Weyerhaeuser Co. v. Domtar Corp.
61 F. Supp. 3d 445
D. Del.2014Background
- Weyerhaeuser filed a breach of contract suit on January 13, 2014 against Domtar over workers' compensation liability post-sale.
- Domtar moved to dismiss under Rule 12(b)(6) alleging failure to state a claim.
- The sale of Weyerhaeuser's fine paper business occurred on March 7, 2007, transferring most liabilities to Domtar.
- The sale and related agreements (Contribution Agreement and Transaction Agreement) are governed by Delaware law.
- There are three employee categories relevant to the dispute: Transferred Employees, U.S. WC Newco Employees, and Retired Employees.
- The controlling issue is whether Retired Employees' workers’ compensation liability is Newco Liability or Retained Liability under the agreements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Retired Employees' workers' compensation liability falls under Newco Liabilities. | Weyerhaeuser contends liability for Retired Employees transferred to Domtar as Newco Liabilities. | Domtar asserts liability for Retired Employees was retained by Weyerhaeuser and not assumed. | Liability for Retired Employees falls within Newco Liabilities; Domtar breached. |
| Whether the contract language with including without limitation governs scope of Newco Liabilities. | Weyerhaeuser argues 2.03(a) includes Newco Liabilities without limitation per 9.02. | Domtar argues only listed subparts cover liabilities and Retired Employees are not included. | 2.03(a) includes Newco Liabilities broadly; Retired Employees not expressly retained, so included. |
| Whether the claims for Retired Employees accrued before January 13, 2011 are time-barred by the statute of limitations. | Weyerhaeuser alleges ongoing tendering and damages post-sale; tolling may apply. | Three-year statute; tolling doctrines inapplicable due to actual knowledge and settlement negotiations. | Claims prior to January 13, 2011 are time-barred; others survive. |
| Whether Domtar must reimburse administration costs for Transferred Employees' claims. | Administration costs are within Newco Liabilities and Domtar should reimburse. | Administration costs are disputed; Domtar argues insufficient pleadings of demand and damages. | Sufficient pleadings shown; claim survives as to administration costs. |
Key Cases Cited
- VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606 (Del. 2003) (contract interpretation and damages standards; pleading sufficiency)
- In re Marvel Entm't Grp., Inc., 273 B.R. 58 (Del. 2002) (statute of limitations and tolling context in bankruptcy/insolvency setting)
- Cooper Distrib. Co. v. Amana Refrigeration, Inc., 63 F.3d 262 (3d Cir. 1995) (including without limitation language; non-exhaustive lists in contracts)