Maxim Solutions, LLC v. Bongards' Creameries

Background

Maxim Solutions, LLC purchased whey protein isolate from Bongards’ Creameries for use in Nectar-brand protein products. Maxim blended the whey protein with other ingredients and later reported that some final products failed mixability testing. Maxim claimed that Bongards supplied whey protein that was not “instant” and that the whey protein caused the product failures.

The parties exchanged a proposed purchase agreement, but Maxim did not sign it. Maxim later sent purchase orders, and Bongards shipped the whey protein and sent invoices containing warranty disclaimers and liability limits. Maxim paid the invoices but did not expressly agree to their terms. Maxim then sued Bongards for breach of contract and breach of the implied warranty of merchantability.

Maxim moved to exclude the opinions and testimony of Bongards’ expert, Thorsten Bornholdt, and moved for partial summary judgment on its claims and on Bongards’ affirmative defenses.

Expert-testimony motion

The court applied Federal Rule of Evidence 702, which governs when expert testimony is sufficiently helpful and reliable to be admitted, and the standards associated with Daubert. Maxim did not challenge Bornholdt’s qualifications. Instead, it argued that his opinions were unreliable because his analysis relied on information that did not precisely match Maxim’s testing and production process.

For the fruit-flavored Nectar products, Bornholdt attributed the mixability problems to the acidity of citrus flavor components in Maxim’s pre-blends. The court concluded that the scientific article Bornholdt considered was sufficiently related to his opinion because mixability is related to solubility and both can be affected by pH and temperature. Differences between the article, Bornholdt’s testing, and the facts of the case affected the weight and credibility of his testimony rather than its admissibility.

For the Chocolate Truffle product, Bornholdt attributed the problem to cocoa powder rather than Bongards’ whey protein. Although he used a different cocoa powder and mixing process from Maxim’s, the court found that those differences also concerned the factual basis and weight of his testimony. The court therefore denied Maxim’s motion to exclude Bornholdt’s expert testimony.

Partial summary judgment

Summary judgment is appropriate only when the evidence shows no genuine dispute about a fact that could affect the outcome and the moving party is entitled to judgment under the law.

Breach of contract. The court analyzed the breach-of-contract claim under Article 2 of the Uniform Commercial Code, which governs sales of goods. The parties agreed that a contract existed and that they performed their obligations, but disputed whether Bongards breached the contract and whether Maxim suffered damages.

The purchase orders required “instant” whey protein, but did not define that term. The court found that “instant” could reasonably mean either whey protein that was ready for final preparation or whey protein that was immediately soluble in water. Because the term was ambiguous, whether Bongards breached the contract by supplying non-instant whey protein presented a disputed factual issue.

The court also found a factual dispute about whether Bongards’ whey protein caused the mixability problems. Bornholdt’s alternative explanation—that acidity in Maxim’s pre-blends contributed to the problems—was sufficient to create a dispute for the factfinder. In addition, Maxim’s declaration stated that its damages totaled $152,026 but did not provide enough support for the calculation or supporting documentation. The existence and amount of damages therefore remained factual issues.

The court denied summary judgment on Maxim’s breach-of-contract claim.

Implied warranty of merchantability. The court ruled that the unsigned purchase agreement did not govern the parties’ relationship. It lacked important terms, including a measurable quantity of whey protein, shipping terms, and the timing and location of delivery. The court also found that Maxim did not intend to be bound by that agreement.

The court concluded that Maxim’s purchase orders, which Bongards accepted and fulfilled, formed the contract. Because the purchase orders did not disclaim implied warranties, Maxim had not waived its implied-warranty-of-merchantability claim. The court also ruled that Bongards’ invoices did not add warranty disclaimers to the contract because Maxim’s payment and acceptance of the goods did not constitute affirmative agreement to those invoice terms.

Even so, the court found genuine factual disputes about whether the whey protein was damaged or defective and whether it caused the mixability problems. The court therefore denied summary judgment on Maxim’s implied-warranty-of-merchantability claim.

Affirmative defenses

The court granted summary judgment for Maxim on Bongards’ third affirmative defense, which relied on an exclusion of implied warranties. The court concluded that Bongards could not establish that the parties agreed to exclude implied warranties of merchantability or fitness for a particular purpose.

The court denied summary judgment on Bongards’ fourth through seventh affirmative defenses because resolving them would require weighing evidence about the cause of the mixability problems. The court granted summary judgment for Maxim on Bongards’ eighth affirmative defense, which asserted that contract terms limited Maxim’s recovery, because those terms were not incorporated into the contract.

The court denied summary judgment on Bongards’ ninth affirmative defense because the term “instant” was ambiguous. The court also denied summary judgment on Bongards’ tenth affirmative defense, which asserted that Maxim assumed the risk that the final products would not mix properly. The order’s final disposition states that Maxim’s motion for partial summary judgment was granted in part and denied in part as addressed herein.

Disposition

The court denied Maxim’s motion to exclude Bornholdt’s expert testimony. It granted in part and denied in part Maxim’s motion for partial summary judgment.