Nestle Overturns $14.2M Spring Water Verdict
(CN) - Nestle did not breach a decades-old agreement over Ozarka spring water licensing, the 10th Circuit ruled, reversing a multimillion-dollar verdict against the Swiss chocolatier.
Eureka Water Co. claimed that it was given an exclusive license to sell Ozarka spring water in 60 Oklahoma counties under a 1975 agreement with Arrowhead, which Perrier acquired in the late 1980s.
After Nestle bought Perrier in 1992, it started selling Ozarka PET Spring water in Eureka's territory. Though Nestle later paid Eureka royalties or "'invasion fees'" totaling $2.5 million, it ended those payments in 2007 after concluding that the arrangement was too expensive.
Eureka filed suit in the U.S. District Court for the Western District of Oklahoma, and a jury ruled that the 1975 agreement gave Eureka an exclusive right to the Ozarka trademark. Eureka won $9.2 million on its breach of contract claim, and $5 million for tortious interference.
But the Denver-based 10th Circuit unanimously sided with Nestle on appeal.
While the 1975 agreement covered purified water and drinking water, it "unambiguously does not cover spring water under Oklahoma contract law," Judge Harris Hartz wrote for a three-member panel.
Eureka cannot support its claim that Nestle had hurt Eureka's business when it stopped offering PET spring water at a discount and began selling directly to Eureka's customers, the court found.
"We reverse the denial of JMOL [judgment as a matter of law] on the tortious-interference claim because Eureka failed to show that Nestle's decision to charge Eureka what it charged other vendors for bottled water was not privileged or justified," Hartz wrote.
"In short, Eureka has failed to show why Nestle did not have the same right as any other seller of goods to treat all similarly situated customers the same, absent a contractual obligation to the contrary," he added.
The 34-page opinion also affirms dismissal of Eureka's claim for unjust enrichment, which relied "on the false premise that Eureka's license to use the Ozarka trademark covers spring water."
On remand, Eureka can seek more than $1 million in unpaid royalties, plus other discounts and allowances of roughly $298,000.
Though Nestle claimed that there was no evidence it deceived Eureka on this cout, the court refused to hear this argument because it had not been raised earlier.
Nestle also argued that the trial court had improperly allowed a "prejudicial privileged document," as well as testimony from a Eureka damages expert, but the federal appeals court called these claims irrelevant.
Judges Carlos Lucero and Terrence O'Brien joined the panel decision.