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WESTERN PUBL. CO. v. FEDERATED GRAPHICS COS.

April 19, 1985

WESTERN PUBLISHING COMPANY, INC., Plaintiff, against FEDERATED GRAPHICS COMPANIES, INC. and LEVENSTEIN GAINES, INC., Defendants


The opinion of the court was delivered by: LUMBARD

LUMBARD, Circuit Judge:*

Western Publishing Company, Inc. sues Federated Graphics Companies, Inc. and Levenstein Gaines, Inc. for $73,444.12, plus interest -- damages for the printing and production, pursuant to agreement, of approximately 780,000 catalogue covers that were subsequently rejected by Federated. Federated counterclaims for $8,515.93, plus interest -- damages resulting from Western's failure to produce covers that "matched" a Cromalin (a color proof used in printing) supplied by Federated. As Western is incorporated in Delaware, with its principal place of business in Racine, Wisconsin, and the defendants are residents of New York, jurisdiction is conferred by 28 U.S.C. ยง 1332 (1982).

 The court finds that the "match" between the Federated-supplied Cromalin and the Western covers was well within the bounds of commercial acceptability and that the contract between the parties required nothing more. If a critical match between the Cromalin and the press proof was required, Federated Graphics was obligated either to have a representative present at the press run to approve the press sheets or otherwise to provide for press sheet approval prior to completion of the press run. Having failed to attend the production so that it could make its own subjective judgment as to the acceptability of a color match, Federated was in breach of contract when it rejected Western's commercially satisfactory product. The court directs that judgment be entered in favor of Western and against Federated Graphics and that Federated's counterclaim be dismissed.

 Finding no basis upon which to hold Levenstein Gaines liable for Federated's breach of contract, Western's claim against defendant Levenstein Gaines is dismissed.

 The court find the following:

 In June 1981, Meredith Burda Corporation requested Federated to arrange for the production of approximately 750,000 covers for the Pennsylvania House furniture catalogue. *fn1" Federated Graphics is a printing broker that arranges for the production of printed material for its clients by placing orders with outside companies and then supervising the overall production process. The Pennsylvania House covers were needed for March 1981, in time for issuance of that year's catalogue. *fn2"

 In late 1981, Richard Scharer, an officer, director, and shareholder of Federated, asked Eric Senkowsky, a salesperson for Western, to submit a proposal for the printing of the catalogue covers. Senkowsky had visited Federated's offices in New York in the fall of 1981 to solicit business, and had met with Herb Scharer, Richard Scharer's father and an employee of Federated. At the end of December, and after Richard Scharer's communication, Herb Scharer provided Senkowsky with specifications for the four-color printing job.

 About January 8, 1982, Western submitted two proposals to Federated on the production and cost of the catalogue covers. The proposals were addressed to Richard Scharer, as Herb Scharer was vacationing in Africa. According to Senkowsky, he received a telephone call from Kenneth Lima, Herb Scharer's son-in-law, a few days later. Lima advised Senkowsky that Western had been selected to do the printing. On January 11, 1982, Senkowsky met with Lima, in the Federated offices, to discuss a reduction in the price of imprinting the names of individual stores on the back covers of the catalogues. In Senkowsky's presence, Lima signed one of the two proposals, after it was amended to reflect changes in the imprinting cost.

 Senkowsky then passed the specifications along to Western's production plant in Poughkeepsie, New York. Between January 16, the date of Herb Scharer's return from Africa, and February 9, Senkowsky and Herb Scharer frequently communicated about the Pennsylvania House project. In a letter to Herb Scharer, dated January 20, 1982, Senkowsky confirmed specification and pricing changes:

 
This is to confirm the final pricing on your Pennsylvania House cover job placed with Western Publishing's Poughkeepsie plant.
 
Relating to our January 8th contract: The base price will change to $60,083.00 and the press plates will cost $200.00 each for one color imprints on cover #4. You will provide us the imprints to size on film. Western will run the four color on one press and run the one color imprints in a separate pass. All other specs remain the same. Final film requirements will be arranged between the plant and you or your staff.
 
Thanks again for the order.

 Sometime between January 20 and February 9, Herb Scharer advised Senkowsky that the color film and Cromalin that Western was to use in its printing would be supplied by Spectragraphics, Inc., and delivered to the Poughkeepsie plant around February 12. Scharer also indicated that 4,950 covers would be needed on March 4, 1982, with the balance due on March 12. In a letter dated February 9, Herb Scharer provided Senkowsky with a purchase order that recapitulated the terms of the agreement between Western and Federated, with minor revisions. In the final paragraph of this letter, Scharer stated:

 
If possible, we will arrange for one of our people to be available for a press OK, otherwise you are to match the cromalins except that the blue ...

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