## Facts

- Reilly Foam Corporation manufactured custom sponges and foam products; Rubbermaid Corporation manufactured mop products sold nationwide.
- Rubbermaid sought specialty sponge components for new sponge mop products and communicated with Reilly about supply, pricing, and quantities.
- Reilly sent a March 26, 1999 letter proposing terms including projected volumes and minimum purchases; Rubbermaid responded on March 30, 1999 accepting many terms but differing or omitting others (including duration and the scope of exclusivity).
- Rubbermaid directed its assembling contractor to purchase sponges from Reilly, but Reilly alleged Rubbermaid also sourced from another supplier and failed to meet contemplated minimums and totals.
- Reilly sued for breach of contract and related theories, including misrepresentation, promissory estoppel, and unjust enrichment.
- On summary judgment, each side sought judgment on contract and related claims; Rubbermaid also sought Rule 37 sanctions for Reilly’s late supplemental expert report.

## Issues

1. Whether the parties formed a contract for sponge supply under Pennsylvania’s UCC § 2-207, and which terms governed where the writings differed.
2. Whether Rubbermaid breached the resulting contract by failing to meet specified minimum purchases and a contemplated total volume.
3. Whether misrepresentation claims were barred by Pennsylvania’s economic loss doctrine and gist-of-the-action doctrine where alleged damages were purely economic and tied to contractual expectations.
4. Whether promissory estoppel and unjust enrichment were available where an enforceable contract governed the same subject matter.
5. Whether Rule 37 sanctions were warranted for late production of a supplemental expert report and, if so, what sanction was appropriate.

## Decision

- The court held Reilly’s March 26 letter was an offer and Rubbermaid’s March 30 letter was an acceptance that formed a contract despite additional or different terms.
- Applying UCC § 2-207 and the knockout rule, the court treated conflicting terms as excluded and supplied missing terms through UCC gap-fillers, rather than adopting either party’s full version.
- The court granted Reilly partial summary judgment on breach liability for Rubbermaid’s failure to make certain minimum annual purchases and failure to purchase a total of two million sponges within the contemplated period.
- The court declined to grant Reilly summary judgment on a broad exclusivity/requirements theory to the extent the record left disputes about the scope of any exclusive obligation.
- The court granted Rubbermaid summary judgment on Reilly’s misrepresentation claims under the economic loss doctrine and gist-of-the-action doctrine.
- The court granted Rubbermaid summary judgment on promissory estoppel and unjust enrichment because an enforceable contract controlled the parties’ relationship on the same subject matter.
- The court granted Rubbermaid’s Rule 37 sanctions motion in part, imposing a limited remedy tailored to the prejudice from the late expert disclosure.

## Legal Principles

- Under UCC § 2-207, an acceptance that does not expressly condition assent on additional or different terms can form a contract even when writings conflict.
- Under the knockout rule, conflicting terms in the parties’ forms are excluded from the contract and replaced by UCC gap-fillers as needed.
- In Pennsylvania commercial disputes, tort claims seeking purely economic damages that are tied to alleged nonperformance of contractual obligations are barred by the economic loss doctrine.
- The gist-of-the-action doctrine bars tort claims where the duty alleged to be breached is fundamentally contractual rather than a separate, socially imposed duty.
- Promissory estoppel and unjust enrichment are unavailable when an enforceable contract governs the same subject matter.
- Rule 37 permits sanctions for untimely expert disclosures; sanctions should be proportionate to the prejudice and scheduling-order violation.

## Conclusion

The court found a sponge-supply contract formed through the parties’ March 1999 correspondence under UCC § 2-207, construed its terms using the knockout rule, held Rubbermaid liable for limited purchase-quantity breaches, eliminated misrepresentation and quasi-contract theories as duplicative of contract remedies, and imposed partial sanctions for a late supplemental expert report.


Reilly Foam Corp. v. Rubbermaid Corp., 206 F. Supp. 2d 643 (E.D. Pa. 2002)