Opera Solutions, LLC v. Schwan's Home Service, Inc.

243 F. Supp. 3d 515, 2017 WL 1064673, 2017 U.S. Dist. LEXIS 40211
CourtDistrict Court, D. Delaware
DecidedMarch 21, 2017
DocketC.A. No. 15-287-LPS
StatusPublished
Cited by1 cases

This text of 243 F. Supp. 3d 515 (Opera Solutions, LLC v. Schwan's Home Service, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Opera Solutions, LLC v. Schwan's Home Service, Inc., 243 F. Supp. 3d 515, 2017 WL 1064673, 2017 U.S. Dist. LEXIS 40211 (D. Del. 2017).

Opinion

MEMORANDUM OPINION

STARK, United States District Judge

Pending before the Court is Defendant Schwan’s Home Service Inc.’s (“Schwan’s” or “Defendant”) motion for summary judgment. (D.I. 128) (“Motion”) For the reasons set forth below, the Court will grant in part and deny in part the Motion.

L BACKGROUND

Plaintiff Opera Solutions, LLC (“Opera” or “Plaintiff’) is a technology and analytics company that provides consulting services to help “deliver rapid profit improvement for its clients.” (D.I. 78 ¶ 8) Defendant Schwan’s is “the largest direct-to-home frozen food delivery provider in the United States, and markets and delivers its products to millions of customers throughout the country via home delivery trucks.” (Id. ¶ 9)

On January 22, 2009, Opera and Schwan’s entered into a Consulting Services Licensing Agreement (“CSLA”). (See D.I. 129 at 2) Pursuant to the CSLA, Opera was to provide “Production Licenses” for its sales recommendations for certain households serviced by Schwan’s, in reten for an annual License Fee to be paid to Opera for each Production License. (See id. at 2-3) The CSLA provides that Production Licenses are required for “Treated Households,” which consist of the middle seven deciles of households deemed “Active Households” by Schwan?s, i.e., Active Households excluding the top decile and bottom two deciles. (See D.I. 130-7 Ex. G § 3.2(d)) “Active Households,” in turn, are defined in the CSLA as households that are active customers of Schwan’s, “as determined in Schwan’s sole discretion.” (Id.) The CSLA further- pro[517]*517vides that “[t]he term of each Production License shall commence on the date such Production License is granted and shall terminate upon expiration of the Term or, if earlier, upon termination of this Agreement pursuant to Section 9.” (Id. § 6,1)

The CSLA provides for limitations on the “redeployment” of Production Licenses. Specifically, Section 6.4 of the CSLA provides that:

Except as set forth in this Section 6.4, each Production License or Quarantine License shall be granted with respect to a specific Treated Household (or other Active Household, in the case of Quarantine Licenses) and may not be transferred, re-assigned, redeployed or otherwise applied to or used for a household other than such original, specific Treated Household (any of the foregoing being referred to as the “Redeployment” of a Production License, or to “Redeploy” such Production License).

(Id. § 6.4(a))

The CSLA was the subject of the parties’ discussions in May 2009, during a meeting in San Diego (“San Diego Meeting”). (See D.I. 129 at 6) Following the meeting, the parties summarized their discussions in the “San Diego Document,” which Opera sent to Schwan’s on July 2, 2009. (See id.) According to the San Diego Document, households included in Opera’s “baseline” calculations would include all spending deciles except for the bottom spending decile. (See D.1.133-14 Tab 25 at 2) '

On September 1, 2010, the parties modified the CSLA in writing, pursuant to the CSLA’s merger clause (see D.I. 130-7 Ex. G § 10.10). (See D.I. 130-10 Ex. J) The parties’ written modification was called Amendment No. 1 (the “Amendment”) to the CSLA. The Amendment incorporated any CSLA provisions that were not altered by the Amendment’s terms, and the Amendment expressly noted that “[c]api-talized terms used herein and not otherwise defined herein shall have the respective meanings set forth the in. the [CSLA].” (Id.) The Amendment.also extended the .CSLA’s term—January 22, 2009 until December 31, 2012 (“Term”)— by one year, such that the CSLA and Amendment both were set to expire on December 31,2013. (See id. § 2.1)

The Amendment required Schwan’s to pay Opera $4,850,000 for up to 3,000,000 Production Licenses (the “Production License Threshold”), and, $0.08 for each additional Production License above the Production License Threshold. (See id. § 6.3) The Amendment also eliminated Section 6.4’s discussion of redeployment. (See id.) Further, it added that Schwan’s selection of the “unique households” to which particular licenses would relate would be undertaken “during each calendar year.” (Id. § 6.2)

Section 6 of the Amendment provides:

6.1 Production Licenses.
Effective as of [September 1, 2010], Opera grants Schwan a limited, exclusive, terminable (in accordance with the terms hereof) license.to use and distribute the Production Phase Deliverables provided by Opera hereunder for up to Three Million (3,000,000) Treated Households in accordance with the terms hereof, including all tangible and intangible media in which such Production Phase Deliverables are .expressed (each such individual household license, a “Production License”). The terms of each Production License shall commence on the date such Production License is granted and shall terminate upon the expiration of the Term or, if earlier, upon termination of this Agreement pursuant to Section 9.
6.2 Quantity of Production Licenses.
Throughout the Production Phase during each calendar year, Schwan shall be [518]*518entitled to determine in its discretion which and how many unique households shall be served hereunder up to the Production License Threshold (as defined in Section 6.8 below). In no event shall Opera be required to refund any License Fee or portion thereof at any time or for any reason.
6.3 License Fees.
(a) Schwan shall pay Opera license fees (“License Fees”) equal to Four Million Eight Hundred Fifty Thousand Dollars ($4,850,000) for Three Million (3,000,000) Production Licenses, which shall include the cost for converting all applicable Quarantine Licenses. In the event that the number of Production Licenses Schwan elects to license exceeds Three Million (3,000,000) (the “Production License Threshold”), for each Production License in excess of the Production License Threshold, Schwan shall pay Opera License Fees equal to Eight Cents ($0.08) per month multiplied by the number of months remaining in the Term thereof. License Fees shall be payable in accordance with Section 7.3. Notwithstanding anything in this Agreement to the contrary, Schwan shall pay the License Fees in accordance with the following payment schedule:
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6.4 Termination of Quarantine Licenses.
Effective as of the Amendment Effective Date, all Quarantine Licenses shall automatically convert into Production Licenses and shall be counted against the Production License Threshold.

m

Finally, the Amendment required the parties to “develop and implement a mutually agreed upon and written success measures and bonus payment schedule pri- or to January 31, 2011.” (Id. § 5) The bonus schedule was to be based upon macro sales number impacts or “the overall and measurable sales benefit that Schwan’s experienced as a result of Opera’s performance.” (D.I. 129 at 8-9; see also D.I. 130-10 Ex. J § 5) The parties, however, did not negotiate a bonus schedule before January 31, 2011, or thereafter. (See generally D.I. 129 at 8-10)

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243 F. Supp. 3d 515, 2017 WL 1064673, 2017 U.S. Dist. LEXIS 40211, Counsel Stack Legal Research, https://law.counselstack.com/opinion/opera-solutions-llc-v-schwans-home-service-inc-ded-2017.