United States District Court, W.D. Arkansas, Fayetteville Division
WAL-MART STORES, INC. PLAINTIFF/ COUNTER-DEFENDANT
CUKER INTERACTIVE, LLC DEFENDANT/ COUNTER-CLAIMANT
MEMORANDUM OPINION AND ORDER
TIMOTHY L. BROOKS UNITED STATES DISTRICT JUDGE.
before the Court are:
Defendant Cuker Interactive, LLC's ("Cuker")
Motion for Partial Summary Judgment (Doc. 121), Statement of
Undisputed Material Facts (Doc. 122-1), and Brief in Support
(Doc. 123-1); Plaintiff Wal-Mart Stores, Inc.'s
("Walmart") Response in Opposition (Doc. 128-1) and
Response to Cuker's Statement of Undisputed Material
Facts (Doc. 129-1); and Cuker's Reply (Doc. 132); and
Walmart's Motion for Summary Judgment as to Counterclaim
(Doc. 86), Brief in Support (Doc. 87-1), and Statement of
Undisputed Material Facts (Doc. 88-1); Cuker's Response
(Doc. 108) and Statement of Disputed Material Facts (Doc.
109); and Walmart's Reply (Doc. 115-1).
reasons given below, Cuker's Motion is DENIED, and
Walmart's Motion is GRANTED IN PART AND DENIED IN PART.
January 30, 2014, Walmart and Cuker signed a contract under
which Walmart agreed to pay Cuker a fixed fee of $577, 719,
in exchange for Cuker's provision of certain services to
help make the website for Walmart's "ASDA Groceries
business" responsive, irrespective of the device on
which it is being viewed, such as a desktop or a mobile
phone. See Doc. 124-7, pp. 8, 17. Walmart was facing
very tight internal deadlines for this project, and the
contract-negotiation process was a very speedy one, taking
merely a few weeks rather than the months that were more
typical. See Doc. 121-1, p. 3. The project launched
almost immediately in early February, and by the end of that
month the parties were already experiencing fundamental
disagreements on matters such as whether various milestones
for performance were strict deadlines or mere aspirations,
when interim fee payments were due, how many rounds of
revisions Walmart could require Cuker to make to its
deliverables, and whether particular demands by Walmart were
outside of the scope of work that Cuker had contracted to
the relationship broke down irreparably, and the instant
lawsuit commenced. In the most recent versions of the
pleadings, Walmart asserts two claims against Cuker for
breach of contract and declaratory judgment, and Cuker
asserts six counterclaims against Walmart for declaratory
judgment, fraudulent inducement, misappropriation of trade
secrets, breach of contract, unjust enrichment, and
injunctive relief. Walmart has moved for summary judgment on
all of Cuker's counterclaims, and Cuker has moved for
summary judgment solely on its counterclaim for declaratory
judgment. Both motions have been fully briefed and are ripe
court shall grant summary judgment if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law."
Fed.R.Civ.P. 56(a). When, as here, cross-motions for summary
judgment are filed, each motion should be reviewed in its own
right, with each side "entitled to the benefit of all
inferences favorable to them which might reasonably be drawn
from the record." Wermager v. Cormorant Twp.
Bd., 716 F.2d 1211, 1214 (8th Cir. 1983); see also Canada
v. Union Bee. Co., 135 F.3d 1211, 1212-13 (8th Cir.
1998). The moving party bears the burden of proving the
absence of any material factual disputes. Fed.R.Civ.P. 56(c);
Matsushita Bee. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586-87 (1986). If the moving party meets this
burden, then the non-moving party must "come forward
with 'specific facts showing that there is a genuine
issue for trial."' Matsushita, 475 U.S. at
587 (quoting Fed.R.Civ.P. 56(c)); Nat'l Bank of
Commerce of El Dorado, Ark. v. Dow Chem. Co., 165 F.3d
602, 607 (8th Cir. 1999). These specific facts must be
"such that a reasonable jury could return a verdict for
the nonmoving party." Allison v. Flexway Trucking,
Inc., 28 F.3d 64, 66 (8th Cir. 1994) (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
Count One of Counterclaim: Declaratory Judgment that Contract
Arkansas law, "the essential elements of a contract are
(1) competent parties; (2) subject matter; (3) legal
consideration; (4) mutual agreement; and (5) mutual
obligations." Independence Cnty. v. City of
Clarksville, 2012 Ark. 17, at *6; 386 S.W.3d 395. In
Count One of its Amended Counterclaim, Cuker seeks "a
declaratory judgment that the Contract is void, invalid and
unenforceable based on lack of mutual assent, "
i.e., based on the absence of mutual agreement.
(Doc. 61-1, fl 41). The parties have filed cross-motions for
summary judgment on this Count.
courts are guided by two legal principles when deciding
whether parties entered into a valid contract:
(1) a court cannot make a contract for the parties but can
only construe and enforce the contract that they have made;
and if there is no meeting of the minds, there is no
contract; and (2) it is well settled that in order to make a
contract there must be a meeting of the minds as to all
terms, using objective indicators.
DaimerChrysler Corp. v. Smelser, 375 Ark. 216,
218-19; 289 S.W.3d 466 (2008). Whether a meeting of minds
occurred is a question of fact. Id. at 219. Thus,
when determining whether any material factual dispute exists
on this point, the Court must "use an objective test for
determining whether there was mutual assent without
consideration of the parties' subjective opinions, "
and with special attention to the language of the alleged
contract as well as to the parties' actions. See
FutureFuel Chem. Co. v. Lonza, Inc., 756 F.3d
641, 646-47 (8th Cir. 2014).
instant contract contains a general "Agreement" as
well as, inter alia, a Statement of Work
("SOW"), attached to the Agreement as Exhibit A.
See Doc. 124-7, p. 8. The Agreement explicitly
obligates Cuker and Walmart to provide the services and pay
the fees, respectively, that are identified in the SOW.
Id. at p. 2, § 1. The services are described in
Section III of the SOW, entitled "Scope of Work."
Section VI of the SOW, entitled "Milestones, " sets
forth a table containing "target milestones for the
project timeline, " with target "Completion
Date[s]" for thirteen separate
"Milestones/Deliverables" which Cuker "will
make the best possible effort to meet, " with
accompanying fee amounts to be invoiced by Cuker and paid by
Walmart, totaling a fixed fee of $577, 719. Id. at
pp. 15-16. Section X of the SOW, entitled "Fees, "
states that "[a]ll invoices for fees and expenses are
payable 45 days after receipt of invoice." Id.
at p. 17.
3 of the Agreement, entitled "Ownership of Deliverables,
" states that "[e]xcept as . . . otherwise
specified in a Statement of Work, all Deliverables (or any
portion or [sic] a Deliverable) authored ... for Walmart by
[Cuker] ... are the exclusive property of Walmart,
id. at p. 2, § 3(a), that "Deliverables
must not include, and [Cuker] may not incorporate,
[Cuker]'s preexisting proprietary information, "
id. at p. 3, § 3(c), and that if Cuker
nevertheless includes such preexisting proprietary
information among its Deliverables, then Cuker "grants
to Walmart a nonexclusive, worldwide, royalty-free,
irrevocable, perpetual license to use [etc.].. .
[Cuker's] Intellectual Property, " id.
Despite this apparently technical use of the word
"Deliverables, " that word is never actually
defined anywhere in the Agreement or the SOW, though as noted
above, it appears to be identified with
"Milestones" in Section VI of the SOW.
various points throughout the "Scope of Work"
Section of the SOW, Cuker is obligated to provide
"wireframes" and "[s]econdary page design
comps" for "the sections listed in the site map
below." Id. at p. 9, § III.e.2 & g.2
(emphasis added). Cuker is also obligated to "develop a
responsive front-end by adding to the existing front-end code
on all of the page templates defined in the scope, "
Id. at p. 9, § III.h.2 (emphasis added), and to
provide Walmart a "responsive template guide, "
id. at p. 12, § III.1.1.a. Neither the
Agreement nor the SOW ever actually defines the word
"template." However, Subsection k of the
"Scope of Work" Section of the SOW, entitled
"Site Map, " opens with the following statement:
"The site map below is a working version it [sic] will
be refined during the design and planning process. The price
is based upon the design of responsive desktop, tablet, and
smartphone layouts for home page, navigation, 10 page
templates, and responsive template guide." Id.
at p. 11. The Agreement explicitly states that the scope of
work may not be changed unless both parties to the
Agreement sign a Project Change Request ("PCR") in
the form attached as Exhibit B to the Agreement. See
Id. at p. 2, § 1. The Agreement and the SOW both
explicitly state that fixed fees for Services may not be
increased through a PCR unless the PCR expressly provides for
such increase. See Id. & at p. 17, §X.A.
Court interprets the site map in Subsection k of the SOW as
being a "working" description of those portions of
the ASDA website which Cuker was agreeing to help make
responsive, with the specifics to "be refined during the
design and planning process." But regardless of that
site map's initial contents and regardless of what form
its refinements would ultimately take, the Court also
interprets Subsection k's language regarding what
"[t]he price is based upon" as placing a hard
categorical limit on the quantity of work that Cuker was
agreeing to do for the fee of $577, 719. In other words, the
contract does not permit the fee to be altered, or the scope
of work to be expanded beyond "the design of responsive
desktop, tablet, and smartphone layouts for home page,
navigation, 10 page templates, and responsive template guide,
" except through a PCR or new SOW. Refinement of
Subsection k's site map without a PCR or new SOW neither
alters the fee nor expands the scope of work; it simply
fleshes out a description of the terrain where Walmart and
Cuker have agreed the work may be done.
briefing, Cuker points to an abundance of evidence in the
record that throughout the parties' relationship, Walmart
and Cuker held very different understandings of exactly how
far the boundaries of the SOWs scope of work extended.
However, as Walmart correctly points out, even if this
mismatch were the result of some ambiguity in the contract,
"ambiguity does not prevent the formation of a contract;
rather, it calls for interpretation of a contract."
Aon Risk Servs., Inc. v. Meadors, 100 Ark.App. 272,
282, 267 S.W.3d 603 (2007). At any rate, this is not a
situation where the parties "agree[d] to terms that
reasonably appealed] to each of them to be unequivocal"
but that were subsequently revealed to be fundamentally
incompatible. Cf. Colfax Envelope Corp. v. Local No.
458-3M, Chicago Graphic Comms. Int'l Union, 20 F.2d
750 (7th Cir. 1994) (referencing the famous English case of
Raffles v. Wichelhaus, in which the parties
contracted for shipment of goods with reference to a ship
named "Peerless" without realizing they
were each referring to different ships by the same name).
further argues that aside from the scope of work, the
contract also lacked mutual agreement as to the timing of
performance. Cuker points out that although the SOW simply
states that Cuker must "make the best possible effort to
meet the timeline, " (Doc. 124-7, p. 14, § VI),
several Walmart employees testified in their depositions that
they believed the SOW's timeline presented hard
deadlines, see, e.g. Doc. 124-8, pp. 63-64, lines
243:3-246:5; Doc. 124-9, p. 57, lines 216:7-216:20; Doc.
124-25, pp. 34-35, lines 125:25-128:7; Doc. 124-26, p. 41,
lines 153:8-153:19. But as this Court explained above, it
must "use an objective test for determining whether
there was mutual assent without consideration of the
parties' subjective opinions, " FutureFuel Chem.
Co., 756 F.3d at 646, and to this Court's mind, a
contractual obligation to "make the best possible
effort" is simply nothing more and nothing less than a
contractual obligation to "make the best possible
effort." This Court is unaware of any Arkansas cases
holding that "best efforts" provisions are
unenforceable for vagueness or ambiguity, and recently had
occasion to observe in a different case concerning New
contract law that "whether such [an] obligation has been
fulfilled will almost invariably... involve a question of
fact." Active Marketing Grp., Inc. v. EB Brands
Holdings, Inc., 2016 WL 6090959, at *3 (W.D. Ark. Oct.
17, 2016) (quoting Kroboth v. Brent, 215 A.D.2d 813,
814 (N.Y. Sup. Ct., App. Div., 3dDept. 1995)).
Cuker argues that the contract also lacked mutual agreement
as to the timing of payments. Again, Cuker points to
different subjective interpretations by the parties of the
SOW's requirements that "Walmart will provide
feedback and approvals as required during every milestone,
" (Doc. 124-7, p. 14, § VI), and that "[a]ll
invoices for fees and expenses are payable 45 days after
receipt of invoice, " id. at p. 15, § X.A.
But again, the fact that the parties disagree on how to
properly interpret these provisions does not mean the parties
did not agree to be bound by them, and whatever ambiguities
or vagaries they might ...