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Druckzentrum Harry Jung GmbH & Co. KG v. Motorola Mobility LLC

United States Court of Appeals, Seventh Circuit

December 18, 2014

DRUCKZENTRUM HARRY JUNG GMBH & CO. KG, Plaintiff-Appellant,
v.
MOTOROLA MOBILITY LLC, Defendant-Appellee

Argued April 18, 2013

Page 411

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 09-CV-7231 -- John W. Darrah, Judge.

For Druckzentrum Harry Jung Gmbh & Company KG, Plaintiff - Appellant: Ann Paton Goodman, Attorney, Carl D. Liggio, Attorney, Mccullough, Campbell & Lane Llp, Chicago, IL.

For MOTOROLA MOBILITY LLC, as successor in interest to Motorola, Inc., Defendant - Appellee: Mark L. Durbin, Attorney, Barnes & Thornburg Llp, Chicago, IL.

Before BAUER, FLAUM, and SYKES, Circuit Judges.

OPINION

Page 412

Sykes, Circuit Judge.

A German printing company sued Motorola Mobility LLC, the cell-phone manufacturer, alleging that it breached a supply contract for printing services. In early 2008 Motorola agreed to make a good-faith effort to purchase 2% of its cell-phone user-manual needs from Druckzentrum Harry Jung GmbH & Co., a printer based in northern Germany. Halfway through the two-year contract period, Motorola's cell-phone sales contracted sharply. In response to the downturn, Motorola decided to consolidate its cell-phone manufacturing and distribution operations in China and buy all related print products there. Motorola notified Druckzentrum of the shift, and the two companies continued to do business together for a few more months during the transition.

The loss of Motorola's business did Druckzentrum in; the printer entered bankruptcy in Germany and brought this suit against Motorola alleging breach of contract and fraud in the inducement of the contract. Among other things, Druckzentrum claimed that the contract gave it an exclusive right to all of Motorola's user-manual printing business for cell phones sold in Europe, the Middle East, and Asia during the two-year contract period. The district judge rejected this claim on the pleadings and later entered summary judgment for Motorola on the

Page 413

rest of the case, finding no evidence to support either a claim of breach of contract or fraud.

We affirm. The parties' written contract contains no promise of an exclusive right to all of Motorola's printing business in Europe, the Middle East, and Asia. And because the contract is fully integrated, Druckzentrum cannot use parol evidence of prior understandings to upset the bargain the parties put in writing. Moreover, although Motorola promised to make a good-faith effort to purchase 2% of its cell-phone user-manual printing needs from Druckzentrum for a two-year period, the contract listed several reasons Motorola might justifiably miss the target. These included business downturns of the sort Motorola experienced, and there is no evidence that it acted in bad faith by moving its printing and distribution activities away from Europe. Finally, the evidence is insufficient to create a jury issue on the claim that Motorola fraudulently induced Druckzentrum to enter into the contract or continue performing under it.

I. Background

Druckzentrum is a printer based in Flensburg, Germany. Motorola is based in Illinois but maintains operations globally. In 1995 Motorola began using Druckzentrum to print user manuals for its cell-phone products marketed in Europe, the Middle East, and Asia--a marketing area apparently known in the trade as the " EMEA" region. During this time period, Motorola manufactured its phones in China and shipped them to a distribution facility in Flensburg, where they were packaged with user manuals printed by Druckzentrum and distributed for sale throughout the EMEA region.

In 2007 Motorola embarked on a program to improve the way it purchased products from vendors. At workshops conducted in fall 2007, Motorola educated vendors on the new process by which they could bid for contracts. Vendors first had to sign a " Corporate Supply Agreement" with a stated effective date of October 1, 2007. Druckzentrum was among the vendors invited to participate. After signing the agreement, Druckzentrum representatives attended a workshop in Illinois.

The materials distributed during the workshop made it clear that vendors would bid for a particular product " segment" --e.g., printed materials, cardboard boxes, plastic packaging, and so forth. It was less clear whether vendors were bidding for a particular region as well. Although the bidding materials contain many references to regions and vendors were supposed to state a bid in reference to a particular region, it is not clear whether Motorola would actually award work on a regional basis.

During the bidding process, Motorola shared its sales forecasts with vendors. Bidders needed to know what sales volume they could expect in order to set prices and ensure that they had capacity to meet demand. Motorola told Druckzentrum that it expected to sell 37 million mobile phones in the EMEA region in 2008 and made other rosy projections.

After bidding for the print segment in the EMEA region, Druckzentrum was given an " Initial Award" consisting of a " base share" of 2% and a " swing share" of 8%, meaning that Motorola made a " commitment" to buy 2% of print products from Druckzentrum and could, at its option, buy another 8% of print products from the company. The percentages were stated on the basis of global spending; thus, 2% of print means 2% of global print purchases, not 2% of EMEA print purchases. But there was no " commitment" in an absolute ...


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