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Tyco Electronics Corporation v. Milwaukee Electric Tool Corporation

October 9, 2012

TYCO ELECTRONICS CORPORATION,
PLAINTIFF
v.
MILWAUKEE ELECTRIC TOOL CORPORATION, DEFENDANT



The opinion of the court was delivered by: Chief Judge Kane

(Magistrate Judge Methvin)

MEMORANDUM

Before the Court is Plaintiff Tyco Electronics Corporation's motion for partial judgment on the pleadings. (Doc. No. 72.) For the reasons that follow, the Court will deny the motion.

I. BACKGROUND*fn1

Plaintiff manufactures electronic components for consumer and industrial products, including custom and specialty products. (Doc. No. 1 ¶¶ 6-7; Doc. No. 33 at 1.) Plaintiff initiated this action by filing a complaint on August 30, 2010, against Defendant Milwaukee Electric Tool Corporation, a manufacturer and marketer of portable electric power tools and accessories. (Doc. No. 1 ¶ 8; Doc. No. 33 at 2.)

Defendant and Plaintiff had a longstanding commercial relationship, whereby Defendant purchased power tool switches from Plaintiff. On December 3, 2007, Plaintiff delivered notice by letter that it would be leaving the power tool switch business. Plaintiff offered to accept new orders from existing customers until the close of business on February 15, 2008. (Doc. No. 1 ¶¶ 12-14; Doc. No. 33 at 2.) Between December 2007 and February 2008, Defendant made purchase orders for power tool switch products totaling approximately $6.3 million. (Doc. No. 1 ¶ 17; Doc. No. 33 at 3.) Defendant's purchase orders specified the items ordered, the quantity ordered, the required delivery date, and the price. (Doc. No. 1 ¶ 19; Doc. No. 33 at 3.) Defendant's purchase order "expressly limit[ed] acceptance to the terms and conditions stated" in that document, including a reservation of "the right to cancel [the] order or any portion of same if delivery is not made when and as specified." (Doc. No. 1 ¶ 20; Doc. No. 33 at 4.)

Plaintiff acknowledged receipt of Defendant's purchase orders by sending a sales order acknowledgment form, which expressly limited acceptance of Defendant's order to the terms and conditions set forth on the acknowledgment, any attachment thereto, and Plaintiff's website. (Doc. No. 1 ¶¶ 21-22; Doc. No. 33 at 4.) Among the terms and conditions attached to the acknowledgment form was a cancellation charge term, which stated:

Any attempt to cancel or refuse delivery . . . or to reschedule shipment or change the specifications . . . will be a breach of contract and is . . . subject to cancellation charges . . . in an amount . . . equal to the special items that are finished at the time of your cancellation, plus the value of work in process and inventory not to exceed the contract price for the special items cancelled. (Doc. No. 1 ¶ 23; Doc. No. 33 at 4.) The sales acknowledgment also referenced the terms and conditions on Plaintiff's website, which provide that if a buyer cancels a purchase of a custom product, Plaintiff could charge, at its discretion, the entire amount of the purchase order. (Doc. No. 1 ¶ 25; Doc. No. 33 at 5.) Defendant asserts that it never agreed to the terms on Plaintiff's sales acknowledgment or website. (Doc. No. 33 at 7.)

On March 26, and April 4, 2008, Defendant asked Plaintiff to reduce, and ultimately stop production on Defendant's then outstanding orders. (Doc. No. 33 at 12.) On April 21, 2009, Defendant faxed Plaintiff copies of its purchase orders with an "X" written across them along with the words "cancelled," and issued new purchase orders for a reduced quantity of switches. (Doc. No. 1 ¶¶ 26-28; Doc. No. 33 at 5.) On June 5, 2008, Plaintiff wrote Defendant, asserting that it could charge Defendant $4.1 million in cancellation fees pursuant to the terms and conditions listed on Plaintiff's website, but that it mitigated its damages, and seeks a total cancellation charge of $2,965,860. (Doc. No. 1 at 41-44; Doc. No. 33 at 12.)

Defendant refused to pay the charges that Plaintiff sought because they were greater than the amount that Defendant would be obligated to pay under a risk-sharing policy that Defendant developed with Plaintiff throughout the parties' longstanding purchaser-supplier relationship. Under the policy, referred to by the Defendant as the 4-4-4 policy, Defendant could reduce the number of products on an order and would only be obligated to pay for "4 weeks of finished goods, 4 weeks of [work-in-process] and 4 weeks of unique raw material" that Plaintiff had on hand. (Doc. No. 33 at 16.) Defendant denies that the purchases were non-cancelable orders. (Id.) Defendant further asserts that, instead of paying the cancellation fees that Plaintiff sought, it agreed to place additional orders in excess of $1 million to help alleviate any damages that Plaintiff suffered. (Doc. No. 33 at 12-13.)

Despite several months of negotiation, the parties failed to resolve their dispute. On August 30, 2010, Plaintiff initiated this action by filing a complaint, setting forth causes of action sounding in breach of contract and promissory estoppel. (Doc. No. 1.)

II. STANDARD OF REVIEW

Any time after the pleadings close and so as not to delay trial, a party may move for a judgment on the pleadings. Fed. R. Civ. P. 12(c). A motion for judgment on the pleadings will not be granted unless the moving party clearly establishes that there are no material issues of fact, and he or she is entitled to judgment as a matter of law. DiCarlo v. St. Mary Hosp., 530 F.3d 255, 259 (3d Cir. 2008). In reviewing a motion for judgment on the pleadings, a court must accept the non-movant's allegations as ...


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