United States District Court, D. Delaware
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.
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.
U.S. District Judge:
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.
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)
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.
CSLA provides for limitations on the "redeployment"
of Production Licenses. Specifically, Section 6.4 of the CSLA
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))
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)
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)
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)
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
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
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 ...