Miniature Precision Components, Inc. v. Standex Elecs., Inc.

571 F.Supp.3d 955

MINIATURE PRECISION COMPONENTS, INC., Plaintiff,

v.STANDEX ELECTRONICS, INC., Defendant.

Case No. 18-CV-1838

United States District Court, E.D. Wisconsin.

Signed November 17, 2021

Michael D. Huitink, Sorrentino Burkert Risch LLC d/b/a SBR Law Group, Brookfield, WI, Herbert C. Donovan, Matthew H. Letzmann, Brooks Wilkins Sharkey & Turco PLLC, Birmingham, MI, for Plaintiff.

David G. Peterson, Reinhart Boerner Van Deuren SC, Waukesha, WI, Jeunesse Rutledge, Laura A. Brenner, Guy R. Temple, Reinhart Boerner Van Deuren SC, Milwaukee, WI, for Defendant.

DECISION AND ORDER

WILLIAM E. DUFFIN, United States Magistrate Judge

1. Background

Plaintiff Miniature Precision Components, Inc. (MPC), supplied Ford Motor Company with oil separator assemblies for use in Ford's model year 2014, 2015, and 2016 Super Duty Trucks. (ECF No. 152-1, ¶¶ 1, 3.) In constructing the oil separator assemblies MPC used a sensor it purchased from defendant Standex Electronics, Inc., (ECF No. 152-1, ¶ 2.) The sensor was designed to trigger a diagnostic trouble code, resulting in the illumination of the vehicle's "Check Engine" light, if a hose became disconnected from the oil separator assembly. (ECF Nos. 152-1, ¶¶ 7, 29; 164-1, ¶¶ 4-5.)

In July of 2015 Ford informed Standex and MPC that it had seen an increase in warranty claims related to the oil separator assemblies. (ECF No. 164-1, ¶¶ 23, 65.) MPC concluded that Standex's sensors were failing, resulting in illumination of the Check Engine light even though the hose remained properly connected. (ECF No. 164-1, ¶ 58.) As a result, drivers were bringing their vehicles in for service unnecessarily. (ECF No. 164-1, ¶ 58.) MPC negotiated a settlement with Ford in 2016 under which MPC agreed to be responsible for a percentage of the warranty costs. (ECF No. 164-1, ¶ 61.) MPC ultimately paid Ford $7.4 million. (ECF No. 164-1, ¶ 62.) In this lawsuit MPC seeks that sum from Standex. (ECF No. 164-1, ¶ 63.)

MPC and Standex have both moved for summary judgment. MPC seeks partial summary judgment on liability. (ECF No. 131.) Standex seeks summary judgment on the ground that MPC allegedly failed to provide timely notice to Standex of the alleged defect. (ECF No. 145.) Alternatively, Standex seeks partial summary judgment dismissing MPC's claims for breach of the implied warranty of merchantability, breach of the implied warranty of fitness for a particular purpose, contractual indemnification, and common law indemnification, as well as limiting MPC's damages to only those sensors that MPC retained and can prove did not conform to the specifications. (ECF No. 145.)

MPC also seeks to exclude at least portions of the proposed testimony of Standex's experts, John G. Peters (ECF No. 121) and Michael Nranian (ECF No. 129). Standex seeks to bar Pradeep Lall (ECF No. 133) and Patrick O'Keefe (ECF No. 138) from testifying as experts for MPC. Standex also seeks to exclude a spreadsheet of warranty claims prepared by Ford (ECF No. 135) and sanctions for alleged spoliation (ECF No. 143).

The court has subject matter jurisdiction under 28 U.S.C. § 1332(a) because the amount in controversy exceeds $75,000 and MPC is a citizen of Wisconsin and Standex is a citizen of Ohio. (ECF No. 1, ¶¶ 3-4.) All parties have consented to the full jurisdiction of this court under 28 U.S.C. § 636(c). (ECF Nos. 8, 9.)

2. Motions for Summary Judgment

"The court shall grant 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). A fact is "material" only if it "might affect the outcome of the suit" and a dispute is "genuine" only if a reasonable factfinder could return a verdict for the non-movant. Anderson v. Liberty Lobby Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In resolving a motion for summary judgment, the court is to "construe all evidence and draw all reasonable inferences from the evidence in" favor of the non-movant. E.Y. v. United States , 758 F.3d 861, 863 (7th Cir. 2014) (citing Gil v. Reed , 535 F.3d 551, 556 (7th Cir. 2008) ; Del Raso v. United States , 244 F.3d 567, 570 (7th Cir. 2001) ). "The controlling question is whether a reasonable trier of fact could find in favor of the non-moving party on the evidence submitted in support of and [in] opposition to the motion for summary judgment." White v. City of Chi. , 829 F.3d 837, 841 (7th Cir. 2016).

2.1. The Agreement

The parties agree that they had a contract for Standex to sell and for MPC to buy the sensors. (ECF No. 152-1, ¶ 11.) However, they have different views as to the terms of that agreement. Each side argues that its terms and conditions apply. MPC contends that, under its terms and conditions, Standex was obligated to provide an expansive warranty, indemnify MPC for any claims, and was broadly liable for damages. Standex insists that its terms and conditions control, and it provided only a limited warranty, disclaimed any further liability, and is entitled to indemnification from MPC.

Notwithstanding MPC's disagreement with the characterization (ECF Nos. 163-1 at 7, 16; 168-1 at 2), this case presents a classic battle of the forms. See Northrop Corp. v. Litronic Indus. , 29 F.3d 1173, 1174 (7th Cir. 1994) (" ‘Battle of the forms’ refers to the not uncommon situation in which one business firm makes an offer in the form of a preprinted form contract and the offeree responds with its own form contract."). Under the traditional "mirror image" rule, any variance in the terms of an acceptance from the terms in the offer cause the acceptance to act as a counteroffer. See id. ; Curwood Inc. v. Prodo-Pak Corp. , No. 07-C-544, 2008 WL 644884 at *3, 2008 U.S. Dist. LEXIS 18295 (E.D. Wis. Mar. 7, 2008). Thus, "[i]f parties to an agreement had already performed after exchanging forms with conflicting terms, ‘the terms of the party who sent the form ... would become the terms of the parties's contract,’ as the ‘last shot’ in the battle of forms." Id. (quoting Step-Saver Data Sys., Inc. v. Wyse Tech. , 939 F.2d 91, 99 (3d Cir. 1991) ).

Section 2-207 of the Uniform Commercial Code, codified in Wisconsin at Wis. Stat. § 402.207, largely abrogated the mirror image rule in recognition of the fact that "[s]ales contracts often do not involve an express agreement on all terms. Instead, one party sends its form to the other party, and the other responds with its own form, which may include significantly different terms." Stoughton Trailers, LLC v. ArcelorMittal Dofasco, Inc. , No. 07-cv-374-bbc, 2008 WL 4722398, at *5, 2008 U.S. Dist. LEXIS 28914, at *13 (W.D. Wis. Apr. 8, 2008). U.C.C. § 2-207 reflects the "marketplace reality" "that buyers and sellers rarely read the fine print in purchase orders or acceptances but rely only on the filled-in portions that specify critical terms such as quantity, quality and price." Stoughton Trailers, 2008 WL 4722398, at *5, 2008 U.S. Dist. LEXIS 28914, at *13 (citing James J. White & Robert S. Summers, Uniform Commercial Code § 1-3, at 6-7 (4th ed. 1995)).

Section 2-207, as codified in Wisconsin, states:

(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.

(2) The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless:

(a) The offer expressly limits acceptance to the terms of the offer;

(b) They materially alter it; or

(c) Notification of objection to them has already been given or is given within a reasonable time after notice of them is received.

(3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of chs. 401 to 411.

Wis. Stat. § 402.207.

When attempting to determine the terms of the parties’ agreement, the first step under § 2-207 is to identify the relevant forms and the appended terms and conditions that the parties exchanged. MPC argues that the terms of the contract are the Terms and Conditions of Purchase that were incorporated into its purchase orders. (ECF No. 152-1, ¶ 12.) Standex's position is that "[t]he parties’ contract for the Sensors consists of Standex's Quotations, which included its Terms of Sale, and the MPC Purchase Orders accepting Standex's Quotations." (ECF No. 164-1, ¶ 27.) Unfortunately, the parties’ submissions do not appear to completely set forth the forms (and conditions) the parties exchanged.

A quotation is generally not an offer.

Q.C. Onics Ventures, LP v. Johnson Controls, Inc. , No. 1-04-CV-138-TS, 2006 WL 1722365 at *5-6, 2006 U.S. Dist. LEXIS 45189 (N.D. Ind. June 21, 2006) (citing cases); see also All. Laundry Sys. LLC v. Stroh Die Casting Co. , 2008 WI App 180, ¶ 33, 315 Wis. 2d 143, 159-60, 763 N.W.2d 167, 175 ("Courts often consider a quotation a preliminary step in negotiations because it does not have the level of detail and completeness of a typical offer.") (citing cases). And Standex has not proven that its quotation had the detail and completeness of a typical offer. But even if the quotation was an offer, MPC's purchase orders did not accept the terms and conditions incorporated into Standex's quotation. It is undisputed that MPC's purchase orders for the sensors at issue¹ included the following:

This purchase order is a requirements contract, and is expressly limited to the provisions stated herein, and MPC's Terms and Conditions of Purchase (available at

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