Reilly Foam Corp. v. Rubbermaid Corp.

206 F. Supp. 2d 643 (2002)

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Nature of the Case

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Facts

P manufactures custom-order sponges and other foam products. D manufactures home products, including mops nationwide. D obtained sponges for its mop products from a company known as Tek Pak, a competitor of P. In 1997, D launched a promotion to introduce new and improved sponge mops into the marketplace. There were to be two basic designs for the Tidal Wave mops: a butterfly sponge and a roller sponge. Target Stores agreed to stock cobalt blue and yellow laminate versions of the Tidal Wave sponge mop line at its stores nationwide. Tek Pak could not make timely deliveries of sponges to meet Target's needs. D contacted P and P submitted a price quotation for Pattern Butterfly sponges and Pattern Roller Mop sponges on an expedited basis. P then manufactured and delivered the sponges. Between March 8 and March 30, the parties discussed a longer-term relationship in which P would supply sponges for the Tidal Wave Project. P claims that it was to be the exclusive supplier of Butterfly and Roller Mop sponges with a Tidal Wave design. D was to purchase a minimum of 300,000 Butterfly, 300,000 Roller Mop, and 300,000 yellow ester Tidal Wave sponges each year. D submitted written estimates to P of its requirements for Butterfly and Roller Mop sponges. P needed to retool its equipment and to license technology from a corporation named Foamex to produce the sponges with a 'tidal wave' effect carved into their bottoms. On March 26, 1999, P sent a letter to D with a proposal that D commit to two million pieces of product under the sub-heading Other Affected Products. There would be a surcharge of $.015 per part in an effort to amortize the cost of tooling for the wave pattern. The two million products would need to be taken over a two year period. P would also require a commitment for all of the butterfly and roller mop laminates that include the Rubbermaid Cleaning Products design. P also supplied a list of prices and D products and suggested price points for each. D responded by letter on March 30, 1999: This letter is to serve as D's commitment and authorization to procure tooling so that P will be in a position to make sponge products with D's patent-pending Tidal Wave TM design. I understand that $.015 will be added to the cost of the sponge purchase price until we have made purchases of 2 million sponges, thereby covering the tooling cost of $30,000. Referencing the attached quotation, our commitment is as follows: 1. Any sponge mop product produced by New Knight, Inc., on behalf of Rubbermaid Home Products, will source the sponge component from P. This includes the current product offering, as referenced in your quotation, as well as any future new products that New Knight will produce for us. 2. Should any cost savings arise from productivity improvements, Rubbermaid is entitled to share in those benefits. D instructed New Knight to purchase sponges solely from P. New Knight complied and used P as its exclusive source of sponges until New Knight entered bankruptcy in August 2001. D made purchases of sponges listed under the 'other affected products' category. But D continued to purchase sponges from Tek Pak for use in the Tidal Wave line of mops. D did not purchase two million sponges within the two-year window, which P sought. P sued D for breach. Both parties moved for summary judgment.