Professional Documents
Culture Documents
Appeal from the United States District Court for the Western
District of Virginia, at Lynchburg.
Norman K. Moon, Senior
District Judge. (6:12cv00023NKMRSB)
Argued:
Decided:
June 9, 2015
Azdel,
thermoplastic
Inc.
composite
(Azdel),
sheet
the
product
manufacturer
called
of
Aero-Lite,
Zodiac,
aircraft
Inc.
(C&D)
sidewalls
for
to
use
American
Aero-Lite
Airlines
to
manufacture
(American).
The
in
Crane
&
Co.
(Crane),
whose
product
proved
filed
price
this
of
144
lawsuit
to
recover
sheets
of
2000
inter
alia
1)
the
grams-per-square-meter
forming
facility
to
be
molded
into
sidewalls;
2)
the
to
Crane.
summary judgment.
The
parties
filed
cross-motions
for
district
courts
summary
judgment
rulings
and
its
denial
of
we
reverse
the
district
courts
grant
of
summary
judgment to C&D because we hold that C&D accepted the 144 sheets
of
2000
gsm
Aero-Lite
by
taking
actions
inconsistent
with
courts
grant
of
summary
to
C&D
regarding
summary
judgment
to
Azdel
on
this
claim
because
C&D
Whether C&D
We
district
courts
rulings
and
termination issue.
I.
A.
4
remand
for
trial
on
the
In
March
Understanding
work
together
Airlines.
2008,
Azdel
(MOU)
to
and
C&D
memorializing
provide
executed
the
aircraft
Memorandum
of
agreement
to
parties
sidewalls
for
American
J.A. 2186.
The Specification
J.A.
Products
sold
to
C&D
will
conform
to
C&Ds
specifications in effect at the time of manufacture
and agreed in writing between AZDEL and C&D.
AZDEL
expressly disclaims any warranty of fitness for a
particular purpose.
J.A. 2189-90 9 (emphasis added).
The MOU required C&D to provide six-month forecasts of its
Aero-Lite
[t]he
requirements
Parties
requirements
times.
because,
acknowledge
for
[2000
J.A. 2189.
gsm
according
that
to
the
AZDELs
Aero-Lite]
agreement,
supply
result
in
chain
long
lead
J.A.
before
the
anticipated
ship
date.
C&D
could
make
the
MOU
severely
limited
the
of
Azdels
C.
C&D shall have the right to terminate this MOU as well
as any open orders in connection thereto if:
(i) the
material does not perform as predicted and is deemed not
suitable for C&Ds intended use, conversion, or processing;
and C&D has given the required 60 days notice and/or (ii)
the customer requests C&D to switch back to conventional
material/manufacturing methods.
J.A. 2190 11.
In
addition
to
obligations
regarding
Aero-Lite,
the
confidentiality
establishing
the
the
and
MOU
purchase
required
the
parties
rights
delivery
parties
of
and
2000
to
gsm
maintain
Paragraph 12 of
the MOU provided that the MOU itself would remain confidential,
and referenced a separate Confidentiality and Non-Disclosure
Agreement
(NDA)
confidentiality
that
would
obligations.
J.A.
govern
2191
certain
12.
other
The
NDA
J.A. 2194.
J.A. 2194.
months
(the
Original
Purchase
Order).
The
Original
J.A. 2350.
According to
Chris Willis, Azdels project manager for Aero-Lite, the preproduction label reflected that to determine the suitability of
Azdels Aero-Lite sheets for American, C&D would have to mold
some sheets into sidewall panels, perform initial tests, and
present a sample sidewall to American for further testing.
C&D
Without
testing
the
sheets
for
conformity
with
the
C&D
employees
not
testified
that
C&Ds
Quality
Department
did
some
point,
J.A. 2023.
C&D
determined
that
the
sheets
Azdel
J.A. 1114.
product,
including
the
fact
that
the
J.A. 1704.
panels
were
Aero-Lite
conventional
sidewalls
crushcore
be
used
in
product
that
C&D
place
had
of
C&Ds
previously
July
2,
2008,
C&D
sent
detailed
to
Azdel
was
investigating
J.A. 886.
a
number
projects
to
find
J.A. 886.
more
C&D
asked
Azdel
about
the
employees,
status
Willis
of
of
the
Azdel
October
stated
delivery
C&D
has
by
not
of
this
product
should
be
put
on
hold.
J.A.
1480.
that
with
the
C&D
personnel.
purchase
order
Other
had
employees
not
been
at
Azdel
terminated,
their
release.
All
orders
remain
valid
until
the
J.A. 1478.
In
J.A 2353-54.
Azdel. 1
Thereafter, Azdel manufactured some lighter weight sheets
of
Aero-Lite,
and
C&D
molded
and
tested
several
of
these
iterations.
of 1320 gsm Aero-Lite based upon a single $15,000 price for the
entire lot.
Aero-Lite.
The
pricing
letter
and
quotations
were
all
marked confidential.
Azdel manufactured more than fifty sheets of the 1320 gsm
product but found only eight sheets worthy of delivery.
C&D
formed
these
that
the
panels
were
conditions
and
passed.
sheets
tested
into
panels
under
J.A. 957.
and
American
informed
Airlines
Azdel
Azdel
indicated
that
it
would
not
produce
any
more
Azdel
October
development
expectations.
of
30,
a
2009,
product
C&D
that
contacted
would
Crane
meet
regarding
Americans
during
C&Ds
negotiations
with
Crane,
it
In
provided
The
quantities
differed.
The
historic
pricing
board
also
included prices for 1200 gsm and 2000 gsm products not reflected
in Azdels pricing letters.
In
March
2010
Crane
provided
C&D
report
of
Cranes
C&D
photographs
attached
to
the
testing
report
identify
the
report
Azdel
testified
that
the
12
product
tested
J.A. 1902-03.
had
been
There is no
Count I
alleged that C&D failed to pay Azdel for the 144 sheets of AeroLite
delivered
under
the
Original
Purchase
Order,
and
for
terminate
MOU
and
open
purchase
orders,
C&D
was
$6000 in compensation for the sample sheets of 1320 gsm AeroLite that Azdel provided pursuant to an April 24, 2009 purchase
order.
Following discovery, Azdel amended its complaint to include
two additional causes of action (Counts IV and V), alleging that
C&D breached confidentiality provisions contained in the MOU and
the
parties
non-disclosure
agreement.
The
district
court
supplemented
from
its
Crane.
discovery
Over
the
requests,
course
of
now
seeking
discovery,
Crane
the
common
interest
privilege
pursuant
to
common
legal
Azdel moved to
The
II.
We
judgment
review
de
the
novo,
nonmoving party.
(4th Cir. 2011).
grant
or
drawing
denial
all
of
inferences
motion
in
for
favor
summary
of
the
Libertarian
Party of Va. v. Judd, 718 F.3d 308, 31213 (4th Cir. 2013)
(internal quotation marks omitted).
A dispute is genuine if a
law applies to Azdels claims arising from the MOU and related
purchase
orders,
and
that
California
law
applies
to
Azdels
confidentiality
provision
and
the
NDA
by
disclosing
There is no
question that the NDA prohibited C&D from disclosing cost and
pricing information that Azdel marked as confidential.
J.A.
2194 (C).
Yet the pricing board was not a reflection of past prices;
rather, it was an indication of what C&D would be willing to pay
for
Cranes
product.
Nothing
in
the
parties
agreements
historic prices, C&D did not disclose that they were Azdels.
And while several of the prices that C&D gave Crane were the
same as Azdels, others were not.
district
courts
ruling
that
C&D
did
not
disclose
Azdels
16
could
be
tested
against
Cranes
CAB.
The
parties
dispute
to
prototypes.
C&D
identified
the
sheets
as
confidential
with the 1320 gsm sheets is an internal order form for the 1320
gsm sheets.
argues
sheets
that
of
the
J.A. 2543.
parties
Aero-Lite
did
not
themselves
to
intend
be
for
marked
the
as
be
conspicuously
labeled
by
the
disclosing
Party
as
not
1320
gsm,
and
the
photographs
attached
to
the
testing
J.A. 1031.
J.A. 1902-03.
Furthermore, though
by
disclosing
specifications
similar
to
the
Azdel also argues that the 1350 gsm Aero-Lite was also not
commercially available and was therefore covered under the NDA.
This argument has been made for the first time on appeal and is
therefore waived.
See Karpel v. Inova Health Sys. Servs., 134
F.3d 1222, 1227 (4th Cir. 1998) (We have repeatedly held that
issues raised for the first time on appeal generally will not be
considered.).
18
However,
nonetheless
disclosure
Azdel
covered
of
by
this
contends
Paragraph
MOU.
that
12
J.A.
of
2191
the
Specification
the
MOU,
12.
which
is
bars
Because
the
support
Orthopaedics,
of
P.C.
this
v.
argument,
Peyton,
in
Azdel
which
cites
the
Countryside
Supreme
Court
of
Virginia stated, where two papers are executed at the same time
or contemporaneously between the same parties, in reference to
the same subject matter, they must be regarded as parts of one
transaction,
and
receive
the
same
construction
as
if
their
541
referencing
maxim
the
familiar
that
[w]here
business
intent
of
the
parties.
Id.
omitted).
19
(internal
quotation
marks
The
question
before
us
is
not
whether
the
MOU
and
the
the
was
conspicuously
marked
as
DISCLOSED
IN
WHOLE
OR
IN
PART
J.A. 2198.
WITHOUT
THE
WRITTEN
2189
In sum, it is clear that the parties did not intend for the
term this MOU to apply to C&Ds specifications.
Thus, the
district
of
court
correctly
held
that
disclosure
C&Ds
Because
we
hold
that
C&D
did
not
breach
its
confidentiality obligations to Azdel, we need not reach the
issue of whether the district court erred in dismissing Azdels
claims for failure to put forward evidence that C&Ds breach
caused actual damages.
20
specifications
did
not
violate
the
MOUs
confidentiality
provision.
B.
We next address Azdels claim that it is entitled to the
contract
price
of
the
144
sheets
of
2000
gsm
Aero-Lite
it
contract
(remedies
of
rate
for
seller);
any
see
goods
also
accepted.);
Green
Hill
id.
Corp.
Uniform
Commercial
Code,
acceptance
of
8.2-703
v.
Greenko
Under the
goods
occurs
the
place
parties.
or
method
of
inspection
may
be
fixed
by
the
Id. 8.2-513(4).
the
provisions
of
paragraph
(c)
are
subject
to
the
reasonable
inspection
would
be
otherwise
inconsistent
However,
molding
inconsistent
Molding
the
with
of
the
Azdels
Aero-Lite
sheets
ownership
into
of
We agree.
Aero-Lite
of
sidewalls
the
was
clearly
Aero-Lite
sheets.
was
substantial
the
Product
is
no
longer
in
sheet
form).
Virginia
(Va.
1997)
nonconforming
(holding
cabinets
that
contractors
constituted
an
act
installation
inconsistent
of
with
Modification
of
Goods
(When
the
buyer
has
not
the
sheets
into
sidewalls
and
presenting
them
to
upon
by
the
parties
included
the
molding
trials
that
J.A. 2159.
The
district
court
relied
in
large
part
on
the
fact
that
the
J.A. 2157.
ownership
because
C&D
had
of
not
the
yet
goods
had
did
the
not
effect
an
acceptance
opportunity
to
conduct
reasonable inspection.
Regardless of whether the initial delivery of Aero-Lite was
necessary
for
C&D
to
determine
the
suitability
of
Azdels
product for its own internal process or for American, the preproduction requirement has no bearing on whether the product
that Azdel delivered to C&D conformed to the parties contract,
i.e., complied with the Specification.
an
acceptance
because
[C&D]
was
not
otherwise
J.A. 2159.
To the
of
Azdels
product
24
had
been
extensively
tested.
whether
it
complied
with
the
Specification
before
acceptance
on
of
Azdels
product
its
determination
that
the
warranty
provision
and
the
parties
bargained-for
allocation of risk.
The decision of the Supreme Court of Virginia in Twin Lakes
Manufacturing Co. v. Coffey, a case relied upon by C&D on appeal
and
cited
by
the
district
court
below,
is
inapposite.
281
ought
The
in
in
the
circumstances
to
court
did
not
address
this
case:
remotely
whether
buyer
have
revealed
the
who
to
question
irreversibly
own
specifications
accepts
Virginia UCC.
25
those
goods
under
the
Lastly,
while
provisions
in
the
MOU
permitted
C&D
to
district
court
held
that
C&D
terminated
the
Original
In the
1.
To determine whether C&D terminated the Original Purchase
Order,
we
must
termination
right
to
first
assess
whether
the
contract
were
under
terminate
the
Original
the
preconditions
metwhether
Purchase
Order
C&D
in
for
had
the
the
first
place. 8
well
any
as
material
does
open
not
orders
in
perform
connection
as
predicted
thereto
and
is
if:
(i)
the
deemed
not
has
customer
given
the
requests
required
C&D
material/manufacturing
to
60
days
switch
methods.
notice
and/or
back
to
J.A.
2190
(ii)
the
conventional
11.C.
The
check.
Yet there is nothing in the MOU to suggest that
Americans failure to immediately accept the sidewalls would
constitute an end to the American Airlines 757 Program.
Thus,
C&Ds reliance on the self-termination provision is misplaced.
8
case.
We
will
address
each
precondition
for
termination
separately.
a.
We first consider whether Azdel had the right to terminate
the MOU as well as any open purchase orders under Paragraph
11.C(i).
That
right
hinges
on
determination
of
whether
contends
that
Paragraph
11.C(i)
permitted
C&D
to
meet
the
language
of
requirements
the
interpretation.
MOU
of
the
simply
Specification.
does
not
The
support
plain
Azdels
that the parties agree that the suitability of the Product for
American Airlines 757 program has been extensively tested and
investigated,
J.A.
C&D
2189
may
9,
deem
Paragraph
Azdels
11.C(i)
product
clearly
contemplates
that
nonetheless
unsuitable.
They
did not.
purchase
orders
even
where
Azdels
product
satisfied
the
not
suitable
processing.
for
J.A. 805.
C&Ds
intended
use,
conversion,
or
warped
Aero-Lite
resulted
in
warped
sidewalls
that
were
J.A. 2190.
In
argues
back
that
to
Paragraph 11.C(ii).
American
using
While
did
not
request
conventional
conceding
that
materials
that
American
C&D
under
never
meaning.
After
the
fit
check,
American
gave
C&D
By requiring a
product
of
different
weight,
C&D
contends
American
was
C&D also
according
C&D
to
resulted
in
American
ultimately
C&D,
because
reverting
had
J.A. 736.
American
back
to
discretion
took
actions
crushcore,
as
to
In other
and
whether
that
because
to
use
J.A. 1653.
Furthermore, it
the
Aero-Lite
material
did
not
meet
Americans
was
influence
on
development
being
the
developed.
decision
continued,
it
to
Given
use
can
the
crushcore
hardly
be
extent
while
said
that
of
C&Ds
Aero-Lite
American
30
of
termination
concluded
and
under
C&D
the
Virginia
maintains
that
UCC.
The
effective
district
notice
of
for
sidewall
production
and,
at
the
very
least,
on
September 17, 2008, when C&D issued its revised purchase order
zeroing out all ordered quantities of Azdels product.
Under the Virginia UCC, [a] person notifies or gives a
notice or notification to another person by taking such steps as
may
be
reasonably
required
to
inform
the
other
person
in
In conducting this
the
UCC,
reasonableness
for
courts
the
typically
finder
of
reserve
fact.
See,
questions
e.g.,
of
Zidell
289,
295
(Iowa
2000)
(collecting
cases,
from
various
Inc.,
rejection
329
based
on
S.E.2d
462,
466-67
nonconforming
(Va.
goods
1985)
occurred
(whether
within
even
alluded
to
other
uses
for
the
product,
recognize
that
of
believed
Azdel
some
evidence
that
suggests
C&D
had
not
J.A. 887.
termination.
committed
to
customer
no
wanted
the
product
based
on
J.A. 1480.
All of this
However, others at
J.A. 1478.
In sum, one could conclude from the July 2 e-mail that C&D
wanted Azdel to treat the Original Purchase Order as having been
terminated.
reasonable
circumstances.
of
the
and
the
surrounding
J.A. 2354.
There is
Revised
Purchase
Order
is
only
effective,
as
termination,
that
Order
if
the
Revised
Purchase
was
the
only
valid
applied,
C&D
would
be
liable
for
December
2008
J.A. 2165.
July
not
constitute
effective
notice
of
Order
in
accordance
with
the
district
courts
assessment.
D.
Under Count III of the Complaint, Azdel seeks to recover
$6000 billed to C&D for the eight sheets of 1320 gsm Aero-Lite
delivered to C&D in August 2009.
Under
Section
8.2-607(2),
precludes
rejection
[a]cceptance
of
the
goods
of
goods
accepted
and
by
the
if
made
buyer
with
that the twenty sheets were a unit is belied by the fact that it
told Azdel it was merely awaiting final approval from American
to release Azdel for production, J.A. 957, and that it would
pay for the 1320 gsm sheets when they received approval from
American.
C&D
never
Azdel delivered.
them,
and
rejected
the
eight
sheets
of
Aero-Lite
that
promised
Americans approval.
to
pay
for
them
after
they
received
35
III.
Finally,
Azdels
Azdel
motion
district
to
court
privilege.
appeals
compel
deemed
the
district
courts
denial
of
certain
Crane
documents
that
the
protected
under
the
common
interest
2003).
The joint defense privilege, an extension of the attorneyclient
share
privilege,
a
common
protects
interest
communications
in
between
litigation.
In
re
parties
who
Grand
Jury
Subpoena: Under Seal, 415 F.3d 333, 341 (4th Cir. 2005) (citing
United
1989)).
States
v.
Schwimmer,
892
F.2d
237,
24344
(2d
Cir.
Id.
privilege has the burden to establish that the parties had some
common
interest
about
legal
matter.
Sheet
Metal
Workers
it
is
unnecessary
that
there
be
actual
United
Indeed
36
we
have
recognized
that
[w]hether
an
action
is
ongoing
or
would undermine the logic of our prior cases holding that the
privilege applies even to actions which are not ongoing.
See,
e.g., In re Grand Jury Subpoenas 893 and 894, John Doe 89129,
902
F.2d
at
249.
We
therefore
affirm
the
district
courts
claims
claims
into a
that a
IV.
For the foregoing reasons, we
AFFIRM IN PART,
VACATE IN PART,
REVERSE IN PART,
AND REMAND.
38