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Corning Inc. v. VWR International

March 15, 2007

CORNING INCORPORATED, PLAINTIFF,
v.
VWR INTERNATIONAL, INC., DEFENDANT.



The opinion of the court was delivered by: Charles J. Siragusa United States District Judge

DECISION AND ORDER

INTRODUCTION

Now before the Court is plaintiff's Motion for Reconsideration [#21], asking the Court to reverse its prior Decision and Order [#20] which denied plaintiff's motion to amend its complaint and dismissed plaintiff's breach of contract claim. For the reasons that follow, the application for reconsideration is granted, the motion to dismiss is denied, and the motion to amend is granted.

BACKGROUND

The facts of this case were set forth in detail in the prior Decision and Order [#20] and need not be repeated here. It is sufficient to note that the Court dismissed plaintiff's breach of contract claim because it found that the parties' "Memorandum of Agreement Corning/VWR Glass Standardization Plan" ("the memorandum") did not satisfy New York's Statute of Frauds, NY Uniform Commercial Code ("UCC") § 2-201. The relevant portion of the memorandum states: "VWR will catalog inventory and sell only Corning's Pyrex reusable glass product line, except as warranted by Tier II customers, to the exclusion of other non-Corning brands, including private label reusable glass." According to plaintiff, VWR agreed to buy its requirements of reusable glass from Corning, with one exception: VWR could buy reusable glass from other suppliers when requested to do so by its Tier II customers. Plaintiff contends that the parties included this provision because they anticipated that VWR's Tier II customers, that is, its "large institutional customers," "were likely to insist that VWR occasionally supply them with certain non-Corning products." (Proposed Second Amended Complaint [#15-3] ¶ 20).

Defendant moved to dismiss plaintiff's breach of contract claim, maintaining that the memorandum failed to satisfy the statute of frauds because it lacked a specific quantity term, and that it also failed to satisfy the statute of frauds as a "requirements" contract, since VWR was not required to buy it requirements of reusable glass exclusively from Corning. Plaintiff responded by arguing that, pursuant to UCC § 2-306, the memorandum satisfied UCC § 2-201, because the alleged contract was an "exclusive requirements contract." (Pl. Mem. of Law [#16] pp. 14). Plaintiff acknowledged, in that regard, that "an agreement is a 'requirements contract' where [inter alia] it . . . obligates the buyer to buy goods exclusively from the seller."*fn1 (Id. at 15). Nevertheless, plaintiff asserted that the subject memorandum was a requirements contract even though it was not entirely exclusive:

VWR's contention that potential sales of non-Corning goods to "Tier II" customers somehow vitiate the exclusivity requirement is simply wrong.

***

That an agreement may be exclusive with respect to certain customers, and not others, does not render it unenforceable. See, Adipar Ltd. v. PLD Intern. Corp., 2002 WL 31740622 *6 (S.D.N.Y. 2002); Access Northern Sec. Corp. v. Linear Corp., 1998 WL 566815 *2 n.4 (S.D.N.Y. 1998). (Id. at 17); (see also, Id. at 25) ("Thus, while VWR's customers could have 'access to glassware from other companies,' this does not alter the exclusive nature of the Agreement.").

The Court rejected plaintiff's argument and found that the memorandum failed to satisfy the statute of frauds because it was not an exclusive requirements contract. In that regard, the Court stated:

[T]he Court concurs with defendant that the agreement lacks a quantity term and therefore fails to satisfy the statute of frauds. Although [plaintiff] contends that a specific quantity term is unnecessary because the agreement is a "requirements contract," the Court disagrees, since the agreement does not require defendant to buy its reusable glass exclusively from plaintiff. Instead, the memorandum permits defendant to buy an unspecified amount of reusable glass for its Tier II customers from other suppliers. Plaintiff argues that "an agreement may be exclusive with respect to certain customers, and not others," but the only two cases that it cites in support of this proposition are inapposite. See, Adipar v. PLD Intern. Corp., 2002 WL 31740622 at *6 (S.D.N.Y. 2002); Access Northern Sec. Corp. v. Linear Corp., 1998 WL 566815 at 2 n. 4 (S.D.N.Y. 1998). The Court has similarly been unable to find any New York case in which a non-exclusive requirements contract was found to have satisfied the statute of frauds. Cf. MDC Corp., Inc. v. John H. Harland Co., 228 F.Supp.2d 387, 392 (S.D.N.Y. 2002) ("[A] requirements contract obligates the buyer to buy exclusively from a particular supplier.") (citation omitted); 1 HAWKLAND UCC SERIES § 2-306:3 ("By their very nature, output and requirements contracts involve exclusive dealing."); but see, Advent Systems Ltd. v. Unisys Corp., 925 F.2d 670, 678 (3rd Cir. 1991) ("The same reasons that led courts to dispense with a specific and certain quantity term in the exclusive requirements context apply equally when a continuing relationship is non-exclusive. The same regulating factor-good faith performance by the parties-applies and prevents the contracts from being illusory.") (Applying the law of Pennsylvania). Consequently, the Court finds that the agreement is not a requirements contract as to reusable glass, and therefore lacks an essential term. (Id. at 12-13).

Plaintiff now asks the Court to reconsider that decision, pursuant to Rule 59(e), because, it contends, the Court misapplied the law.*fn2 Specifically, plaintiff contends that the Court failed to appreciate "the parties' nearly three-year course of performance under the Agreement." (Memo of Law [#21-6] p. 1). As to that, plaintiff contends that the Court failed to understand that it should "look to performance as the decisive element in analyzing requirements contracts and for supplying terms not explicitly set forth in the document memorializing the parties' agreement." (Id.).*fn3 Moreover, plaintiff contends that in New York, a "non-exclusive requirements contract" satisfies UCC § § 2-201 and 2-306. Alternatively, plaintiff asks the Court to enter final judgment on the breach of contract claim pursuant to Rule 54(b), so that it may take an immediate appeal.

ANALYSIS

Plaintiff brings the subject motion pursuant to Rule 59(e) of the Federal Rules of Civil Procedure. It is well settled that when making such a motion, the moving party must show that the Court overlooked the controlling decisions or factual matters that were put before the Court in the underlying motion. Nakano v. Jamie Sadock, Inc., No. 98 Civ. 0515, 2000 WL 1010825, at *1 (S.D.N.Y. July 20, 2000); Walsh v. McGee, 918 F.Supp. 107, 110 (S.D.N.Y.1996). However, in addition, "[a] court is justified in reconsidering its previous ruling if: (1) there is an intervening change in the controlling law; (2) new evidence not previously available comes to light; or (3) it becomes necessary to remedy a clear error of law or to prevent obvious injustice." See Nnebe v. Daus, No. 06 Civ. 4991, 2006 WL 2309588, at *1 ...


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