Crown Battery Manufacturing Co. v. Club Car, Inc.

185 F. Supp. 3d 987, 2016 U.S. Dist. LEXIS 60776, 2016 WL 2625010
CourtDistrict Court, N.D. Ohio
DecidedMay 9, 2016
DocketCase No. 3:12CV2158
StatusPublished
Cited by11 cases

This text of 185 F. Supp. 3d 987 (Crown Battery Manufacturing Co. v. Club Car, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Crown Battery Manufacturing Co. v. Club Car, Inc., 185 F. Supp. 3d 987, 2016 U.S. Dist. LEXIS 60776, 2016 WL 2625010 (N.D. Ohio 2016).

Opinion

James G. Carr, Senior United States District Judge

ORDER

This is a contract and warranty suit between a battery maker, plaintiff Crown Battery Manufacturing, Inc., and a manufacturer of golf carts, defendant Club Car, Inc.

The core dispute is straightforward: who is responsible for the fact that the Crown-made batteries powering Club Car’s carts could not hold a charge, such that the carts regularly lost power during a round of golf? See Crown Battery Mfg. Co. v. Club Car, Inc., 2015 WL 5011988, *4-5 (N.D.Ohio 2015) (Crown VIII).

Crown contends its batteries met Club Car’s specifications. It blames the carts’ onboard charger (OBC), which, in Crown’s telling, did not accurately measure the amount of draw on the battery and thus could not fully recharge it. Club Car alleges that Crown’s batteries did not conform to the specifications it gave Crown.

More than three years into litigation, a Club Car representative disclosed at his Rule 30(b)(6) deposition that the company had not preserved, or taken any steps calculated to preserve, any of the thousands of batteries that form the basis of its warranty claims. Instead, it had left in place its battery-destruction practices, un[992]*992der which Club Car dealers and customers with a defective Crown battery retained the battery for only ninety days. If Club Car did not request the battery during that time, the customer was free to scrap it.

This disclosure prompted Crown’s pending motion for sanctions. (Doc. 127).

It contends Club Car’s conduct amounts to intentional or, at the very least, negligent spoliation of relevant evidence. Crown asks me to sanction Club Car by dismissing its warranty claims, granting it summary judgment on those claims, or issuing an adverse-inference instruction.

For the following reasons, I grant the motion and the request for a mandatory adverse-inference instruction.

Background

A. Contract

The parties executed a Strategic Supply Agreement in September, 2009. Crown Battery Mfg. Co. v. Club Car, Inc., 2013 WL 5670950, *1 (N.D.Ohio 2013) (iCrown I). Crown agreed to produce a certain number of batteries each week, and Club Car would buy a portion of those batteries on an as-needed basis.

Crown warranted that its batteries “will be free from all defects in title, design, material and workmanship,” and that they “will be in strict accordance with the mechanical and performance specifications and all other requirements set forth in the drawings for those [batteries] and in any specification referenced in those drawings[.]” (Doc. 127-5 at 5).

The contract assigned Grown the responsibility to ensure that the batteries were compatible with Club Car’s carts and “all interrelated systems.” (Id.). Crown accordingly “represented] and warranted] that it is familiar with all interrelated systems and Batteries within the Vehicles that could affect the performance, reliability and functionality of the Products[.]” (Id.).

Crown agreed that it would bear “liability for all Vehicle failures to the extent that they result directly from a defect or deficiency in a [battery’s] design, including (without limitation) a [battery’s] integration into a Vehicle.” (Id.). It would not be liable, however, for any battery that failed “as a direct result of,” inter alia, “being abused or misused, destroyed, or charged by defective charger or charging errors including overcharging, undercharging, or incomplete charging for any reason[.]” (Doc. 127-5 at 11).

The contract also spelled out how the parties would process warranty claims.

After a customer complained about a defective Crown battery, Club Car could request the battery and test it for defects. A “Battery Test Sheet,” a document that Club Car created and Crown approved, was “the sole criteria for judging if a battery has failed.” (Id. at 12). Once Club Car determined that a battery had failed, Crown had “the burden of proof that a failed battery is due to one or more of the conditions set forth in [the warranty-limitation section described] above.” (Id.).

When Crown received a warranty claim from Club Car, it had thirty days from the date it received the claim to challenge it. (Id.). Within that same thirty-day period, Crown could request that Club Car produce the battery.

The parties used a proprietary database called Tavant to submit, respond to, and monitor the status of warranty claims.

B. Business

Beginning in January, 2010, Crown produced more than 12,000 batteries each week for Club Car’s use. Crown Battery Mfg. Co. v. Club Car, Inc., 2014 WL 587142, *1 (N.D.Ohio 2014) (Crown II). [993]*993Crown “delivered the batteries to its warehouse, from which Club Car would take batteries as needed.” Id.

In early 2011, however, “Club Car told Crown that Crown batteries in its golf carts were failing because they were not holding charges. In May, 2011, Club Car tendered hundreds of warranty claims for defective batteries. Crown refused to hon- or the claims, stating that the OBCs, not its batteries, were defective.” Crown Battery Mfg. Co. v. Club Car, Inc., 2014 WL 587147, *1 (ND.Ohio 2014) (Crown III).

By October, 2011, Club Car was purchasing only 5,000 to 7,000 batteries each week. The next month, with reports of failed batteries piling up, Club Car told Crown it would no longer use its batteries in the Precedent line of golf carts. Id. Club Car ceased purchasing Crown batteries by March, 2012, though in April it took $2.3 million worth of batteries from Crown’s warehouse without paying for them. (Doc. 81-1 at ¶¶147-48); Crown Battery Mfg. Co. v. Club Car, Inc., 2014 WL 1379594, *1 & n. 1 (N.D.Ohio 2014) (Crown IV).

“In and around 2012,” Club Car put all of its pending warranty claims against Crown — totaling some $12 million — on “hold status” in the Tavant database. (Doc. 127 at 5).

A Club Car representative, Steven Nis-sen, testified that this move was merely a way “to bin the claims such that [Crown] can see them, yet they are not subject to a timing constraint for a response.” (Doc. 127-2 at 2). At the same time, Nissen acknowledged that the hold status prevented Crown from “accept[ing] or reject[ing] the claim[s].” (Doc. 127-2 at 2).

C. Litigation

Crown filed this suit in August, 2012. (Doc. 1). Extensive pretrial motion practice has pared the case down essentially to Crown’s claims related to the $2.3 million Club Car owes it for batteries, and Club Car’s counterclaims for breach of warranty and breach of contract.

Despite engaging in substantial discovery, Crown never asked Club Car to produce the defective batteries or a sample thereof. In its third set of interrogatories, however, which it served in March, 2014, Crown asked Club Car to “describe Club Car’s process for holding/retaining batteries for each [of its warranty] claim[s]” against Crown. (Doc. 127-1 at 5). Club Car refused to answer on grounds that the question “seeks information not relevant to the claims and defenses at issue in this action[.]” (Id.).

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185 F. Supp. 3d 987, 2016 U.S. Dist. LEXIS 60776, 2016 WL 2625010, Counsel Stack Legal Research, https://law.counselstack.com/opinion/crown-battery-manufacturing-co-v-club-car-inc-ohnd-2016.