Power Restoration Int'l, Inc. v. Pepsico, Inc.
| Decision Date | 16 March 2015 |
| Docket Number | CIVIL ACTION No. 12-1922 |
| Court | U.S. District Court — Eastern District of Pennsylvania |
| Parties | POWER RESTORATION INTERNATIONAL, INC., Plaintiff, v. PEPSICO, INC. et al., Defendants/Third Party Plaintiffs, v. GREGORY JENNINGS et al., Third Party Defendants. |
MEMORANDUM
Two motions for summary judgment are pending in this breach-of-contract dispute. First, Defendants PepsiCo, Inc., Bottling Group LLC, and Frito-Lay Trading Company (Europe), Gmbh (collectively "PepsiCo") move for summary judgment against Plaintiff Power Restoration International, Inc. ("Power Restoration"), contending that undisputed material facts establish that Power Restoration cannot succeed on its claim that PepsiCo breached an alleged oral contract for the installation of energy efficiency equipment at approximately 100 PepsiCo facilities worldwide. Second, Third Party Defendant Gregory Jennings (who is Power Restoration's President and CEO) moves for summary judgment against PepsiCo as a Third Party Plaintiff, arguing that PepsiCo has presented insufficient evidence to support its various claims against him. Having reviewed the record thoroughly and considered the arguments from all parties, the Court will grant PepsiCo's Motion for Summary Judgment and deny Mr. Jennings' Motion for Summary Judgment.
Power Restoration was engaged in the business of designing and installing industrial and commercial electrical systems known as OptiSine Electrical Power Quality Systems ("EPQS"). According to Power Restoration, EPQS allow customers to reduce electrical consumption and thereby realize cost savings and increase the longevity of electrically powered equipment. The installation of harmonic abatement filters in industrial applications—a key component of EPQS—was "brand new" at the time Power Restoration was formed.2 (Power Restoration's ("PRI") Response to Statement of Facts ("RSF") ¶ 6). At the time of the alleged oral contract, Power Restoration had no contracts with any customers for any work. Gregory Jennings was Power Restoration's President and CEO and Robert Fabrizio was Power Restoration's Vice President of Business Operations.
PepsiCo is a publicly traded, multinational corporation that engages in the manufacture, sale, and distribution of beverages and food products. Steven Bertz was a PepsiCo employee in Strategic Supply Management - Capital/MRO/ME/IPO. The parties dispute the nature of Mr. Bertz's roles in PepsiCo and Power Restoration. PepsiCo claims that Mr. Bertz was a Band 1 employee at PepsiCo (the lowest-level executive that exists in PepsiCo's corporate structure) and that Mr. Bertz had a financial interest in Power Restoration beginning in mid-2010. Power Restoration asserts that Mr. Bertz represented himself as the head of global procurement for PepsiCo, having the title "SSM Director" or "Global Procurement - Group Manager," and that Mr. Bertz never had a financial interest in Power Restoration. According to Power Restoration, any documents discussing Mr.Bertz's interest in Power Restoration were created in contemplation of Mr. Bertz taking an interest in Power Restoration after he left PepsiCo.
In August 2010, at a meeting arranged by Third Party Defendant George Mazzoli,3 Mr. Jennings met Mr. Bertz for the first time. Power Restoration alleges that Mr. Bertz and Mr. Jennings entered into an oral agreement obligating PepsiCo to procure energy services and EPQS from Power Restoration. According to Power Restoration, Mr. Bertz agreed that PepsiCo would (1) hire Power Restoration to perform audits at 150 PepsiCo facilities, (2) hire Power Restoration to design and install EPQS at approximately 1004 PepsiCo facilities, and (3) pay an average cost of $300,000 per facility. The parties dispute whether the alleged oral contract ever existed, whether it was primarily for goods or services, and whether it was the product of collusion between Mr. Bertz (who, as stated above, allegedly had a financial interest in Power Restoration at the time) and Mr. Jennings. Mr. Jennings testified that he believed the alleged oral agreement would not be memorialized in an overarching written agreement governing upgrades at all of PepsiCo's facilities, but rather would be formalized in writing through the issuance of purchase orders on a project-by-project basis.5
PepsiCo claims that Mr. Bertz continued to conspire with Power Restoration after the alleged oral agreement was reached. For example, an internal Power Restoration communication from September 7, 2010 contemplated giving Mr. Bertz 5% of Power Restoration's profits, and a communication from September 22, 2010 listed Mr. Bertz as "the advisory counselor" in Power Restoration's company structure and management. On September 26, 2010, Mr. Mazzoli sent an email to Mr. Jennings stating that he and Mr. Bertz could not pursue a membership or consultant relationship with Power Restoration because of potential conflicts of interest with their employment at Siemens and PepsiCo, respectively. The next day, Mr. Jennings circulated conference call notes purporting to memorialize that Mr. Mazzoli and Mr. Bertz (PepsiCo's Mot. Ex. 8 at PRI 00840). Power Restoration maintains that Mr. Jennings did not question the veracity of Mr. Mazzoli's email or the conference call notes until long after he received them, but Mr. Jennings testified that he understood at the time he received the email that it was a "false statement," at least with respect to Mr. Mazzoli. (See Jennings Dep. 85-86). Moreover, in October 2010, Power Restoration and Mr. Bertz were in talks to give Mr. Bertz a 19% ownership interest in Power Restoration, and in November 2010, Mr. Jennings learned that Mr. Bertz planned to incorporate a separate legal entity (Dark Wing, LLC) to be a partner in Power Restoration on his behalf.
In late 2010 and early 2011, PepsiCo hired Power Restoration to install EPQS at three PepsiCo facilities in Hayward, California, Stone Mountain, Georgia, and Mississaugua, Ontario. PepsiCo claims that it engaged Power Restoration to perform energy audits and prepare specific written proposals for the installation of EPQS at those three facilities, and that PepsiCo would decide whether or not to purchase goods or additional services from Power Restoration based on the results of the audits and the written proposals. PepsiCo issued purchase orders to document theHayward, Stone Mountain, and Mississaugua transactions. Power Restoration argues that the use of purchase orders for these facilities is evidence of the alleged oral contract, which was to be implemented through the issuance of written purchase orders on a project-by-project basis. Power Restoration also conducted audits at numerous PepsiCo locations and submitted proposals to install EPQS at three PepsiCo facilities in Europe.
On February 15, 2011, Mr. Bertz sent a "Letter of Intent" to Power Restoration purporting to confirm PepsiCo's intent "to procure over the next 12 months, Power Quality Solutions to be installed at PepsiCo facilities located in multiple countries," "to conduct at least 150 audits of these facilities," and "to issue 100 Orders to PRI Global Enterprises6 for design and installation during this period, with an average cost of $300,000." (PepsiCo's Mot. Ex. 16). Power Restoration contends that the Letter of Intent confirms the existence of the alleged oral contract, but PepsiCo claims that the Letter of Intent was issued to a non-existent company and that Mr. Jennings (the President and CEO of Power Restoration) has admitted that the Letter of Intent is a fraud. Mr. Bertz issued a letter two days later expressly canceling and rescinding the previous Letter of Intent. PepsiCo claims that it eventually terminated Mr. Bertz after learning of and investigating his relationship with Power Restoration. On May 27, 2011, after PepsiCo concluded that Power Restoration did a poor job of installing the EPQS at the Hayward facility, PepsiCo terminated its outstanding purchase orders with Power Restoration.
On April 13, 2012, Power Restoration filed suit against PepsiCo. Power Restoration's Amended Complaint (Docket No. 38) includes: (1) a breach of contract claim for lost profits and expectation damages (Count 1), (2) an unjust enrichment claim for the value of services and goodsalready provided to PepsiCo (Count 2), (3) a conversion claim (Count 3), and (4) a claim for misappropriation of trade secrets (Count 4). As part of Count 1, Power Restoration seeks over $9 million in profits that it claims were lost as a result of PepsiCo's breach of the alleged oral contract. To calculate the amount of lost profits, Power Restoration begins with the terms of the alleged oral agreement as described in the Letter of Intent, and then interprets those terms in light of the testimony from Mr. Fabrizio and Mr. Jennings that they expected to earn a 30% profit on the contract. The only evidence of Power Restoration's costs are Power Restoration's 2010 tax return, a budget prepared in December 2010, and projections prepared by Mr. Fabrizio for the years 2011 and 2012. The evidence in the record explains neither how Mr. Fabrizio arrived at his projections, nor why Mr. Fabrizio and Mr. Jennings believed that Power Restoration would earn a 30% profit on the contract with PepsiCo.
A court shall grant a motion for summary judgment "if 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). An issue is "genuine" if there is a sufficient evidentiary basis on which a reasonable jury could return a verdict for the non-moving party. Kaucher v. Cnty. of Bucks, 455 F.3d 418, 423 (3d Cir. 2006) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 ...
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