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McCoy v. Gamesa Technology Corp., Inc.

United States District Court, Seventh Circuit

June 12, 2013

AARON McCOY, Plaintiff,


CHARLES P. KOCORAS, District Judge.

This matter comes before the Court on Counter-Plaintiffs Outland Renewable Energy, LLC's and Outland Energy Services, LLC's (together "Outland") motion for leave to file an amended complaint pursuant to Federal Rule of Civil Procedure 15. For the following reasons, the motion is denied.


This litigation began in December 2010 as a negligence claim as a result of an on-the-job injury. It has since spawned a host of crossclaims and counterclaims among the various parties involved in the suit. The present motion before the Court involves one discrete set of plaintiffs and one set of defendants. The Court limits its discussion to the events that relate to its analysis of the instant motion.

On September 22, 2011, Outland filed a twenty-two count counterclaim against Counter-Defendants Gamesa Wind U.S., LLC and Gamesa Technology Corp. Inc. (together "Gamesa"). Gamesa moved for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c), which the Court granted with respect to all but one count for indemnification. See McCoy v. Gamesa Tech. Corp., No. 11 C 592, 2012 U.S. Dist. LEXIS 138417 (N.D. Ill. Sept. 26, 2012). Outland now seeks leave to amend the complaint and has attached a seven-count proposed first amended complaint ("amended complaint"). The Court recounts the claims and allegations found therein.

I. Amended Complaint

A. Gamesa-Outland Contracts

Outland was a Minnesota company that provided wind farm operation, maintenance, and repair services ("O&M Services") to the wind energy industry in the United States and abroad. Gamesa manufactures wind turbines ("turbines"). As part of Gamesa's standard sales agreements, Gamesa would require purchasers to contract with it for O&M Services for a specified amount of time. Gamesa did not maintain its own internal O&M Services group, but instead subcontracted O&M Services work to independent companies, including Outland. Gamesa subcontracted O&M Services work to Outland from 2006 to 2012. Outland represents that it furnished superior services to Gamesa.

Beginning in 2006, Outland performed work on Gamesa's behalf under a series of "Purchase Orders, " which set forth a task or a set of specific tasks to perform at a particular site. Outland's revenue as a result of performing under various Purchase Orders grew from $225, 000 in 2006 to $6.1 million in 2010.

On October 3, 2008, Outland and Gamesa entered into the Framework Services Agreement ("FSA"), the first contract that called for Outland to perform O&M Services over a more prolonged period of time at wind farms owned by Iberdrola Renewables Inc. ("Iberdrola"), one of Gamesa's clients. On November 19, 2008, Outland and Gamesa entered into a new agreement entitled the Maintenance Services Agreement ("MSA"), which placed additional Iberdrola-operated wind farms under a long-term agreement. Iberdrola's wind farm at Cayuga Ridge was one of the sites governed by the MSA.

Outland alleges that the MSA revised many of the provisions in the FSA. Specifically, it revised the contours of the FSA's noncompetition clause, the governing law clause, the dispute resolution clause, and the clause dealing with the solicitation of the other party's employees. Further, the MSA set forth that Outland was required to satisfy all of Gamesa's customers' needs with respect to O&M Services, including maintenance, design modifications, and technical support. Outland was also responsible for training its personnel on safety and technical standards. Finally, the MSA obligated Outland to follow site-specific rules and protocol established by Iberdrola.

B. Events Leading to the Cayuga Ridge Accident

Outland technicians required its wind turbine technicians to employ a safety procedure known as the "lock-out tag-out" ("LOTO") procedure. The LOTO procedure complied with industry standards and federal regulations. On September 23, 2010, Gamesa and Iberdrola instructed Outland's on-site personnel to follow a modified procedure ("modified LOTO procedure"), which was put in place to increase maintenance efficiency. No member of Outland's off-site management was aware of the modified LOTO procedure's implementation. On October 20, 2010, while working under the modified LOTO procedure, Aaron McCoy ("McCoy") and several other Outland technicians were performing repair and maintenance work on wind turbines at Cayuga Ridge. At one point, an Outland technician radioed an Iberdrola technician to power up a particular wind turbine. The Iberdrola technician mistakenly powered up the wind turbine that McCoy was then scaling. An electrical explosion occurred, and McCoy sustained injuries as a result.

The United States Occupational Health and Safety Administration ("OSHA") conducted an investigation of Cayuga Ridge in response to the accident. Outland's personnel cooperated fully with OSHA. On April 8, 2011, OSHA issued six citations against Outland. Upon learning that only Outland was cited, Gamesa manager Gary Stansbury ("Stansbury") stated to Outland executive Steve Scott ("Scott"), "to be honest, we're shocked we weren't cited as well."

C. Gamesa's Plans to Eliminate Outland

In August 2010, Gamesa hired Rick Hammill ("Hammill") and Stansbury to lead Gamesa's services department. Outland alleges that Hammill decided that Gamesa would establish its own internal O&M Service group, which would reduce the amount of work subcontracted to providers like Outland. Gamesa reached this decision despite promises to Outland that it would continue to tender work to Outland. Based on Gamesa's representations, Outland continued to invest in equipment with the expectation that the work would continue.

Outland alleges that around the end of 2010 and the beginning of 2011, Gamesa devised a plan to offer to buy out Outland. If Outland refused, Gamesa planned to destabilize Outland and put it out of business. Specifically, Gamesa would represent to Outland that it would receive more business from Gamesa, causing Outland to make substantial investments in equipment and personnel. After Outland made these investments, Gamesa would cease providing business to Outland, which would put Outland out of business and enable Gamesa to staff its nascent internal O&M Services group with experienced Outland technicians.

In January 2011, Stansbury expressed to Scott Gamesa's interest in acquiring Outland. Scott declined, insisting that Outland wished to remain independent. In January or February, Gamesa secretly decided to cease tendering Purchase Orders to Outland.

On February 17, 2011, Outland and Duke Energy ("Duke") entered into an agreement (the "Acquisition Agreement") under which Duke would purchase a 25% share in Outland. As part of the Acquisition Agreement, Outland would receive all of the O&M Services contracts for Duke's wind farms ("Duke O&M Agreement"). Outland informed Stansbury about the Acquisition Agreement a week later, and that Duke or another party may eventually acquire all of Outland. Gamesa knew that Duke and Outland would enter into the Duke O&M Agreement, and determined that Gamesa would be unable to destabilize the company if the agreements were consummated.

On February 26, 2011, Stansbury called Scott and, after assuring Scott that Gamesa was happy with Outland's work, told him that he believed that Iberdrola would not permit Outland to continue to work on its wind farms, since Iberdrola and Duke were competitors. On March 27, 2011, Scott contacted Iberdrola's Vice President of Commercial Operations, who gave the Acquisition Agreement Iberdrola's blessing, and stated that the competition issue was not a concern.

Gamesa then contacted Duke directly on April 14, 2011 and attempted to entice Duke to refrain from entering into the Acquisition Agreement by offering a five-year warranty extension of O&M Services on one of Duke's turbine projects in Pennsylvania. Duke rejected the offer and informed Gamesa that Duke would no longer tender O&M Services work to Gamesa.

On May 11, 2011, the Acquisition Agreement was amended (the "Amended Acquisition Agreement") to add Sterling Partners ("Sterling"), an institutional investor, as a buyer. Outland alleges that Gamesa knew or had reason to know that Outland, ...

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