Field Intelligence Inc v. Xylem Dewatering Solutions Inc, No. 21-2087 (3d Cir. 2022)
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Xylem, which sells large-capacity water pumps, requested that Field develop hardware to interface with the pumps and computer software for monitoring and controlling the equipment. A 2013 “NonDisclosure Agreement” contained an arbitration provision. Xylem purchased the units from Field via written Purchase Orders and purchased monthly subscriptions that permitted Xylem’s customers to use Field’s software via cellular networks to monitor and control their Xylem pumps. There was no written agreement governing Xylem’s software subscription purchases until the 2017 “Software Subscription Service Agreement,” which contained an “integration clause” stating that “[t]his Agreement constitutes the entire agreement between the parties with respect to its subject matter and supersedes any and all prior or contemporaneous understandings or agreements.” The 2017 contract contained no arbitration provision, instead requiring any “action under or concerning” that contract to be litigated in New Jersey. Xylem began building its own hardware.
Field sued, in New Jersey, for breach of the 2017 contract. In discovery, Xylem sent Field an interrogatory asking whether it intended to rely on the 2013 contract to support any of its claims. Field responded that Xylem breached the 2013 contract by its actions. Xylem then filed an arbitration demand. The district court held that the 2017 agreement superseded the earlier contract, eliminating any duty to arbitrate. The Third Circuit vacated in part. The district court was authorized to determine whether the second agreement superseded the first but the first agreement was not superseded.
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