2008 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 3-26-2008 

# P hibro Anim al H e alth v

. C orne rs t one AG P ro d P r e c e de nt i al or N on-P r e c e de nt i al : N on-P r e c e de nt i al D ocke t N o . 06-4278

F o llow thi s and a dd it ion al work s at : http://d i git alc ommon s .l a w . vi ll anova . e du/thir dc ir c uit_2008

Thi s de c i sion i s br ou ght t o you for f r e e and ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. It h as be e n a c c ept e d for inclusion in 2008 D e c i sion s b y an author i z e d a dmini s tr at or of V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. F or mor e inform at ion, p le as e c ont a ct Be n j amin . C arl s on@l a

w . vi ll anova . e du . Re c omme nde d C it at ion " P hibr o Anim al H e alth v

. C orne r s t one AG P r od " (2008). 2008 D e cisio n s . P ape r 1384. http://d i git alc ommon s .l a

w . vi ll anova . e du/thir dc ir c uit_2008/1384NOT P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT

_____________ N o. 06- 4278

_____________ P HI BRO ANI M AL HEAL TH U. S . , I NC.

v. CO RN ER STO N E A G PRO D U CT S, A ppel l ant

_____________ O n A p p ea l from the U n it ed S tat es D istri ct C o u rt

fort he D i s t r i ctof N ew J er s ey ( D . C . N o. 03- cv- 02664) D i s t r i ctJ udge: H onor abl e G arr et tE . B r ow n, J r . , C hi ef J udge

_____________ Subm i t t ed U nderT hi r d C i r cui tL . A . R . 34. 1( a)

M ar ch 11, 2008

_____________ B efor e: FU E N T E S, C H A G A R E S A N D A L D I SE R T , C i r cui tJ udges

( Fi l ed: M ar ch 26, 2008)

_____________ OP I NI ON

_____________ A L D I SE R T , C i r cui tJ udge A ppel l antC or ner s t one A g Pr oduct s ( “C orner s t one”) appea l s fr om an or derof the U n ited S tate s D istric t C o u rt f o r th e D istric t o f

N e w Je rse yg ra n tin g su m m a ryju d g m e n t in2

f a v o r o f A p p e llee P h ib ro A n im a l H e a lth U .S ., In c ., (“ P h ib ro ” ) o n a ll cla im s ra ise d in P h i b r o ’ s c o mp l a i n ta n d a l l c o u n t e r c l a i ms r a i s e d b yCo r n e r s t o n e . W e wi l l a f f i r m. B eca us e w e w r i t e exc l us i vel yforthe part i es and the part i es ar e fa m i l i arw i t h t he fac t s and pr ocee di ngs bel ow , w e w i l l notr evi s i tthem her e. I. W e a re sa tisf

ied th a t th e D istric t C o u rt p ro p e rlyg ra n ted su m m a ryju d g m e n t in favorof Phi br o on al l of the cl ai m s as s ert ed i n Phi br o’ s compl ai nt . Phi br o fi r s tas s ert ed cl ai m s forbr eac h of contr act , unj us tenr i chment , acc ounts t at ed and c onver s i on. T he N ew J er s eyU ni form C om m er ci al C ode s t at es thata buy er“mustpayatthe contr actr at e for anygoods acc ept ed. ” N . J . St at . A nn. § 12A : 2- 607( 1) . I n t hi s cas e, ther e i s no di s put e that P h ib ro d e liv e re d g o o d s to C o rn e rsto n e a n d th a t C o rn e rsto n e a c c e p ted th o se g o o d s in acc or dance w i t h t he part i es ’ D i s t r i but or s hi p A gr eement . I ndeed, C orner s t one does not di s put e thati tr ece i ved, acc ept ed and r es ol d t he goods i dent i fi ed i n t he N ovember26, 2 0 0 1 inv o ice. A d d it ion all y , C o rne rst o n e d o es n o t dispu te th at i t has fa il ed to p ayP h ibro fort hes e goods . A s C or ner s t one has acc ept ed goods fr om Phi br o, the N ew J er s ey U ni form C om m er ci al C ode mandat es thatC orner s t one paythe contr actpr i ce f orthe goods . A ccor di ngl y , t he D i s t r i ctC our tdi d noterri n gr ant i ng s um m aryj udgm enti n favor of Phi br o on Phi br o’ s br eac h of contr act , unj us tenr i chment , acc ounts t at ed and conver s i on cl ai m s . See El ectr o- C athet erC orp. v. Sur gi cal Speci al t i es I ns t rum entC o. , 587 F. Supp. 1446, 1456 ( D . N . J . 1984) ( fi ndi ng thats um m aryj udgm entw as appr opr i at e, even3

in lig h t o f

th e d e f e n d a n t’s c laim f

o r a n o f f se t, w h e re th e re w a s n o g e n u in e d isp u te a s to the p lai n ti ff ’s ri g h t t o rec o v er o n the p arti cu lar i n v o ices). Phi br o al s o as s er t ed a c l ai m fordecl ar at oryr el i ef i n i t s compl ai nt . T he t erm s of the D i s t r i but or s hi p A gr eementpr ovi ded thatthe agr eementw oul d t erm i nat e on J une 30, 2 0 0 2 . If sa les o f R u m a tel to C o rn e rsto n e u n d e r th e a g re e m e n t ex c e e d e d $ 3 8 0 ,0 0 0 in 2 0 0 1 , h o we v e r , t h e a g r e e me n two u l d a u t o ma t i c a l l yr e n e w f o ra n a d d i t i o n a l o n e - y e a rt e r m. A lth o u g h C o rn e rsto n e c o n ten d s th a t itm a d e p u rc h a se s o f a t lea st $ 3 9 3 ,0 0 0 in 2 0 0 1 , this amount i ncl udes $140, 400 w or t h of R um at el s hi pped i n N ovember2001 forw hi ch C or ner s t one has y ett o m ake pa ym ent . T hus , s al es t o C orner s t one ca nnotbe s ai d t o have exce eded $380, 000 i n 2001. T her efor e, the D i s t r i ctC our tpr oper l ydet erm i ned thatthe ag ree m en t betw ee n P h ibro an d C o rne rst o n e term inated o n Ju n e 3 0 , 2 0 0 2 , an d d id n o t err i n gr ant i ng s um m aryj udgm enton t hi s cl ai m i n favorof Phi br o. II. C or ner s t one as s er t ed a numberof count er cl ai m s agai ns tPhi br o ar i s i ng fr om P h i b r o ’ s a l l e g e d b r e a c h o f t h e e x c l u s i v i t yp r o v i s i o n o f th e D i s t r i b u t o r s h i p A g r e e m e n t . We are sati sfied that the D istri ct C o u rtp rop erlyg ran ted s u m m aryjud g m en t i n fa v o r of P h ibro o n th e s e c o u n te rc la im s a s w e ll. Fi r s t , C or ner s t one as s er t ed thatPhi br o br eac hed the D i s t r i but or s hi p A gr eementby c o n tac tin g A rc h e r D a n iels M id lan d (“ A D M ” ) in o r a ro u n d M a rc h 2 0 0 3 re g a rd in g th e sa le of R um at el t o A D M . A s di s cus s ed above , how ever , the D i s t r i but or s hi p A gr eement4

e x p i r e d b yi t s o wn t e r ms o n J u n e 3 0 , 2 0 0 2 . T h u s , a n yc o n t a c tb e t we e n P h i b r o a n d ADM s ubs equentt o t he agr eement ’ s t erm i nat i on does notvi ol at e the agr eement . B eca us e the c o n tac t b e tw e e n P h ib ro a n d A D M o c c u rre d a f terth e ter m in a tio n o f

th e D istrib u to rsh ip A gr eement , t he D i s t r i ctC our tpr oper l ygr ant ed s um m aryj udgm enti n favorof Phi br o on t h i s c o u n t e r c l a i m. S e c o n d , C o rn e rsto n e a ss e rte d th a t P h ib ro in ten tio n a llyin ter f e re d w ith its p ro sp e c tiv e e c o n o m ic a d v a n tag e b yd e a lin g d ire c tlyw ith A D M w h ile C o rn e rsto n e w a s in n e g o tiatio n s w ith A D M to a ss ig n A D M its rig h ts u n d e r th e D istrib u to rsh ip A g re e m e n t. C o rne rst o n e’s a tt em p t t o assig n it s ri g h ts oc cu rred in ea rl y2 0 0 3 . A t th at t im e, ho w ev er, C or ner s t one had no r i ght s i n t he D i s t r i but or s hi p A gr eementt o as s i gn t o A D M as the agr eementt erm i nat ed on J une 30, 2002. B eca us e C orner s t one had no r i ght s t o as s i gn, C o rn e rsto n e h a d n o re a so n a b le e x p e c tatio n o f p ro sp e c tiv e e c o n o m ic a d v a n tag e w ith w h ich P h ibro interfe red . T h e D istri ct C o u rtthere fo re d id n o t err i n g ran ti n g su m m ary j u d g me n ti n f

a v o ro f P h i b r o o n t h i s c o u n t e r c l a i m. T hi r d, C or ner s t one s oughtr eform at i on of the D i s t r i but or s hi p A gr eementt o r efl ect t he part i es ’ al l eged i nt ent i on t o gr antC orner s t one the exc l us i ve r i ght s t o m anufa ctur e, l abel , m arket , di s t r i but e and s el l R um at el i n a 0. 44 g/ l b conce ntr at i on. T he l anguage of t he agr eement , how ever , cl ear l yappoi nt ed C orner s t one as the exc l us i ve di s t r i but orof R um at el undera goat - s peci fi c l abel . I n addi t i on, the D i s t r i but or s hi p A gr eementcont ai ned a cl aus e s t at i ng t hati tr epr es ent ed the ent i r e agr eementand under s t andi ng betw een the5

par t i es . T hi s C our thas expr es s ed i t s hes i t at i on aboutr eform i ng contr act s w i t h cl ear l anguage and has s t at ed that“[t ] he pow erof r eform at i on s houl d be us ed onl yw hen the m i s t ake i s m at er i al , w hen ther e w oul d notbe pr ej udi ce t o t he otherpart y( bes i des l os s of t he bar gai n) , and upon a s how i ng t hatthe [pa r t ys eeki ng r eform at i on] exer ci s ed rea so n ab le ca re.” R aicz yk v . O ce an C o u n tyV eterina ryH o sp . , 3 7 7 F . 3 d 2 6 6 , 2 7 0 (3d C ir . 2004) . A s t he D i s t r i but or s hi p A gr eementw as cl eari n i t s t erm s and C orner s t one ca nnot sh o w that n o p rejud ice to P h ibro w o u ld resu ltfro m ref o rm ati o n , the D istri ct C o u rt corr ect l ydet erm i ned thatr eform at i on w as i nappr opr i at e i n t hi s cas e and pr oper l ygr ant ed s um m aryj udgm enti n favorof Phi br o. Four t h, C or ner s t one s oughti nj unct i ve r el i ef pr ohi bi t i ng Phi br o fr om s el l i ng Ru ma t e l t o ADM o ro t h e rc o mp a n i e s i n v i o l a t i o n o f th e Di s t r i b u t o r s h i p Ag r e e me n t . As pr evi ous l ydi s cus s ed, t he D i s t r i but or s hi p A gr eementexpi r ed i n 2002. T hus , anys al es by Phi br o t o ot hercompani es aft ert hatdat e do notvi ol at e the agr eement . B eca us e the D i s t r i but or s hi p A gr eementhas been t erm i nat ed byi t s t erm s , C orner s t one’ s cl ai m for in ju n c tiv e re lief

p ro h ib iti n g P h ib ro f

ro m se lli n g R u m a tel to o th e r c o m p a n ies is unavai l i ng, and the D i s t r i ctC our tpr oper l ygr ant ed s um m aryj udgm enti n favorof Phi br o. Fi fth, C or ner s t one as s er t ed a c l ai m forr es t i tut i on, notw i t hs t andi ng i t s ow n br eac h o f t h e a g r e e me n t , f

o rt h e b e n e f

i tc o n f e r r e d o n P h i b r o th r o u g h i t s a g r e e me n twi t h ADM. A s pr evi ous l ydi s cus s ed, w hen Phi br o engage d i n negot i at i ons w i t h A D M , the D i s t r i but or s hi p A gr eementbetw een Phi br o and C orner s t one had e xpi r ed. B eca us e the6

agr eementhad t erm i nat ed, C or ner s t one had no r i ght s t o t r ans fert o A D M and thus s uffe r ed no l os s w hen Phi br o contr act ed w i t h A D M di r ect l y . I n addi t i on, the D i s t r i but or s hi p A gr eements peci fi cal l ypr event s C orner s t one fr om r ecove r i ng cons equent i al , i nci dent al , s peci al ori ndi r ectdamages – t he ki nd of damages s oughtby th is c laim . A c c o rd in g ly , the D istric t C o u rt d id n o t er r in g ra n tin g su m m a ryju d g m e n t in favorof Phi br o. W e have cons i der ed al l cont ent i ons r ai s ed bythe part i es and conc l ude thatno f u r t h e rd i s c u s s i o n i s n e c e s s a r y. T he j udgm entof the D i s t r i ctC our tw i l l be af fi r m ed.