Soundvision Technologies, LLC v. Templeton Group Ltd.
929 F. Supp. 2d 1174
D. Utah2013Background
- TruAudio, a Utah company, outsources manufacturing to Chinese factories via intermediaries and vendors.
- Kai Shuai Industrial, a Taiwan company, owns the Yong Tong factory that produced TruAudio goods and tooling (open tooling vs customer-owned tooling).
- Templeton Group, founded by Chris Swan, directly interfaced with Chinese factories to design, modify, and price TruAudio products and acted as TruAudio’s vendor.
- Templeton was paid only through a markup on产品s ordered by TruAudio; there was no flat fee or formal written contract governing termination or compensation regime.
- From 2006 to 2009 Templeton helped develop several product lines (Ghost, Revolve, X series) and managed communication with factories; TruAudio ultimately ceased using Templeton in 2009 and began sourcing directly.
- In 2009 TruAudio terminated Templeton and began purchasing through Kai Shuai; Templeton later disclosed to ODM Kai Shuai’s pricing, which allegedly contributed to TruAudio ending its relationship with Templeton.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Contractual payment obligation | Templeton claims owed amounts for orders and tooling under contracts with Kai Shuai. | Templeton was paid only via markup; past due invoices arise from agreed purchases through Templeton, not from implied duties. | Kai Shuai’s motion granted on contractual claim; Templeton denied on implied/overarching terms. |
| Existence of an overarching exclusive agreement | Templeton and TruAudio had an implied exclusivity to purchase through Templeton for developments. | No written or contractual basis; TruAudio could switch suppliers; exclusivity not established. | Templeton’s claim for exclusive governing agreement rejected; TruAudio not bound to exclusive purchases. |
| Quantum meruit / unjust enrichment | Templeton seeks recovery for development work even without an express contract. | No contract implied in fact; unjust enrichment not available without a contract covering the subject matter. | Court grants summary judgment against Templeton on contract implied in fact; reserves contract implied in law claim for further context; unjust enrichment claims denied. |
| Implied covenant of good faith and fair dealing | Templeton claims TruAudio deprived it of fruits of a contract by terminating. | No preexisting contractual relationship justifying breach of implied covenant. | Court grants TruAudio’s summary judgment on implied covenant claim. |
| Intentional interference with economic relations | Templeton alleges Kai Shuai’s price list disclosure and TruAudio’s actions disrupted prospective business. | There was no wrongful or improper act under California or Utah standards; disclosures and market competition do not amount to wrongful interference. | Templeton’s and TruAudio’s claims partly denied; Templeton’s claim against Kai Shuai denied; TruAudio’s against Templeton granted in part. |
Key Cases Cited
- Korea Supply Co. v. Lockheed Martin Corp., 29 Cal.4th 1134 (Cal. 2003) (independent duty or standard necessary for wrongful interference)
- Leigh Furniture & Carpet Co. v. Isom, 657 P.2d 293 (Utah 1982) (improper purpose or improper means for interference claim)
- Murphy Oil USA, Inc. v. Wood, 438 F.3d 1008 (10th Cir. 2006) (summary judgment standard in contract cases and implied terms)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (Supreme Court 1986) (summary judgment standard and burden of proof)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (Supreme Court 1986) (motion for summary judgment standard; evidence evaluation)