A.T. Kearney, Inc. v. International Business MacHines Corp.

867 F. Supp. 943, 1994 U.S. Dist. LEXIS 11736, 1994 WL 654467
CourtDistrict Court, D. Oregon
DecidedAugust 9, 1994
DocketCiv. 92-1536-HA
StatusPublished
Cited by2 cases

This text of 867 F. Supp. 943 (A.T. Kearney, Inc. v. International Business MacHines Corp.) is published on Counsel Stack Legal Research, covering District Court, D. Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
A.T. Kearney, Inc. v. International Business MacHines Corp., 867 F. Supp. 943, 1994 U.S. Dist. LEXIS 11736, 1994 WL 654467 (D. Or. 1994).

Opinion

OPINION

HAGGERTY, Judge:

This is an action for negligence, negligent misrepresentation, contribution, and indemnity by A.T. Kearney, Inc. (ATK), a consulting firm, against International Business Machines (IBM). Plaintiff seeks to recover $13.25 million from defendant, which is the amount ATK paid to Fred Meyer (“FM”) to settle a prior lawsuit brought by FM against ATK. Both parties seek summary judgment. For the following reasons, defendant’s motion for summary judgment is granted.

BACKGROUND

In 1989 FM retained ATK, an international management and information technology consulting firm, to provide professional transition management services. Plaintiff provided consulting services to FM from 1989 through mid-1991. These services included developing an “MIS” [Management Information System] Plan designed to provide enhanced computer processing power in FM *945 stores. This MIS Plan was also called an “architecture.”

Plaintiff and FM solicited information regarding improving FM’s system from several computer vendors, including defendant. In May 1989 IBM proposed using an IBM mainframe computer at the FM headquarters. This was rejected, and in October 1989 plaintiff recommended that FM use the “distributed MIS architecture,” that did not use a mainframe computer.

Fred Meyer approved of and agreed to this proposal. In late 1989 and early 1990, FM purchased 100 AS/400 computers from IBM under an extensive written agreement between FM and IBM.

It is undisputed that plaintiffs new architecture presented a massive change in the way FM could conduct business, and that the architecture was soon deemed a failure. By mid-1991 FM had returned to a more traditional, “centralized” business structure. An IBM mainframe computer was installed at FM headquarters, and FM’s relationship with plaintiff was terminated.

In September 1991, FM sued plaintiff for breach of contract, professional negligence, breach of fiduciary duty, and negligent misrepresentation. In October 1992, FM amended its complaint against ATK, increasing the damages sought from $14 million to $110 million. Plaintiff then filed this indemnity suit against IBM in state court in Oregon.

In December 1992 ATK settled its suit with FM by agreeing to pay FM $18.25 million. Plaintiff did not acknowledge fault or liability. While ATK was settling with FM, IBM petitioned to remove Kearney’s suit against IBM to federal court. Defendant has now moved for summary judgment. STANDARDS

Summary judgment should be granted if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Fed. R.Civ.P. 56(c). If the moving party shows that there are no genuine issues of material fact, the nonmoving party must go beyond the pleadings and designate facts showing an issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). A scintilla of evidence, or evidence that is merely colorable or not significantly probative, does not present a genuine issue of material fact. United Steelworkers of America v. Phelps Dodge Corp., 865 F.2d 1539, 1542 (9th Cir.), cert. denied, 493 U.S. 809, 110 S.Ct. 51, 107 L.Ed.2d 20 (1989).

The substantive law governing a claim determines whether a fact is material. T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th Cir.1987). Reasonable doubts as to the existence of a material factual issue are resolved against the moving party. Id. at 631. Inferences drawn from facts are viewed in the light most favorable to the nonmoving party. Id. at 630-31.

DISCUSSION

Plaintiff presents three sets of claims: (1) negligence and negligent misrepresentation; (2) contribution; and (3) indemnity. These are addressed in turn below.

1. ATK’S NEGLIGENCE CLAIMS

Defendant grounds its motion against ATK’s negligence claims on a December 1992 decision from the Oregon Supreme Court recognizing that negligence claims for the recovery of economic losses “must be predicated on some duty of the negligent actor to the injured party beyond the common law duty to prevent foreseeable harm.” Onita Pacific Corp. v. Trustees of Bronson, 315 Or. 149, 159, 843 P.2d 890 (1992).

This decision acknowledges that economic losses might be recoverable in some cases on a claim for negligent misrepresentation, but emphasizes that in such cases “the concept of duty as a limiting principle takes on a greater importance than it does with regard to the recovery of damages for personal injury or property damage.” Id. The court in Onita chose not to specifically identify the types of relationships—besides a traditional fiduciary relationship—that could give rise to negligent misrepresentation liability, but did clearly exclude relationships founded upon *946 “arm’s length transactions.” Id. at 163, 843 P.2d 890.

Plaintiff acknowledges that Onita requires that a “special relationship” must exist before economic losses are recoverable under a theory of negligent misrepresentation. See Plaintiff’s Brief in Opposition at 18 (“At bottom, the evidence demonstrates that IBM had the requisite special relationship with Kearney and Fred Meyer such that IBM owed a duty ‘to exercise reasonable care to avoid misrepresenting facts.’ Onita, 315 Or. at 165, 843 P.2d 890.”).

Accordingly, ruling on defendant’s motion for summary judgment on the negligence claims requires first determining whether the existence of a “special relationship” is an issue of law for the court to decide.

A. Is the Existence of a Special Relationship a Question of Law?

At oral argument on the summary judgment motion, both parties acknowledged that the court in Onita established a case-by-case approach to determining the existence of a special relationship. See Onita, 315 Or. at 159, 843 P.2d 890 (“rather than adopting a black letter ‘rule,’ we opt to develop the scope of the duty and the scope of recovery on a case-by-case basis_”).

Plaintiff asserted that the court should either (1) find as a matter of law that a special relationship existed, or (2) leave the question for a jury to decide.

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867 F. Supp. 943, 1994 U.S. Dist. LEXIS 11736, 1994 WL 654467, Counsel Stack Legal Research, https://law.counselstack.com/opinion/at-kearney-inc-v-international-business-machines-corp-ord-1994.