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JML Industries, Inc. v. Pretium Packaging

October 25, 2006

JML INDUSTRIES, INC., PLAINTIFF,
v.
PRETIUM PACKAGING, LLC, DEFENDANT.



The opinion of the court was delivered by: Judge Caputo

MEMORANDUM

Presently before the Court is Defendant Pretium Packaging, LLC's Motion for Summary Judgment. (Doc. 86.)For the reasons set forth below, the Court will grant in part and deny in part Defendant's Motion. The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1332 and 1441.*fn1

BACKGROUND

A. Factual Background

In 2003, Zapata Innovative Plastics, Inc. ("Zapata") began manufacturing and supplying LEGO lids to Defendant. (Doc. 89-1 ¶ 1.) At that time, Jeffrey M. Lotz ("Lotz") was employed by Zapata as the general manager of its plant in Hazleton, Pa. (Doc. 89-1 ¶ 2.) The pricing arrangement between Zapata and Defendant provided that Defendant would break even on the LEGO lids. (Doc. 89-1 ¶ 3.)

Later in 2003, Lotz informed Defendant that Zapata could not supply the quantity of LEGO lids that Defendant would need in the future. (Doc. 89-1 ¶ 4.) As a result, Lotz offered Defendant three options: (1) Lotz would find another supplier to Defendant at no cost; (2) Lotz would help Defendant establish its own injection molding division to manufacture LEGO lids; or (3) Lotz would start his own business to manufacture the lids, provided Defendant could guarantee Lotz the business for a period of time. (Doc. 89-1 ¶ 5.)

In August of 2003, Lotz met with Dale Behm ("Behm"), a representative of Defendant,*fn2 for lunch. (Doc. 89-1 ¶ 6.) During this luncheon meeting, Lotz and Behm orally agreed that a company to be formed by Lotz would manufacture and supply LEGO lids for Defendant for a two (2) year period.*fn3 (Doc. 89-1 ¶ 7.) Lotz and Behm also agreed upon a pricing structure under which Defendant would continue to break even on the LEGO lids. (Doc. 89-1 ¶ 8.)

In September of 2003, Lotz incorporated JML Industries, Inc. ("Plaintiff"). (Doc. 89-1 ¶ 9.) Plaintiff then purchased several pieces of specialized equipment, costing $53,100.00, in order to manufacture the lids to be supplied to Defendant. (Doc. 89-1 ¶¶ 20 - 22.) Plaintiff also leased equipment from US Bancorp. (Doc. 89-1 ¶ 25.) Plaintiff began manufacturing and supplying LEGO lids to Defendant in November 2003. (Doc. 89-1 ¶ 10.)

In May of 2004, Plaintiff submitted a price quote to Defendant for lids to be produced for LEGO's 2005 campaign. (Doc. 89-1 ¶ 11.) Plaintiff and Defendant dispute whether this quote complied with the agreed upon pricing structure. (Doc. 89-1 ¶¶ 12-13; Doc. 95 ¶¶ 12-13.) Defendant informed Lotz that Plaintiff's price needed to be reduced. (Doc. 89-1 ¶ 14.)

In response, Lotz sent an email to Defendant on May 26, 2004 stating that Plaintiff "would do everything possible on [its] end to help reduce cost to [Defendant] by being very judicial on box terms and pallet usage, but there [was not] a significant reduction in price that [it] could give." (Doc. 98-2 p. 7.)

Defendant subsequently located a supplier in Nazareth, Pennsylvania, S&L Plastics, Inc. ("S&L"), which would supply LEGO lids to Defendant at a lower price than Plaintiff's quote. (Doc. 89-1 ¶ 17.) Defendant awarded the LEGO 2005 campaign contract to S&L and stopped doing buisness with Plaintiff. (Doc. 89-1 ¶ 19.)

In November of 2004, Plaintiff entered into an agreement with US Bancorp, which provided that Plaintiff would pay $1,000 per month to cover the interest expense on the equipment it had leased. (Doc. 89-1 ¶ 26.) That agreement persisted until March of 2005, at which time Plaintiff began manufacturing housewares for its new customer, IKEA. (Doc. 89-1 ¶ 29.)

B. Procedural Background

On October 25, 2004, Plaintiff filed an action against Defendant in the Luzerne County Court of Common Pleas for breach of contract and promissory estoppel. (Doc. 1-3.) On November 24, 2004, the action was removed by Defendant to this Court pursuant to 28 U.S.C. ยง 1441 based on diversity of citizenship. (Doc. 1-1.) Defendant then filed a counterclaim against Plaintiff. (Doc. 2.) Defendant also moved to dismiss Plaintiff's complaint (Doc. 3) ...


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