Opinion ID: 171042
Heading Depth: 1
Heading Rank: 4

Heading: July 2000 Order for UPS Systems and Batteries

Text: In 1999 and 2000, in the midst of the dot-com boom when demand for co-location facilities was high, Level 3 was developing a co-location project in a New York City building, known as the Mondo Condo. An eleven-story building, the Mondo Condo was to provide several co-location centers on different floors, each leased to a different customer. This case centers around equipment ordered for the seventh floor. For that floor, on July 11, 2000 Level 3 ordered from Liebert a number of UPS systems. As part of this order, Level 3 also purchased UPS system batteries rated for 15 minutes of ride-through time, which is the specification indicating how long a battery can carry power to a UPS system in the event of a power outage. As with all previous orders, Liebert was to ship the UPS systems and the battery manufacturer was to ship the batteries directly to the Mondo Condo, where Level 3's contractor would assemble them. Keith Driscoll, a Stillwell-Hansen employee, handled sales for the Mondo Condo site. On September 27, 2000, at a weekly meeting between Level 3 and Liebert, Driscoll informed Anthony Sirotka, Level 3's project manager for the Mondo Condo, that the batteries order would be delayed until March 2001. The battery manufacturer was about six months behind in production because of the dot-com boom. Sirotka became very upset, shouted and cursed at Driscoll, and demanded that Driscoll find replacement batteries within, a matter of hours. According to Driscoll's testimony, Sirotka even suggested that a ride-through time shorter than 15 minutes would suffice if Driscoll could quickly locate replacement batteries. But Sirotka and other Level 3 representatives testified that Driscoll was the one to suggest a shorter, six-minute alternative. Still on September 27, right after the meeting, Driscoll was able to locate four six-minute batteries to replace the delayed order of 15-minute batteries. The six-minute batteries were in storage after a cancelled order, and some were up to two years old, but Driscoll also learned the batteries were in good condition. Immediately after he located the six-minute batteries, Driscoll sent an email to Sirotka. In that email, Driscoll noted the $156,828 deduct to change the battery from GNB 15 minute to the 6 minute GNB, and also mentioned [t]his new battery can be on site in four weeks. Id. at 1615. Although Sirotka and Driscoll both testified that Sirotka had never asked about the replacement batteries' age or storage conditions, their testimonies diverge regarding what Driscoll had disclosed about the batteries. According to Driscoll's testimony, he had specifically told Sirotka on September 27  as well as repeating the same to Sirotka and other Level 3 representatives during the next-day conference call  that the batteries were coming from storage because of a cancelled order, and were up to two years old but in good condition. Sirotka, on the other hand, testified Driscoll had never explained the six-minute batteries were anything but factory-fresh, coming to Level 3 directly from the manufacturer. In fact, Sirotka and his two managers at Level 3 all testified they had understood Driscoll's use of the word new in reference to the six-minute batteries to mean the batteries would be brand-new, just like all other batteries Level 3 had been ordering from Liebert. Approximately two weeks later, on October 6, 2000, Driscoll sent Sirotka another email. In the email, Driscoll explained Level 3's two options regarding the six-minute batteries. He told Sirotka, If you [sic] intention is to use both batteries, you will need to buy these in addition to the original order, quoting a total price of $448,280. Id. at 1619. If, on the other hand, Level 3 want[s] to just replace the battery ... it will be a deduct, just as Driscoll had explained in the September 27 email. Id. Sirotka's same-day response instructed Driscoll to order the 6 minute batteries ASAP and to retain our original order for the 15 minute batteries which will need to be installed when they arrive. Id. Based on this email exchange, Driscoll understood the six-minute batteries to represent merely a temporary solution, to be replaced with the 15-minute batteries when they arrive. That understanding was consistent with what Driscoll subsequently learned in the September 28 conference call with Level 3 representatives, during which they discussed the temporary nature of the six-minute batteries solution. Moreover, Driscoll recalled that Level 3 representatives, in a later meeting, conceded that the six-minute batteries were always considered to be temporary. Sirotka and the other Level 3 representatives, however, testified that the six-minute solution was permanent. Whatever the true state of affairs, there is no evidence that Level 3 ever communicated to Liebert its understanding that the solution was meant to be permanent. The only communication  Sirotka's email instructing Driscoll to add the six-minute batteries to the original order and explaining the 15-minute batteries will need to be installed when they arrive, id. at 1619  indicated the six-minute batteries were temporary. After receiving Sirotka's instruction to order the six-minute batteries in addition to the 15-minute order, Driscoll faxed him a formal quotation for the six-minute batteries. Sirotka immediately signed the quotation and, several weeks later, submitted a corresponding purchase order, finalizing the transaction for Level 3 to receive two sets of batteries. Never before in the course of business between Level 3 and Liebert did the parties face a situation requiring a replacement order of batteries for a UPS system.