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Gardensensor, Inc. v. Stanley Black & Decker, Inc.

United States District Court, N.D. California, San Francisco Division

September 24, 2014

GARDENSENSOR, INC., a Delaware Corporation, formerly known as PLANTSENSE, INC., a Delaware Corporation, Plaintiff,
v.
STANLEY BLACK & DECKER, INC., a Delaware Corporation, formerly known as BLACK & DECKER (U.S.), a Maryland Corporation, Defendant.

ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT RE: DKT. NO. 76

NATHANAEL M. COUSINS, Magistrate Judge.

Black & Decker moves for summary judgment, or in the alternative, partial summary judgment on Gardensensor's breach of contract action. The damages Gardensensor seeks consist entirely of lost profits. Black & Decker contends that the breach of contract claim fails as a matter of law because: 1) the Easybloom Agreement, entered into by Gardensensor and Black & Decker, waives the recovery of all lost profits; 2) even if the agreement only waives consequential lost profits, the damages sought by Gardensensor are barred because they are consequential; and 3) the damages sought by Gardensensor are speculative and cannot be established with reasonable certainty. Because the Court finds that Black & Decker has failed to establish that the claimed lost profits are barred or are too speculative, the Court DENIES Black & Decker's motion for summary judgment.

I. BACKGROUND

Gardensensor, then known as PlantSense, developed the Easybloom Plant Sensor in 2008. Dkt. No. 75-2 at 3. A customer could insert the Plant Sensor into the ground, and use it to take readings of the soil, light, and temperature. Dkt. No. 68-28 at 16. The customer could then connect the device to his or her computer, and get recommendations for growing house or garden plants based on the readings. Id. at 16-17.

Gardensensor started selling the Plant Sensor, and generated revenue from sales of the product itself and related web-based revenues. Dkt. No. 75-8 at 2. Gardensensor then sought out a partner with experience in mass marketing and sales, to go into "big box retail." Dkt. No. 77-9 at 11. On December 18, 2009, Gardensensor and Black & Decker entered into an agreement to commercialize the Plant Sensor ("Easybloom Agreement"). Dkt. No. 68-28. Under the Easybloom Agreement, Black & Decker had the exclusive right to manufacture and sell the device. Id. at 3-4. Black & Decker agreed "to commit the marketing funds that it reasonably determines are necessary to support the launch and sale" of the Plant Sensor, with a minimum marketing placement spend of $350, 000 by December 4, 2010. Id. at 7. In addition, Black & Decker agreed to pay Gardensensor 10% of the net sale price of each unit sold during the term of the contract. Id. at 4. The Easybloom Agreement further provided that Gardensensor "is responsible for developing revenues based on website click through to other parties" and that Black & Decker "has no claim to [Gardensensor's] web revenues or subscription revenues." Id. at 6.

On June 21, 2012, Gardensensor filed this action, claiming that Black & Decker breached the Easybloom Agreement by failing to market the device as required by the agreement. Dkt. Nos. 1; 24 at 9-10. Gardensensor is seeking lost profits as a result of the breach in the amount of $25 million. Dkt. No. 24 at 12. Black & Decker now brings this motion for summary judgment. Dkt. No. 76. The Easybloom Agreement provides for all disputes regarding the agreement to be governed by Delaware law. Dkt. No. 68-28 at 14.

II. LEGAL STANDARD

Summary judgment may be granted only when, drawing all inferences and resolving all doubts in favor of the nonmoving party, 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); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A fact is material when, under governing substantive law, it could affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute about a material fact is genuine if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. Bald assertions that genuine issues of material fact exist are insufficient. Galen v. Cnty. of L.A., 477 F.3d 652, 658 (9th Cir. 2007).

The moving party bears the burden of identifying those portions of the pleadings, discovery, and affidavits that demonstrate the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. Once the moving party meets its initial burden, the nonmoving party must go beyond the pleadings and, by its own affidavits or discovery, set forth specific facts showing that a genuine issue of fact exists for trial. Fed.R.Civ.P. 56(c); Ruffin v. Cnty. of L.A., 607 F.2d 1276, 1280 (9th Cir. 1979). All reasonable inferences, however, must be drawn in the light most favorable to the nonmoving party. Olsen v. Idaho State Bd. of Med., 363 F.3d 916, 922 (9th Cir. 2004).

III. DISCUSSION

A. Black & Decker Has Failed to Establish That the Easybloom Agreement Bars All Lost Profit Damages As a Matter of Law

Black & Decker contends that it is entitled to summary judgment as a matter of law because the Easybloom Agreement waives the recovery of all lost profit damages. Dkt. No. 76 at 16.

The Easybloom Agreement states, in relevant part:

8.10. NO CONSEQUENTIAL DAMAGES. EXCEPT FOR DAMAGES SUBJECT TO INDEMNIFICATION UNDER SECTION 4.2, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR INDIRECT DAMAGES OF ANY KIND INCURRED BY THE OTHER PARTY, INCLUDING WITHOUT LIMITATION ECONOMIC DAMAGES OR INJURY TO PROPERTY AND LOST PROFITS, REGARDLESS OF WHETHER SUCH PARTY SHALL BE ...

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