Opinion
Civil Action No. 99-0771 SECTION "C" (1)
October 30, 2000
ORDER AND REASONS
Defendant Minimed, Inc. ("Minimed") has moved for partial summary judgment regarding invoices that have not yet been paid by Plaintiff Infusion for products delivered by Defendant. In its complaint, Plaintiff has alleged numerous causes of action against Defendant for its conduct pursuant to this relationship, including breach of contract, antitrust violations and unfair trade practices. Plaintiff insists that partial summary judgment on this issue is inappropriate because Plaintiff is entitled to offset its potential damage award against the amount still owed to Defendant. The Court heard oral argument on this motion on October 25, 2000, and took the matter under submission. For the reasons below, IT IS ORDERED that Defendant's Motion for Partial Summary Judgment is DENIED.
Infusion Resources Inc. has since changed its name to Insulin Infusion Specialties. For purposes of clarity, the Court will refer to Plaintiff as "Infusion."
At oral argument, the Court ruled that California law controls this dispute. Therefore, the Court does not need to address the choice of law arguments raised by the parties in their briefs in this Order.
I. BACKGROUND
Minimed is a manufacturer of insulin infusion pumps and related diabetic supplies. Infusion, a full-service diabetes management company, sells a variety of diabetic supplies to end-users, and provides patient education, support and training. In 1994/1995, Minimed and Infusion entered into a business relationship whereby Minimed would sell its product to Infusion, who would resell it to end-users. The parties formalized their agreement in 1998 with a written Distribution Agreement. The Agreement contains provisions preventing Infusion from "manufactur[ing], distribut[ing] or market[ing] products which compete directly or indirectly" with Minimed's products. Infusion insists that the parties agreed that Infusion would not promote non-Minimed products, but would be able to sell non-Minimed products at the request of its customers.
The parties disagree on the exact date.
Minimed terminated the relationship in late November, 1998. The Agreement specifically allowed Minimed not to renew the agreement. See Agreement ¶ 20. Upon learning of Minimed's intent not to renew, Infusion placed significant orders over the next month, allegedly "stockpiling" Minimed products. Minimed now seeks summary judgment for the amount due for those sales. Infusion insists that it has paid what it owes Minimed, less any offset Infusion is entitled to for damages caused by Minimed's breach of contract and other anticompetitive practices, and denies any charges of "stockpiling." Infusion does not dispute that it purchased the goods that are the subject of Minimed's motion for summary judgment.
II. ANALYSIS
A. Standard of Review
A district court can grant a motion for summary judgment only when the "`pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.'" Celotex Corp. v. Catrett, 477 U.S. 317, 322(1986) (quoting Fed.R.Civ.P. 56(c)). When considering a motion for summary judgment, the district court "will review the facts drawing all inferences most favorable to the party opposing the motion." Reid v. State Farm Mut. Auto. Ins. Co., 784 F.2d 577, 578 (5th Cir. 1986). The court must find "[a] factual dispute . . . [to be] `genuine' if the evidence is such that a reasonable jury could return a verdict for the nonmoving party . . . [and a] fact . . . [to be] "material' if it might affect the outcome of the suit under the governing substantive law." Beck v. Somerset Techs., Inc., 882 F.2d 993, 996 (5th Cir. 1989) (citingAnderson v. Liberty Lobby, Inc., 477 U.S. 242, 248(1986)).
"If the moving party meets the initial burden of showing that there is no genuine issue of material fact, the burden shifts to the non-moving party to produce evidence or designate specific facts showing the existence of a genuine issue for trial." Engstrom v. First Nat'l Bank of Eagle Lake, 47 F.3d 1459, 1462 (5th Cir. 1995) (citing Celotex, 477 U.S. at 322-24, and Fed.R.Civ.P. 56(e)). The mere argued existence of a factual dispute will not defeat an otherwise properly supported motion.See Anderson, 477 U.S. at 248. "If the evidence is merely colorable, or is not significantly probative," summary judgment is appropriate. Id. at 249-50 (citations omitted). Partial summary judgment dismissing only certain claims is appropriate under the same standards. See Fed.R.Civ.P. 56(d). See also Corporate Investigative Div., Inc. v. American Tel. Tel. Co., 884 F. Supp. 220, 223-24 (W.D.La. 1995) (using same standard of review for partial summary judgment on liability alone under 56(c)).
B. Plaintiff's Entitlement to Offset Damages as Defense to Motion for Summary Judgment
Infusion certainly owes Minimed for the products it purchased and for which it has not yet paid. The issue is whether Infusion can offset that debt by what Infusion claims is damages owed it by Minimed. Resolution of that issue depends upon whether Minimed's claims arise under the Distribution Agreement or not. If they do, Plaintiff survives summary judgment, because its own offsetting claims arise under the same contract. See Cal. Comm. Code § 2717. Defendant has insisted that its claims arise under the purchase orders, which are sales contracts separate from and independent of the Distribution Agreement. In support of its position, Defendant relies on numerous cases where courts have found that a distribution agreement and a purchase order are two distinct contracts, precluding offset. See, e.g., ECHO Inc. v. Whitson Corp., 52 F.3d 702 (7th Cir. 1995); Schieffelin Co. v. Valley Liquors, Inc., 823 F.2d 1064 (7th Cir. 1987); M/A/-Com. Inc. v. C.W. Swift Assoc., CV 94-2713-GHK (C.D. Cal. 1995); C.R. Bard, Inc. v. Medical Electronics Corp., 529 F. Supp. 1382 (D. Mass. 1982).
Plaintiff argues that the presumption in California Commercial Code § 2717, in favor of construing the Agreement and the purchase orders as distinct contracts, does not apply in this case. Plaintiff points to the language in ECHO, which suggests that each determination is fact-specific, and maintains that the facts of this case indicate that Defendant's claims arise pursuant to the Distribution Agreement. InECHO, the Seventh Circuit ruled that when the purchase order, and not the distribution agreement, sets out the "price, type and quantity of the goods for any particular sale," the contracts are distinct. See 52 F.3d at 705. The Schieffelin court also found that when "the price, type and quantity of goods sold resulted from accepted purchase orders and not from the distributorship agreement," the agreements were separate contractual obligations. 823 F.2d at 1067.
In this case, however, "the price, type and quantity" of the goods available are set forth in the Distribution agreement itself. See Defendant's Motion for Summary Judgment Exh. A, Annex 1. The shipping terms were detailed in Annex 4 to the Agreement, and minimum purchase obligations of Infusion are included in Annex 3. See id. Therefore, the presence of these elements in the Distribution Agreement — the absence of which apparently dictated the Seventh Circuit's decision — point to the Distribution Agreement as the basis of Minimed's counterclaim. The Court could determine that, as a matter of law, the Distribution Agreement and purchase orders are one contract. As Plaintiff is only seeking to survive Defendant's Motion for Partial Summary Judgment, however, it is not necessary for the Court to go that far.
Plaintiff has also raised the argument that Defendant has either waived or is estopped from denying that the rights it seeks to enforce emanate from the Distribution Agreement. Specifically, in its April 15, 1999 letter, Minimed "reference[d] that certain Education Dealer Distribution Agreement," and characterized Infusion's obligation to pay as arising "[p]ursuant to Section 3 of the Agreement." See Plaintiff's Response Memorandum Exh. 5. Twice more in that letter, Minimed referred to the Agreement as the source of its rights and Infusion's obligations to pay.See id. More factual development would be necessary for the Court to determine whether Minimed has waived its rights under any purchase orders by subsuming them under the Distribution Agreement, or similarly, whether Minimed is estopped from raising that argument. This presents another reason why the Court should not grant partial summary judgment on one discrete issue at this stage of the litigation.
III. CONCLUSION
For both of these reasons, the Court finds that partial summary judgment for the Defendant is inappropriate at this time. The Court believes that this decision is not only legally correct, but also demonstrates appropriate prudence in light of the many claims that remain unresolved in this dispute.
Therefore, IT IS ORDERED that Defendant's Motion for Partial Summary Judgment is HEREBY DENIED.