Futurefuel Chemical Co. v. Lonza, Inc. ( 2014 )

United States Court of Appeals
For the Eighth Circuit
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No. 12-3433
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FutureFuel Chemical Company
lllllllllllllllllllll Plaintiff - Appellant
v.
Lonza, Inc.
lllllllllllllllllllll Defendant - Appellee
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No. 13-1396
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FutureFuel Chemical Company
lllllllllllllllllllll Plaintiff - Appellant
v.
Lonza, Inc.
lllllllllllllllllllll Defendant - Appellee
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Appeal from United States District Court
for the Eastern District of Arkansas - Batesville
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Submitted: January 13, 2014
Filed: June 27, 2014
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Before WOLLMAN and SHEPHERD, Circuit Judges, and WEBBER,1 District
Judge.
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SHEPHERD, Circuit Judge.
FutureFuel Chemical Company (FFCC) appeals the district court’s2 grant of
summary judgment on its claims of breach of contract and promissory estoppel
against Lonza, Inc. (Lonza). FFCC also appeals district court orders denying FFCC’s
belated request for a jury trial, concerning the unsealing of the court record, and
awarding attorney’s fees to Lonza. For the reasons explained below, we affirm the
grant of summary judgment to Lonza, we dismiss as moot FFCC’s claim that the
district court abused its discretion in denying FFCC’s motion for jury trial, we also
dismiss FFCC’s appeal as it pertains to the unsealing of the record for lack of
appellate jurisdiction, and, finally, we affirm the district court’s grant of attorney’s
fees in this case.
I.
In 2008, Lonza supplied advanced pharmaceutical ingredients to the
pharmaceutical industry. One of its products was trityl losartan (TTL), which Lonza
supplied to Merck Pharmaceuticals. Lonza used Diethoxymethane (DEM), a solvent,
1
The Honorable E. Richard Webber, United States District Judge for the
Eastern District of Missouri, sitting by designation.
2
The Honorable Susan Webber Wright, United States District Judge for the
Eastern District of Arkansas.
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in its manufacture of TTL. In 2008, Lonza learned that it would need a new supplier
for DEM. At the same time, FFCC began exploring the possibility of producing
DEM and approached Lonza about supplying its needs for DEM. Lonza’s
representative immediately informed FFCC that its needs for DEM were volatile and
depended greatly on the amount of recycled DEM it could recover through its
production process.
FFCC proceeded with its plans to begin production of DEM. In the middle of
2008, Lonza representatives visited FFCC’s facility in Arkansas and met with FFCC
representatives. Again, FFCC learned that Lonza’s need of DEM varied depending
upon the success of its recycling and recovery program. After the visit, Lonza and
FFCC began evaluating a potential supply arrangement for DEM. FFCC proposed
that the two parties sign a Letter of Intent that described in broad terms a future
agreement of the parties. FFCC claimed that it needed such an agreement to proceed
with a $1.7 million capital expenditure to construct a DEM processing facility.
After further negotiations, FFCC and Lonza representatives signed a three-page
Letter of Intent on August 25, 2008. Under the heading “Purpose,” the Letter of
Intent provided:
Based upon our discussions concerning the storage and supply of
[DEM] conducted since May 2008 and the information we have
exchanged, we are entering into this Letter of Intent in order to develop
an Agreement under which [FFCC] will store purchased DEM for
[Lonza] and will additionally supply FFCC-manufactured DEM to
Lonza in accordance with Lonza’s specifications for the product.
This Letter of Intent contemplates that the parties will negotiate and
execute a definitive supply agreement (the “Agreement”) on or before
October 1, 2008. It is the intent of the parties to meet to begin
preparation of the Agreement by August 31, 2008.
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This Letter of Intent is intended to confirm our understanding of the
principal terms and conditions of the transaction and our mutual
willingness to proceed in good faith to work toward the execution of a
definitive Agreement consistent with these terms.
Under the heading “Long Term Supply Strategy,” the Letter of Intent provided:
FFCC agrees to configure and modify existing manufacturing equipment
to a state necessary to produce DEM to the quality that meets the
specifications outlined in Table 1.
Lonza agrees to purchase DEM from FFCC at the following volumes:
1,000 metric tons in 2009, 80% of its worldwide demand for 2010 and
80% of its worldwide demand for 2011. Lonza estimates that the
expected DEM usage in 2009 is 1800 metric tons, and 900 metric tons
in 2010 followed by 800 metric tons in 2011.
The Letter of Intent included a price/volume chart that established price per
pound and price per kilogram based upon the amount of DEM purchased annually,
with amounts ranging from more than 1250 metric tons annually to less than 400
metric tons annually.
After signing the Letter of Intent, the parties continued to negotiate for a long-
term supply agreement. Negotiations continued with various draft supply agreements
and counter proposals. In June 2009, almost a year after signing the Letter of Intent,
Lonza informed FFCC that its projected demand for DEM had dropped to between
200 and 250 metric tons due to the success of its recovery process and because Merck
had ordered less TTL than originally expected. In July 2009, Lonza made a “spot”
purchase of 60 metric tons of DEM, however, FFCC charged Lonza a rate that
exceeded the price listed in the Letter of Intent’s pricing chart because FFCC
considered the Letter of Intent to be dormant. In 2010, Lonza made another “spot”
purchase of 79 metric tons of DEM, with FFCC again charging Lonza a price
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exceeding that found in the pricing chart. Later in 2010, Merck withdrew its business
from Lonza, and Lonza sold its TTL production facility.
FFCC initiated this action in Arkansas state court, asserting the Letter of Intent
constituted a binding contract for Lonza to purchase 1000 metric tons of DEM in
2009 and claiming that Lonza had breached the contract. Alternatively, FFCC argued
that promissory estoppel should apply. Lonza removed the case to federal court on
the basis of diversity jurisdiction. The district court then granted Lonza’s motion for
summary judgment, holding (1) the Letter of Intent did not constitute a binding
contract to purchase 1000 metric tons of DEM in 2009 and, thus, Lonza could not
have breached the contract with FFCC, and (2) FFCC was not entitled to relief under
the theory of promissory estoppel because it was unable to show that Lonza made a
promise to purchase 1000 metric tons of DEM in 2009.
After the entry of summary judgment, the district court sua sponte notified the
parties that it intended to unseal all documents the parties had filed under seal in the
case and gave the parties 10 days to file objections. FFCC moved for reconsideration
of the court’s decision to unseal the documents. Before the district court could
review FFCC’s motion for reconsideration, however, FFCC filed its notice of appeal
challenging the district court’s grant of summary judgment. Because the case was on
appeal and the district court no longer had access to the record material in question,
the district court denied the motion for reconsideration without prejudice. The district
court stated that FFCC could refile its motion for reconsideration within 15 days after
this court issues its mandate. The documents in question remain under seal.
Also after the entry of summary judgment, Lonza moved for $105,865.61 in
attorney’s fees. Lonza indicated through its submitted billing records that it
attempted to eliminate the hours worked on FFCC’s promissory estoppel claim from
the attorney’s fees claimed. The district court granted Lonza’s attorney’s fees request
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in full. Lonza also sought $6,840.40 in costs; the district court denied the costs
request except for $350 in filing fees for removal of the action to federal court.
II.
FFCC appealed the district court’s grant of summary judgment and the district
court’s order indicating its intention to unseal the court’s record. FFCC filed a
second appeal challenging the district court’s denial without prejudice of FFCC’s
motion to reconsider the proposal to unseal the documents and the district court’s
grant of attorney’s fees to Lonza. We have consolidated these appeals.
There are four issues presented by these consolidated appeals. First, did the
district court properly grant summary judgment to Lonza? This issue is broken down
into two parts: whether there was a breach of contract or, alternatively, whether
under the doctrine of promissory estoppel, Lonza should be estopped from reneging
on a promise to purchase DEM. Second, if the grant of summary judgment was
improper, did the district court abuse its discretion in denying FFCC’s belated motion
for a jury trial? Third, did the district court err in ordering the trial documents
unsealed? Finally, did the district court err in awarding attorney’s fees or in
calculating the attorney’s fees award?
A. Summary Judgment
The first issue for consideration is whether the district court properly granted
summary judgment in favor of Lonza on the issues of breach of contract and
promissory estoppel. We review a district court’s grant of summary judgment de
novo, BancorpSouth Bank v. Hazelwood Logistics Ctr., LLC, 706 F.3d 888, 893 (8th
Cir. 2013), and we will affirm if “there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law,” Fed. R. Civ. P. 56(a). We
view all facts and make “all reasonable inferences in the light most favorable to the
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nonmoving party.” BancorpSouth Bank, 706 F.3d at 893 (internal quotation omitted).
Both FFCC and Lonza agree that Arkansas substantive law applies to this diversity
case. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938).
1. Breach of Contract
Under Arkansas law, “[t]he essential elements of a contract are (1) competent
parties, (2) subject matter, (3) legal consideration, (4) mutual agreement, and
(5) mutual obligations.” Williamson v. Sanofi Winthrop Pharm., Inc., 60 S.W.3d 428,
433 (Ark. 2001). In determining “whether a valid contract was entered into,” the
Arkansas Supreme Court instructs that courts consider two legal principles: “(1) a
court cannot make a contract for the parties but can only construe and enforce the
contract that they have made; and if there is no meeting of the minds, there is no
contract; and (2) it is well settled that in order to make a contract there must be a
meeting of the minds as to all terms, using objective indicators.” Id. at 434. Thus,
we are to use an objective test for determining whether there was mutual assent
without consideration of the parties’ subjective opinions. See Ward v. Williams, 118
S.W.3d 513, 521 (Ark. 2003). We are persuaded by two objective criteria: the
language of the Letter of Intent and the parties’ actions.
In this case, the best source for determining whether the parties mutually
assented to a sales contract is the language of the Letter of Intent. See Arloe Designs,
LLC v. Ark. Capital Corp., 2014 Ark. 21, 4 (2014). The language from the “Purpose”
section of the Letter of Intent states, “we are entering into this Letter of Intent in order
to develop an Agreement under which [FFCC] . . . will . . . supply
FFCC-manufactured DEM to Lonza in accordance with Lonza’s specifications for the
product.” Later, in the same section, the Letter of Intent provides, “that the parties
will negotiate and execute a definitive supply agreement (the ‘Agreement’) on or
before October 1, 2008.” This language manifests that the Letter of Intent is a
preliminary, non-binding proposal to agree. While later language established price
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and quantity amounts and indicated that Lonza “agrees” to those terms, the language
of the Letter of Intent and the ongoing negotiations between the parties over these
terms demonstrates that there was no mutual assent. At best, the pricing and quantity
terms memorialized the point from which the parties would continue negotiations
toward an agreement. Further, there is nothing in the Letter of Intent to suggest that
the parties contemplated being bound by the pricing and quantity terms until the
agreement was reached. The Letter of Intent only expressed the parties’ obligations
to continue negotiations in a good faith attempt to reach a supply contract. Lonza
upheld this obligation, although a contract ultimately could not be formed.
Further, an objective view of the parties’ interactions also supports the district
court’s grant of summary judgment. Even with the proposed price and quantity chart
memorialized in the Letter of Intent, when Lonza made two spot purchases of DEM
from FFCC, FFCC charged Lonza a price that exceeded the price stated in the Letter
of Intent. These transactions demonstrate the parties did not conduct their business
in recognition of a valid contractual arrangement to buy and sell 1000 metric tons of
DEM in 2009. Accordingly, the district court properly granted summary judgment
to Lonza on FFCC’s breach-of-contract claim because the parties did not reach a
meeting of the minds as to all terms and, therefore, there was no contract formed.
2. Promissory Estoppel
Because Lonza never promised to purchase 1000 metric tons of DEM in 2009,
FFCC cannot succeed on its promissory estoppel claim. “To prove promissory
estoppel, a plaintiff must show that the defendant made a promise; that the defendant
should have reasonably expected the plaintiff to act or refrain from acting in reliance
on the promise; that the plaintiff acted or refrained from acting in reasonable reliance
on the promise to its detriment; and that injustice can be avoided only by enforcement
of the promise.” Fairpark, LLC v. Healthcare Essentials, Inc., 381 S.W.3d 852, 859
(Ark. Ct. App. 2011). As explained above, the Letter of Intent merely manifested the
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parties’ intentions to negotiate towards a supply agreement. Nothing in the Letter of
Intent or in the parties’ conduct suggests that Lonza made a firm promise to purchase
1000 metric tons of DEM in 2009. The district court properly granted summary
judgment on FFCC’s promissory estoppel claim.
B. Motion for Jury Trial
In light of our determination that summary judgment was properly granted in
this case, the question of whether the district court abused its discretion in denying
FFCC’s belated motion for a jury trial is now moot. See Fed. R. Civ. P. 38, 39. We
dismiss this issue.
C. Unsealing of Trial Documents
In conjunction with its order granting summary judgment, the district court
entered an order stating its intention to unseal all documents filed under seal in the
case. The court granted the parties 10 days to file objections to the court’s “proposed
course of action regarding sealed documents.” (Doc. 69 at 2 (emphasis added).) The
district court noted that it had supervisory power over the court’s records and that
there was a presumption in favor of public access to court records. See Nixon v.
Warner Commc’ns, Inc., 435 U.S. 589, 596, 598 (1978) (recognizing a “common-law
right of access to judicial records” and that “[e]very court has supervisory power over
its own records”). FFCC filed a Motion for Reconsideration objecting to the court’s
proposed action of unsealing the records and requesting that the district court conduct
an individualized assessment of the material filed under seal. Before the district court
ruled on the objections set forth in the Motion for Reconsideration and prior to the
district court ordering the unsealing of the documents, however, FFCC appealed the
grant of summary judgment. The district court then denied the Motion for
Reconsideration without prejudice, stating that FFCC could renew the motion up to
15 days after this court decides the appeal and issues a mandate.
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“The courts of appeal . . . shall have jurisdiction of appeals from all final
decisions of the district courts of the United States.” See 28 U.S.C. § 1291. “Once
a notice of appeal is filed, the district court is divested of jurisdiction over matters on
appeal.” State ex rel. Nixon v. Coeur D’Alene Tribe, 164 F.3d 1102, 1106 (8th Cir.
1999). However, “we have held that a district court retains jurisdiction over collateral
matters, such as attorney’s fees or sanctions, while an appeal is pending.” Id. at 1107
n.3. “[T]he right of access to judicial records and documents is independent of the
disposition of the merits of the case.” Stone v. Univ. of Md. Medical Sys. Corp., 855
F.2d 178, 180 n.* (4th Cir. 1988). Thus, the district court was permitted to consider
whether to unseal the record despite FFCC’s filing of a notice of appeal in this case
challenging the grant of summary judgment to Lonza, which was a final and
appealable decision.
The district court has not fully considered FFCC’s objections to the court’s
proposal to unseal the records, however, because it no longer has access to the sealed
record that has been transmitted to this court. Thus, the district court has not yet
made a final, appealable decision on the issue of unsealing the records. FFCC’s
notice of appeal as it pertains to the district court’s proposed disposition of the sealed
records is premature. This situation is analogous to those cases where the district
court awards sanctions or attorney’s fees but does not determine the amount of
sanctions or fees at that time. See, e.g., Dieser v. Cont’l Cas. Co., 440 F.3d 920, 923-
24 (8th Cir. 2006). The district court was clear that it was only proposing to unseal
the records and would entertain objections to its proposal. Those objections were
filed, but because the case was on appeal, the district court no longer had access to
the materials for review. In denying the Motion to Reconsider without prejudice, the
court again expressed its willingness to consider objections to its proposal to unseal
the records. The district court has not yet entered an order unsealing the records, and
therefore there is no final, appealable decision for this court to review. As we held
in Dieser, because the notice of appeal was not taken from a final, appealable order,
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the notice of appeal was ineffective to confer appellate jurisdiction on this Court.3
Accordingly, we dismiss FFCC’s appeal as it pertains to the issue of unsealing the
court record.
D. Attorney’s Fees
Finally, we consider whether the district court properly awarded attorney’s fees
to Lonza. “We review the court’s interpretation of state law de novo, and its decision
to award attorney fees for an abuse of discretion.” Burlington Northern R. Co. v.
Farmers Union Oil Co., 207 F.3d 526, 534 (8th Cir. 2000) (citations omitted).
Because we have affirmed the district court’s grant of summary judgment to Lonza,
FFCC’s argument that the reversal of summary judgment would justify our vacating
the award of attorney’s fees is no longer viable. FFCC also argues that the award
should be vacated because its action was not “primarily” a contract action and the
promissory estoppel claim was at least equal to the breach-of-contract claim.
In a diversity action, state law governs the availability of attorney’s fees where
no conflicting federal statute or court rule applies. See id. “In any civil action . . . for
. . . breach of contract . . . the prevailing party may be allowed a reasonable attorney’s
fee to be assessed by the court and collected as costs.” Ark. Code Ann. § 16-22-308.
When breach-of-contract claims are advanced along with other claims, “an award of
attorney’s fees to the prevailing party is proper only when the action is based
primarily in contract.” Reed v. Smith Steel, Inc., 78 S.W.3d 118, 126 (Ark. Ct. App.
2002). We agree with the district court that FFCC’s primary focus was its claim that
Lonza breached a contract with FFCC. The first count of the complaint was for
3
Although we lack jurisdiction over the issue of whether the district court may
unseal the record because no final, appealable decision has been reached on that issue
by the district court, “we are not barred from considering those decisions of the
district court that are final” such as the grant of summary judgment and the award of
attorney’s fees. See Cooper v. Saloman Bros., Inc., 1 F.3d 82, 85 (2d Cir. 1993).
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breach of an express contract. Count II raised a claim of breach of an implied
contract, and FFCC requested that it only be considered “in the event that it is found
that an express contract was not formed.” The promissory estoppel claim was set
forth in Count III, and FFCC prefaced this claim with the request that the court only
consider the claim if “it is found that neither an express contract nor an implied
contract was formed and breached by Lonza.” In short, FFCC’s primary theory
before the district court was that the Letter of Intent formed a contract to purchase
1000 metric tons of DEM in 2009. Therefore, the district court correctly determined
that the award of attorney’s fees was appropriate in this case pursuant to section 16-
22-308.
FFCC has also challenged the amount of attorney’s fees awarded by the district
court. The Arkansas Supreme Court has noted factors for courts to use to determine
the appropriate amount of attorney’s fees.
[A]lthough there is no fixed formula in determining the computation of
attorney’s fees, the courts should be guided by recognized factors in
making their decision, including the experience and ability of the
attorney, the time and labor required to perform the legal service
properly, the amount involved in the case and the results obtained, the
novelty and difficulty of the issues involved, the fee customarily charged
in the locality for similar legal services, whether the fee is fixed or
contingent, the time limitations imposed upon the client or by the
circumstances, and the likelihood, if apparent to the client, that the
acceptance of the particular employment will preclude other
employment by the lawyer.
Chrisco v. Sun Indus., Inc., 800 S.W.2d 717, 718-19 (Ark. 1990).
Here, the district court performed a detailed review of each of these factors and
awarded $105,865.61 in attorney’s fees. Although FFCC raises objections to certain
aspects of the district court’s analysis of the Chrisco factors—for example, claiming
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that the hourly rate claimed by the Arkansas attorney should not have exceeded the
hourly rate claimed by the Philadelphia attorney—FFCC fails to demonstrate any way
in which the district court’s analysis could be deemed an abuse of its discretion. Cf.
Parke v. First Reliance Standard Life Ins. Co., 368 F.3d 999, 1012 (8th Cir. 2004)
(holding district court commits abuse of discretion in determining attorney’s fees for
ERISA case “when the district court commits a clear error of judgment in weighing
the relevant factors” (quotation omitted)). “The district court is in a better position
than the Court of Appeals to assess the course of the litigation and the quality of work
performed by the attorneys.” Computrol, Inc. v. Newtrend, L.P., 203 F.3d 1064, 1072
(8th Cir. 2000). Accordingly, we affirm the district court’s award of $105,865.61 in
attorney’s fees.
III.
We affirm the district court’s grant of summary judgment and its award of
attorney’s fees. We dismiss as moot the jury trial issue and dismiss for lack of
appellate jurisdiction FFCC’s appeal as it pertains to the unsealing of the record.
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