that the quotation should not have included the Cobasys Terms and Conditions. Daimler maintained that Cobasys had expressly accepted the MBUSI Master Terms Direct Purchasing ("Master Terms") earlier in the process and requested that Cobasys conform its quotation to that document. Daimler also noted that, from its point of view, the costs quoted were not to be considered estimates, as prices and costs had a "not-to-exceed" character.
On April 5, Cobasys issued a second quotation, incorporating the changes that Daimler had requested, including express incorporation of the MBUSI Master Terms and its Appendices. The quotation also included a ten-year warranty and delivery quantities and terms, breaking down the expected production of 5,000 units over three years. Daimler engineering then asked Cobasys to ensure that the quotation met the sheet metal requirements it had earlier provided to Cobasys. On April 13, Okonoski emailed Gressmann a list of open issues regarding shipping, sheet metal quotes, and engineering questions. Gressmann responded with a request that Cobasys provide an updated quotation to the Daimler team. On April 16, Okonoski emailed to Daimler a third quotation that included edits and engineering changes. Upon reviewing this latest quotation, Daimler discovered that the System Operating Voltage Range was unacceptable and requested that Cobasys correct that item. Cobasys agreed to do so, and on April 17 MBUSI issued a Purchase Contract ("Purchase Contract") for the NiMH battery. Less than thirty minutes after issuing this Purchase Contract, Gressmann emailed Okonoski to inform him that MBUSI had not accepted certain engineering changes listed in Cobasys's last quote, citing a need to have a precise understanding of the commercial effects these changes would entail.
The Purchase Contract contained numerous errors. The Daimler Globus system that pulls information from engineering programs and places it in the purchase contracts had included the wrong information. As such, the Purchase Contract listed the incorrect weight and an incorrect volume requirement of 80% as opposed to 100%. Furthermore, the price term listed in the Purchase Contract was different from the price in Cobasys's quotation.
On April 24, Okonoski called Gressmann to inform her that he had questions about the Purchase Contract. Gressmann asked him to submit any open questions that prevented Cobasys from signing the Purchase Contract by close of business that day.
That same day, Okonoski replied with an email stating that he had reviewed the Purchase Contract with the parties at Cobasys responsible for signing production contracts. In addition to requesting engineering and payment proposal clarifications, Okonoski also returned the Purchase Contract itself with text boxes describing points of confusion and disagreement. First, Okonoski expressed concern that the pricing term was only good through the end of 2007. He also noted that the listed weight of the battery was incorrect, and that the quantity to be provided by Cobasys was listed at 80% rather than 100%. Furthermore, Cobasys required that both maximum daily volume and the warranty terms should be stated on the face of the Purchase Contract and that Daimler commit to return packaging to Cobasys. Finally, Okonoski noted that the quote provided by Cobasys was not referenced in the Purchase Contract. He requested that such a reference be made in order to document the parties' agreement. Gressmann responded to this email with a request that Okonoski put his concerns in a letter as Daimler could not see the added text boxes. Okonoski complied with this request.
On April 27, Okonoski emailed Gressmann with another concern. After discussing with his management the daily production allocation, Cobasys had concerns about committing to an allocation of up to twenty-five battery packs per day. Cobasys asked if a maximum of seventeen would be acceptable. Daimler responded that it could not reduce the requirement below twenty-five and asked Cobasys to confirm that it could meet that production schedule. Cobasys remained firm that it would be difficult to expand production beyond seventeen batteries per day, but noted that this level of production would meet the monthly allocation provided by Gressmann. On May 14, Cobasys issued another quotation updating terms, but stated that without a resolution to the daily production discussion, it would be unable to sign a Purchase Contract.
Also in late April, Cobasys began to issue purchase orders to suppliers in support of the MBUSI battery project. Joseph Crocenzi, Vice President of Finance for Cobasys, expressed concern at this outlay of capital without a production contract in hand. Hansen stated that Cobasys had received purchase orders and supporting documentation from Daimler that allowed it to move ahead while covering costs in case the program was cancelled. Hansen noted that the program had always been projected to lose money, but was necessary to enter into business with Daimler and BMW.
On June 26, Gressmann emailed Okonoski...
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