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REILLY FOAM CORP. v. RUBBERMAID CORP.
May 28, 2002
REILLY FOAM CORP., PLAINTIFF,
RUBBERMAID CORP. DEFENDANT.
The opinion of the court was delivered by: Berle M. Schiller, United States District Judge.
A dispute between Plaintiff Reilly Foam Corporation ("Reilly Foam") and
Defendant Rubbermaid Corporation ("Rubbermaid") over a contract for
sponges results in the Court doing the mopping-up. Reilly Foam alleges
that it contracted to supply Rubbermaid with its requirements for certain
sponges for assembly into mops sold to Target stores. Reilly Foam alleges
that rather than obtaining sponges solely from Reilly Foam, Rubbermaid
continued to obtain sponges from another supplier and failed to make set
minimum purchases. Rubbermaid denies that the contract created between
the parties called for Reilly Foam to be its exclusive supplier.
Reilly Foam moved for partial summary judgment, contending the
agreement and record demonstrate Rubbermaid's liability as a matter of
law. Rubbermaid, in a cross-motion, argues that it had no obligation to
directly purchase sponges, that Plaintiff's misrepresentation claims are
barred by the economic loss and gist-of-the-action doctrines, and that
its claims for promissory estoppel and restitution are pre-empted by the
parties' contract. The water here is murkier than both parties believe.
Plaintiff's Motion for Partial Summary Judgment is granted in part and
Defendant's Motion for Summary Judgment is granted in part as explained
Rubbermaid has also moved for sanctions because Reilly Foam produced a
supplemental expert report after this Court's scheduling deadline. As set
forth below, that motion is also granted in part.
Reilly Foam manufactures custom-order sponges and other foam products.
Defendant Rubbermaid manufactures home products, including mops
nationwide. Before its agreement with Reilly Foam, Rubbermaid obtained
sponges for its mop products from a company known as Tek Pak, a competitor
of Reilly Foam.
In 1997, Rubbermaid launched its "Tidal Wave Project" to introduce new
and improved sponge mops into the marketplace. The new sponge mops were
named for a wave pattern which would be cut into the sponges. There were
to be two basic designs for the Tidal Wave mops: a butterfly sponge and a
roller sponge. The butterfly sponge mop included a mechanism which folded
in half like the wings of a butterfly in order to wring out water. The
sponge would be squeezed by a roller mechanism.
Target Stores agreed to stock cobalt blue and yellow laminate versions
of the Tidal Wave sponge mop line at its stores nationwide. Rubbermaid
initially sought to obtain sponges for the mops from Tek Pak. However,
Tek Pak could not make timely deliveries of sponges to meet Target's
Rubbermaid contacted Reilly Foam on March 4, 1999 to determine if it
could fulfill Rubbermaid's need for sponges. Rubbermaid's immediate
objective with Reilly Foam was to satisfy Target's current demand. Reilly
Foam submitted a price quotation to Rubbermaid on March 8, 1999 for
Pattern Butterfly sponges and Pattern Roller Mop sponges on an expedited
basis. Reilly Foam then manufactured and delivered the sponges.
Between March 8 and March 30, the parties discussed a longer-term
relationship in which Reilly Foam would supply sponges for Rubbermaid's
Tidal Wave Project. But the parties now vigorously dispute what the terms
of the relationship were. According to Joseph Reilly of Reilly Foam, his
company was to be the exclusive supplier of Butterfly and Roller Mop
sponges with a Tidal Wave design. Rubbermaid was to purchase a minimum of
300,000 Butterfly, 300,000 Roller Mop, and 300,000 yellow ester Tidal
Wave sponges each year. Rubbermaid also submitted written estimates to
Reilly Foam of its requirements for Butterfly and Roller Mop sponges.
Reilly Foam needed to retool its equipment and to license technology from
a corporation named Foamex to produce the sponges with a "tidal wave"
effect carved into their bottoms. Reilly Foam expressed concern that its
profits on the contract permit it to recoup its costs.
On March 26, 1999, Reilly Foam forwarded a letter to Tony Ferrante
of Rubbermaid signed by Joseph Reilly. The letter read:
This letter details the proposal that we briefly
spoke about last evening. This includes the two
laminates that we are currently working on, the roller
mop and the butterfly mop. There are other products
that we are familiar with through Kendo/New Knight,
which would be the brown large celled ester, the
pattern yellow ester and the yellow ether and white
scrubmate. All of these are priced on the ensuing
Our proposal is that Rubbermaid Cleaning Products
commit to two million pieces of product under the
sub-heading Other Affected Products. There would be a
surcharge of $.015 per part in an effort to amortize
the cost of tooling for the wave pattern. The two
million products would need to be taken over a two
year period. We would also require a commitment for
all of the butterfly and roller mop laminates that
include the Rubbermaid Cleaning Products design.
I have also spoken to Foamex and they have agreed to
run their "sample" tool for the short term until the
production tool is complete, which would be
approximately eight weeks. Please keep in mind that
this is a proprietary pattern and we would need your
design should this project move forward.
Finally, we appreciate the opportunity and
understand the price sensitive nature of your
products. Reilly Foam Corporation has made various
concession to keep this program moving forward.
Tony, after reviewing the quotation and the
conditions of this letter, please respond through a
letter stating Rubbermaid Cleaning Products
I look forward to your response.
(March 26, 1999 Letter, Def. App. at 2a). Accompanying the letter was a
list of products, prices, and quantities on Reilly Foam letterhead:
RUBBERMAID CLEANING PRODUCTS PROJECT
Butterfly Sponge 1-1/4" x 2-7/8" x 9" $.675 each
Roller Mop 2-3/8" x 3-3/4" x 8-5/8" $.625 each
Brown Sponge 2-3/8" x 3-3/4" x 8-1/2"
Annual Quantity 340,000 Pcs. $.290 each
Yellow Ester with 2-1/2" x 3-3/4" x 8-1/2"
Annual Quantity 350,000 Pcs. $.320 each
Yellow Ether to 2-3/8" x 3-3/4" x 8-5/8"
Annual Quantity 300,000 Pcs. ...