Retail Pipeline, LLC v. Blue Yonder Grp., Inc.

557 F.Supp.3d 535

RETAIL PIPELINE, LLC and Darryl Landvater, Plaintiffs,

v.BLUE YONDER GROUP, INC. formerly known as JDA Software Group, Inc. and Blue Yonder, Inc. formerly known as JDA Software, Inc., Defendants.

Case No. 2:17-cv-00067

United States District Court, D. Vermont.

Signed August 31, 2021

Jennifer E. McDonald, Esq., Marc B. Heath, Esq., Tristram J. Coffin, Esq., Downs Rachlin Martin PLLC, Burlington, VT, for Plaintiffs.

Justin B. Barnard, Esq., Karen McAndrew, Esq., Dinse, Knapp & McAndrew, P.C., Burlington, VT, for Defendants.

OPINION AND ORDER GRANTING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT AND GRANTING IN PART PLAINTIFFS’ MOTION TO STRIKE

Christina Reiss, United States District Judge

Plaintiffs Retail Pipeline, LLC ("Plaintiff Retail Pipeline") and Darryl Landvater ("Plaintiff Landvater") bring this action alleging breach of contract, breach of the implied covenant of good faith and fair dealing, breach of a contract implied in law or fact, and constructive fraud against Defendants Blue Yonder Group, Inc. and Blue Yonder, Inc. (collectively, "JDA").¹ Pending before the court are: JDA's motion for summary judgment on all counts (Doc. 100) and Plaintiffs’ motion to strike JDA's reply to Plaintiffs’ statement of disputed facts. (Doc. 108.) On March 22, 2021, the court heard oral argument at which time the court took the pending motions under advisement.²

Plaintiffs are represented by Jennifer E. McDonald, Esq., Marc B. Heath, Esq., and Tristam J. Coffin, Esq. JDA is represented by Justin B. Barnard, Esq., and Karen McAndrew, Esq.

I. Plaintiffs’ Motion to Strike JDA's Reply to Plaintiffs’ Statement of Disputed Facts.

JDA filed a sixty-nine page "reply" to Plaintiffs’ statement of disputed material facts in which they reject Plaintiffs’ characterization of certain facts as disputed, assert that Plaintiffs mischaracterize the evidence, and assert new legal arguments. Under Local Rule 56(a) and (b), a moving party must include "a separate and concise statement of undisputed material facts[ ]" in support of its motion for summary judgment and a non-moving party must provide "a separate, concise statement of disputed material facts." Local Rule 56(a) affords JDA the opportunity to bring relevant factual matters to the court's attention, but it does not contemplate the filing of a reply to the non-moving party's statement of disputed facts. JDA also did not seek leave to file their "reply" before filing it with the court.

To the extent JDA's "reply" merely corrects the record or cites evidence admissible pursuant to the completion doctrine, it will be considered. See Fed. R. Evid. 106 ("If a party introduces all or part of a writing or recorded statement, an adverse party may require the introduction, at that time, of any other part — or any other writing or recorded statement — that in fairness ought to be considered at the same time."); see also Rotman v. Progressive Ins. Co. , 955 F. Supp. 2d 272, 276 (D. Vt. 2013) (holding "the court will follow [its previous decisions], and will disregard [a party's] additional facts unless it is clear from the parties’ briefing that those facts are both material and undisputed"). The remainder of JDA's reply statement will not be considered. Plaintiffs’ motion to strike (Doc. 108) is therefore GRANTED IN PART.

II. The Undisputed Facts.

A. The Parties.

Plaintiff Retail Pipeline is a Vermont limited liability company with its principal place of business in Essex Junction, Vermont. It was founded as a consultancy firm in the mid-1990s by Andre Martin, a Canadian citizen and resident of Montreal, Quebec, and by Plaintiff Landvater, a Vermont resident. Mr. Martin and Plaintiff Landvater are supply chain professionals who have worked together since the 1970s in the implementation of Distribution Requirements Planning ("DRP") processes which assist businesses in managing inventory.

JDA is a multi-national company based in Arizona and founded in the mid-1980s. It is a leader in supply chain management and provides end-to-end retail and supply chain planning and execution products for more than 4,000 customers worldwide.

B. JDA's Demand and Fulfillment Product.

JDA has developed a number of related software suites, including systems tailored to the retail, service, wholesale distribution, third-party logistics, and transportation sectors. JDA built some of these software suites itself and added others through acquisition and merger with other supply chain companies.

A major modern innovation in supply chain management was the concept of DRP, which uses forecasts of future demands for a product to determine when the product is likely to require replenishment. DRP also generates orders for additional quantities of product based on demand forecasts, current inventory levels, the time lapse between ordering a product and its receipt, and other data to ensure that the product is timely replenished before it is exhausted. DRP is intended to increase the efficiency of the supply system by allowing each node in the supply chain to maintain the optimum inventory while reducing the number of "stock-outs" (i.e., complete depletion of a stock of product), which leads to better customer service and increased sales.

JDA sells a DRP product called Demand and Fulfillment ("D&F"), which generates demand forecasts for a company's products and utilizes those demand forecasts to generate replenishment orders that are phased over time to reduce risk of stock-outs. D&F was originally developed in the 1990s for use in "time-phased" supply chain planning at the manufacturing and distribution center levels. D&F is used by hundreds of consumer goods companies and retailers, including Walmart, CVS, Lowe's, and Dick's Sporting Goods.

For many years, the supply chain industry has sought to facilitate better collaboration between retailers and suppliers to improve the efficiency of supply chains and realize significant savings. JDA saw a potential market for software that facilitated such collaboration and data-sharing between retailers and suppliers. During the early 2010s, it began to develop a "module" or add-on that worked with D&F. JDA's supply chain collaboration product was originally called Collaborative Shelf Planning Analytics ("CSPA").

C. Plaintiffs’ Development and Marketing of its Flowcasting DRP.

In the 1990s, DRP was used at the distribution center and manufacturing levels. In an effort to expand DRP to the retail store level, Mr. Martin and Plaintiff Landvater approached established supply chain software vendors and encouraged them to develop retail-focused DRP software. None of the companies agreed to develop retail-focused DRP software so Mr. Martin and Plaintiff Landvater decided to develop a retail-focused DRP software of their own.

Plaintiff Landvater had engaged in computer programming in the early 1970s and in college, but when he began working on development of retail DRP software he had not written code in twenty-five years. In preparation for development of DRP software, Plaintiff Landvater read a book on programming.

Between 1997 and 1998, Plaintiff Landvater developed the software product that he and Mr. Martin would later market under the name "Flowcasting." The Flowcasting software served two primary business functions: (1) it helped enable DRP by forecasting demand and generating time-phased orders to replenish products before they were depleted and (2) facilitated collaboration between retailers and suppliers on forecasts and replenishment orders.

In 2000, Plaintiff Retail Pipeline made an initial sale of Flowcasting to Sears for $450,000. However, Sears "abruptly shelved" the product and never proceeded with full implementation of Flowcasting. (Doc. 100-1 at 6, ¶ 30.) In 2003, when Plaintiff Retail Pipeline entered into a software licensing agreement for Flowcasting with a company called Tomax, Plaintiff Retail Pipeline was operating at a net loss. Under the Tomax agreement, Plaintiff Retail Pipeline received an up-front payment of $150,000, with the potential for net revenue royalties and an option for Tomax to acquire Plaintiff Retail Pipeline after a four-year period. The Tomax agreement contained a best-efforts clause which required Tomax to use commercially reasonable efforts to license and market Plaintiff Retail Pipeline's software. By 2006, Plaintiff Retail Pipeline had "backed out" of the agreement with Tomax. According to Plaintiff Landvater, Plaintiff Retail Pipeline decided to "part[ ] ways with Tomax because of differences in vision about Flowcasting and its direction." (Doc. 100-1 at 7, ¶¶ 36, 37.)

In 2009, Plaintiff Retail Pipeline formed a new partnership to market Flowcasting with RedPrairie, a "well-established" multi-national supply chain software company. Id. at 7, ¶ 38. RedPrairie sold software for managing warehouse and transportation logistics, but "lacked expertise in planning and replenishment[.]" Id. at 7, ¶ 39. At the time, Plaintiff Retail Pipeline had recently launched a pilot of Flowcasting's supply chain collaboration capabilities using Flowcasting to manage replenishment of Kraft Foods at Sam's Club stores.

Plaintiff Retail Pipeline was only profitable for a single year (2000) before it sold its intellectual property to JDA in 2014.

D. The Joint Venture.

Plaintiff Retail Pipeline and RedPrairie entered into a joint venture, Retail Pipeline Collaborative Flowcasting Group, LLC (the "Joint Venture"), to which Plaintiff Retail Pipeline assigned the intellectual property associated with Flowcasting technology. Under the terms of the Joint Venture agreement, RedPrairie effectively acquired a 50% interest in Plaintiff Retail Pipeline's intellectual property in exchange for an up-front capital contribution to the Joint Venture. The Joint Venture agreement contained a buy-out provision, giving RedPrairie "put" and "call" options. Under the put option, RedPrairie could cause Plaintiff Retail Pipeline to buy it out for the value of its capital contributions and...