United States District Court, E.D. North Carolina, Western Division
TERRENCE W. BOYLE, UNITED STATES DISTRICT JUDGE
cause comes before the Court following remand from the court
of appeals. On remand, this Court denied Albemarle's
motion for summary judgment on the grounds previously imposed
as to Bayer's declaratory judgment and breach of contract
claims related to Albemarle's second and third methyl
bromide price increases and directed the parties to brief
whether summary judgment would be appropriate on grounds
other than Virginia's first material breach doctrine,
which the court of appeals held was improperly applied in
this circumstance. The parties have complied with the
Court's order for additional briefing, and, for the
reasons discussed below, this matter will proceed to trial on
Bayer's remaining claims.
Court incorporates by reference as if fully set forth herein
the factual and procedural background of this matter as
recited in its order entered April 14, 2016. [DE 80]. All
that remains to be decided at this stage is whether the
record supports entry of summary judgment in Albemarle's
favor on Bayer's claims relating to Albemarle's
second price increase to $8.43 per pound of methyl bromide
effective July 1, 2014, and its third price increase to
$11.09 per pound effective April 1, 2015. See Bayer
Cropscience LP v. Albemarle Corp., No. 16-1555, 2017 WL
2645547, at *5 n. 5 (4th Cir. June 20, 2017) ("We take
no position on the merits of Bayer's claims that
Albemarle's second and third price increases constitute a
violation of the UCC or breach of the Agreement."). In
the briefing following remand, Albemarle contends that
summary judgment in its favor is appropriate as to the second
and third price increases and Bayer contends that whether
these price increases violated the UCC or the parties'
agreement must be decided by a jury.
of summary judgment is appropriate only if there are no
genuine issues of material fact for trial and the movant is
entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a).
The moving party bears the initial burden of demonstrating
the absence of a genuine issue of material fact. Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986). In
determining whether a genuine issue of material fact exists
for trial, a trial court views the evidence and the
inferences in the light most favorable to the nonmoving
party. Scott v. Harris, 550 U.S. 372, 378 (2007).
its core, Bayer's complaint alleges that Albemarle used
its contractual leverage- under the open-price provision-to
artificially inflate the price of methyl bromide in violation
of the good faith and fair dealing requirements of the
UCC." Bayer Cropscience, 2017 WL 2645547 at *2.
Where there is an open price term or the parties have not
agreed on a price, a price to be fixed by the seller or the
buyer "means a price for him to fix in good faith."
Va. Code § 8.2-305. "Good faith includes observance
of reasonable commercial standards of fair dealing in the
trade if the party is a merchant." Id. Official
Comment 3. Thus, "the party that is to set the price
does not have the power to act arbitrarily." Am.
Trading & Prod. Corp. v. Fairfax County Bd. of
Sup'rs, 214 Va. 382, 386 (1973).
Court decided, and the Fourth Circuit affirmed, that
Albemarle's first price increase to $4.09 per pound,
effective April 1, 2014, "was reasonable because it was
set through a value-based analysis, it reflected
Chemtura's increased tolling fee, and there was no
evidence of discriminatory or commercially unreasonable
pricing strategies." Bayer Cropscience, 2017 WL
2645547 at *2. Genuine issues of material fact preclude entry
of summary judgment in Albemarle's favor, however, as to
the good faith and reasonableness of the second and third
price increases. Although the application of Albemarle's
value-in-use model to determine the first price increase from
$1.85 to $4.09 per pound supports that Albemarle acted in a
commercially reasonable manner, a genuine issue of material
fact exists as to whether application of the same
value-in-use model would support a second price increase to
$8.49 per pound only three months later. Viewing the evidence
in the light most favorable to Bayer, a reasonable juror
could conclude that the more-than-doubling of the price
between April 2014 and July 2014, based at least in part on
the same value-based model, represents an absence of good
faith or an arbitrary price increase. As to the April 2015
price increase, Albemarle contends that it was based on an
across-the-board thirty-percent price increase due to
increasing demand for its bromine-related products. Ware
Decl. [DE 59-3] ¶ 20. Even assuming, without deciding,
that an across-the-board price increase would be commercially
reasonable under these circumstances, because the April 2015
price was based on the July 2014 price increase, the Court
finds that genuine issues of fact preclude entry of summary
judgment as to the third price increase as well.
has also moved to strike Bayer's response to this
Court's order, arguing that it improperly disclosed new
witnesses and proposed new legal theories. Striking a
pleading or other filing is a drastic remedy, see, e.g.,
Waste Mgmt. Holdings, Inc. v. Gilmore, 252 F.3d 316, 347
(4th Cir. 2001), and the Court declines to do so here.
Moreover, as it need not have relied on the evidence
submitted in support of Bayer's response to the
Court's order, the motion to strike is moot.
the foregoing reasons, genuine issues of material fact
preclude entry of summary judgment on Bayer's claims
related to Albemarle's second and third price increases.
Albemarle's motion to strike [DE 96] is DENIED.
Bayer's consent motion to seal its unredacted brief [DE
94] is GRANTED. The clerk is DIRECTED to refer this matter to