Taylor Corporation v. Georgia-Pacific Consumer Products LP

Background

In April 2013, Georgia-Pacific Consumer Products LP and WorkflowOne LLC, Taylor Corporation’s predecessor in interest, entered a one-year agreement covering the purchase and sale of specified roll and cut-sheet paper products. The agreement was nonexclusive, but Taylor had to make commercially reasonable efforts to purchase from Georgia-Pacific unless Georgia-Pacific could not meet Taylor’s requirements. The parties later extended the agreement through October 31, 2021.

Taylor purchased substantial quantities from other suppliers. Taylor asserted that it planned to purchase from other suppliers the portion of its requirements that Georgia-Pacific could not provide. Georgia-Pacific acknowledged that Taylor could have purchased at least 60,000 tons annually, which would have qualified for the highest volume rebate, but Georgia-Pacific agreed to apply that rebate level even though Taylor’s actual purchases were below that amount.

In December 2018, Georgia-Pacific told Taylor that it would stop manufacturing the roll paper products Taylor had been purchasing. Georgia-Pacific later decided to leave the communication papers business entirely. Taylor sued, alleging that Georgia-Pacific breached the agreement by failing to give six months’ notice before discontinuing the paper supply. Taylor sought damages for the additional cost of buying paper from other suppliers during that period.

Earlier Summary-Judgment Ruling

Both parties moved for summary judgment. The court ruled that the parties had an enforceable requirements contract and that Georgia-Pacific breached the agreement. It also ruled that Taylor was injured by paying more for paper it would have obtained from Georgia-Pacific absent the breach. The court granted Taylor’s partial motion for summary judgment on liability but left the amount of damages for later determination.

Taylor initially submitted an expert calculation estimating cover damages at between $3,015,000 and $3,520,000. That calculation relied on Georgia-Pacific’s supply forecasts and Taylor’s prior purchases. After summary judgment, Taylor changed its calculation and sought $5,355,000 for its entire paper volume during the six-month period.

Motion in Limine

Georgia-Pacific filed a motion in limine, which is a request to limit evidence or arguments at trial, asking the court to exclude Taylor’s new damages calculation. Georgia-Pacific argued that Taylor disclosed the calculation more than a year after discovery ended, that it contradicted the record, and that it caused prejudice. Taylor responded that its revised calculation simply removed an unwarranted assumption.

Under Rules 26 and 37 of the Federal Rules of Civil Procedure, parties must disclose damages computations and supporting information, and a court may impose sanctions for failures to make required disclosures. The court considered the reason for Taylor’s noncompliance, the surprise and prejudice to Georgia-Pacific, the effect on the trial, and the importance of the information.

Court’s Analysis

The court found that Taylor’s late disclosure was neither justified nor harmless. The agreement was nonexclusive, and the record showed that Taylor expected Georgia-Pacific to supply only part of its requirements. The record indicated that Taylor expected at most 4,000 tons per month at the beginning of 2019, with a goal of increasing supply to 4,400 tons per month. Taylor had never obtained all of its requirements from Georgia-Pacific during the agreement’s term.

The court also found that Taylor’s revised calculation contradicted the court’s summary-judgment findings, the parties’ depositions, interrogatory responses, and exhibits. Those materials indicated that Taylor expected to receive less than its full requirements from Georgia-Pacific in 2019. Taylor did not explain why it waited so long to revise its damages calculation, and the court found the delay unreasonable and the new disclosure unjustified.

The court stated that the damages issue at trial would include determining the volume of paper Taylor would have been able to purchase from Georgia-Pacific from January through June 2019. Because Taylor had not previously alleged that it would have obtained 100% of its volume from Georgia-Pacific, the court ruled that Taylor could not make that argument for the first time through the revised calculation.

Disposition

The court granted Georgia-Pacific’s motion in limine. It limited the maximum volume Taylor could use to calculate cover damages at trial to 4,000 tons per month. The court did not address Georgia-Pacific’s alternative argument that judicial estoppel should bar the late disclosure, because it granted the motion on other grounds.