BLACKBERRY LIMITED v. PCS WIRELESS LLC., No. 2:2015cv01070 - Document 27 (D.N.J. 2016)
Court Description: MEMORANDUM OPINION fld. Signed by Judge Kevin McNulty on 4/4/16. (sr, )
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Not for publication UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY BLACKBERRY LIMITED, Plaintiff, MEMORANDUM OPINION V. PCS WIRELESS LLC, Defendant. KEVIN MCNULTY, U.S.D.J.: This is a one-count Complaint for claim of breach of cont ract brought by BlackBerry Limited against PCS Wireless LLC. BlackBerry and PCS entered into a number of agreements under which PCS agreed to purchase cellular devices from BlackBerry. BlackBerry contends that PCS brea ched some of these contracts by failing to pre-pay for devices it ordered. (Dkt. No. 1 (“Cplt.”)) PCS responds that BlackBerry never filled those orders, and that the consequential damages BlackBerry seeks are simply not availab le under the terms of their agreement. Therefore, PCS says, the claim for breach of contract should be dismissed under Fed. R. Civ. P. 12(b)(6). For the reasons discussed below, the motion to dismiss is denied . (Dkt. No. 13) The agreements at issue BlackBerry alleges that it entered into multiple agreements (“Orde r Agreements”) with PCS between March and October 2014. The Order Agreements specified the quantity and type of devices that PCS wished to purchase from BlackBerry. Under this arrangement, PCS subm itted orders for hundreds of thousands of devices. (Cplt. 2) Blackberry alleges that it agreed ¶ 1 Dockets.Justia.com Civ. No. 15-1070 (KM) to sell some of the devices to PCS at lower price s than it offered to other buyers because of PCS’s “commitment to purchase large quantities of devices and its acceptance of Terms and Conditions under whic h BlackBerry would immediately recognize the revenue from the sales.” (Cplt. ¶ 14) BlackBerry contends that PCS breached certa in of these agreements by failing to pay for devices it ordered. Specifica lly, BlackBerry alleges that PCS has failed to pay for approximately 200,000 devi ces that it agreed to purchase. (Cplt. ¶ 2) BlackBerry did not deliver the devi ces at issue to PCS. Rather, BlackBerry resold the devices to other buyers at prices lower than what PCS had agreed to pay. (Cplt. 3) BlackBerry seek ¶ s to recover the difference between the price at which PCS contracted for the devices, and the price at which it ultimately resold them. PCS asserts that the damages BlackBerry seek s to recover are barred by their contracts. At issue between the parties is the interpretation of Section 16 of the Terms and Conditions, which are incorpora ted into the Order Agreements.’ That Section is a limitation of liabi lity provision, which states: The liability of each party to the other party unde r the agreement will be subject to a total cumulative cap equal to the total amount paid by Buyer to BlackBerry pursuant to the orde r acknowledgement. Under no circumstances shall either party be liable to the other party for any indirect, economic , special, commercial, incidental, exemplary or consequential damages (including lost profits, loss of business revenue or earnings, lost data, damages caused by delays, or a failure to reali ze expected savings) directly or indirectly arising out of or in connection with the transactions contemplated by the agreemen t, or from a breach of contract, tort or other liability, even if the poss ibility of such damages were known or should have been know n or their likelihood has been disclosed to BlackBerry or Company as the case may be. For clarity and notwithstanding the forgoing, neither party’s liability will be subject to any limitation: (a) in respect of that party’s breach of its confidentiality obligation s under this agreement; (b) in respect of that party’s infringem ent or violation of Though the limited liability provisions vary slightly betw een the Order Agreements, the language is “substantially identical for all of the Order Agreements at issue in this dispute.” (Cplt. ¶ 10) 2 intellectual property rights of the other party; (c) to the extent that such liability cannot be exclud ed at law; and (d) any obligation to pay any amount payable for pro ducts or services delivered pursuant to the agreement. (Dkt. No. 13-4 p. 4)2 The parties have submitted com peting interpretations of this provision, supported by expert opinions from practitioners of Ca nadian 3 law. BlackBerry argues that the provision supports its breach of contract claim, while PCS respon ds that the damages BlackBerr y seeks are barred by the plain langua ge of the limited liability provisi on. Standard on a motion to dis miss PCS has moved to dismiss the complaint for failure to state a clai m, pursuant to Fed. R. Civ. P. 12( b)(6). Rule 12(b)(6) provides for the dismissal of a complaint, in whole or in part, if it fails to state a claim upon which relief can be granted. The defendant, as the moving party, bears the bur den of showing that no claim has been stated . Hedges v. United States, 404 F.3 d 744, 750 (3d Cir. 2005). In deciding a Rule 12(b)(6) motion, a court must tak e the allegations of the complaint as true and dra w reasonable inferences in the light most favorable to the plaintiff. Phillz s v. County of Allegheny, 515 F.3 d 224, 231 (3d Cir. 2008) (traditional “reasonab le inferences” principle not underm ined by Twombly, see infra). Federal Rule of Civil Procedure 8(a) does not require that a com plaint contain detailed factual allega tions. Nevertheless, “a plaintiff’s obligation to provide the ‘grounds’ of his ‘en titlement to relief’ requires more than labels and conclusions, and a formulaic rec itation of the elements of a cau se of action will 2 Though the Terms and Conditions of the Order Agreements were not to the complaint, the terms of the attached agreements are integral to the com plaint. Accordingly, I take note of them. (See Dkt. No. 13-4) 3 BlackBerry is based in Canada, the Agreement contains a choice of provision, and the parties agree tha law t Canadian law governs the interpre tation of the contracts. 3 not do.” Bell Atl. Corp. v. Twom bly, 550 U.s. 544, 555 (2007) . Thus, the complaint’s factual allegations must be sufficient to raise a plai ntiff’s right to relief above a speculative level, so that a claim is “plausible on its face.” Id. at 570; see also Umland v. PLANC O Fin. Serv., Inc., 542 F.3d 59, 64 (3d Cir. 2008). That facial-plausibility standard is met “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misco nduct alleged.” Ashcroft u. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). While “[t]he plausi bility standard is not akin to a ‘probability req uirement’. it asks for more than a sheer possibility.” Iqbal, 556 U.S. at 678 . PCS contends that the complai nt fails to state a claim under applicable Canadian law. Fed. R. Civ. P. 44.1 provides that the determinatio n of foreign law is a “ruling on a question of law,” albeit one that may dep end on evidence or testimony: . . While any determination as to fore ign law is a legal question, any relevant material or source, inc luding testimony, may be considered in establishing foreign law. See Fed. R. Civ. P. 44.1; Republic of Turkey v. OKS Partner s, 146 F.R.D. 24, 27 (D. Mass. 1993). Commonly, oral or writte n expert testimony accompanied by foreign legal materials is provid ed. See id.; C.A. Wright & A. Mil ler, Federal Practice & Procedure § 2444 at 406 (1971). United States v. Pre-Columbian Art ifacts, 845 F. Supp. 544, 546 (N. D. Ill. 1993).4 See also Abdallah v. Int’l Lease Fin.. Corp., No. CV 14-06769 MMM MANX, WL 1263141, at *12 (C.D. Cal. Ma 2015 r. 9, 2015); Juch—Tech, Inc. u. Intelsat Corp., No. 13cv8885—LAK—FM, 2014 WL 416022 *6...g 5, (S.D.N.Y. Aug. 21, 2014), report and recommendation adopted, 2014 WL 7239483 (S.D.N.Y. Dec.19, 201 4) (relying, in a case where plaintiff provided notice of intent to rely on Canadian law in its complaint, on expert declarations and reports regarding the substance of Ontario law and analyzing the sufficiency of plaintif fs fraudulent concealment claims under substantive Ontario law); City of Har per Woods Employees’ Ret. Sys. u. Olv er, 577 F. Supp. 2d 124, 128 (D.D.C. 2008), affd, 589 F.3d 1292 (D.C. Cir. 2009); Nat’l Group for Commc’ns & Computers Ltd. u. Luc ent Techs. Int’l, Inc., 331 F. Supp. 2d 290, 294 (D.N.J. 2004). 4 Discussion I will deny the motion to dismiss because this case is replete with factual issues inappropriate for resolution on a motion to dismiss. A. Canadian law There is a lively dispute about Canadian cont ract law and how it applies to the agreements at issue. The parties have submitted a thorough round of briefing (including a sur-reply), addressing the intricacies of Canadian contract law and how it applies to this case. Both sides have supplemented their briefing with reports from experts on Canadian law supporting their interpretation. Not surprisingly, the experts reach exactly opposite conclusions about the application of Canadian law to the facts of this case. For example, Blackberry’s expert, Stephen Goudge, Q.C., concludes that the language in Section 16 restricting either party’s liability for “indirect, economic, special, commercial, incidental, exem plary or consequential damages (including lost profits, loss of busines s revenue or earnings....)” does not apply to the injury BlackBerry alleges here . He asserts that Blackberry is alleging “direct damages,” which is distinct from “indirect,” “economic,” or “consequential” damages under Canadian law. (Dkt. No. 18-2 p. 7) Therefore, he concludes that Blackberry’s damages are not excluded by the limited liability provision. In contrast, PCS’s expert, Earl Cherniak, Q.C., concludes that a Canadian court would find BlackBerry’s damages to be “barred by the plain language” of the provision. (Dkt. No. 19-2 p. 4) The parties, and their experts, also disagree about the meaning of other language contained in Section 16, including the “cumulative cap” and the categories explicitly excluded from the limitation of liability, such as the “obligation to pay for products or services delivered pursuant to the agreement.” (Dkt. No. 13-4 p. 4) (emphasis added). Along with their expert opinions, the parties have submitted a plethora of Canadian cases supporting their respective positions on each portion of the contractual language at issue. As noted above, the court may, on a Rule 12(b )(6) motion, accept ... 5 testimonial and other evidence on a que stion of foreign law. Were such a determination likely to be dispositive, I would do so. Other potential issues of fact, however, stand in the way of reso lution of this case. Discovery and marshaling of evidence on summary judgment are required before this Cou rt can focus the issue of how Canadian law applies to a settled factual scenar io. B. Issues of Fact Material facts underlying the complai nt are unsettled, warranting an exchange of discovery between the par ties. The parties’ intent at the time the contract was drafted, for example, is ill-suited to resolution on a motion to dismiss. And the parties are in agr eement as to Canadian law, at least to this extent: the expressed intent of the par ties is paramount. See Dkt. No. 192 p. 5; P1. Br. at 5—6. There are, of course, cases where con tractual language unambiguously rules out a claim of breach, and a motion to dismiss may confidently be granted. This is not such a case. Tru e, Canadian decisions give some gui dance as to terms of art under Canadian con tract law. But what these parties mea nt by “indirect, economic, special, com mercial, incidental, exemplary or consequential damages” in relation to an imperfectly consummated order may depend on the surrounding factual context, including a course of dealing between the parties. PCS is adamant that the contract plainly signifies that “the parties intended to exempt each other from liability for any expectation damage s that might arise if either party chose not to consummate an order.” (Def. Br. 7) BlackBerry is equally certain that “the parties agreed that PCS had a payment obligation for all devices PCS ordered , not just for those that were actu ally shipped.”) (P1. Br. 13) (emphasis in original)). I see no such clear, unamb iguous language in the Agreement. The Agr eement does not explicitly address the situation of goods purportedly ord ered, but not prepaid. PCS makes arguments from context, which may even tur n out to be correct, but that is not in itself sufficient to put a complaint out of court; it is an issue of factual and contractual interpretation. 6 Other factual questions pot entially relevant to damages can not be settled on a motion to dismiss. Did BlackBerry specifically design ate phones for shipment to PCS based on its orders? For how long did it hold them aside before seeking to resell the m to another customer? Wa s business lost in the interim? Did BlackBerry sel l the ordered phones at a low er (or higher) price? 5 Did PCS promptly notify Bla ckBerry that it was not movin g forward with certain orders? The parties must conduct some discovery in order to fill in these, and other, factual bla nks. In sum, I find that the issues the parties raise to the Court are not ripe for resolution on a motion to dismiss. CONCLUSION For the foregoing reasons, PC S’s motion to dismiss the com plaint is DENIED. (Dkt. No. 13). An appropriate order accompanies this opinion. Dated: April 4, 2016 Newark, New Jersey HON. KEVIN MCNULTY United States District JIadge 5 14. PCS allegedly enjoyed favorable price terms vis-à-vis other buy ers. See Cplt. 7 ¶
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