Opinion ID: 2708372
Heading Depth: 2
Heading Rank: 1

Heading: The Parties and the McCoy Accident

Text: Appellees Gamesa Wind US and Gamesa Technology Corp. (collectively “Gamesa”) are wholly-owned domestic subsidiaries of a non-party Spanish manufacturer of wind turbines. They contracted with Minnesota-based appellants Outland Renewable Energy and Outland Energy Services (collectively “Outland,” though their names have since changed) to provide maintenance services for Gamesa wind turbines. Utility company Iberdrola Renewables (“Iberdrola”) operated Gamesa-made wind turbines at the Cayuga Ridge Wind Farm in Illinois. While servicing a wind turbine at Cayuga Ridge, Outland employee Aaron McCoy was electrocuted when the turbine unexpectedly re-energized. McCoy began this case by filing a personal injury case in state court against Iberdrola and Gamesa Technology Corp. The case was removed to federal court on the basis of diversity of citizenship. Iberdrola then impleaded Gamesa Wind US and Outland to seek indemnification for the McCoy accident based on contract and the Illinois Joint Tortfeasor Contribution Act (“JTCA”). The various defendants then filed numerous cross-claims and counterclaims related to the personal injury dispute. 4 No. 13-3350 B. Outland’s Original Counterclaims and the Settlement This appeal concerns only Outland’s third-party counterclaims against Gamesa. Gamesa asserted third-party claims against Outland for contribution for the McCoy accident based on contractual indemnification and the Illinois JTCA. Outland responded with 22 counterclaims, raising a host of new issues and greatly widening the scope of the case. These included indemnification for the McCoy accident; federal antitrust claims under the Sherman and Clayton Acts; state antitrust claims under Illinois, Minnesota, and Texas law; and numerous other state law claims. Outland makes only jurisdictional arguments regarding these claims on appeal. In response to Outland’s third-party counterclaims, Gamesa attempted to enforce a contractual provision providing for venue exclusively in Pennsylvania, but the district court found the provision invalid under Illinois law. Outland then moved for a preliminary injunction against Gamesa’s allegedly unfair competitive practices. After a five-day hearing, Outland’s request for a preliminary injunction was denied based on Illinois substantive law. Gamesa then moved for judgment on the pleadings under Rule 12(c). The district court dismissed all but one of Outland’s counterclaims for failure to state claims for relief. Only the claim for indemnification related to the McCoy accident survived. McCoy, Gamesa, and Outland then settled. The district court accepted the settlement with a finding of good faith, protecting Outland and Gamesa from further claims for contribution under the Illinois JTCA, see 740 Ill. Comp. Stat. 100/2, and all claims arising from the accident among those parties were dismissed. At that point, only the original personal injury dispute between McCoy and No. 13-3350 5 Iberdrola remained, but the court had not issued a final judgment. C. Outland’s Proposed Amended Counterclaims About six months after the district court dismissed Outland’s third-party counterclaims, Outland moved for leave to amend its counterclaims against Gamesa. Outland presented seven proposed amended counterclaims and argued for the first time that the substantive law of Minnesota, not Illinois, should apply. The district court determined that Outland had waived the choice of law issue. It then denied leave to amend based on futility and undue delay. Outland focuses its appeal on the merits of the proposed amended counterclaims, so we follow suit. The proposed amended counterclaims arose from the following alleged events from early 2011. Gamesa attempted to acquire Outland but was rebuffed. Duke Energy, a utility company and Gamesa customer, then entered an agreement to purchase a twenty-five percent stake in Outland. Duke and Outland also began negotiating a possible fleet services agreement, which would have been very lucrative for Outland by making it the main provider of maintenance services for Duke-operated wind turbines. They also discussed a possible agreement for Duke to purchase all of Outland, which would be funded in part by an institutional investor. During these negotiations, the federal Occupational Safety and Health Administration (“OSHA”) issued six citations to Outland based on the McCoy accident. Shortly thereafter, Duke informed Gamesa of its ongoing negotiations with Outland. Gamesa made its own offer to provide maintenance services for Duke-operated wind turbines, but Duke 6 No. 13-3350 declined. Gamesa then sent a letter to Outland saying that the OSHA citations resulting from the McCoy accident showed a breach of their maintenance contract. Gamesa stopped issuing new purchase orders to Outland as a result of the alleged breach, which significantly reduced the value of Outland. (For reference, Outland’s revenue from Gamesa purchase orders was over $6 million in 2010.) Duke and Outland eventually closed the complete acquisition agreement, but only after Duke lowered its offer by $15 million after Gamesa stopped issuing purchase orders to Outland. Duke did not enter a contractual fleet services agreement despite having previously “agreed” to do so. Outland alleged that it did not breach its contract with Gamesa and that Gamesa’s letter claiming breach based on the OSHA citations was sent in bad faith. Outland presented three theories of liability based on the resulting change in the value of the complete acquisition agreement—tortious interference with contract; tortious interference with prospective economic advantage; and if the other two theories failed, the generic “prima facie tort,” a problematic concept not adopted by Illinois state courts. The district court determined that these claims would not survive a motion to dismiss and denied leave to amend based on futility. Outland further alleged that Gamesa had been planning to replace Outland with in-house maintenance services but had encouraged Outland to expand and train new personnel. The cessation of new purchase orders after the OSHA citations was done in bad faith to complete this scheme. Outland alleged claims for promissory estoppel based on its detrimental reliance and for breach of fiduciary duty on the theory that Gamesa and Outland had a principal-agent relaNo. 13-3350 7 tionship. The district court denied leave to amend to add these claims because the nearly six months that had passed since the Rule 12(c) dismissal constituted an undue delay that unfairly prejudiced Gamesa. The sixth proposed counterclaim sought indemnification for the OSHA penalties imposed on Outland for the McCoy accident. The district court denied leave to amend based on the settlement order and undue delay. The final proposed counterclaim again alleged federal antitrust violations of the Sherman and Clayton Acts based on Gamesa’s supposed monopoly over its own services and its unusually high market power despite having roughly ten percent of wind turbine sales market. The district court also denied leave to amend these claims based on futility. The district court entered a separate judgment under Federal Rule of Civil Procedure 54(b) on Outland’s counterclaims against Gamesa. Outland then moved to alter or amend the judgment under Rule 59(e), arguing for the first time that the district court lacked subject matter jurisdiction over the original counterclaims. Outland argued that its own federal antitrust claims were too weak even to invoke federal question jurisdiction under 28 U.S.C. § 1331 and alternatively that its own state claims did not fall within the scope of supplemental jurisdiction under 28 U.S.C. § 1367(a). At no point did Outland request the district court to exercise its discretion under § 1367(c), which allows a court to decline supplemental jurisdiction under certain circumstances even when a claim falls within the scope of § 1367(a). The district court denied the motion, and Outland has appealed. 8 No. 13-3350