As to the issue of reliance, Hytel acknowledges most of Gore’s
allegations, but contends that it purchased at least one “Finetech”
machine subsequent to commencing its relationship with Gore, and in
response to Gore’s alleged promises. Additionally, although Hytel
admits that although most of the equipment theoretically could
serve other purposes, in reality it has been unable to either use
or sell them.

For purposes of this motion, the Court must accept Hytel’s
factual allegations as true. Thus, it finds questions of fact that
preclude a granting of full summary judgment. This includes
promises such as “I guarantee [Hytel] will need this equipment”
that clearly qualify as unambiguous. Similarly, Hytel shows
reliance via its submitted deposition testimony that it purchased
the equipment because of (and therefore in reliance upon) Gore’s
unambiguous promises, and has been unable to use it since Gore
terminated their business relationship. However, Gore’s motion for
summary judgment is granted with respect to equipment Hytel
purchased prior to its selection as Gore’s supplier and prior to
Gore’s granting of the alleged promises.

Gore’s briefs do not directly contest either the
reasonableness or damages prongs of the promissory estoppel test.
This allows Hytel to establish both without contest - showing
reasonableness by referring to Gore’s promises and forecasts of
expected demand, and damages by the price of the equipment. Even

had Gore contested reasonableness, recent Seventh Court precedent

~ 19 -



claim. Therefore, the Court addresses these issues solely under
Count II’s promissory estoppel framework.
6. Safety Stock

Hytel contends that, in addition to the three months worth of
materials, labor, and incidental costs, Gore also agreed to pay for
one month’s worth of “safety stock.” Gore disputes this, insisting
that its liability is limited to three months’ worth of materials
- and that its requests for “safety stock” were factored into
higher initial purchase orders.

Though, as the Court earlier found, the February 15, 2001
e-mail exchange does not memorialize the entire agreement, it does
seem to preclude Hytel’s claims regarding the safety stock. As
noted above, McCoy admitted in the e-mail that “If we order beyond
our lead times, we are doing so at our sole risk. . . . Our total
lead time is 12 weeks.” McCoy thereby implicitly recognized that
Gore bore no liability for safety stock materials - as anything
Hytel did beyond twelve weeks fell ‘at our sole risk.”
Additionally, a July 18, 2001 Dohl e-mail to Hytel stated that “we
would like to hold 1 month of safety stock in house as well as the
demand that you see on the attachment” (emphasis added). By
informing Hytel that Gore would hold the safety stock “in house,”
this Dohl e-mail confirms Gore’s contention that the safety stock
discussions related to Gore initially placing more purchase orders
rather than Hytel maintaining a perpetual excess supply of raw

material.

- 13 -



Similarly, Hytel’s responds to Gore's paragraph 22 by stating
“Hytel does not dispute the facts set forth in paragraph 22.”
Therefore, the Court admits Gore’s paragraph twenty-two statement
that “profit was built into the purchase price for finished goods.”

Cc. Factual Background

Between 2000 and 2002, Gore engaged in the manufacture and
sale of fiber optic connectors comprising, in part, a RESA and a
TESA. In early 2000, Gore selected Hytel as its supplier of these
subassemblies. In pitching the deal to Hytel, Gore representatives
indicated that Gore’s demand for subassemblies would resemble a
hockey stick. By this, Gore meant that demand would start out low
but rapidly shoot upward. Because Hytel required a large lead-time
to manufacture subassemblies (a process that necessitated securing
the necessary parts, labor and equipment), Gore agreed to provide
Hytel with six-month forecasts of its expected demand.

Although Gore never promised to purchase specific quantities
of subassemblies, it admits agreeing to reimburse Hytel for up to
a three-month supply of parts, if Hytel bought in reliance on
Gore’s demand forecasts and the forecasts exceeded the actual
demand. Gore claims its agreement with Hytel was a written
contract memorialized in a series of February 15, 2001 e-mails
between Gore and Hytel officers. Under this agreement, Gore
acknowledges it owes Hytel for 505 RESA parts and 2,900 TESA parts.
However, Gore claims that its contract obligations are limited only

to paying for these parts, and denies ever agreeing to pay for



suggests they would still lose. See Cloud Corporation v. Hasbro,
Inc., 314 F.3d 289 (7th Cir. 2002) (in a contract modification case,
decision of supplier to produce parts for manufacturer in absence
of purchase orders was reasonable) .

4. Engineering Costs

The same analysis applies as to engineering costs, an issue
not extensively briefed by either party. To the degree that Hytel
expended resources on engineering to improve its chances of
securing the supplier contract with Gore, it clearly did not act
reliance on any promise. However, engineering costs that post date
the Hytel-Gore agreement, and the alleged promises concerning
future orders, may factually have been made in reasonable reliance
on such promises. These costs withstand summary judgment and
should proceed to trial.

III. CONCLUSION

For the reasons discussed above, Gore’s motion is granted in
part and denied in part, as follows:

1. On Count I, the Court grants summary judgment for Gore on
Hytel’s claims for lost profits and safety stock, and concludes
that Hytel does not make a breach of contract claim for equipment
and engineering costs.

2. The Court denies summary judgment as to Hytel’s other

Count I claims.

- 20 -


Johansen’s depositions that - when read in context - show no denial
of such a promise. Consequently, Gore fails to meet its minimum
summary judgment burden of showing that no material facts are in
dispute. As such, to the extent that Hytel makes a promissory
estoppel claim for labor and incidental costs (its brief states
“there is sufficient evidence in the record to establish a claim
for promissory estoppel based upon the same allegations made in
Count I,” but never explicitly lays out a promissory estoppel-based
labor and incidental cost claim), this claim withstands summary
judgment.
3. Equipment Costs

Gore contests Hytel’s promissory estoppel claim for equipment
and engineering costs on several grounds. First, Gore again
argues that the February 15, 2001 e-mails constitute a valid
written contract limiting its liability to just three-months worth
of materials cost. Because the Court rejects this position, Gore’s
argument here fails.

Gore also contends that any alleged promises made to Hytel
cannot withstand the tests of unambiguity and reliance. Gore
argues that its only quasi-promise to Hytel consisted of talking
about the “hockey stick”-shaped demand. Gore also states that its
hockey stick-comparison occurred before it even selected Hytel as
its supplier - and therefore, prior to it having any obligations to

Hytel whatsoever. Thus, in Gore’s view, even if the Court finds



midpoint forecast. McCoy then replied to Dohl, writing that
“Gore’s direction was very clear - order to the midpoint of the
forecast, consistent with our lead times. If we order beyond that,
we are doing so at our sole risk.” Dohl sent the final e-mail,
remarking that McCoy’s position “Sounds good, Thanks for the
clarity, and insured confidence of continual board supply.”

Hytel argues that these e-mails do not memorialize the entire
agreement, but merely clarify an apparent ambiguity in the
previcusly-made contract. Hytel notes that the e-mails do not
preclude, or even discuss, the possibility that Gore also bore
responsibility for overhead and labor costs. Indeed, Hytel points
out that the e-mails themselves refer specifically only to raw
boards, not even other parts and raw materials to which Gore fully
concedes it owes payment.

On this point, Hytel is correct. The e-mails do not contain
a formal offer or an acceptance, and therefore cannot function as
a contract. Indeed, the e-mails themselves refer to a September 27
(presumably referring to September 27, 2000) agreement, implying
that the parties formed a contract on that date. In addition, the
e-mails discuss only Gore’s liability for boards, omitting any
discussion of other parts and raw materials to which Gore fully
concedes liability. Thus, it is clear that the e-mails intend
merely to clarify one particular aspect of the previously agreed-

upen contract.



Lastly, Hytel claims that Gore made numerous unambiguous
promises regarding the size and value of future orders. In
reliance, Hytel contends that it expended $483,646.03 purchasing
new equipment, and $125,000.00 in unbilled engineering services
that it expected to recoup over through sales of completed
subassemblies. Accordingly, Hytel also seeks $606,646.00 in
reliance damages.

II. DISCUSSION
A. Summary Judgment Standard

Summary judgment is appropriate if “the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is entitled
to a judgment as a matter of law.” Fen. R. Civ. P. 56(c). A fact
is “materiai” if it could affect the outcome of the suit under the
governing law; a dispute is “genuine” where the evidence is such
that a reasonable jury could return a verdict for the nonmoving
party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

The burden is initially upon the movant to demonstrate the
absence of a genuine issue of material fact. Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). In assessing the movant’s
claim, the court must view all the evidence and any reasonable
inferences that may be drawn from that evidence in the light most
favorable to the nonmovant. Miller v. Am. Family Mut. Ins. Co.,
203 F.3d 997, 1003 (7th Cir. 2000). Once the moving party has met

-6-



other costs such as overhead and labor. Similarly, Gore denies
ever making Hytel any unambiguous promises concerning future
orders. As such, Gore contends that any money Hytel expended
beyond the three-month parts supply was at Hytel’s own risk - and
not in obligation of any contract or in reliance upon any promise.

Conversely, Hytel denies that the February 15, 2001 e-mails
accurately describe the contract in its entirety, and alleges that
a preceding oral agreement with Gore entitles it to more than just
payment for a three-month supply of parts. In addition to parts,
Hytel contends that Gore orally agreed to pay costs such as labor
and overhead expended in reliance on Gore’s forecast. Although
Hytel concedes that the contract called for it to factor profit
into the purchase price for the finished boards, Hytel also asks
the Court to award lost profits damages.

Additionally, Hytel challenges the methodology Gore uses to
calculate its parts-cost liability. By Hytel’s reckoning, the
contract required it to purchase parts beyond the three-month
forecast, to ensure a constant one-month “safety stock” was always
available to Gore. Hytel also spars with Gore regarding whether
“packlog” should be factored into Gore’s parts-debt to it. The
result is that, in their interrogatory answers, Hytel claims
contract damages of $480,962.40. This includes $183,347.28 worth
of lost profits, $258,856.12 in material costs, $14,520 in labor
costs, and $24,239 in incidental damages such as unemployment taxes

paid as a result of breach-induced layoffs.



that its “hockey stick” comparisons qualify as an unambiguous
promise, Hytel could not have reasonably relied on it.

Gore also argues that other factors compel a finding of no
reliance. Gore notes that Hytel purchased most of the equipment
prior to being selected as Gore’s supplier of subassemblies. Ergo,
Gore contends that Hytel bought the equipment not out of reliance
on any Gore promise, but rather to entice Gore to select it instead
of a competitor for the subassembly contract. Furthermore, Gore
insists that Hytel could use most of the equipment for purposes
beyond its contract with Gore.

Hytel disputes Gore’s version of the facts concerning both
ambiguity and reliance. First, Hytel contends that Gore’s promises
to it were more specific than references to “hockey stick” shaped
demand. Hytel notes - and Gore fails to dispute - that the phrase
“hockey stick” meant that demand would start out slow but then
sharply accelerate. Hytel claims that Gore promised hockey stick-
demand both before and repeatedly it became Gore’s supplier. Hytel
also claims that Dohl specifically told McCoy “you have to buy this
equipment because our ramp-up is coming, the volume is looking
huge. . . . I guarantee [Hytel] will need this equipment.” In
Hytel’s view, it purchased this equipment “based on the lots and
lots of parts they said they were going to buy,” then found itself
stuck with useless equipment when Gore stopped ordering

subassemblies.



Illinois corporation, and Gore’s reply memorandum refers to
Illinois as the appropriate sovereign.

Under Illinois law, a plaintiff seeking relief for breach of
an oral contract bears the burden to both plead and prove the
essential terms of the agreement sued on; that is, the offer made
and its acceptance. Richco Plastic Co. v. IMS Co., 288 Ill. App.
3d 782,786 (App. Div. 1997). As with any contract, the offer “must
be so definite as to its material terms or require such definite
terms in the acceptance that the promises and performances to be
rendered are reasonably certain.” Rose v. Mavrakis, 278 Ill. Dec.
751,755 (App. Div. 2003).

2. Written or Oral Contract?

Gore contends that it had a written contract with Hytel
requiring it to purchase up to three months’ worth of parts should
its purchase orders fall below the midpoint forecasts it issued to
Hytel. Gore contends this contract was formalized in its entirety
in a series of February 15, 2001 e-mails. In these e-mails, Gore
officer Christopher Dohl (“Doh1”) cautioned Hytel that he believed
Hytel was ordering too many raw boards, and reminded Hytel that
“Gore agrees to purchase any boards brought to forecast for
2 months. This was agreed upon at our meeting on 9/27.” Hytel
officer Kevin Ledvina responded by stating that he recalled Hytel
President Dirk McCoy (“McCoy”) insisting upon a minimum of three
months’ protection. Dohl then answered with a warning that Hytel

was still ordering to the maximum forecast, not the agreed upon

-~8-



Minote Order Form (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Judge Harry D. Leinenweber Sitting Judge if Other
or Magistrate Judge than Assigned Judge
CASE NUMBER 02 C 3846 DATE 2/18/2004
CASE Hytel Group, Inc. vs. W.L. Gore & Associates Inc.
TITLE

MOTION:

[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature

of thie motion being presented.]

DOCKET ENTRY:

Mail AO 450 form. ddocketing deputy initials

Copy to judge/magistrate judge.

re : date nailed notice
courtroom j :

wap deputy’s
initials

Date/time received in
central Clerk’s Office mailing deputy initia’s

(1) Qo Filed motion of [ use listing in “Motion” box above.]
2) a Brief in support of motion due
(3) Oo Answer brief to motion due. Reply to answer brief due
(4) QO Ruling/Hearing on___set for __ at -
(5) a Status hearing set for 25 Feb. 04 at 9:00 A.M..
(6) a] Pretrial conference[held/continued to] [set for/re-set for} on set for at
(7) oO Trial{set for/re-set for] on at
(8) Oo [Bench/Jury trial] [Hearing] held/continued to at
(9) Oo This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) CO Local Rule 41. OOFRCP41(a)(1) OO FRCP41(a)(2).
(0) «xf [Other docket entry] - ENTER MEMORANDUM OPINION AND ORDER: Gore’s motion for
summary judgment is granted in part and denied in part.
al @ (For further detail see order attached to the original minute order.]
No notices required. advised in open court, Document
‘ ‘ Number
No notices required. umber of aties -
Notices mailed by judge's stalt.
Notitied counsel by telephone. FEB 19 2004
SY | Docketing to mail notices.

Af



forecasts and safety stock.” However, Hytel cites no evidence or
deposition testimony supporting this position. Hytel also asks the
Court to grant it lost profits by reading in § 2-708(2) of the
Uniform Commercial Code into the contract. This provision is
designed to place “the seller in as good a position as performance

would have done,”

providing him with lost profits and incidental
damages. The difficulty with Hytel’s use of § 2-708(2) is the fact
that, as shown above, Hytel had no legal right to profit - and
therefore the UCC cannot convey such a right. The UCC imputes
terms only when the contract is silent or there has been no meeting
of the minds on the disputed issue, such as in a classic “battle of
the forms.” It does not rewrite existing contracts with legally
definite terms.

The Court finds that Gore meets its initial summary judgment
burden on the issue of lost profits, and that Hytel fails to meet
its responsive burden. The Court thus grants summary judgment to
Gore on the Count I issue of lost profits.

4. Labor and Incidental Costs

Gore also contests Hytel’s prayer for repayment of labor and
incidental costs, claiming that its agreement with Hytel excluded
them. However, Gore substantiates its position with only out-of-
context and misleading citations to the record. For instance, Gore
supports its claim that the contract shields it from responsibility

for labor and incidental costs by referring to the February 15

2001 McCoy’s e-mail, which states “if [Hytel] order[s] beyond [the

-1l1-



That being said, the only evidence Hytel presents of
any agreement comes via deposition testimony of McCoy and Hytel
Chief Executive Officer Scott Johansen (“Johansen”), who both
testify that the agreement arose in oral discussions with Gore
officials. Thus, for purposes of summary judgment, the Court will
assume that the purported contract existed in oral form prior to
the February 15, 2001 e-mails. This means that while the Court
acknowledges that the e-mails provide evidence of certain aspects
of the Hytel-Gore contract, it does not hold that the e-mails
record the entire contract.

3. Lost Profits

In paragraph eight of its Local Rule 56.1 Statement, Gore
contends that “Gore was also under no obligation to purchase
finished boards at any time.” In paragraph twenty-two, Gore states
that “profit was built into the purchase price for finished goods.”
As Hytel failed to dispute to either statement, the Court deems
both admitted. This means that, for purposes of this motion, the
contract stipulated that Hytel factored profit into the purchase
price for the finished boards, which Gore had no obligation to
purchase. It therefore follows that the contract gave Hytel had no
legal expectation of profit. Accordingly, Gore meets its initial
summary judgment burden on the issue of lost profits.

Hytel responds by arguing that “there is a substantial amount
of evidence . . . that indicates Hytel understood that Gore would

be liable for all costs (including profit) associated with its

- 10 -



its burden, the nonmoving party “may not rest upon the mere
allegations” contained in its pleading, but rather “must set forth
specific facts showing that there is a genuine issue for trial.”
FeD. R. Civ. P. 56(e); Becker v. Tenenbaum-Hill Assoc., Inc., 914
F.2d 107, 110 (7th Cir. 1990); Schroeder v. Lufthansa German
Airlines, 875 F.2d 613, 620 (7th Cir. 1989). It “must do more than
simply show that there is some metaphysical doubt as to the
material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586 (1986). Accordingly, summary judgment is
mandatory “against a party who fails to make a showing sufficient
to establish the existence of an element essential to that party’s
case, and on which that party will bear the burden of proof at
trial.” Celotex, 477 U.S. at 322. In such a situation, there can
be “‘no genuine issue as to any material fact,’ since a complete
failure of proof concerning an essential element of the nonmoving
party’s case necessarily renders all other facts immaterial.” Id.
at 323.
B. Count I: Breach of Contract
1. Contract Standards

In settling contract disputes, a federal court should look to
the state law that governed the formation of the contract. Gibson
v. Neighborhood Health Clinics, Inc., 121 F.3d 1126, 1130 (7th Cir.
1997). In this action, the Court presumes that the law of Illinois

applies, since this case was filed in Illinois, Hytel is an


3. On Count II, the Court grants summary judgment for Gore

with respect to Hytel’s claims for parts, lost profits.and safety

a“
stock, Pa )
“

f

i 2
4. The Court denies summary judgment 3s to Hytel's Count II

,
é . fe
claims for labor, incidental, equipment, gnd engineering costs.
f

IT IS SO ORDERED.

Harry D. Leinenweber, Judge
United States District Court

bate: ths Le, Lon

~21-


Local Rule 56.1, the moving party must submit a statement of
material facts with “references to the affidavits, parts of the
record, and other supporting materials relied upon.” Local
Rule 56.1(a) (3). In turn, the opposing party must file “a response
to each numbered paragraph in the moving party’s statement,” and,
in the case of disagreement, provide specific references to
supporting evidentiary material. Local Rule 56.1(b) (3) (A). If the
opposing party does not respond and controvert the moving party’s
statement of material facts, those facts are deemed admitted for
the purposes of the motion. Local Rule 56.1(b)(3)(B); Smith v.
Lamz, 321 F.3d 680, 683 (7th Cir. 2003).
In this case, Gore’s paragraph 8 of its Local Rule 56.1

statement states that:

Gore was under no obligation to issue

forecasts. Gore was also under no obligation

to purchase finished boards at any time.

Gore’s obligation was limited to paying Hytel

for material and supplies Hytel purchased in

reliance on Gore’s three-month forecasts.

Anything Hytel did beyond that insofar as

ordering parts for subassemblies was concerned

was at Hytel’s sole risk (internal citations

omitted).
Hytel’s response to paragraph eight states that it “disputes the
allegations contained in paragraph 8.” However, Hytel does not
specifically refute with “specific references to supporting
evidentiary material” that “Gore was also under no obligation to

purchase finished boards at any time.” Consequently, the Court

deems this portion of paragraph eight admitted.


Hytel attempts to refute this evidence by references to its
executives’ deposition testimony, where Johansen and McCoy parrot
Hytel’s interpretation of safety stock. In doing so, Hytel
essentially argues that the one-month safety stock agreement formed
a portion of the oral agreement it made with Gore. Since Gore has
met its initial summary judgment burden of showing no issue of
material fact, Hytel must rebut by showing “specific facts”
evidencing this oral agreement. This it fails to do. Hytel points
to no specific conversations in which it claims Gore promised to
pay for safety stock in addition to the three-months parts supply.
Nor does Hytel give a specific recitation of Gore’s alleged offer
to pay for safety stock in this manner. Hytel certainly presents
nothing to refute the clear written evidence found in the e-mails.
Accordingly, Hytel cannot withstand summary judgment on this issue.

7. Damage Calculation

Although agreeing in principle on Gore’s liability for three-
months of materials, Hytel and Gore spar over the damages resulting
from that liability. One of their disputes, settled above in
Gore’s favor, concerns whether Gore bears additional responsibility
for safety stock. However, the resolution of the safety stock
question does not end the parties’ bickering over the materials and
parts damage calculation. Rather, the parties also dispute the
issue of “backlog.”

The backlog disagreement concerns subassemblies that Hytel

contends Gore ordered before the August 23, 2001 forecast and that

- 14 -


Hytel’s contract with Gore clearly imposed liability on Gore for
the costs of three months’ worth of materials, and clearly absolved
Gore of responsibility for covering lost profits and safety stock.
Therefore, the Count I breach of contract claim covers each of
these issues, preventing their resolution via the Count II
promissary estoppel claim. Likewise, should a jury determine that
Hytel’s contract with Gore either covers or excludes labor,
incidental, equipment and engineering costs, such a finding would
bar a promissary estoppel claim on those issues. However, as a
jury could determine that the contract did not assign liability for
these costs, the Court discusses below whether the promissory
estoppel claims for each cost, in turn, can withstand summary
judgment.

To establish a promissory estoppel claim on these issues
Hytel must show that: 1) the defendant made an unambiguous promise
to the plaintiff; 2) the plaintiff relied on the promise; 3) the
plaintiff's reliance was expected and foreseeable by the defendant;
and 4) the plaintiff relied on the promise to her detriment.
Pokora v. Warehouse Direct, Inc., 322 Ill. App. 3d 870, 879 (App.
Div. 2001).

2. Labor and Incidental Costs

As discussed earlier, Gore fails to establish any material
facts disputing the proposition that it promised to pay for labor
and incidental costs. Instead, it relies only on out-of-context

quotes from the February 15, 2001 e-mails and from McCoy’s and

-16-



parts purchased by plaintiff to manufacture items for defendant
pursuant to an agreement that defendant would buy the parts or
subassemblies incorporating the parts.” In defining damages, the
complaint lists “8,666 boards of the RESA [Receiver Electrical
Subassembly] and 11,543 TESA [Transmitter Electrical Subassembly],
Hytel purchased for Gore pursuant to the August 23, 2001 Forecast.”
As such, Hytel’s complaint never alleges damages stemming from lost
profits and assorted costs (i.e., overhead, labor and equipment)
under either a breach of contract or a promissory estoppel theory.
Indeed, Hytel’s complaint does not even include the near-universal
prayer for other relief that the Court deems appropriate.

Nevertheless, beginning with Hytel’s interrogatory answers and
continuing through deposition and motion practice, Hytel has
consistently argued that it suffered those damages. In doing so,
Hytel gave Gore notice of its intent to seek recovery for damages
beyond the allegedly unpaid-for parts. As Gore has not argued that
Hytel’s complaint pleads itself out of this extra relief, the Court
finds that Hytel’s complaint has been constructively amended to
include any additional claims for damages made by Hytel during the
course of discovery.

B. Local Rule 56.1 Responses

Local Rule 56.1 of the United States District Court for the
Northern District of Illinois (“Local Rule 56.1") establishes
procedures that both moving and opposing parties must follow in

filing and responding to a motion for summary judgment. Under

-2-



IN THE UNITED STATES DISTRICT COURT - f 2
FOR THE NORTHERN DISTRICT OF ILLINOIS G L i ‘iD
EASTERN DIVISION

FEB 4 4 2004
JUDGE Harry 9 yn
HYTEL GROUP, INC., HARRY 0. LeINe yer
US. DISTRICT COURT Jubae .
Plaintiff, Case No. 02 C 3846
v. Hon. Harry D. Leinenweber

W.L. GORE & ASSOCIATES, INC.,

GAETED

Defendant. FEB 1 2 2004

MEMORANDUM OPINION AND ORDER
Plaintiff Hytel Group, Inc. (hereinafter, “Hytel”) brings suit
against Defendant W.L. Gore & Associates, Inc. (hereinafter,
“Gore”). Count I alleges that Gore breached its contract with
Hytel by failing to pay for a three-months supply of parts used by
Hytel in constructing subassemblies for Gore. Count II, pled in
the alternative, makes the same allegations under a promissory
estoppel theory. Although not pled in the complaint, Hytel also
apparently seeks damages for Gore’s failure to pay other costs,
such as labor and equipment, associated with Hytel’s production of
subassemblies. Pursuant to Federal Rule of Civil Procedure 56(c),
Gore moves for summary judgment.
I. INTRODUCTION
A. The Complaint
Hytel’s complaint, never amended, narrowly specifies its
allegations against Gore. The complaint states that “this is a

case in which plaintiff . . . seeks payment of over $250,000 for

x


three-month lead time], we are doing so at our sole risk.” On its
face, the e-mail limits simply Gore’s liability for parts to three~
months. It does not address the question of who bears the risk for
labor and incidental costs. Similarly, Gore’s use of selective
quotes from McCoy’s and Johansen’s deposition testimony also fails
to support its argument. When read in context, both these
depositions factually dispute Gore’s claim of no liability for
labor and incidental costs. As the movant in this summary judgment
proceeding, Gore bears the burden of initially establishing the
absence of material facts. On this issue, Gore has failed to do
so. Therefore, Gore has failed to shift the burden to Hytel, and
the Court cannot dispose of this issue through summary judgment.
5. Equipment and Engineering

Although Hytel also seeks damages for the purchase of
equipment, McCoy admitted in deposition that Gore “did not agree to
give [Hytel] cash up front” for the equipment. Rather, Hytel
claims that equipment costs “factored into our price” for finished
product. Additionally, McCoy noted that Hytel agreed to buy the
equipment only because “Chris Dohl said, ‘You have to buy this
equipment because out ramp-up is coming, the volume is looking
huge.” Similarly, Hytel does not allege that the contract required
Gore to finance engineering costs. Based on the presented
evidence, Hytel makes only a promissory estoppel claim for

equipment and engineering costs ~- and not a breach of contract



Hytel had already manufactured, but not shipped to Gore. Hytel
argues that the August 23, 2001 forecast concerns’ only
subassemblies not yet ordered by Gore. Gore responds by stating
that the August 23, 2001 forecast was all-inclusive of its
requirements - and included subassemblies it had ordered but not
received prior to that date. In the Court’s view, this is a clear
factual dispute inappropriate for summary judgment.
Cc. Count II: Promissory Estoppel
1. Promissory Estoppel Standards

Under Illinois Law, a party may plead both plead breach of
contract and promissory estoppel in the alternative, as Hytel does
here. Czerska v. United Airlines, Inc., 292 F. Supp. 2d 1102
(N.D.Il1. 2003). However, a fact-finder’s determination that the
parties agreed to an enforceable contract precludes recovery under
promissory estoppel. Id. This occurs only when “the performance
which is said to satisfy the requirement of detrimental reliance is
the same performance which supplies consideration for the
contract.” Prentice v. UDC Advisory Services, Inc., 271 Ill. App.
3d 505,512 (App. Div. 1995). However, should a contract’s terms be
ambiguous or unknown “the absence of fully detailed terms
would . . . discourage dismissing the promissory estoppel claims.”
Tibor Machine Products, Ine. v. Freudenberg-NOK General
Partnership, 942 F. Supp. 1165, 1174 (N.D. Ill. 1996), partially

vac’d on other grounds 967 F. Supp. 1006 (N.D. Ill. 1997). Here,

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