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Amerisourcebergen Drug Corp v. Kohll's Pharmacy & Homecare

October 26, 2012

AMERISOURCEBERGEN DRUG CORP., PLAINTIFF AND COUNTER-DEFENDANT,
v.
KOHLL'S PHARMACY & HOMECARE, INC., DEFENDANT AND COUNTER-CLAIMANT.



The opinion of the court was delivered by: Gene E.K. Pratter,j.

MEMORANDUM

OCTOBER ____,2012

Amerisourcebergen Drug Corporation ("ABDC") has sued Kohll's Pharmacy and Homecare, Inc. ("Kohll's") for breach of contract. The parties have filed cross-motions for partial summary judgment. Kohll's asks the Court to rule as a matter of law that a mutual or unilateral mistake occurred during the formation of its contract with ABDC, while ABDC argues that Kohll's breached the contract. For the following reasons, the Court denies both motions.

I. Factual Background*fn1

ABDC is a wholesale distributor of pharmaceutical products, while Kohll's is a retail pharmacy with an annual sales volume of $33 million. On December 27, 2005, Kohll's president, David Kohll, signed an Individual Purchase Agreement ("IPA"), which set forth terms and conditions regarding a business relationship between it and ABDC. The parties dispute the significance of this document, as ABDC contends that the IPA is merely a negotiation document, not a contract. Language in the IPA stated that "[e]ach party reserves the right to terminate this agreement with 60 days notice."

On January 23, 2006, ABDC and Kohll's executed a Prime Vendor Agreement ("PVA"). Under the PVA, ABDC agreed to provide products, including prescription and over-the-counter pharmaceuticals, to Kohll's. The parties agree that either party could terminate the PVA "for cause," but that the PVA did not allow Kohll's to terminate the agreement upon receipt of a more favorable offer from an ABDC competitor. The PVA established that the "term of agreement" would run from January 23, 2006 until January 31, 2012, and (unlike the IPA) it did not include language allowing either party to terminate the agreement upon 60 days of notice prior to January 31, 2012.*fn2 The PVA also stated that "[i]n the event of a conflict between a prior document between the parties and this Agreement, this Agreement will control. This Agreement supersedes prior oral or written representations by the parties that relate to its subject matter other than the security interest[.]"

Critically, the PVA included a section entitled "Minimum Order Volume," which stated that:

Customer's minimum annual Net Purchase (total purchases less returns, credits, rebates, late payment fees and similar items) volume during Year 1 is $15,600,000. Year 1 is from the Effective Date to January 31, 2007. Subsequent contract years are the following twelve (12) month periods. Customer's Net Purchases during subsequent years are projected to increase at a rate of 5.00% per year during each year of the Term. Customer's aggregate Net Purchase volume over the life of this Agreement will be no less than $106,089,000.

As discussed below, ABDC argues that this quoted language entitles it to partial summary judgment.

On January 6, 2009, Kohll's informed ABDC that it intended to terminate the PVA. Although ABDC's counsel objected to the termination, Kohll's ceased purchasing products from ABDC after January 2009. The parties agree that Kohll's did not terminate the PVA "for cause." On February 19, 2009, ABDC filed this action and alleged that Kohll's breached the PVA.

II. Standard of Review

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 (1986)). A factual dispute is "material" if it might affect the outcome of the case under governing law. Id. (citing Anderson, 477 U.S. at 248). Under Rule 56, the Court must view the evidence presented in the motion in the light most favorable to the non-moving party. See Anderson, 477 U.S. at 255. However, "[u]nsupported assertions, conclusory allegations, or mere suspicions are insufficient to overcome a motion for summary judgment." Betts v. New Castle Youth Dev. Ctr., 621 F.3d 249, 252 (3d Cir. 2010).

The movant bears the initial responsibility for informing the Court of the basis for its motion for summary judgment and identifying those portions of the record that it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where the non-moving party bears the burden of proof on a particular issue, the moving party's initial burden can be met simply by "pointing out to the district court that there is an absence of evidence to support the nonmoving party's case." Id. at 325. After the moving party has met its initial burden, the non-moving party must set forth specific facts showing that there is a genuinely disputed factual issue for trial by "citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations . . . , admissions, interrogatory answers, or other materials" or by "showing that the materials cited do not establish the absence or presence of a genuine dispute." Fed. R. Civ. P. 56(c). ...


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