Tigg v. Dow Corning Corp.

962 F.2d 1119 (3rd Cir. 1992)

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Nature of the Case

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Facts

P and D entered into a joint development agreement for a new product known as 'RetroSil.' P was to supply P with its requirements of control stations and adsorbers. The agreements specified D's 'minimum' and 'expected' purchases of control stations and adsorbers for but not for 1985 and 1986, but stated that these were to be provided by July 1, 1984. If D did not purchase the minimum adsorber units during a particular year, P could sell these units to other customers. D bought the stated minimum for 1982. The minimums for 1983 were reduced, and D's purchases still fell short. D purchased 102 control stations (instead of the reduced minimum of 480) and 500 adsorbers (instead of the reduced minimum of 1750). In April 1984, D claimed a 'technical failure' in the product pursuant to a provision of the agreements and notified P that it was suspending purchases. D eventually terminated the agreements. For the entire year of 1984, D bought no control stations and only 105 adsorbers; the minimums in the contract were 825 control stations and 2500 adsorbers. D made no purchases for 1985 and 1986. P sued D for breach of contract. P alleged that D had wrongfully reduced the stated minimums for 1983 and that D had acted in bad faith in setting its requirements (at nothing) for the years 1985 and 1986. D claims that the minimums were not binding and that it had acted in good faith in setting its requirements. The district court granted partial summary judgment for P, holding that the contracts required D to purchase the minimums set out in their provisions. The district court certified this question for interlocutory review, and the appeals court reversed, holding that there was a genuine issue of material fact concerning the intended meaning of the term 'minimum.' The case was then tried before a jury. D contends that the minimums were not binding and that RetroSil was a flawed product that was rejected by the market. Since competing products cleansed transformers more efficiently and quickly, P argued, RetroSil was a failure. P argued that RetroSil was technologically sound and blamed any problems on other causes, such as the failure to change filters frequently enough and the use of Fluid 561 rather than allegedly better fluids. P claimed D decided to abandon RetroSil, not because of defects in the product, but for other reasons, such as D's inability to produce enough Fluid 561 to meet the demand that existed even without RetroSil sales. P got the verdict for $17.5 million. D appealed.