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Keck Garrett & Associates, Inc. v. Nextel Communications

February 21, 2008

KECK GARRETT & ASSOCIATES, INCORPORATED, PLAINTIFF-APPELLANT,
v.
NEXTEL COMMUNICATIONS, INCORPORATED, DEFENDANT-APPELLEE.



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 05 C 3265-Rebecca R. Pallmeyer, Judge.

The opinion of the court was delivered by: Ripple, Circuit Judge

ARGUED NOVEMBER 9, 2007

Before CUDAHY, RIPPLE and ROVNER, Circuit Judges.

Keck Garrett & Associates, Inc., brought this diversity action against Nextel Communications, Inc. It sought recovery from Nextel for breach of contract and in quantum meruit. After discovery, the parties filed cross-motions for summary judgment. Keck Garrett failed to defend its quantum meruit claim and thereby abandoned it. The district court granted Nextel's summary judgment motion on the remaining claim because it found that Nextel had not violated any provision of the contract. Keck Garrett appealed to this court. It also filed two motions for sanctions against Nextel, one in the district court and one in this court.

For the reasons stated in this opinion, we affirm the judgment of the district court. We further hold that we lack jurisdiction to consider Keck Garrett's motion for sanctions.

I. BACKGROUND

A.

Keck Garrett is an Illinois corporation with its principal place of business in Illinois. It markets communications and provides branding strategies for businesses. From 1997 to 2003, it provided product packaging design and related services to Nextel. Nextel is a Delaware corporation with its principal place of business in Reston, Virginia. Through its wholly owned subsidiaries, Nextel provides fully integrated wireless communication services.

Keck Garrett's dispute with Nextel centers on the Falcon Project, a packaging initiative that Nextel was planning for 2003. In 2002, Keck Garrett worked on Nextel's Condor Project, an industrial design and creative design project that supported Nextel's launch of a new platform of wireless devices developed by Motorola. At that time, Brian Lausch was the Nextel representative responsible for managing Nextel's relationship with Keck Garrett. At the press release for the Condor Project in late 2002, Lausch mentioned that Keck Garrett might be assigned to work on the Falcon Project in 2003.

The Falcon Project was never assigned to Keck Garrett. Nextel discussed the project with Keck Garrett in early January 2003, and it e-mailed to the company a confidential document entitled "Falcon Packaging Requirements." The document and the e-mail indicated that the industrial design plans were still uncertain and that Nextel did not know the scope of its creative needs.

In mid-January 2003, Nextel informed Keck Garrett that another company was working with it on the industrial design aspects of the Falcon Project. It did, however, inform Keck Garrett that it still planned to assign the creative packaging work to Keck Garrett. Several times, Nextel told Keck Garrett that it planned to prepare a "creative brief" that would describe its creative needs. Nextel indicated that, once it developed the creative brief, Keck Garrett would be able to determine the amount and type of work that would be required and to inform Nextel of how much that work would cost.

In late January, Lausch and his supervisor, Jim Obermeyer, held a conference call with representatives of Keck Garrett. They gave a PowerPoint presentation during that meeting in order to keep Keck Garrett informed of Nextel's plan for its brand. Nextel regularly kept its marketing partners up-to-date on its branding strategies, even if Nextel was not engaged with the partner in ongoing or upcoming projects.

On January 23, 2003, Nextel issued a $1 million blanket purchase order to Keck Garrett for that year's anticipated packaging work. Nextel issues written purchase orders to all agencies that work with it. These documents establish the terms and conditions of the relationship between Nextel and each of its vendors. The blanket purchase orders generally do not describe any particular work or project; instead, they set forth the terms and conditions that will govern any work that the vendor may be asked to complete in a given time period. Nextel issues blanket purchase orders in part to expedite payment to vendors by eliminating the need to issue a separate purchase order each time an estimate for work is submitted. A blanket purchase order authorizes particular Nextel representatives to assign work to a given vendor, up to the value of the blanket purchase order, without having to seek internal authorization for additional purchase order numbers. Even with a blanket purchase order, however, the vendor had to send in an estimate for approval; the blanket purchase order only eliminated the need for a separately authorized purchase order for each estimate.

Nextel often issued blanket purchase orders to Keck Garrett over their years of work together. Keck Garrett understood that Nextel would pay only for work that it had approved on the basis of a signed estimate. Keck Garrett therefore usually began work only after Nextel approved an estimate of the costs. If Keck Garrett was in the middle of an assigned project for Nextel and it was determined that the project would exceed the approved estimate, however, Keck Garrett sometimes continued to work on the project even if it had not yet received a signed approval from Lausch. Nextel generally refused to move back deadlines for any reason; in this way, Keck Garrett was able to complete Nextel's projects on time, although at the risk of not receiving approval for the expanded project.

Vicki Hall, a financial analyst at Nextel, forwarded the 2003 blanket purchase order to Keck Garrett by e-mail to inform Keck Garrett of its purchase order number for that year. The 2003 blanket purchase order stated that it was a "Blanket Order for 2003 Phone & Accessory Packaging" and listed Hall and Lausch as the persons authorized to release funds. The "delivery date" for "2003 Blanket Order for Phone & Accessory Packaging," the same type of work that Keck Garrett had done for Nextel in the past, was December 31, 2003. The blanket purchase order also included the terms and conditions to govern their relationship.

Keck Garrett and Nextel agree that the 2003 blanket purchase order is an integrated contract that is governed by and subject to Delaware law. The parties further agree that, under the blanket purchase order, the supplier must pay Nextel's costs and reasonable attorneys' fees if Nextel defends any action brought by a supplier and prevails.

Among other incorporated terms and conditions in the blanket purchase order is a provision governing "payments and invoices." The provision states that the "Supplier shall be paid upon the submission of proper invoices or vouchers, the prices stipulated herein for work completed and/or Articles delivered and accepted, less any proper deductions or setoffs." R.1 at 4. The provision further requires that invoices include the "Purchase Order number, item number, description of Articles or work, sizes, quantities, unit prices, and extended totals." Id. The 2003 blanket purchase order also permits Nextel to make changes in writing to the general scope of the blanket purchase order, including changes to the description, time and performance of services.

Shortly after the 2003 blanket purchase order was issued, Keck Garrett submitted to Nextel invoices totaling $19,700. The invoices used the purchase order number on the 2003 blanket purchase order. The invoices were not for Falcon Project work, but for work that had been assigned under the Condor Project. Nextel paid the invoices.

In the months after the 2003 blanket purchase order was issued, Keck Garrett and Nextel exchanged a series of e-mails about the Falcon Project. Nextel e-mailed several Falcon-related documents to Keck Garrett, including the packaging concept timeline for the Falcon Project and potential packaging structures that Nextel was considering. If Nextel had assigned the creative design project to Keck Garrett, Keck Garrett would have been placing its creative design on these packages. Some of the information was highly confidential. The e-mails also clearly stated, however, that the creative requirements for the Falcon Project were still to be determined. The creative design, the scope of which was still uncertain, was the aspect that Keck Garrett expected to complete.

In late February, Keck Garrett e-mailed Lausch about the progress of the packaging structure. Keck Garrett also asked when it might need to start "concepting" the designs. Keck Garrett indicated that the company was trying to plan in advance for scheduling purposes. Nextel stated again that it was planning to prepare a formal creative brief for the Falcon Project in the following weeks, but it had not yet done so.

In mid-March, Lausch e-mailed Keck Garrett to let it know that the creative brief was nearly complete and that he hoped to share it with Keck Garrett during the first week of April. Keck Garrett responded that it would get started on the Falcon Project as soon as it received the creative brief. Not having received the brief, Keck Garrett sent another e-mail as late as May 6 asking when Nextel would release the Falcon Project so that Keck Garrett could "get started."

On May 19, 2003, Nextel informed Keck Garrett that it would not need Keck Garrett's creative packaging work on the Falcon Project. Nextel had been in the process of vetting new advertising agencies, and the agency it just had hired had offered to perform the packaging work at no additional cost. Nextel did not refrain from assigning work to Keck Garrett over performance issues; the decision was motivated purely by competitive business interests. Nextel never assigned the Falcon Project to Keck Garrett. Keck Garrett never ...


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