Opinion ID: 171119
Heading Depth: 1
Heading Rank: 2

Heading: UCC or Oklahoma common law

Text: Before turning to the merits, we must address an issue that both the district court and the parties overlooked: whether the Uniform Commercial Code (UCC), as enacted by Oklahoma, or Oklahoma common law contract principles govern these appeals. [6] Our diversity jurisdiction requires that we ascertain and apply the state law rather than reach[ing][our] own judgment regarding the substance of the state law in question. Wade v. Emcasco Ins. Co., 483 F.3d 657, 665 (10th Cir. 2007) (internal quotation marks omitted) (quoting Wankier v. Crown Equip. Corp., 353 F.3d 862, 866 (10th Cir.2003)). Generally, we would follow the most recent decisions of the Oklahoma Supreme Court, id. at 665-66; however, in the case at bar, the Oklahoma Supreme Court has not considered whether the UCC or the common law governs a beer distributorship agreement. Accordingly, we must analyze decisions from the lower state courts in Oklahoma, decisions from appellate courts in other states, and decisions from the federal district courts in Oklahoma in order to predict what [Oklahoma's] highest court would do. Id. at 666. In Oklahoma, Article 2 of the UCC governs transactions in goods. Okla Stat. tit. 12A, § 2-102. The statute defines goods as all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale. Id. § 2-105(1). There is no doubt that beer satisfies the statutory definition of a good; however, we must determine whether a distribution contract for beer constitutes a transaction in goods. Although the Oklahoma Supreme Court has not yet addressed how to determine if a contract that provides both services and goods fits within Article 2's scope, it appears that Oklahoma courts would apply the predominant factor test utilized by most other state courts. See Gilbert Cent. Corp. v. State, 716 P.2d 654, 663 (Okla.1986) (applying the predominant factor test in another context to determine if a highway construction contract constituted the sale of personal property); see also Pepsi-Cola Bottling Co. of Pittsburg, Inc. v. PepsiCo, Inc., 431 F.3d 1241, 1255 n. 7 (10th Cir.2005) (noting that New York law applies the predominant factor test to determine if a contract falls within the scope of Article 2); Belleville Toyota, Inc. v. Toyota Motor Sales, U.S.A., Inc., 199 Ill.2d 325, 264 Ill.Dec. 283, 770 N.E.2d 177, 194 (2002) (applying the predominant purpose test to determine if Article 2 applied to an automobile dealership agreement); East Hill Marine, Inc. v. Rinker Boat Co., Inc., 229 S.W.3d 813, 818 (Tex.App.2007) (applying the dominant factor test to determine if a dealership contract fit within Article 2's scope). The majority of other courts conclude that Article 2 governs distribution agreements because the sale of goods is the predominant factor. [7] See, e.g., Pepsi-Cola Bottling Co., 431 F.3d at 1255 n. 7 (concluding that the predominant factor test dictates that a distributorship agreement for soft drinks fits within Article 2's scope); Intercorp, Inc. v. Pennzoil Co., 877 F.2d 1524, 1527-28 (11th Cir.1989) (holding that Alabama law dictated that an oil products distributorship agreement fit within the scope of Article 2); Jo-Ann, Inc. v. Alfin Fragrances, Inc., 731 F.Supp. 149, 153-55 (D.N.J.1989) (applying New Jersey law and concluding that Article 2 applied to a distributorship agreement for cosmetic products); Belleville Toyota, 264 Ill.Dec. 283, 770 N.E.2d at 196 (concluding that Article 2 governed an automobile dealership agreement); E. Hill Marine, Inc., 229 S.W.3d at 819-20 (applying the dominant factor test and determining that Article 2 applies to a boat distributorship agreement). In addition to the strong majority of jurisdictions that conclude that Article 2 governs distributorship agreements, one Oklahoma federal district court applied the UCC, without further discussion, to a distributor agreement. Phillips Machinery Co. v. LeBlond, Inc., 494 F.Supp. 318, 320 (N.D.Okla.1980). The combination of these decisions leads us to predict that, if faced with the current situation, the Oklahoma Supreme Court would apply the UCC to the contract dispute at the heart of these appeals.