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Opera Solutions, LLC v. Schwan's Home Service, Inc.

United States District Court, D. Delaware

March 21, 2017

OPERA SOLUTIONS, LLC, Plaintiff,
v.
SCHWAN'S HOME SERVICE, INC. Defendant.

          Daniel M. Silver, Jameson A.L. Tweedie, MCCARTER & ENGLISH, LLP, Wilmington, DE Thomas J. Finn, Paula Cruz Cedillo, MCCARTER & ENGLISH, LLP, Hartford, CT Attorneys for Plaintiff.

          Robert J. Katzenstein, SMITH, KATZENSTEIN & JENKINS LLP, Wilmington, DE Michael D. Hutchens, M. Gregory Simpson, MEAGHER & GEER, P.L.L.P., Minneapolis, MN " Attorneys for Defendant.

          MEMORANDUM OPINION

          STARK, U.S. District Judge:

         Pending before the Court is Defendant Schwan's Home Service Inc.'s ("Schwan's" or "Defendant") motion for summary judgment. (D.I. 128) ("Motion") For the reasons set forth below, the Court will grant in part and deny in part the Motion.

         I. BACKGROUND

         Plaintiff Opera Solutions, LLC ("Opera" or "Plaintiff) is a technology and analytics company that provides consulting services to help "deliver rapid profit improvement for its clients." (D.I. 78 ¶ 8) Defendant Schwan's is "the largest direct-to-home frozen food delivery provider in the United States, and markets and delivers its products to millions of customers throughout the country via home delivery trucks." (Id. ¶ 9)

         On January 22, 2009, Opera and Schwan's entered into a Consulting Services Licensing Agreement ("CSLA"). (See D.I. 129 at 2) Pursuant to the CSLA, Opera was to provide "Production Licenses" for its sales recommendations for certain households serviced by Schwan's, in return for an annual License Fee to be paid to Opera for each Production License. (See Id. at 2-3) The CSLA provides that Production Licenses are required for "Treated Households, " which consist of the middle seven deciles of households deemed "Active Households" by Schwan's, i.e., Active Households excluding the top decile and bottom two deciles. (See D.I. 130-7 Ex. G § 3.2(d)) "Active Households, " in turn, are defined in the CSLA as households that are active customers of Schwan's, "as determined in Schwan's sole discretion." (Id.) The CSLA further provides that "[t]he term of each Production License shall commence on the date such Production License is granted and shall terminate upon expiration of the Term or, if earlier, upon termination of this Agreement pursuant to Section 9." (Id. § 6.1)

         The CSLA provides for limitations on the "redeployment" of Production Licenses. Specifically, Section 6.4 of the CSLA provides that:

Except as set forth in this Section 6.4, each Production License or Quarantine License shall be granted with respect to a specific Treated Household (or other Active Household, in the case of Quarantine Licenses) and may not be transferred, re-assigned, redeployed or otherwise applied to or used for a household other than such original, specific Treated Household (any of the foregoing being referred to as the "Redeployment" of a Production License, or to "Redeploy" such Production License).

(Id. § 6.4(a))

         The CSLA was the subject of the parties' discussions in May 2009, during a meeting in San Diego ("San Diego Meeting"). (See D.I. 129 at 6) Following the meeting, the parties summarized their discussions in the "San Diego Document, " which Opera sent to Schwan's on July 2, 2009. (See id.) According to the San Diego Document, households included in Opera's "baseline" calculations would include all spending deciles except for the bottom spending decile. (SeeD.l. 133-14 Tab 25 at2)

         On September 1, 2010, the parties modified the CSLA in writing, pursuant to the CSLA's merger clause (see D.L 130-7 Ex. G § 10.10). (See D.I. 130-10 Ex. J) The parties' written modification was called Amendment No. 1 (the "Amendment") to the CSLA. The Amendment incorporated any CSLA provisions that were not altered by the Amendment's terms, and the Amendment expressly noted that "[capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth the in the [CSLA]." (Id.) The Amendment also extended the CSLA's term - January 22, 2009 until December 31, 2012 ("Term") - by one year, such that the CSLA and Amendment both were set to expire on December 31, 2013. (See Id. §2.1)

         The Amendment required Schwan's to pay Opera $4, 850, 000 for up to 3, 000, 000 Production Licenses (the "Production License Threshold"), and, $0.08 for each additional Production License above the Production License Threshold. (See Id. § 6.3) The Amendment also eliminated Section 6.4's discussion of redeployment. (See id.) Further, it added that Schwan's selection of the "unique households" to which particular licenses would relate would be undertaken "during each calendar year." (Id. § 6.2)

         Section 6 of the Amendment provides:

6.1 Production Licenses.
Effective as of [September 1, 2010], Opera grants Schwan a limited, exclusive, terminable (in accordance with the terms hereof) license to use and distribute the Production Phase Deliverables provided by Opera hereunder for up to Three Million (3, 000, 000) Treated Households in accordance with the terms hereof, including all tangible and intangible media in which such Production Phase Deliverables are expressed (each such individual household license, a "Production License"). The terms of each Production License shall commence on the date such Production License is granted and shall terminate upon the expiration of the Term or, if earlier, upon termination of this Agreement pursuant to Section 9.
6.2 Quantity of Production Licenses.
Throughout the Production Phase during each calendar year, Schwan shall be entitled to determine in its discretion which and how many unique households shall be served hereunder up to the Production License Threshold (as defined in Section 6.3 below). In no event shall Opera be required to refund any License Fee or portion thereof at any time or for any reason.
6.3 License Fees.
(a) Schwan shall pay Opera license fees ("License Fees") equal to Four Million Eight Hundred Fifty Thousand Dollars ($4, 850, 000) for Three Million (3, 000, 000) Production Licenses, which shall include the cost for converting all applicable Quarantine Licenses. In the event that the number of Production Licenses Schwan elects to license exceeds Three Million (3, 000, 000) (the "Production License Threshold"), for each Production License in excess of the Production License Threshold, Schwan shall pay Opera License Fees equal to Eight Cents ($0.08) per month multiplied by the number of months remaining in the Term thereof. License Fees shall be payable in accordance with Section 7.3. Notwithstanding anything in this Agreement to the contrary, Schwan shall pay the License Fees in accordance with the following payment schedule:
6.4 Termination of Quarantine Licenses.
Effective as of the Amendment Effective Date, all Quarantine Licenses shall automatically convert into Production Licenses and shall be counted against ...

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