939 F.2d 91 (3d Cir. 1991)
In 1981, Step-Saver Data Systems, Inc. began operating as a value added retailer for International Business Machines products, combining hardware and software to meet the needs of physicians' and lawyers' offices.1 By the mid-1980s, Step-Saver developed a multi-user computer system using an IBM AT as the main computer, WY-60 terminals manufactured by Wyse Technology, and Multilink Advanced as the operating system produced by The Software Link, Inc.2 Step-Saver began marketing this system in November 1986 after testing the software and receiving assurances from TSL sales representatives about compatibility with off-the-shelf MS-DOS programs.3
Almost immediately upon installation of the system, Step-Saver began to receive complaints from some of its customers.4 Step-Saver, in addition to conducting its own investigation of the problems, referred these complaints to Wyse and TSL, and requested technical assistance in resolving the problems.5 After several preliminary attempts to address the problems, the three companies were unable to reach a satisfactory solution, and disputes developed among the three concerning responsibility for the problems.6 At least twelve of Step-Saver's customers filed suit against Step-Saver because of the problems with the multi-user system.7
Step-Saver first filed a declaratory judgment action seeking indemnity, which the district court dismissed as not ripe, a ruling affirmed on appeal.8 Step-Saver then filed a second complaint alleging breach of warranties by both defendants and intentional misrepresentations by TSL.9
On the first day of trial, the district court ruled that the box-top license constituted the complete agreement and excluded evidence of prior warranties.10 It granted a directed verdict for TSL on the misrepresentation claim and on the warranty claims after additional briefing.11 The case proceeded against Wyse, where the jury found for Wyse on express warranty and fitness for particular purpose, and the court refused to instruct on merchantability.12 Step-Saver appealed four issues to the Third Circuit, including the effect of the box-top license and sufficiency of evidence on the other claims.13
Whether the box-top license formed the complete and exclusive agreement between Step-Saver and TSL under the Uniform Commercial Code?14
Under UCC § 2-207, when parties' conduct establishes a contract but writings do not agree, additional terms in a confirmation are proposals that do not become part of the contract if they materially alter the agreement unless expressly accepted.15
No. The telephone orders and matching purchase orders and invoices formed the contract without reference to the box-top license, which arrived later and materially altered the agreement by disclaiming warranties and limiting remedies.16 TSL did not make acceptance conditional because it continued selling after Step-Saver refused to sign similar agreements and the parties agreed Step-Saver could transfer copies despite the license's non-transferability clause.17 Repeated sending of the license without Step-Saver taking action on the warranty terms did not establish a course of dealing incorporating the disclaimers.18
The box-top license did not form the complete and exclusive agreement; the district court's ruling is reversed and the warranty claims against TSL are remanded.19
Whether sufficient evidence existed to support Step-Saver's claim of intentional misrepresentation against TSL?20
To prevail on intentional misrepresentation, a plaintiff must prove by clear and convincing evidence a material misrepresentation, intention to deceive, intention to induce reliance, justifiable reliance, and resulting damage.21
No. Step-Saver presented evidence of TSL sales representatives' statements about practical compatibility with MS-DOS programs and the Wyse terminal.22 The only evidence offered to show fraudulent intent was a co-founder's deposition statement that he knew of no programs completely compatible with Multilink Advanced.23 Industry standards distinguish practical compatibility, under which products work together in almost every situation, from complete compatibility, which is virtually impossible, and the statement addressed only the latter.24
The evidence was insufficient to support the claim; the directed verdict for TSL on intentional misrepresentation is affirmed.25
Whether sufficient evidence existed to submit Step-Saver's implied warranty of merchantability claim against Wyse to the jury?26
The implied warranty of merchantability under UCC § 2-314 requires that goods be fit for the ordinary purposes for which such goods are used. Goods must conform to the standards generally acceptable in the trade for goods of the kind.27
No. The only evidence Step-Saver offered was compatibility problems between the WY-60 terminal and the Multilink Advanced program, such as issues with repeatable NUM LOCK and CAPS LOCK keys causing synchronization errors.28 Undisputed testimony established that the WY-60 conformed to industry-standard specifications for terminals designed to work with IBM AT multi-user systems, that identical problems occurred with competitors' terminals, and that over one million WY-60 terminals had been sold as the top-selling model in its class.29
The evidence was insufficient to support a finding that Wyse breached the implied warranty of merchantability; the district court's refusal to instruct the jury on that claim is affirmed.30
Whether the district court abused its discretion by excluding a letter from Wyse and refusing rebuttal testimony on the ordinary uses of the WY-60 terminal?31
The district court did not abuse its discretion by excluding an unsent letter and refusing rebuttal testimony.32
No. The district court excluded an unsent letter from Wyse and refused rebuttal testimony on the ordinary uses of the WY-60 terminal.33 The memorandum opinion rejecting Step-Saver's motion for a new trial provided a sufficient basis for these rulings, and the Third Circuit found no abuse after careful review of the record.34
The evidentiary rulings are affirmed.35