Opinion ID: 3016904
Heading Depth: 3
Heading Rank: 4

Heading: Quality Control Problems with the 1065 Valves

Text: In awarding lost profits, the Magistrate Judge did not consider whether the prototype 1065 valves supplied by Specialty satisfied Superior’s quality control requirements. This should have been determined. Whether the FAI approval was improperly given, while irrelevant to the adequate assurance inquiry, is relevant to damages. To recover lost profits under Pennsylvania law, Specialty must establish to a reasonable certainty when and if the valves would meet specifications. Advent Sys., 925 F.2d at 680. Neither Specialty nor its subcontractor had experience manufacturing the valves, so we do not have a course of performance upon which to rely. Therefore, Specialty had to present other evidence of substantial compliance with the contract requirements before lost profits could be recoverable. The M agistrate Judge made no findings on the matter, stating in a footnote: “It would be remiss for this court to fail to consider Superior Shell’s responsibility to deliver a safe 27 product to market. In that respect, the need to conduct further testing was not only reasonable but apparently necessary.” For Specialty to recover lost profits for the 1065 valves, on remand the Magistrate Judge must find that Speciality introduced evidence establishing when (if ever) the valves could have met Superior’s quality control requirements (assuming Superior worked with Speciality in good faith).