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Maricopa County v. Office Depot Inc.

United States District Court, D. Arizona

January 13, 2020

Maricopa County, et al., Plaintiff,
v.
Office Depot Incorporated, Defendant.

          ORDER

          Dominic W. Lanza United States District Judge

         Pending before the Court are the parties' cross-motions for summary judgment concerning the statute of limitations. (Docs. 208, 213.) For the following reasons, both motions will be denied.

         BACKGROUND

         I. Relevant Procedural History

         On May 1, 2014, Maricopa County brought this action in state court. (Doc. 1-1 at 4-19.) On June 19, 2014, Office Depot removed it to federal court. (Doc. 1.) The complaint alleged two contract-related claims (breach of contract and breach of the implied covenant of good faith and fair dealing) and claims for negligent misrepresentation, common law fraud, and violation of the Arizona Consumer Fraud Act (“ACFA”). (Id. at 15-19.) Essentially, Maricopa County alleged that a “bundle of interrelated documents and contractual agreements” between various parties comprised a contract that Maricopa County was “free to enforce . . . against Office Depot.” (Id. at 12 ¶ 39.)

         This “bundle” included a 2006 Master Agreement between Los Angeles County and Office Depot, as well as various provisions included in or incorporated into Los Angeles County's Request for Proposal (“RFP”). (Id. at 8 ¶ 20, 9-11 ¶¶ 26-33.) It also included an Administration Agreement between U.S. Communities and Office Depot. (Id. at 8 ¶ 21.) The complaint alleged that the “contract terms and representations by Office Depot” led Maricopa County to “reasonably believe[] that under the 2006 Master Agreement Office Depot did in fact guarantee, and did provide, its best government pricing, without qualification.” (Id. at 11 ¶ 36.) Yet, the complaint alleged, “[w]hile the 2001 and 2006 Master Agreements were in effect, Office Depot chose to violate its low price guarantee and sold office supplies to other governmental entities at prices materially lower than those offered to [Maricopa County] under the 2006 Master Agreement.” (Id. at 12 ¶ 42.)

         In June 2014, Office Depot moved to dismiss the complaint. (Doc. 10.) This motion was granted in part and denied in part. (Doc. 24.) The Court dismissed with prejudice the negligent misrepresentation, common law fraud, and ACFA claims because they were not pleaded with sufficient particularity and failed as a matter of law. (Id. at 17-19.) The Court also limited the contract-based claims. First, the Court found that Maricopa County did not have a direct contractual relationship with Office Depot. (Id. at 11 [“Although plaintiff alleges that it had a direct contractual relationship with defendant, plaintiff has not cited to any contract to which both it and defendant were parties. Plaintiff is not a party to the Master Agreement and plaintiff was not a party to any of the other agreements attached to the RFP or defendant's response to the RFP.”].) The Court further found that Maricopa County failed to allege it was an intended beneficiary of the Master Agreement and thus dismissed the contract-based claims premised on an alleged breach of the Master Agreement. (Id. at 13-14.) However, the Court found that Maricopa County was a third-party beneficiary of the Administration Agreement and therefore could proceed on the contract-based claims premised on an alleged breach of the Pricing Commitment in the Administration Agreement. (Id. at 15-16.)

         Maricopa County moved for reconsideration as to its ACFA claim and as to the ruling that Maricopa County had no direct contractual relationship with Office Depot. (Doc. 26.) This motion was denied. (Doc. 27.)

         In June 2016, the parties cross-moved for summary judgment on the remaining contract-based claims. (Docs. 90, 91.) The Court granted summary judgment to Office Depot, accepting Office Depot's interpretation of the Pricing Commitment and finding there was no breach under that interpretation. (Doc. 105.) Office Depot had also moved for partial summary judgment under the theory that most of Maricopa County's alleged damages fell outside the statute of limitations (Doc. 91 at 16-17), but the Court declined to address that argument in light of the determination that Office Depot was entitled to summary judgment on other grounds.

         In December 2016, Maricopa County appealed. (Doc. 109.)

         In December 2018, the Ninth Circuit issued a memorandum decision that affirmed in part, and reversed in part, the Court's earlier decisions. (Doc. 136-1.) Because the parties now dispute the scope of the Ninth Circuit's ruling-and how it affects the scope of the mandate-it is important to be precise when summarizing its contents. In the first portion of its decision, the Ninth Circuit upheld the dismissal of the negligent misrepresentation, fraud, and ACFA claims. (Doc. 136-1 at 4-5.) In the second portion of its decision, the Ninth Circuit upheld the dismissal of Maricopa County's “contract claims based on the Master Agreement.” (Id. at 5.) Specifically, the court held that Maricopa County “lack[ed] standing” to enforce the price guarantee contained in Section 23 of the Master Agreement because (1) “[t]hat right vested solely in LA County, ” (2) “[t]he Agreement did not authorize piggybacking agencies such as Maricopa to enforce the price guarantee secured to LA County in Section 23, ” and (3) “the implicit contract created by the business relationship between Maricopa and Office Depot, to the extent that any such contract existed, does not empower Maricopa to enforce the provisions of contracts executed by other parties.” (Id.) In support of these conclusions, the court cited an Arizona case that applied Arizona substantive law. (Id., citing Nahom v. Blue Cross & Blue Shield of Arizona, Inc., 885 P.2d 1113, 1117 (Ariz.Ct.App. 1994).) Finally, in the third portion of its decision, the Ninth Circuit reversed the grant of summary judgment in Office Depot's favor on Maricopa County's claim for breach of the Pricing Commitment within the Administration Agreement “because material disputes of fact remain . . . as to whether the Administration Agreement required Office Depot to provide piggybacking entities with the lowest pricing that Office Depot offered to any state or local government entity nationwide, including San Francisco (Maricopa's position), or whether ‘available' meant the price the public agency would actually receive under another cooperative purchasing agreement for which it was eligible to participate (Office Depot's position).” (Id. at 6-7.) In support of this conclusion, the court cited a case that applied California substantive law. (Id., citing Cachil Dehe Band of Wintun Indians v. California, 618 F.3d 1066, 1077 (9th Cir. 2010).)

         In April 2019, after the Ninth Circuit issued its mandate, this case was reassigned to the undersigned judge. (Docs. 136, 145.) Afterward, the parties filed an array of pretrial motions.

         On October 9, 2019, the Court issued a 48-page order resolving seven motions in limine (Docs. 155, 156, 157, 158, 159, 160, 161), two motions to exclude expert opinions (Docs. 171, 172), supplemental briefs regarding whether Maricopa County is entitled to a jury trial (Docs. 193, 195, 196), and supplemental briefs concerning the applicability of the Uniform Commercial Code (Docs. 198, 199). (Doc. 203.)

         One of Office Depot's motions in limine sought to exclude all evidence barred by the statute of limitations. (Doc. 157.) The Court denied this motion without prejudice and instead authorized Office Depot to file a motion for partial summary judgment limited to the statute of limitations. (Doc. 203 at 15.) Afterward, Office Depot timely filed a motion for partial summary judgment (Doc. 208), Maricopa County filed a cross-motion for partial summary judgment and a response to the motion (Doc. 213), [1] Office Depot filed a reply (Doc. 218), and Maricopa County filed a reply (Doc. 223).

         II. Relevant Factual Background

         The Administration Agreement between Office Depot and U.S. Communities took effect on January 2, 2006. (Doc. 209 at 2.) The Pricing Commitment is one of three Commitments set forth in the Supplier Commitments, a single-page document incorporated by reference in the Administration Agreement. (Doc. 193-1 at 2 § 8 [incorporation provision]; id. at 6 [Supplier Commitments].) The Pricing Commitment provides:

A commitment that supplier's U.S. Communities pricing is the lowest available pricing (net to buyer) to state and local public agencies nationwide and a further commitment that, if a state or local public agency is otherwise eligible for lower pricing through a federal, state, regional or local contract, the supplier will match the pricing under U.S. Communities.

(Id. at 6.)

         As noted in the Ninth Circuit's order, one of the key disputes in this case concerns the meaning of the Pricing Commitment. Maricopa County contends the Pricing Commitment “require[d] [Office Depot's] U.S. Communities pricing to be . . . the lowest available pricing (net to buyer) to state and local public agencies nationwide, and that if [Office Depot] offered lower pricing to public agencies outside of U.S. Communities then that lower pricing bec[ame] [Office Depot's] U.S. Communities price.” (Doc. 186 at 11.) Maricopa County further contends that Office Depot violated this provision by entering into a contract with the City and County of San Francisco (“CCSF”) that offered lower pricing than the U.S. Communities contract. (Notably, Maricopa County isn't arguing it should have been charged the same prices CCSF actually paid under that contract. Instead, Maricopa County's theory is that it was entitled to the prices Office Depot should have been charging CCSF under the other contract, even though CCSF was actually charged and paid higher prices.) Meanwhile, Office Depot's position is that the Pricing Commitment simply required it to offer its lowest available pricing to the subset of state and local public agencies who were members of U.S. Communities, “such that, if a U.S. Communities member was ‘otherwise eligible' for lower pricing, Office Depot would offer that member that lower pricing under the aegis of U.S. Communities.” (Doc. 199 at 2. See also Doc. 186 at 11-12 [“The second clause of the Pricing Commitment . . . sets out how to address those occasional instances when an Office Depot contract potentially had lower pricing: if, based on the agency's usage, it would save money purchasing under a different contract held by Office Depot that the agency was eligible to use, Office Depot would treat that pricing as U.S. Communities' pricing.”].)

         In 2008, a former Office Depot salesman, David Sherwin, began sending faxes and emails to government agencies in which he alleged that Office Depot was engaging in various forms of pricing misconduct, including violations of the “best pricing” guarantees provided in the U.S. Communities contract. (Doc. 209 ¶ 11; Doc. 214 ¶ 11.)

         In April 2008, in part in response to these allegations, Maricopa County requested that U.S. Communities conduct “a contract pricing review of [its] entire 2007 purchases [from Office Depot] of more than $4.6M.” (Doc. 209-1 at 110.)

         On May 21, 2008, U.S. Communities sent an email to a host of individuals, including Maricopa County representatives, that addressed Maricopa County's audit request and Mr. Sherwin's allegations. (Doc. 209 ¶ 12-23; Doc. 209-1 at 110-31; Doc. 214 ¶ 12-23, 192.) The email concluded that Maricopa County had not been overcharged. (Doc. 209-1 at 110.) The email also contained some forwarded materials from Mr. Sherwin, which contained references to Office Depot's contracts with Georgia, California, Nebraska, and North Carolina but no reference to Office Depot's contract with CCSF. (See also Doc. 214 ¶ 200.)

         On June 4, 2008, U.S. Communities forwarded Office Depot's response to Sherwin's allegations to a host of individuals, including Maricopa County representatives. (Doc. 209 ¶ 24; Doc. 209-1 at 137-40; Doc. 214 ¶ 24.) In the response letter, which contained no mention of the CCSF contract, Office Depot stated in relevant part that “Mr. Sherwin's allegations are generally based on erroneous or distorted facts (if they are based on facts at all)” ...


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