Court Opinion

ID: 3002649
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:31:57.852524+00
Date Added: 2024-06-11T11:45:50.421869
License: Public Domain

In the

United States Court of Appeals
              For the Seventh Circuit

No. 08-1359

INEOS P OLYMERS INCORPORATED ,
                                                 Plaintiff-Appellant,
                                 v.

BASF C ATALYSTS and BASF
A KTIENGESELLSCH,
                                              Defendants-Appellees.

            Appeal from the United States District Court
       for the Northern District of Illinois, Eastern Division.
            No. 1:07-cv-02817—Milton I. Shadur, Judge.

   A RGUED O CTOBE R 21, 2008—D ECIDED JANUARY 13, 2009

 Before R IPPLE, E VANS and S YKES, Circuit Judges.
  R IPPLE, Circuit Judge. INEOS Polymers Incorporated
(“INEOS Polymers”) brought this action against BASF
Catalysts and BASF Aktiengesellsch (“BASF AG”) for
breach of contract and tortious interference with con-
tractual rights. The district court dismissed the com-
plaint with prejudice, and INEOS Polymers appealed. For
the reasons set forth in this opinion, we now reverse the
judgment of the district court and remand for further
proceedings.
2                                               No. 08-1359

                              I
                     BACKGROUND
A. Facts
                1. The Supply Agreement
  In 1992, Amoco Chemical Company, a subsidiary of
Amoco Corporation, outsourced the production of its
polypropylene catalyst, known as “CD-Catalyst,” to
Catalyst Resources, Inc. (“CRI”), a company owned by
Phillips Petroleum Company (“Phillips”). The agreement
reached between Amoco Chemical and CRI was embodied
in a long-term supply agreement (“Supply Agreement”).
According to the terms of the Supply Agreement, CRI
agreed to build a production facility in Texas, and
Amoco Chemical agreed to pay the cost of the facility
over the course of a ten-year period through its pur-
chasing commitments.
  The detailed Supply Agreement is over one hundred
pages long and includes terms for production and pricing,
as well as more general contractual terms. The dispute
in this case centers on the interpretation of Articles 17 and
19 of the contract. Article 17, entitled “The Right of First
Refusal Clause,” states in relevant part:
    17.A. During the term of this Agreement, neither CRI
    nor Phillips, which indirectly wholly owns CRI, shall
    sell, transfer, assign, grant any option with respect to,
    merge, or otherwise dispose of any of the ownership or
    control of CRI, or any part of the Plant or of the Plant
    Site, or allow any of the foregoing to occur, unless: (i)
    CRI or Phillips has received a bona fide arm’s-length
    offer to transfer the entire ownership or control of CRI,
No. 08-1359                                                  3

    or to transfer the ownership or control of certain
    assets of CRI, which assets include but are not
    limited to the entirety of the Plant and the Plant Site, to
    such party or parties; (ii) CRI or Phillips has deter-
    mined that it is willing to accept such offer; (iii) CRI or
    Phillips has notified Amoco, in writing, of the terms
    and conditions of such offer; (iv) CRI or Phillips has
    first afforded Amoco the option to buy all of CRI or
    to buy all of the certain assets of CRI, which
    assets include but are not limited to the entirety of the
    Plant and the Plant Site, whichever is applicable, on
    terms and conditions no less favorable to Amoco than
    those contained in the offer; and (v) Amoco does not
    exercise its option to buy all of CRI or to buy all of the
    certain assets, which assets include but are not
    limited to the entirety of the Plant and the Plant Site,
    whichever is applicable, on such terms and condi-
    tions within ninety (90) days of receipt of the written
    notification referred to in (iii) above.
R.50-2, Ex. A at 95-96. Article 17.B. goes on to state that
the right of first refusal does not apply to transfers of
ownership to any company wholly owned by Phillips.
Article 17.C. provides that, in the event that Amoco fails
to exercise its option, and CRI completes the transaction,
the transferee in those circumstances would continue to
be bound by the Supply Agreement, including specifically
Article 17.A. See id. at 96-97.
  Also at issue is one of the “General Provisions” of Article
19, specifically Article 19.A., concerning “Assignment”:
    Assignment. Neither party may assign this Agree-
    ment, or any part thereof, without the prior written
4                                                No. 08-1359

    consent of the other, except that Amoco may assign
    this Agreement in its entirety only without the
    consent of CRI at any time to an entity owned fifty
    percent (50%) or more, directly or indirectly, by
    Amoco Corporation, and CRI may assign this Agree-
    ment in its entirety only without the consent of Amoco
    to any company one hundred percent (100%) owned,
    directly or indirectly, by Phillips. Any other attempted
    assignment without the other party’s consent shall be
    void. The terms of this Agreement shall be binding
    upon and inure to the benefit of the parties hereto
    and their successors and permitted delegatees and
    assignees.
Id. at 100.

                  2. Corporate Changes
  Over the years since the Supply Agreement was
entered, each party has undergone a number of corporate
mergers, restructurings or changes in ownership, which
are crucial to understanding the parties’ claims in this
appeal. The corporate evolution of both parties is set
forth below.
 In 1995, Amoco Chemical assigned its rights and duties
under the Supply Agreement to Amoco Polymers.1 On
December 31, 1998, Amoco Corporation, the parent of
Amoco Chemical and indirect parent of Amoco Polymers,
merged with a subsidiary of The British Petroleum Com-

1
  There is no suggestion in the record that CRI objected to
this action as an impermissible assignment under Article 19.A.
No. 08-1359                                                  5

pany p.l.c. (“BP”). The merged entity was renamed BP
Amoco Corporation. Subsequent to this merger, Amoco
Polymers was renamed BP Amoco Polymers, Inc.2
   In 2005, BP announced a corporate reorganization of
its petrochemical and refining business. Pursuant to this
reorganization, on March 31, 2005, the shares of BP Amoco
Polymers were transferred to a newly formed limited
liability company, indirectly owned by BP, called O & D
USA LLC. On May 24, 2005, O & D USA LLC was
renamed Innovene USA LLC, and BP Amoco Polymers
was renamed Innovene Polymers, Inc. Later that same
year, INEOS US Intermediate Holding Company LLC
acquired Innovene LLC, the parent company of both
Innovene USA LLC and Innovene Polymers. On May 31,
2006, the entities changed their names to INEOS USA
LLC and INEOS Polymers, Inc., respectively.
  On the CRI side of the transaction, in 1994, Mallinckrodt
purchased CRI, including the plant and CRI’s rights and
obligations under the Supply Agreement. By letters
dated October 13, 1993, and December 17, 1993, Amoco
waived its right of first refusal under Article 17 with
respect to the purchase of CRI by Mallinckrodt. In 1998,
another company, Engelhard purchased CRI’s assets
from Mallinckrodt; again, Amoco Polymers waived its
right of first refusal.3 In 1999, and again in 2005, Engelhard

2
   The successor to CRI did not object to this merger as viola-
tive of Article 19.A.
3
    Specifically, the letter dated March 24, 1998, stated:
      1. Upon Amoco’s receipt of a fully executed copy of this
                                                 (continued...)
6                                                      No. 08-1359

entered into a sale/leaseback transaction first with Chase
Equipment Leasing, Inc., and later with Key Corporate
Capital, that involved assets subject to Article 17; with
respect to both of those transactions, Amoco waived its
right of first refusal. See R.50-2, Exs. C & D. In June 2006,
BASF AG “announced the completion of an acquisition
whereby Engelhard became a wholly owned subsidiary
of BASF AG and was subsequently renamed and con-
verted to BASF Catalysts.” R.50-2, ¶ 40.4
  The corporate evolution of the parties to the Supply
Agreement, set forth above, are embodied in the fol-
lowing chart:

3
    (...continued)
       letter, Amoco will be deemed to have waived its rights of
       first refusal under Article 17 of the Agreement only for the
       transaction proposed in the February 23, 1998 letter of intent
       between Mallinckrodt and Engelhard (the “Letter of In-
       tent”), provided that the transaction set forth in the Letter
       of Intent is consummated by December 31, 1998. Article 17
       of the Agreement shall remain in full force and effect and
       apply to all other transfers described in Article 17 and
       shall apply to any sale or transfer by Mallinckrodt to
       Engelhard of assets covered by Article 17 if such occurs
       after December 31, 1998.
R.50-2, Ex. B. The letter made no mention of Article 19.A.
4
  Prior to this transaction, BASF AG, through a wholly owned
subsidiary had attempted a hostile takeover of Engelhard.
Specifically, it had made an all-cash proposal to acquire all
outstanding common stock. The board of Engelhard initially
rejected the offers and proposals of BASF AG; however, on
May 29, 2006, the board approved a merger agreement.
No. 08-1359                                                                  7

         Supply Agreement: History of the Parties
Date    BASF Catalysts    INEOS Polymers          Transaction/Event

1992    CRI               Amoco Chemical          Original supply agree-
                                                  ment

1994    Mallinckrodt                              Mallinckrodt buys CRI
                                                  in stock purchases

1995                      Amoco Polymers, Permitted assignment
                          Inc.            to Amoco Polymers,
                                          Inc.

1998    Engelhard                                 Engelhard buys CRI
                                                  a s s e t s f r o m
                                                  Mallinkrodt

1998/                     BP Amoco Poly- 1999 name change fol-
1999                      mers, Inc.     lowing 1998 Amoco
                                         Corp. merger into BP
                                         subsidiary

2005                      In n o v e n e   P o ly- Name change follow-
                          mers, Inc.               ing BP internal reorga-
                                                   nization

2005/                     INEOS Polymers, 2006 name change fol-
2006                      Inc.            lowing 2005 INEOS
                                          Holding acquisition of
                                          Innovene Polym ers
                                          indirect parent

2006    BASF   Catalyst                           Engelhard merges into
        LLC                                       BASF AG subsidiary
8                                                No. 08-1359

Appellant’s Br. at 12 (footnote omitted).
  When INEOS Polymers became aware of the Engelhard-
BASF AG transaction, it informed Engelhard and BASF
Catalysts that it believed that the change of ownership
had triggered Article 17’s right of first refusal. BASF
Catalysts denied that Article 17 was triggered by the
transaction. Subsequently, BASF Catalysts discontinued
discussions with INEOS Polymers concerning plant
improvements unless INEOS Polymers “abandoned its
efforts to exercise the right of first refusal.” R.50-2, ¶ 48.

B. District Court Proceedings
  INEOS Polymers brought an action in the United States
District Court for the Northern District of Illinois
against BASF Catalysts and BASF AG alleging breach of
contract and tortious interference with contractual
rights, respectively. BASF Catalysts and BASF AG moved
to dismiss the complaint on various grounds, one of
which was that INEOS Polymers was an impermissible
assignee of the Supply Agreement and, therefore, could not
enforce the rights set forth in that agreement. The district
court agreed and dismissed INEOS Polymers’ amended
complaint on the ground that, as an impermissible as-
signee, it could not maintain an action to enforce the
contract.
  INEOS Polymers moved for reconsideration and for
leave to file a second amended complaint; the district
court granted the motions, but again dismissed the com-
plaint with prejudice on the same ground. The district
court summarized its holding accordingly:
No. 08-1359                                                 9

    In sum, the bottom line remains that INEOS is just
    not an entity owned 50% or more, directly or indi-
    rectly, by Amoco Corporation. And that being so, it is
    not within the limited universe of permitted assignees
    that was carefully marked out by the original con-
    tracting parties when they put their deal together.
    Hence the motion to reject INEOS’ attempted enforce-
    ment of Art. 17.A is well taken. And that calls for
    dismissal not only of the [second amended complaint]
    but also of the action itself, for INEOS’ successive
    struggles to escape that result have confirmed that the
    basic defect on which this Court has elaborated at
    some length, both in Opinion I and this opinion, is
    not curable.
R.64 at 8.5

                              II
                       DISCUSSION
  As we have just noted, the sole basis on which the
district court granted the defendants’ motion to dismiss
was that INEOS Polymers could not enforce any rights
under the contract. According to the district court, the

5
   Because the district court dismissed the action on the
ground that INEOS Polymers was an impermissible assignee,
it did not reach the merits of INEOS Polymers’ claims, nor did
it address any of the other arguments in support of the motion
to dismiss made by BASF Catalysts or BASF AG. On appeal,
neither BASF Catalysts nor BASF AG urges us to affirm the
district court’s judgment on any other ground.
10                                                  No. 08-1359

corporate transactions that transformed BP Amoco Poly-
mers into INEOS Polymers involved an assignment of
rights under the Supply Agreement to an entity not
“owned fifty percent (50%) or more, directly or indirectly,
by Amoco Corporation.” Therefore, the district court
concluded, INEOS Polymers was an impermissible as-
signee and could not maintain an action for breach of the
Supply Agreement vis a vis BASF Catalysts and BASF AG.
   “We review de novo a district court’s dismissal of a
complaint for failure to state a claim. In our review, we
must accept the allegations in the plaintiff’s complaint as
true and draw all reasonable inferences in favor of
the plaintiff.” Vill. of DePue, Ill. v. Exxon Mobil Corp., 537
F.3d 775, 782 (7th Cir. 2008). A complaint will withstand
a motion to dismiss if it provides a “ ‘short and plain
statement of the claim showing that the pleader is
entitled to relief’ that is also sufficient to provide the
defendant with ‘fair notice’ of the claim and its basis.”
Windy City Metal Fabricators & Supply, Inc. v. CIT
Technical Fin. Servs., Inc., 536 F.3d 663 (7th Cir. 2008) (citing
Bell Atl. Corp. v. Twombly, ___ U.S. ___, 127 S. Ct. 1955, 1964
(2007); Fed. R. Civ. P. 8(a)(2)). “In order to demonstrate
that he is entitled to relief, however, the pleader must
show through his allegations that ‘it is plausible, rather
than merely speculative, that he is entitled to re-
lief.’ ” Id. (quoting Tamayo v. Blagojevich, 526 F.3d 1074,
1083 (7th Cir. 2008)).
     When reviewing the dismissal of a breach of contract
     claim the meaning of the contract “must be determined
     from the words or language used, and a court cannot
No. 08-1359                                                   11

    place a construction on the contract which is contrary
    to the plain and obvious meaning of the language.” If
    the district court determines that the contract is unam-
    biguous, it may determine its meaning as a matter of
    law. The unambiguous contract controls over con-
    trary allegations in the plaintiff’s complaint.
McWane, Inc. v. Crow Chicago Indus., Inc., 224 F.3d 582, 584
(7th Cir. 2000) (quoting Johnstowne Centre P’ship v. Chin, 458
N.E.2d 480, 481 (Ill. 1982); additional citations omitted).

A. Language and Structure of the Supply Agreement
  In order to uphold the district court’s judgment dis-
missing INEOS Polymers’ action, we must conclude that,
based on a clear and unambiguous reading of the
Supply Agreement, Article 19.A. requires the parties to
obtain the other’s consent prior to any change in owner-
ship or control. We do not believe that the language or
structure of the contract allows us to reach that conclusion.
   First, the district court’s interpretation of Article 19.A. is
at odds with the common meaning and use of the
terms “assignment” and “change in corporate control.” We
made clear in Baxter Healthcare Corp. v. O.R. Concepts, Inc.,
69 F.3d 785 (7th Cir. 1995), that these terms are not synony-
mous. In that case, Baxter had entered into a distribu-
tion agreement with O.R. Concepts. During the term of
the agreement, O.R. Concepts sold ninety-five percent of
its stock to a third party, Vital Signs. Baxter sued O.R.
claiming that it “was in breach of the Agreement because
the sale of stock constituted an assignment of O.R.’s
interest in the Agreement to Vital Signs. Baxter asserted
12                                                 No. 08-1359

that such an assignment was in violation of a provision
of the Agreement requiring Baxter’s written consent
prior to O.R. assigning its interest in the Agreement.” Id.
at 787. We disagreed and explained accordingly:
     Baxter fails to demonstrate how the change of owner-
     ship of O.R. stock constitutes an assignment of O.R.’s
     interests in the Agreement. It is well settled that a
     change in corporate ownership does not constitute a
     variation of that corporation’s contractual obligations.
     U.S. Can Co. v. NLRB, 984 F.2d 864, 868 (7th Cir. 1993)
     (“A sale of stock, like a merger, does not affect the
     contractual obligations of the corporation.”); United
     States Shoe Corp. v. Hackett, 793 F.2d 161, 163-164 (7th
     Cir. 1986). Baxter ignores the most fundamental
     characteristic of a corporate entity: its independence.
     Flynn v. Allis Chalmers Corp., 634 N.E.2d 8, 10 ([Ill. App.
     Ct.] 1994) (“In Illinois, a corporation is deemed a
     distinct legal entity, separate from other corporations
     with which it may be affiliated.”); Peoples Energy Corp.
     v. Illinois Commerce Comm’n, 492 N.E.2d 551, 558 ([Ill.
     App. Ct.] 1986) (“The general rule . . . is that holding
     companies and their subsidiaries are separate legal
     entities.”). O.R. has at all times remained an independ-
     ent and functioning organization. That fact has not
     been affected by its change in ownership. The most
     persuasive demonstration of this is that Baxter itself
     chose O.R. as the proper party to sue in this action, not
     its owners. Because the change in stock ownership did
     not change O.R.’s obligations under the Agreement,
     O.R.’s interests in the Agreement are still O.R.’s inter-
     ests. They have not been assigned to anyone.
No. 08-1359                                                13

Id. at 788 (parallel citations omitted). Absent special
circumstances, therefore, a change in ownership does
not affect the contractual obligations of the company,
that is, it does not effect an assignment of rights.
   Applying this general rule to the present circumstances,
the transfer of BP Amoco Polymers stock to another
company did not constitute an assignment of rights for
purposes of Article 19.A. Article 19.A. addresses only
assignments of rights under the Supply Agreement. It
does not define the term “assignment” or “assign”; there-
fore, according to Illinois law, the term must be accorded
its common and usual meaning. See Dean Mgmt., Inc. v. TBS
Const., Inc., 790 N.E.2d 934, 940 (Ill. App. Ct. 2003) (“Be-
cause the contract does not define ‘written notice,’ we must
give the term its common and generally accepted mean-
ing.” (internal citations omitted)); Michigan Ave. Nat’l Bank
of Chicago v. Evans, Inc., 531 N.E.2d 872 (Ill. App. Ct. 1988)
(“Since the lease does not define the term ‘sale’, it will be
assumed that the word is intended to be used in its usual
meaning.”). As set forth above, the general rule is
that a change in corporate ownership does not
effectuate an assignment of rights. Baxter Healthcare, 69
F.3d at 788 (“It is well settled that a change in corporate
ownership does not constitute a variation of that corpora-
tion’s contractual obligations.”).
   BASF Catalysts acknowledges this general rule, however,
it claims that, in the present case, the general rule simply
does not apply: “The distinction that INEOS ignores is
that those cases simply stand for the proposition that non-
assignment clauses are not generally triggered by changes
in control of a contracting party . . . .” Appellee’s Br. at
14                                                    No. 08-1359

16. This general principle, BASF Catalysts continues, “is
contrasted with Article 19.A. of the Agreement, which
specifies that no change in control of Amoco Chemical
from Amoco Corporation, or of CRI from Phillips, would
be permitted without the consent of the other party.” Id.
(emphasis added).
   We cannot agree that the language of Article 19.A. takes
it outside of the general rule articulated in Baxter
Healthcare. Article 19.A. is completely silent with respect
to a change in ownership or a change in control. By con-
trast, it explicitly addresses assignments of the Supply
Agreement and provides that, with an exception for
certain intra-corporate transfers, the rights may not be
assigned absent consent by the parties.
   Essentially, the district court read the exception in the
first sentence of Article 19.A.,6 not as providing a more
permissive approach for assignments to affiliated corpora-
tions, but as prohibiting any change in ownership without
prior consent. However, we cannot square the district
court’s reading of Article 19.A. with general rules of
contract interpretation or with the other provisions of the

6
  See R.50-2, Ex. A at 95-96 (“Neither party may assign this
Agreement, or any part thereof, without the prior written
consent of the other, except that Amoco may assign this Agreement
in its entirety only without the consent of CRI at any time to an
entity owned fifty percent (50%) or more, directly or indirectly, by
Amoco Corporation, and CRI may assign this Agreement in its
entirety only without the consent of Amoco to any company
one hundred percent (100%) owned, directly or indirectly, by
Phillips.”) (emphasis added).
No. 08-1359                                                 15

Supply Agreement. The “except” clause of Article 19.A.
follows the absolute bar to assignment of contractual rights
found earlier in the same sentence: “Neither party may
assign this Agreement, or any part thereof, without the
prior written consent of the other . . . .” The “except”
clause, therefore, provides a permissive exception to the
general prohibition of assignment of contractual rights to
affiliate entities.
  Furthermore, the district court’s interpretation of
Article 19.A. makes other portions of that article super-
fluous. According to the district court, any change in
corporate ownership is governed by the consent require-
ment of Article 19.A.; in other words, any successor
corporation also is an assignee for purposes of Article 19.A.
However, the provision at the end of Article 19.A.—that
the Supply Agreement should be binding on the parties’
“successors and permitted delegatees and assign-
ees”—does not treat successors and assignees as inter-
changeable. Therefore, equating successors and assignees,
for purposes of Article 19.A., would violate the principle
of contract interpretation that “meaning and effect must
be given to every part of the contract including all its
terms and provisions, so no part is rendered meaningless
or surplusage unless absolutely necessary.” Coles-Mountie
Elec. Co-op. v. City of Sullivan, 709 N.E.2d 249, 253 (Ill.
App. Ct. 1999); see also Miniata v. Ed Miniata, Inc., 315 F.3d
712, 715 (7th Cir. 2002) (applying the Illinois rule of
construction).
  Finally, the district court’s interpretation of Article 19.A.
would render meaningless much of Article 17 and, there-
fore, violate the same rule of construction. If Article 19.A.’s
16                                                  No. 08-1359

language governing assignments also prohibits any
change of control or ownership without consent, then
Article 17’s specific proscription of Phillips’ ability to “sell,
transfer, assign, grant any option with respect to, merge
or otherwise dispose of any of the ownership or control
of CRI,” absent certain conditions being met, is mere
surplusage. Article 17 specifically addresses a change
in corporate control. It provides that neither CRI nor
Phillips shall “sell, transfer, assign, grant any option
with respect to, merge or otherwise dispose of any of the
ownership or control of CRI” absent certain conditions being
met, namely Amoco being afforded the right of first
refusal. R.50-2, Ex. A at 95-96 (emphasis added).7 The
separate mention of “dispos[ition] of any of the owner-
ship or control of CRI” demonstrates that, with respect
to Article 17.A, the parties chose to mention explicitly a
change in ownership or control, but, with respect to
Article 19.A., did not.
  In sum, according the terms of the Supply Agreement
their usual meaning and giving effect to all of the terms
of the Supply Agreement, we cannot conclude that the
face of the contract is susceptible only to the district
court’s interpretation. By contrast, the language and
structure of the Supply Agreement strongly suggest that

7
  Given that the CD-Catalyst was “vital” to the polypropylene
production of Amoco Chemical and its licensees, it is under-
standable why it would insist on a right to first refusal. It
needed to ensure that whoever succeeded to CRI’s business
was capable of producing the CD-Catalyst according to specifi-
cations, within the parties’ pricing structure, for the long
term. See R.50-2 ¶ 2.
No. 08-1359                                                    17

Article 19.A. is a provision meant to address only assign-
ment of rights. Because the corporate mutations that
occurred between 1992 and 2006 on Amoco’s side of the
Supply Agreement did not involve assignments of rights
that required consent by CRI (or its successors), INEOS
Polymers is not an impermissible assignee. Consequently,
at this stage in the litigation, we cannot conclude that
INEOS Polymers is unable to prosecute this action
against BASF Catalysts and BASF AG.

B. Course of Performance
   The parties’ course of performance over the life of the
Supply Agreement also calls into question the district
court’s interpretation. With respect to all of the corporate
reorganizations and changes in ownership during the
life of the Supply Agreement, no party raised Article 19.A.
as a barrier to any transaction until the present dispute
arose. By contrast, the documents executed at the time
of each of the transfers of ownership of CRI (or one of
its successors) showed that the parties understood that
Article 17.A., giving Amoco a right to first refusal, not
Article 19.A.’s assignment language, was implicated by
the sale.8

8
  The letters with respect to the sale of CRI to Mallinckrodt are
not attached to the Second Amended Complaint, but their
contents are alleged in ¶ 35. See R.50-2. These allegations
must be accepted as true for purposes of a motion to dismiss.
Vill. of DePue, Ill. v. Exxon Mobil Corp., 537 F.3d 775, 782 (7th
Cir. 2008). The letter with respect to the sale by Mallinckrodt
                                                    (continued...)
18                                                 No. 08-1359

  Furthermore, for its part, BASF Catalysts has not been
able to articulate with any consistency which corporate
changes it believed were impermissible and why it did
not object, contemporaneously, to those assignments.
For instance, in the district court, BASF Catalysts
initially claimed that the merger of Amoco with a BP
subsidiary (with the consequent change in ownership of
Amoco Polymers) was an impermissible assignment, see
R.36 at 8-9; however, it never introduced evidence of a
contemporaneous objection to that change in ownership
under Article 19.A. It subsequently changed its position
in the district court and stated that it was not objecting
to the merger with BP, but offered no rationale why it
was abandoning this claim. See R.56 at 6 n.2. However,
BASF Catalysts now offers the following explanation as
to why the creation of BP Amoco Polymers, after the
merger of Amoco Corporation with a BP subsidiary, was
acceptable: “The change of ownership language applied
only to Amoco Chemical and CRI; their ownership by
intermediate companies was irrelevant, so long as they
were ultimately owned by Amoco Corporation and
Phillips (or their successors).” Appellee’s Br. at 23.
  Given BASF Catalysts’ evolving position with respect
to the BP merger, it is hard to disagree with INEOS Poly-
mers’ claim that “BASF had to invent this distinction in

8
  (...continued)
to Engelhard, see R.50-2, Ex. B, as well as the leaseback agree-
ments entered by Engelhard, see R.50-2, Exs. C and D, are all
attached to the Second Amended Complaint and reference
Article 17, but make no mention of rights under Article 19.A.
No. 08-1359                                                   19

order to explain why INEOS Holding’s acquisition re-
quired consent but the prior transactions involving BP and
BASF’s own acquisition of Engelhard did not.” Reply Br.
at 9. It is difficult to reconcile this new argument of
BASF Catalysts with its stated understanding of Article
19.A.—that it is a general prohibition against one party
“foist[ing] an entity controlled by a stranger onto the
other without the other’s consent.” See Appellee’s Br. at 7.
  Ineos Polymers alleged in its complaint conduct by the
parties that strongly suggests that the parties understood
that the requirements of Article 17, as opposed to those
of Article 19.A., were implicated by changes in corporate
ownership. These allegations, when taken as true, serve
as further evidence that the district court’s interpretation
of the Supply Agreement cannot be upheld as a matter
of law. Cf. Harris Trust & Sav. Bank v. Hirsch, 445 N.E.2d
1236 (Ill. App. Ct. 1983) (“[W]hile conduct is not conclu-
sive, the court will look to the parties’ action under a
contract as strongest evidence of their meaning since
the parties to an agreement know best what they meant.”).9

                         Conclusion
  For the reasons set forth above, it is not clear from
the face of the contract that INEOS Polymers is an imper-
missible assignee—the sole basis for the district

9
  Because we determine that the contract language is susceptible
to a reading that allows INEOS Polymers to maintain this
action, we need not reach, at this stage in the litigation, INEOS
Polymers’ arguments concerning waiver and estoppel.
20                                              No. 08-1359

court’s dismissal of INEOS Polymers’ action against
BASF Catalysts and BASF AG. Consequently, the judgment
of the district court is reversed, and the case is remanded
for further proceedings consistent with this opinion.
Circuit Rule 36 shall apply. INEOS Polymers may recover
its costs in this court.
                                    R EVERSED and R EMANDED

                          1-13-09