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CISG CASE PRESENTATION

United States 9 September 2004 Federal District Court [State of Washington] (Delizia v. Columbia Distributing Company)
[Cite as: http://cisgw3.law.pace.edu/cases/040909u1.html]

Primary source(s) of information for case presentation: Plaintiff's reply brief

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Case identification

DATE OF PLEADING: 20040909 (9 September 2004)

JURISDICTION: United States [federal court]

TRIBUNAL: U.S. District Court, Western District of Washington [federal court of 1st instance]

JUDGE(S): James L.Robart

CASE NUMBER/DOCKET NUMBER: C03-2292 JLR

CASE NAME: La Delizia Friulani la Delizia, S.C.A.R.L. v. Columbia Distributing Company, Inc. et al.

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Italy (plaintiff)

BUYER'S COUNTRY: United States (defendant)

GOODS INVOLVED: Wine


Classification of issues present

APPLICATION OF CISG: Yes [CISG pleaded by parties]

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 38 ; 39 [Also cited: Article 44 ]

Classification of issues using UNCITRAL classification code numbers:

38A [Buyer's obligation to examine goods: time for examining goods];

39A2 [Requirement to notify seller of lack of conformity of goods: buyer must notify seller within reasonable time]

Descriptors: Examination of goods ; Lack of conformity notice, timeliness

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Editorial remarks

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Citations to case abstracts, texts, and commentaries

CITATIONS TO ABSTRACTS OF DECISION

(a) UNCITRAL abstract: Unavailable

(b) Other abstracts

Unavailable

CITATIONS TO TEXT OF DECISION

There was no court decision. The case was settled prior to trial. Presented below is the text of Plaintiff's Reply to Columbia's Response to Plaintiff's Motion for Partial Summary Judgment. This reply brief is also available at 2004 WL 2975203 (W.D.Wash).

CITATIONS TO COMMENTS ON CASE

Unavailable

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Plaintiff's reply brief

United States District Court, Western District of Washington

La Delizia Friulani la DELIZIA, S.C.A.R.L., an Italian limited liability
cooperative company Plaintiff,

v.
COLUMBIA DISTRIBUTING COMPANY, INC., an Oregon corporation, Defendant.
Columbia Distributing Company, Inc., an Oregon corporation, and Columbia
Distributing of Seattle, LLC, an Oregon limited liability company, Counterclaim
Plaintiffs,
v.
Viticoltori Friulani La Delizia, S.C.A.R.L., an Italian limited liability
cooperative company, Counterclaim Defendant

No. C03-2292 JLR

9 September 2004

PLAINTIFF'S REPLY TO COLUMBIA'S RESPONSE TO
PLAINTIFF'S MOTION FOR PARTIAL SUMMARY
JUDGMENT RE UNMERCHANTABLE WINE

[...]

Judge James L. Robart

I. Introduction

Dispute having the burden of proof, Columbia Distributing of Seattle, LLC ("Columbia Seattle) presents no evidence raising an issue of material fact regarding the merchantability of the wine at issue. Instead, Columbia Seattle relies on unsupported, conclusory allegations offered by nonexperts that the wine had an unspecified "hidden defect."

Further, the response of Columbia Seattle underscores the fact that as a matter of law, the wine was not inspected as required by the United Nations Convention on Contracts for the International Sale of Goods ("CISG"), and that once a problem was identified, Columbia Seattle, and its assignor, Young's Market, did not provide timely notice to La Delizia. Columbia requests this court to excuse its failure to provide timely notice, but offers no equitable or factual basis for doing so.

II. Argument

A. The 2000 Pinot Grigio was Merchantable upon Delivery.

Neither Columbia Seattle nor Young's Market dispute the fact that Young's Market sold over 22,000 cases of 2000 Pinot Grigio containing over 264,000 bottles, or that the wine at issue was excess inventory that resulted when Trader's Joe's decided to buy less wine than anticipated. To avoid a loss because of the ordering mistake, Columbia Seattle and Young's Market allege that the excess inventory Young's Market could not timely sell prematurely aged. Columbia Seattle and Young's Market argue that the allegedly premature aging of the wine was due to a "hidden defect" at the time it was delivered.

Columbia Seattle and its assignor, Young's Market, bear the burden of proving that the 2000 Pinot Grigio was non-conforming at the time of receipt. See Chicago Prime Packers v. Northam Food Trading Company, 320 Fed Sup 2d 702, 710 (N.D. I11. 2004). However, despite having the burden of proof, no evidence of a "hidden defect" is presented. More significantly, no effort is made, by expert testimony or otherwise, to even describe the "hidden defect."

As discussed in La Delizia's motion and supporting documentation, Pinot Grigio is a wine that is produced to be consumed when fresh. Pinot Grigio ages quickly, first losing its distinctive freshness, and subsequently its saleability. The aging process is a natural one, and is influenced by a number of factors, including shipping and storage conditions such as light and temperature. The fact that a wine ages, even faster than one might expect, is not evidence of a "hidden defect," but rather is suggestive of a natural process perhaps accelerated by environmental factors outside of the control of the winery.

To support their argument Columbia Seattle and Young's Market rely upon the testimony of Damien Pascale, vice president of marketing for Young's Market. Mr. Pascale presumably has some expertise marketing wine, but there is no suggestion he has special knowledge of the chemical composition of wine, the winemaking process or is otherwise a wine expert. Moreover, Mr. Pascale makes a number of conclusory, unsupported statements. For example, he states that the Pinot Grigio was kept under similar conditions as other wines of the same or similar variety, but does not describe what the other wines were, when they were received, which warehouse they were stored in, how long they were stored, how their chemical composition compared to the 2000 Italian Pinot Grigio at issue, etc. Nor does Mr. Pascale describe the conditions in the various warehouses where these wines were stored, or even that he has personal knowledge of such conditions. Mr. Pascale then opines that the wine must have aged prematurely because of a hidden defect in the manufacturing or bottling process, but he offers no guidance as to what the defect might have been. Mr. Pascale's opinion is simply rank speculation based on unsupported allegations. It is certainly not sufficient to deny summary judgment. Berg v. Kincheloe, 794 F.2d 457, 459 (9th Cir.1986); Lake Nacimiento Ranch Co. v. County of San Luis Obispo, 841 F.2d 872, 876 (9th Cir.1987)

B. Neither Columbia Seattle nor Young's Market Conducted a Timely Inspection.

Per the evidence presented by Columbia Seattle, Young's Market first saw signs of non-conformity in March or April 2002. See Declaration of Karen Thomas.[1] However, there is no indication that an inspection was conducted at that time as required under the CISG. See CISG Advisory Council Opinion No. 2, Examination of the Goods and Notice of Non-Conformity: Articles 38 and 39, [<http://cisgw3.law.pace.edu.cisg/CISG-AC-op2.html>] (the period for examining for latent defects commences when signs of the lack of conformity become evident).

Even if the alleged non-conformity was not evident in March or April 2002, it was certainly evident during the summer of 2002 when, as Mr. Pascale testifies, Young's Market received returns from retailers.[2] At the latest, Young's Market knew in September that there was a problem. Despite all these signs of non-conformity, there is no evidence that an inspection was ever conducted by Young's Market.

Similarly, although Columbia Seattle learned of the problem in November, it did not bother to taste the wine until April 2003, and even then, it only tasted one of multiple bottling codes. There is no documentation or testimony that the bulk of the allegedly non-conforming wine was ever examined. Apparently Columbia Seattle and Young's Market presumed that because some wine at one location showed signs of non-conformity, all the remaining wine must have been in the same condition. No basis is offered for this presumption, although La Delizia agrees that by April 2003, more than two years after harvest and almost two years after shipment, the remaining 2000 Pinot Grigio would have likely lost the characteristic freshness that appeals to consumers.

C. The Notice Given to La Delizia was Not Timely as a Matter of Law.

Columbia Seattle acknowledges that La Delizia was not given notice of the alleged non-conformity until approximately one year after Young's Market first became aware of signs of the lack of conformity. If we ignore Young's Market's statement that it first became aware of problems in March or April 2002, then the allegedly latent defects became evident during the summer of 2002. However, notice was not given for more than nine months thereafter.

Columbia Seattle alleges that it did not learn of the non-conformity until November 2002. Since Columbia Seattle acknowledges that it stands in the shoes of Young's Market, it should be charged with Young's Columbia's knowledge. However, even if Columbia Seattle is not so charged, there was still an unreasonable delay of more than five months in giving La Delizia notice.

Columbia Seattle attempts to distinguish cases relied upon by La Delizia on the basis that they did not involve perishable items. See page 9 of Columbia Seattle's Response. However, the distinction pointed out by Columbia Seattle undermines its position. The perishability of an item heightens, not diminishes, the need for prompt notice. See White & Summers, Uniform Commercial Code, 11-10 at 442 & n. 88 (2nd ed. 1980), and cases cited at page 22 of Plaintiff's Motion.

Furthermore, the fact that many of the cases deal with items where defects could have been discovered upon delivery does not help Columbia Seattle. La Delizia does not contend the alleged non-conformity should have been discovered earlier. La Delizia contends that under the CISG, once Young's Market and Columbia had notice of non-conformity, they had the duty to give La Delizia notice within a reasonable time - and more than five months is not reasonable under the CISG as a matter of law.

Notably, Columbia Seattle does not cite any CISG case holding that a delay in giving notice of more than five months, which is the minimum delay in the instant case, was reasonable. As Columbia Seattle appears to recognize, the body of CISG law clearly supports La Delizia's position in this case. See cases collected in the CISG Advisory Council Opinion Number 2, Examination of the Goods and Notice of Non-conformity: Articles 38 and 39.

Columbia Seattle attempts to avoid the result mandated by the CISG cases by citing Peter Pan Seafoods, Inc. v. Olympic Foundry Company, 17 Wn. App. 761, 769 (1977) for the proposition that six months may be a reasonable time within which to notify a seller of an intent to reject. Columbia Seattle's reliance upon Peter Pan Seafoods is misplaced. The Peter Pan Seafoods case involves a "sale on approval" transaction pursuant to RCW 62A.2-326. The buyer in that case purchased an engine, and the parties agreed that if the engine did not perform to buyer's satisfaction, the seller would remove the engine at seller's expense. The court was faced with the question of determining a reasonable time during which the purchaser could test the engine to his satisfaction. Since the written warranty provided for a six-month period during which the manufacturer agreed to repair defects, the court found that the same period would be a reasonable length of time for buyer to accept or reject. Thus, the six-month period used by the court was an approval period contracted for by the parties, and did not concern a period to give notice of non-conformity. Notably, the court found in favor of the seller because the buyer did not reject the engine within a reasonable time after the approval period. The court found that the UCC "imposes a duty of good faith upon all transactions [and]...a delay of nearly six months by the buyer in informing the seller of the intended revocation is insufficient compliance with the good faith obligation." Id. at 770. Thus, contrary to Columbia Seattle's representation, the Peter Pan Seafood underscores the fact that a delay of nearly six months in notifying a seller of intended revocation is not reasonable as a matter of law.

D. Columbia Seattle Has Not Provided the Court with any Basis Excusing its Failure to Inspect or Give Notice.

Columbia Seattle argues that under Article 44 of the CISG, Columbia Seattle should be excused for its failure to give the requisite notice. However, Columbia Seattle offers no factual basis for its position. Columbia Seattle acknowledges that it learned of the alleged defects in November 2002, but did not inspect the wine or give notice to La Delizia until April 2003. Moreover, if as Columbia Seattle suggests, its stands in the shoes of Young's Market, then the delay was even more egregious. Columbia Seattle offers no reason why it could not have notified La Delizia of the potential problem earlier. An e-mail would have sufficed. See CISG Advisory Council Opinion No. 1, Electronic Communications under CISG, 15 August 2003, [<http://cisgw3.law.pace.edu/cisg/CISG-AC-op1.html>]. (The term "notice" includes electronic communications provided that the seller expressly or impliedly has consented to receiving electronic messages of that type, in that format, and to that address). There were constant communications between the parties during this time and there was no reason, excusable or otherwise, why notice could not have been given earlier as required by the CISG.

III. Conclusion

The 2000 Pinot Grigio at issue was merchantable at the time of delivery. There is no competent evidence to the contrary. Even if the wine was non-conforming because of an unspecified "hidden defect," an inspection of the wine was not conducted timely as required under the CISG. In fact, there is no evidence that an adequate inspection was ever conducted. Moreover, the notice of non-conformity was not timely under the CISG as a matter of law. Accordingly, La Delizia respectfully requests that Columbia Seattle's counterclaim for unmerchantable wine be dismissed.


FOOTNOTES

1. Ms. Thomas states that in March or April 2002 Trader Joe's indicated it had tasted the wine and it would not purchase any more because of quality concerns. As evidence that the 2000 Pinot Grigio was unmerchantable, Ms. Thomas' statement is hearsay and therefore objectionable. Moreover, in March and April 2002 the 2001 vintage Pinot Grigio was available and Trader Joe's may simply have stated the obvious: the quality of a more recent vintage would be better. However, to the extent the hearsay statement suggested to Young's Market that there were quality problems in March or April 2002, then Young's Market's duty to inspect and give notice was actually triggered earlier than previously thought.

2. Although La Delizia subpoenaed all records of Young's Market relating to the disputed wine, no documents were produced indicating a return by a retailer until late September 2002.

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Pace Law School Institute of International Commercial Law - Last updated July 18, 2005
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