Linde, LLC v. Valley Protein, LLC, 1:16-cv-00527

Background

Linde and Valley Protein entered a series of agreements: a 2011 Product Supply/Equipment rental package and a November 1, 2014 set of agreements (collectively the “2014 Agreement”) that included a Bulk CO2 supply term (exclusive supply for five years) and a separate equipment lease/rider for a spiral freezer.
Valley Protein experienced performance problems with the 2011 freezer starting by early 2012 and sought new equipment in 2014; Linde proposed equipment but the freezer Linde engineered for 2014 allegedly failed to meet Valley Protein’s needs.
Linde agreed to rescind the 2014 equipment lease (the freezer rental) but refused to rescind the 2014 Bulk CO2 supply term; Valley Protein thereafter leased equipment from Air Liquide and began buying CO2 from Air Liquide.
Linde sued for breach of the 2014 Bulk supply obligation and unpaid invoices; Linde claimed lost profits of $963,084 and past due CO2 invoices of $38,963.89.
Valley Protein counterclaimed for breach of contract, breach of the implied covenant, intentional and negligent misrepresentation, and UCL violations based largely on the 2011 freezer malfunctioning and alleged misrepresentations about equipment and delivery surcharges.
The court addressed choice of law (contract claims governed by New Jersey law; tort/UCL claims governed by California law), granted summary judgment to Linde on its breach of contract, account stated, and common-count claims, and granted summary judgment to Linde on all Valley Protein counterclaims except that one narrow theory of Valley Protein’s covenant claim (CO2 conversion-rate theory) was time-barred but other tort theories survived time-bar review; Linde’s covenant claim remained pending.

Issues

Issue	Plaintiff's Argument (Linde)	Defendant's Argument (Valley Protein)	Held
Choice of law	Apply California law to all claims	Contracts specify New Jersey law governs validity/construction/effect	Court: enforce choice for contract claims (New Jersey); tort/UCL claims governed by California; choice-of-law clause narrowly construed to contract interpretation only
Did Valley Protein rescind entire 2014 Agreement (excusing CO2 obligation)?	Only the equipment lease was rescinded; the Bulk CO2 term remained in effect	Rescission of equipment should void the whole package (single integrated agreement)	Court: agreements were separate contracts per the Product Supply Agreement language; rescission of equipment lease did not void the Bulk CO2 contract; Linde entitled to breach liability
Linde’s breach of contract damages (lost profits) and unpaid invoices	Lost profits of $963,084 and unpaid invoices $38,963.89; damages provable by Linde’s sales projections	Valley Protein contests foundation of projections	Court: awarded Linde damages—granted summary judgment on breach and account stated; projections found sufficiently grounded; total award $1,002,047.89
Are Valley Protein’s contract and covenant claims/time-barred?	One-year contractual limitations enforceable (New Jersey) for 2011 agreement; 2014 claims accrue by December 2014	Valley Protein argued equitable grounds and discovery tolling	Court: contract claims time-barred where outside agreed one-year period; covenant claim partly time-barred under California 4-year rule for CO2 conversion theory, but other covenant theories not resolved on statute grounds
Misrepresentation & negligent misrepresentation; applicability of economic-loss rule	Linde: intentional misrep fails (no scienter); negligent misrep barred by economic-loss rule because claims mirror contract breaches	Valley Protein: misrepresentations induced agreements and caused economic injury; seeks tort relief	Court: intentional misrep dismissed (no admissible evidence of scienter; sham affidavit disregarded). Negligent misrep dismissed under economic-loss analysis because claims closely parallel contract breaches and seek purely economic losses
UCL (Cal. Bus. & Prof. Code §17200) claims	Linde: UCL claims time-barred, no standing for injunctive relief, no public impact for fraudulent prong; restitution not shown	Valley Protein: alleges fraudulent/unfair/unlawful conduct tied to contract formation and delivery practices	Court: granted summary judgment to Linde on all UCL prongs—statute of limitations bars some theories, Valley Protein lacks public-impact evidence for fraudulent prong, no basis for injunctive relief, and no predicate unlawful theory shown

Key Cases Cited

In re Oracle Corp. Sec. Litig., 627 F.3d 376 (9th Cir. 2010) (summary judgment burdens and evidence at summary judgment)
Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (summary judgment framework)
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (U.S. 1986) (nonmoving party must show genuine dispute)
Nedlloyd Lines B.V. v. Superior Court, 3 Cal.4th 459 (Cal. 1992) (choice-of-law analysis under Restatement §187)
Robinson Helicopter Co. v. Dana Corp., 34 Cal.4th 979 (Cal. 2004) (economic loss rule and when tort claims survive contract context)
Guz v. Bechtel Nat’l, Inc., 24 Cal.4th 317 (Cal. 2000) (implied covenant claim duplicative of contract breach is superfluous)