Or. Potato Co. v. Kerry Inc.
| Decision Date | 16 December 2021 |
| Docket Number | 20-cv-92-jdp |
| Citation | 575 F.Supp.3d 1064 |
| Parties | OREGON POTATO COMPANY, doing business as Rader Farms, Plaintiff, v. KERRY INC., Defendant. |
| Court | U.S. District Court — Western District of Wisconsin |
Michael A. McCaskey, Brooke Rogers, Andrew Arthur Lothson, Swanson, Martin & Bell, LLP, Chicago, IL, for Plaintiff.
Jesse Leigh Jenike-Godshalk, Thompson Hine LLP, Cincinnati, OH, Joseph Robert Berger, Thompson Hine LLP, Washington, DC, Peter Kocoras, Thompson Hine LLP, Chicago, IL, Kendall W. Harrison, Godfrey & Kahn S.C., Madison, WI, for Defendant.
The dispute in this case arises out of a failed business relationship between a company that makes smoothie mixes and a supplier of yogurt cubes, which is one of the mix's ingredients. Both plaintiff Oregon Potato Company (OPC) and defendant Kerry, Inc. move for summary judgment. Dkt. 114 and Dkt. 120.
The parties raise many issues in more than 400 pages of briefing, but the key dispute is whether Kerry unreasonably delayed in fulfilling OPC's orders for yogurt cubes in 2019, justifying OPC's decision to cancel the parties’ contracts and sue for damages. The court concludes that neither party has shown that it is entitled to summary judgment on that issue because it turns on the reasonableness of the parties’ conduct, a question within the purview of the jury. OPC's contract claims will proceed to trial, but the court will grant summary judgment to Kerry on OPC's promissory estoppel claim and claim under the Washington Consumer Protection Act, as well as on some damages issues. The court will grant summary judgment to OPC on Kerry's affirmative defenses for waiver, estoppel, impracticability, and failure to mitigate damages.
The material facts are undisputed.
Since 2017, OPC has had a license to make and sell "Jamba At Home Smoothies," which OPC distributes to grocery stores and other retailers. One ingredient of the smoothies is a yogurt cube. From 2017 to 2019, OPC purchased the yogurt cubes from Kerry, which manufactures food, beverages, and pharmaceutical products.
In 2018 and 2019, OPC sent purchase orders to Kerry by email, and Kerry would respond by email with an order acknowledgment. This case is about purchase orders that OPC placed from January 2019 to May 2019. The parties’ claims and defenses depend largely on these purchase orders and related communications, so the court will review them in some detail here.
In January 2019, OPC sent Kerry purchase order no. 20504 for 1,152 cartons of cubes with a requested a March 1 pick-up date. Kerry responded with an order acknowledgment that identified March 18 as both the "ship date" and the "delivery date." The order acknowledgement was accompanied by an email stating that On February 12, OPC replied by "thank[ing] [Kerry] for the confirmation."
On March 15, Kerry informed OPC that it would be able to provide by March18 only 462 cartons of the 1,152 cartons of yogurt cubes that OPC ordered. Kerry wrote that there was a power outage at the facility and that the full order wouldn't be complete until "early May." In response, OPC directed Kerry to "ship this full in May." Kerry sent a revised order acknowledgement, identifying May 6 as the "ship date" and May 10 as the "delivery date."
Also on March 15, OPC sent Kerry purchase order nos. 21909 and 21908, both for 1,152 cartons and both with a requested pick-up date of April 29. Kerry responded with an order acknowledgment that identified May 6 as both the "ship date" and the "delivery date." An accompanying email included the same qualifying language about "the soonest ship dates" and that "dates are subject to change depending on delivery of raw material."
In April, Kerry informed OPC that its orders "will not be ready for pick up until July 1" because of "production delays" and "a mechanical issue." In response, OPC wrote that the delay "is going to place our customer out of stock," but OPC didn't cancel any of its orders at that time.
On May 1, OPC informed Kerry that OPC would have to "formulate out of [Kerry's] products if [Kerry] can't produce [OPC's] products on time." Kerry wrote that it was "dealing with some capacity restraints" and was "working to improve [OPC's] ship dates."
On May 7, OPC asked Kerry to provide the 462 cartons that it had previously indicated were available for the January order. Kerry provided 485 cartons on May 13.
On May 9, OPC sent Kerry purchase order nos. 23222, 23223, 23224, 23225, 23226, and 23227 for several different flavors of yogurt cubes. On May 10, OPC submitted purchase order no. 23269 to account for the unfilled portion of its January 15 order. The May 9 purchase orders requested a June pick-up date; the May 10 purchase order didn't include a requested pick-up date. In response, Kerry sent order acknowledgements identifying July 1 as both the "ship date" and the "delivery date" for five of the purchase orders and July 15 as the date for two of the orders. An email accompanying all of the order acknowledgements directed OPC to review the "estimated delivery date" and warned that "the requested ship date and delivery date on the [purchase order] are not always able to be met due to raw material availability, lead time and/or production capacity." Kerry sent a separate email in response to the May 9 purchase orders that included the following language: In response to that email, OPC wrote, "thank you."
On May 15, Kerry informed OPC that Kerry was "unable to improve the July ship date." In response, OPC wrote it will "start formulating items without Kerry ingredients."
On May 31, Kerry informed OPC on a conference call that Kerry would not be able to fulfill any of their orders until November 2019.
On June 3, Kerry offered to give OPC the product formulas for the cubes if OPC agreed to "waive any action or damages that it may otherwise have asserted." OPC responded that it would "not be waiving any actions or damages."
In June 2019, representatives of Focus Brands, which owns the rights to the Jamba brand, contacted Kerry on OPC's behalf, asking Kerry to "please look into this asap." On July 8, Kerry asked Focus how much product OPC needed to "bridge supply till 2020." On July 9, Focus told Kerry that OPC would need more than 100,000 pounds of yogurt cubes. On July 15, Kerry wrote that it would "be able to manufacture these products by the end of Sept. Exact dates forthcoming." Focus wrote that "[i]t may be tough for [OPC] to go that long without yogurt cubes."
On July 25, OPC submitted revised purchase orders for all of its pending orders, seeking a pick-up date of August 15. OPC described this as "a desperate move to get inventory as soon as possible, a drop-dead date." Kerry didn't provide any order acknowledgements in response. Instead, a Kerry employee wrote that she had "not had any communication from the plant stating any update from the Nov 1 that is currently listed." In response, OPC wrote: "If November 1 is the date, go ahead and cancel all the purchase orders in subject." On July 29, Kerry wrote: Kerry didn't explain to OPC how Kerry would be able to fill orders in August. As of July 29, Kerry didn't have all the raw materials it would need to fulfill OPC's orders.
On July 31, a Kerry representative asked OPC whether shipping dates between August 22 and August 30 would "work" for OPC. If so, the representative would get "updated confirmations from our plant." Again, Kerry didn't explain how it would meet those dates in light of its previous statements, and it didn't identify any new circumstances that would permit quicker production. An OPC employee wrote that she would "ask management and get back to" Kerry.
On August 2, OPC wrote to Kerry that OPC had "cancelled all of the late and unfulfilled open orders." In a separate communication, OPC told Kerry that it wasn't ordering any more product. On August 5, Focus also told Kerry that the order should be cancelled.
OPC is incorporated in Washington and its principal place of business is there. Kerry is incorporated in Delaware, and its principal place of business is in Wisconsin. The court has jurisdiction under 28 U.S.C. § 1332 because the parties are citizens of different states and the amount in controversy is more than $75,000.
OPC is asserting claims against Kerry for breach of contract, promissory estoppel, and violations of the Washington Consumer Protection Act. For its part, Kerry asserts affirmative defenses for waiver, estoppel, impracticability, and failure to mitigate damages. One or both parties move for summary judgment on all of these claims and defenses. Kerry also moves for summary judgment on several damages issues.
A claim for breach of contract has three elements: (1) an enforceable contract between the parties; (2) a breach of the contract; and (3) damage. Kaste v. Amery Reg'l Med. Ctr., Inc. , 2016 WI App 75, ¶ 9, 371 Wis. 2d 759, 886 N.W.2d 592. There is no dispute that the parties’ purchase orders and order acknowledgements created enforceable contracts. But the parties dispute whether Kerry breached any of those contracts, whether any breach is excused under one of Kerry's affirmative defenses, and whether OPC suffered any damages as a result of any breach. The parties assume that...
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