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Steves and Sons, Inc. v. Jeld-Wen, Inc.

United States District Court, E.D. Virginia, Richmond Division

November 19, 2019

STEVES AND SONS, INC., Plaintiff,
v.
JELD-WEN, INC., Defendant.

          MEMORANDUM OPINION

          Robert E. Payne, Senior United States District Judge

         This matter is before the Court on the PLAINTIFF STEVE AND SONS, INC.'S MOTION FOR FURTHER RELIEF UNDER 28 U.S.C. § 2202 (ECF No. 1906) (the "Motion") wherein Steves and Sons, Inc. ("Steves") seeks a declaration of certain rights and obligations under the Doorskin Product Agreement (the "Supply Agreement") executed on May 1, 2012 between Steves and JELD-WEN, Inc. ("JELD-WEN").

         The lengthy and complex history of this litigation is set out in full in previous opinions, including in the MEMORANDUM OPINION (ECF No. 1813) issued on December 7, 2018. (See also ECF No. 976; ECF No. 1424; ECF No. 1581.) In Count Two of its Complaint against JELD-WEN, Steves alleged, inter alia, that JELD-WEN had breached, among other things, Section 6 of the Supply Agreement; and Steves sought both damages for the alleged breach and a declaration of rights respecting the provisions of Section 6. The jury found for Steves on Count Two and awarded damages against JELD-WEN. Thereafter, the Court issued an Amended Final Judgment Order (ECF No. 1852) in which it declared, among other things, that: (1) the Supply Agreement (ECF No. 5-1) provided for both price increases and decreases when JELD-WEN's Key Input costs increased or decreased, respectively; and (2) that the Supply Agreement required JELD-WEN to give Steves annual notice of changes in Key Input costs and doorskin prices. In the Motion, Steves requests further relief based on these two declarations. For the reasons set forth below, the Motion will be granted.

         I. Factual and Procedural Context

         At trial, the jury found that JELD-WEN had breached Section 6 of the Supply Agreement by overcharging Steves for Madison and Monroe doorskins in the amount of $1, 303, 035 and in the amount of $8, 630, 567 for all other doorskins. (ECF No. 1022 ¶¶ 4-7.) Section 6 provides, in relevant part, as follows:

a. The price for Product delivered to STEVES' facilities in effect on the date hereof will be as shown in Schedule 1 (the "Initial Price").
b. The Initial Price shall remain in effect for the duration of this Agreement unless a price increase or decrease takes place in accordance with the terms hereof.
c. The Initial Price may vary on an annual basis by an amount that is . . . the percentage increase in the JELD-WEN Key Inputs (shown in Schedule 2) . The percentage of cost contributed as initially supplied by JELD-WEN in Schedule 2 is subject to verification by STEVES.
JELD-WEN will calculate the variance utilizing production and shipments from JELD-WEN plant locations for the previous rolling twelve (12) month period October 31 to November 1 . . . Once this baseline cost is established utilizing the correct percentage and defined input costs, a percent change will be established. The sales price will then be adjusted to 50% of the percent change in cost. By no later than [November 30] of each year, JELD-WEN shall provide notice to STEVES of the price to be in effect for the coming year (January 1 - December 31). In the event such notice is not received by STEVES by the close of business on November 30, STEVES will so notify JELD-WEN and JELD-WEN will have 15 days (through December 15) to cure such omission, failing which there shall be no price increase for the coming year. If such notice specifies a price to be in effect for the coming year that results in a 5% or greater increase over the then-existing price, however, STEVES may, upon written notice to JELD-WEN, terminate this Agreement effective immediately ....

(ECF No. 5-1 at 4.) Section 6 governs price increases over the course of the Supply Agreement. In sum, it provides for yearly adjustments to doorskin prices based on changes in JELD-WEN's costs of certain so-called "Key Inputs" related to the manufacture of doorskins that Steves was to purchase under the Supply Agreement.

         The evidence showed that JELD-WEN had breached Section 6 by: (1) not properly calculating its year-to-year costs for the Key Inputs, resulting in inaccurate cost determinations; and (2) not reducing prices to reflect reduced Key Input costs in the years when those Key Input costs decreased. Based on the jury's verdict and the record, the Court granted Steves' request for declaratory relief under Section 6 of the Supply Agreement in December 2018, (ECF No. 1813), and reiterated in its Amended Final Judgment Order that:

(1) The pricing provisions of Section 6 of the Doorskin Product Agreement (the "Supply Agreement") (ECF No. 17 93-1) apply to provide for price increases when JELD-WEN's Key Input costs increase and for price decreases when JELD-WEN's Key Input costs decrease; and
(2)- JELD-WEN is required to provide STEVES with annual notice by November 30 of each year of the year-over-year percentage change of the Key Input costs in the Supply Agreement, and the resulting doorskin price increase or decrease to be charged for the ensuing year.

(ECF No. 1852 at 12-13.][1] The Amended Final Judgment Order, albeit in its discussion of Steves' antitrust claims, also noted that the Court "retains jurisdiction to enable any party to this Order to apply at any time for further orders and directions as may be necessary and appropriate to carry out or construe this Order, ... to enforce compliance, to punish violations of its provisions, and to assure that the provisions of this Final Judgment Order are fully satisfied." (Id. at 9.)

         a. Steves' Evidence at Trial

         Steves' expert, Avram Tucker ("Tucker"), testified at trial as to Steves' damages from the overcharges that JELD-WEN imposed on doorskin prices. (ECF No. 1910 at 3.) According to Tucker, JELD-WEN overcharged Steves by almost 8.88%. Tucker calculated the overcharge damages for the Madison and Monroe doorskins as $1, 303, 035 and for all other doorskins as $8, 630, 567. (ECF No. 1907-1 at 1195-96.) In its verdict on Count Two, the jury awarded Steves damages in the amounts to which Tucker testified. (ECF No. 1022 ¶¶ 4-7.) In the Motion, Steves argues that, by "awarding Steves 8.88% of its total relevant purchases from JELD-WEN, the jury established unequivocally that JELD-WEN overcharged Steves by 8.88%." (ECF No. 1910 at 4; see also ECF No. 1907-1 at 1195 (Tucker testifying that "[i]f you look on the right side, it says 7.87 percent, which is what I determined the price decrease should be. If you compare that to the just over 1 percent, you'll see that the overcharge is about 9 percent.").)

         At trial, JELD-WEN chose not to present evidence about how to calculate Key Input costs or the issue of overcharge damages under Count Two. Instead, JELD-WEN defended Count Two by arguing that JELD-WEN was not required to reduce prices when Key Input costs decreased. (See generally ECF No. 1036.)

         b. JELD-WEN's Post-Trial Billing

         In the Motion, Steves alleges that, after the jury's verdict in February 2018, JELD-WEN continued to charge for the rest of 2018 the same prices that it had charged in 2017. (ECF No. 1910 at 7.) It is beyond dispute that the Supply Agreement requires JELD-WEN to give Steves annual notice by November 30 of any year-over-year percentage changes in the Key Input costs and any consequent increases or decreases in doorskin prices. (ECF No. 1852 at 13.) In the Motion, Steves alleges that JELD-WEN "did not provide Steves with any such notification or comparative Key Input cost information in November 2017." (ECF No. 1910 at 7.) JELD-WEN does not say otherwise as to 2017. The following year, in November 2018, JELD-WEN informed Steves that:

there will be a price change for JELD-WEN molded door skins for 2019. The change in the Key Inputs is 2.17%, of which Steves' portion is 1.09%. Effective January 1, 2019, the change in your molded skin pricing will be .09%.

(ECF No. 1910-1 at 2.)

         After the Court granted declaratory relief to Steves in December 2018, (ECF No. 1813), JELD-WEN and Steves exchanged several letters about prices under Section 6, (see, e.g., ECF No. 1910 at 8-11). Steves took the position that JELD-WEN's failure to adjust its prices meant that it was continuing to overcharge Steves and that JELD-WEN was flouting the rulings in Steves' favor on the overcharge issue. (See ECF No. 1910-5 at 1-4; ECF No. 1910 at 9.) JELD-WEN's position was that "any reliance on statements or rulings from the [litigation], or the jury's verdict in that matter, to amend or add to the parties' obligations under the Agreement is,' at best, premature." (ECF No. 1910-4 at 2.) In January 2019, JELD-WEN sent Steves a chart containing its 2019 prices. (ECF No. 1910-9.)

         c. Steves' § 2202 Motion

         In the Motion, Steves asks the Court, pursuant to 28 U.S.C. § 2202, to award Steves damages from JELD-WEN's overcharges from February 15, 2018-the date of the jury verdict (ECF No. 1022)-to May 31, 2019-the date of Steves' § 2202 motion.[2] (ECF No. 1910 at 2.) The parties have stipulated that Steves' total purchases from JELD-WEN during this time period were: $3, 351, 192 for Madison doorskins; $2, 996, 241 for Monroe doorskins; $38, 778, 236 for all other types of doorskins; and $28, 937, 326 for doorskins from the Towanda plant. (ECF No. 1951 at 2.) They have also stipulated that Steves received a $2, 332, 984 credit for prompt payment and defective doorskins and that Steves' total net purchases, including the credit, were thus $71, 730, 011. (Id.)

         At the September 10, 2019 evidentiary hearing on the Motion, Steves requested $7, 083, 013 in damages because of JELD-WEN's alleged failure to adjust post-verdict prices charged in 2018 and 2019 to comply with the jury's verdict and the Court's orders for declaratory relief, (ECF No. 1813; ECF No. 1852). (ECF No. 1966 at 42.) JELD-WEN had previously calculated the overcharge damages from 2018 to be only $1, 722, 452. (ECF No. 1910-12 at 3.) At the September 10, 2019 evidentiary hearing, JELD-WEN clarified that the total overcharge damages were $5, 695, 362, assuming that Tucker's 8.88% overcharge was correct. (ECF No. 1966 at 75-76, 138.) However, JELD-WEN also contended that, under its own methodology-i.e., not using the 8.88% overcharge as a baseline-overcharge damages were instead $2, 682, 702. (Id. at 76, 138.)

         1. Steves' Proposed Method ...


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