Nvision Global Tech. Solutions, Inc. v. Cardinal Health 5, LLC

• Decision Date: 14 August 2012
• Docket Number: No. 1:11–cv–0389–WSD.,1:11–cv–0389–WSD.
• Citation: 887 F.Supp.2d 1240
• Parties: NVISION GLOBAL TECHNOLOGY SOLUTIONS, INC., Plaintiff, v. CARDINAL HEALTH 5, LLC, Defendant.
• Court: U.S. District Court — Northern District of Georgia

887 F.Supp.2d 1240

NVISION GLOBAL TECHNOLOGY SOLUTIONS, INC., Plaintiff,

v.CARDINAL HEALTH 5, LLC, Defendant.

No. 1:11–cv–0389–WSD.

United States District Court,

N.D. Georgia,

Atlanta Division.

Aug. 14, 2012.

Eric F. Barton, John A. Sherrill, R. Wayne Bond, Rebecca Allison Davis, Seyfarth Shaw, LLP, James E. Connelly, Kirk W. Watkins, Womble Carlyle Sandridge & Rice, PLLC, Atlanta, GA, for Plaintiff.

Dean Andrew Calloway, James Williams, Joseph E. Finley, Lucas W. Andrews, Richard H. Deane, Jr., Jones Day, Atlanta, GA, for Defendant.

OPINION AND ORDER

WILLIAM S. DUFFEY, JR., District Judge.

This matter is before the Court on Cardinal Health 5, LLC's (“Defendant” or “Cardinal”) Motion for Relief Under Rule 56(h) of the Federal Rules of Civil Procedure [192]; Cardinal's Motion for Partial Summary Judgment [143]; nVision Global Technology Solutions, Inc.'s (“Plaintiff” or “nVision”) Motion for Partial Summary Judgment [148]; and nVision's Renewed Motion for Summary Judgment on Cardinal's Counterclaims of Fraud and Estoppel [206].

I. BACKGROUND¹A. Cardinal's 2007 Request for Proposal for Freight Payment and Audit Services

nVision was founded in 2003 as a software company to develop, sell, and lease logistics software used for freight bill payment and audit services. (Def.'s Resp. and Objections to Pl.'s Statement of Material Facts (“PSOF”) [61.3] ¶ 1). Cardinal is a leading provider of medical, surgical, and pharmaceutical products and services, including wholesale distribution to retail customers such as drug stores, supermarket pharmacies, hospitals, and alternative care providers. (Pl.'s Resp. to Def.'s Statement of Material Facts (“DSOF”) [67] at 6).

In August 2007, Cardinal issued a “Request for Proposal” (“RFP”) and solicited bids from companies to provide freight payment and audit (“FPA”) services to some of Cardinal's business units. (Def.'s Resp. and Objections to Pl.'s Statement of Material Facts in Support of its Mot. for Partial Summ. J. (“PSMF I”) [157.1] at 2; ²Pl.'s Resp. to Def.'s Statement of Material Facts as to Which There is No Genuine Issue to be Tried (“DSMF I”) [171] at 2). The successful bidder in the RFP process would provide FPA services to Cardinal that included auditing and paying invoices for carriers who delivered Cardinal's pharmaceutical and other products. (DSMF I at 3). Cardinal estimated that it cost approximately $1.2 million to perform FPA services “in-house” using its own resources and believed cost savings could be achieved by using an external FPA service provider. (PSMF I at 4; DSMF I at 29–30).

The RFP specified the process for the company with which it would contract, including self-invoicing courier services to be provided by the successful bidder. (DSMF I at 4–5). This service was required to be designed to collect orders from customers and “group those orders under one shipment master record [for each delivery] so they rate as one charge [to Cardinal from a carrier] vs. getting assessed individual charges for each order [by carriers].” ( Id.). This required the successful bidder to be able to accept Cardinal's customer information at an “order level,” apply “grouping logic” to create a single shipment at the “stop level,” and generate a single “self-invoice” shipment master record, or freight bill, to facilitate payment to the carrier who delivered Cardinal shipments at the “stop level.” ( Id. at 9–10, 15–16). Thus, the end product of the self-invoicing courier service, according to the RFP, was a carrier freight bill or invoice ³ created from data processed at the order level, which was then transmitted to Cardinal's carriers. ( Id. at 17–18, 45–46). The carrier picked up and delivered the shipment of aggregated invoices and was paid for the shipment service. Cardinal ultimately paid for all shipments.

The RFP stated that the successful bidder could expect to process 568,000 transactions under this courier, stop-specific, self-invoicing model each month. ( Id. at 13–15). The RFP included a “pricing matrix” to be used by bidders for FPA services. ( Id. at 18). Cardinal requested that all bidders insert into the pricing matrix the prices they would charge on a “per transaction” basis for each service. ( Id. at 18–19). The RFP specified that “pricing was to be inclusive of audit, allocation, and reporting processes.” ( Id. at 19 (emphasis in original RFP)). The RFP also specified that if any other costs would be “require[d] to perform the services outlined in the RFP,” bidders were to identify them in a table titled “Other Fees (please describe in detail).” ( Id. at 21).

The RFP also asked bidders to distinguish between “float pricing” and “non-float pricing.” ( Id.). Float pricing referred to the prices a FPA provider would charge when it received advance funding from Cardinal to pay carriers. ( Id. at 21–23). A FPA provider was able to earn interest (“float”) on advanced funds until they were used to pay carriers for delivery of Cardinal's goods. ( Id.). Because an FPA provider can earn interest on advanced funds, float pricing was understood to be generally lower than pricing based on the FPA provider using its own funds to pay carriers (“non-float pricing”). ( Id.).

The RFP also permitted bidders to object to any of the conditions in the RFP, stating that a failure to object “shall mean that bidder agrees with, and will comply with the conditions set forth” in the RFP. ( Id. at 23–24). ⁴

B. nVision's RFP submission

In August 2007, nVision submitted a response to the RFP and did not object to any of the terms or conditions stated in it, to include those regarding the self-invoicing courier service and pricing methodology. ( Id. at 25–26). nVision did not identify any other fees that it intended to charge to perform the FPA services required by the RFP and specifically did not list “flat file data feed” fees or “multiple line item data field” fees as fees nVision expected to charge to perform services to Cardinal. ( Id. at 27–28, 50–51). nVision stated in an email to Cardinal that nVision's proposal included pricing for self-invoice courier transactions and that self-invoicing services were considered equivalent to “EDI Small Package Invoices.” ( Id. at 34).⁵

Based on the nVision response to the RFP and its proposed pricing for services detailed in the RFP, Cardinal estimated that nVision's annual billing would be $180,000 less than the next-lowest bidder and $160,000 less than its $1.2 million internal cost to perform the same FPA services. ( Id. at 28–30; Pl.'s Resps. and Objections to Def.'s Additional Statement of Facts (“DSAMF II”) [223.1] at 54–55; PSMF I at 3–4). nVision's initial internal estimates for its projected revenue for providing FPA services to Cardinal were comparable and indicated that nVision would earn $800,000 to $1.2 million annually in transaction fees. (DSAMF II at 54; DSMF I at 31).

In October 2007, after responses to the RFP were submitted and evaluated, Cardinal selected nVision to provide FPA services. (Def.'s Resp. and Objections to Pl.'s Statement of Material Facts in Supp. of its Mot. for Summ. J. (“PSMF II”) [214.1] at 1–2; PSMF I at 5; DSMF I at 33).

C. Contract negotiations between nVision and Cardinal

During late 2007 and early 2008, nVision and Cardinal engaged in negotiations regarding the Logistics Services Agreement (“LSA”). (DSMF I at 33–34). The lead negotiators for each side were Bill Pimpo (“Pimpo”) for Cardinal, and Luther Brown (“Brown”), nVision's CEO. ( Id. at 39–40). The parties exchanged multiple drafts of the LSA, and its associated pricing schedule. ( Id. at 33–34; PSMF II at 2–7; PSMF I at 5–6). A merger clause in the LSA generally provided that the LSA and its attached schedules represented the entire agreement between the parties, superseded prior negotiations, agreements, contracts, communications, or understandings and that the LSA could only be modified by a writing signed by the parties. (DSMF I at 33–34; LSA § 11.7).

During contract negotiations in October 2007, Brown confirmed that the rate for EDI Small Package Invoices—which had been claimed by nVision to be equivalent to self-invoicing courier transactions—should be priced at $.025 for no-float, or non-funded, transactions and $.015 for float, or Cardinal advance-funded, transactions. (DSMF I at 34–36).

During negotiations in December 2007 and January 2008, the rate for non-funded self-invoice courier transactions was consistently listed as $.025 on drafts of the LSA. (PSMF II at 4; DSMF I at 36). With the exception of rates for self-invoice courier and self-invoice private fleet transactions, the funded rates for transaction fees in the pricing schedule were consistently listed at a rate lower than the non-funded rates for each different category of FPA services to be provided by nVision. (PSMF II at 2–7; PSMF I at 5–7; DSMF I at 36, 44–45).

On February 7, 2008, the draft of the LSA was revised by nVision and the proposed pricing schedule was transferred from a Microsoft Word document into a Microsoft Excel spreadsheet. (PSMF II at 4; DSMF I at 37). The new pricing schedule, which was prepared by nVision, failed to include pricing for self-invoice courier or self-invoice private fleet transactions. (PSMF II at 4; DSMF I at 37).

On February 8, 2008, Cardinal advised nVision of the omission of pricing for self-invoice courier and self-invoice private fleet transactions. (PSMF II at 4; DSMF I at 37). Brown notified Cardinal by email that the information would be added to the proposed pricing schedule. (PSMF II at 4; Def.'s Resp. to Pl.'s Statement of Additional Material Facts (“PSAMF I”) [193.1] at 2; DSMF I at 37). Brown copied his assistant, Jennifer Shaeffer (“Shaeffer”) on the email.⁶ ( Id.).

On February 11, 2008, Shaeffer updated the pricing schedule with pricing information for self-invoice courier and self-invoice private fleet transactions and forwarded the updated document to Brown. (PSMF II at 4; DSMF I at 38). nVision's updated...