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National v. Fiberweb

October 29, 2011

NATIONAL TRAFFIC SERVICE, INC., PLAINTIFF,
v.
FIBERWEB, INC. AND REEMAY, INC., DEFENDANTS.



The opinion of the court was delivered by: William M. Skretny Chief Judge United States District Court

DECISION AND ORDER

I. INTRODUCTION

In this diversity action, Plaintiff National Traffic Service, Inc. ("National Traffic"), a New York corporation, brings suit against Defendant Fiberweb, Inc. ("Fiberweb"), a South Carolina corporation, claiming breach of contract and unjust enrichment.*fn1 Plaintiff's claims arise out of Defendant's failure to pay Plaintiff for negotiating discounted rates with freight carriers in the second year of the parties' agreement. Presently before this Court is Defendant's Motion for Summary Judgment.*fn2 For the reasons discussed below, Defendant's motion is granted in part, and denied in part.

II. BACKGROUND

A. Facts

Plaintiff, National Traffic, is a New York corporation with its principal place of business in Amherst, New York, and is a provider of transportation logistics services. (Plaintiff's Statement of Material Undisputed Facts ("Pl.'s Statement"), Docket No. 26, ¶ 1.) Defendant, Fiberweb, is a South Carolina corporation with its principal place of business in Old Hickory, Tennessee. (Defendant's Local Rule 56.1 Statement of Material Facts ("Def.'s Statement"), Docket No. 20, ¶¶ 1, 5.) Defendant is engaged in the business of developing and manufacturing high performance nonwoven fabrics, used in a variety of commercial products. (Defendant's Memorandum of Law in Support of Motion for Summary Judgment ("Def.'s Mem."), Docket No. 21, 2-3.)

On December 8, 2005, the parties entered into a 2-year Logistics Management Services Agreement ("Agreement"), whereby National Traffic agreed to provide logistic management services for Fiberweb's domestic and international shipping. (Pl.'s Statement ¶¶ 2, 3, 4.) Such services included negotiating freight contract rates, preparing freight transportation plans, auditing and paying freight carrier bills, submitting weekly progress reports, and various related tasks. (Id. ¶ 4.) Payment for National Traffic's services was set in accordance with two separate fee structures. For the first year, National Traffic would receive a percentage of document savings it had generated through its negotiations. (Id. ¶ 7.) In the second year, National Traffic would be paid by a separate criteria listing compensation rates for completion of specific tasks, including filing weekly reports, auditing, on-line carrier routing, and 30% of documented negotiated savings for carrier negotiation services. (Id.)

Pursuant to National Traffic's agreement to provide carrier negotiation services, the Agreement authorized National Traffic to negotiate contracts with authorized carriers on Fiberweb's behalf. (Id. ¶ 25.) The Agreement also reserved Fiberweb's right not to be bound by any of the negotiated contracts. (Id.) Finally, the Agreement granted Fiberweb the right to end the Agreement for any reason on thirty days notice. (Id. ¶ 3.) If Fiberweb did so within the first twelve months of the Agreement, it would be obligated to pay National Traffic a fee based on projected savings. (Id.)

For the first year of the Agreement, National Traffic negotiated discounted rates with Fiberweb's carriers, realizing savings of $383,136. In accordance with the Agreement, Fiberweb paid National Traffic 30% of that amount, or $114,940. (Id. ¶ 9.) National Traffic received confirmation from Fiberweb to again negotiate discounted rates for the second year of the Agreement. (Id. ¶ 10.) Following negotiations, National Traffic presented Fiberweb with a transportation plan detailing the expected cost savings. (Id. ¶¶ 15, 16.) The transportation plan did not take into account the closure of three of Fiber's manufacturing locations. (Id. ¶ 22.) The unaccounted for closures corresponded with an approximately 10% decrease in overall shipping volume. (Id.) Fiberweb elected not to adopt National Traffic's transportation plan. (Id. ¶ 17.) Although Fiberweb did use several of the carriers included in the transportation plan, it did so at the original year one rates. (Def.'s Statement ¶ 30.)

National Traffic now seeks payment of 30% of the expected savings detailed in the transportation plan, that National Traffic alleges would have been realized had Defendant adopted the plan.

B. Procedural History

National Traffic commenced this action on March 28, 2008 by filing a complaint in the United States District Court for the Western District of New York. On March 31, 2010, Fiberweb filed the instant Motion for Summary Judgment.

III. DISCUSSION

A. Choice of Law

Neither party disputes that Tennessee law should govern this dispute pursuant to ยง 10.1 of the Agreement. Determining the controlling substantive law requires application of New York's choice of law rules. Schwartz v. Liberty Mut. Ins. Co., 539 F.3d 135, 151 (2d Cir. 2008) (quoting Booking v. Gen. Star Mgmt. Co., 254 F.3d 414, 419 (2d Cir. 2001)). New York courts will enforce a contractual choice-of-law clause so long as the chosen law bears a reasonable relationship to the parties or the transaction. Aramarine Brokerage, Inc. v. OneBeacon Ins. Co., 307 Fed. Appx. 562, 564 (2d Cir. 2009); Burns v. Del. Charter Guarantee & Trust Co., No. 10 Civ. 4535, 2011 WL 2314835, at *6 (W.D.N.Y. June 8, 2011). Fiberweb's principal place of business is in Old Hickory, Tennessee. In addition, at the time the parties entered into the agreement, Fiberweb was operating eight separate manufacturing facilities, ...


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