774 F.3d 410
7th Cir.2014Background
- Druckzentrum, a German printer, sued Motorola Mobility LLC for breach of contract and fraud after Motorola moved printing of user manuals to China during a two-year Initial Award contract.
- The contract required a good-faith effort to purchase 2% of Druckzentrum’s prints, with a swing up to 8%, based on global spend, not an absolute guarantee.
- The contract was fully integrated, with an Entire Agreement clause, and incorporated extrinsic materials by reference.
- Motorola downsized sales in 2008, shifted to a direct-ship model from Germany to China, and notified Druckzentrum in November 2008 that business would end by Q1 2009.
- Druckzentrum eventually went bankrupt; the district court granted Motorola summary judgment on exclusivity, the 2% target, and fraud claims; Druckzentrum appealed.
- The appellate court affirmed, holding no exclusive right existed, and no bad-faith breach or fraudulent inducement evidence supported summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether contract grants exclusivity to Druckzentrum | Druckzentrum contends exclusivity implied from bidding. | Contract is fully integrated; no exclusive term. | No exclusivity; integration clause bars parol evidence. |
| Whether Motorola breached the 2% target clause | Missed target due to Motorola’s actions contravening agreement. | Good-faith effort required; various commercial factors may excuse misses. | No breach; downturn and business changes excused performance. |
| Whether Motorola fraudulently induced Druckzentrum | Updated forecasts were knowingly misleading to induce bidding. | No evidence of knowingly false statements; disclosure duty not triggered by format change. | No fraud; no material misrepresentation established. |
Key Cases Cited
- Original Great American Chocolate Chip Cookie Co. v. River Valley Cookies, Ltd., 970 F.2d 273 (7th Cir. 1992) (bad-faith standard; not required to act altruistically)
- Williams v. Chicago Osteopathic Health Sys., 654 N.E.2d 613 (Ill. App. Ct. 1995) (duty to disclose newly acquired information when acting on earlier statement)
- St. Joseph Hosp. v. Corbetta Const. Co., 316 N.E.2d 51 (Ill. App. Ct. 1974) (duty to disclose information related to misrepresentations)