Deere & Company v. Ohio Gear

In the
United States Court of Appeals
For the Seventh Circuit
____________

No. 05-1990
DEERE & COMPANY, a Delaware
corporation, and FUNK
MANUFACTURING COMPANY,
a Kansas corporation,
Plaintiffs-Appellants,
v.

OHIO GEAR, a South Carolina
corporation, and REGAL-BELOIT,
a Wisconsin corporation,
Defendants-Appellees.
____________
Appeal from the United States District Court
for the Central District of Illinois.
No. 02 C 4011—Joe Billy McDade, Judge.
____________
ARGUED NOVEMBER 29, 2005—DECIDED AUGUST 29, 2006
____________

Before MANION, WILLIAMS, and SYKES, Circuit Judges.
SYKES, Circuit Judge. This diversity action involves a
contract dispute over tractor parts supplied by defendant
Ohio Gear to plaintiffs Deere & Company and Funk
Manufacturing Company (collectively “Deere”). Deere seeks
millions of dollars in replacement and repair costs plus
consequential damages flowing from Ohio Gear’s provision
of tractor parts that Deere claims contained defective
washers. The district court granted summary judgment for
2 No. 05-1990

Ohio Gear because the action was commenced after a
contractual one-year limitations period had expired. Deere
argues on appeal that the district court abused its discre-
tion in granting Ohio Gear’s summary judgment motion
before Deere completed expert discovery and filed a re-
sponse. Deere also argues that the district court erred by
applying the contractual one-year limitations period.
We reverse. Because of ongoing discovery disputes over
expert witnesses, Deere asked the district court for an
enlargement of time to take expert witness discovery and
respond to Ohio Gear’s motion for summary judgment. The
court granted the motion. Ohio Gear, however, was
unable to comply with the new expert witness discovery
deadline and moved the court for an extension of time to
produce its experts for deposition. That motion went
undecided for several months. As a consequence, Ohio
Gear’s experts were not deposed and Deere’s deadline to
respond to Ohio Gear’s summary judgment motion came
and went without a response. Without addressing the
pending discovery dispute, the district court then treated
Deere’s failure to respond to the summary judgment motion
as an admission (invoking its local court rule) and granted
summary judgment for Ohio Gear. Under the procedural
circumstances of this case, this was an abuse of discretion.
We vacate the summary judgment and remand the case for
further proceedings.

I. Background
The business relationship between Deere and Ohio Gear
began with something the parties call the “Clark transac-
tion,” a February 1997 deal in which Deere purchased ring-
and-pinion sets from Ohio Gear. Deere initiated the Clark
transaction by requesting a price quotation from Ohio Gear,
and Ohio Gear replied by issuing a written quotation
containing its pricing and standard terms and conditions.
No. 05-1990 3

Ohio Gear’s terms and conditions included:
1. AGREEMENT AND LIMITATIONS. . . . Seller
objects to and shall not be bound by additional or
different terms whether printed or otherwise in Buyer’s
purchase order or in any other Communication from
Buyer to Seller. Such additions and differences in terms
shall be considered material and Seller’s terms and
conditions shall govern.
....
21. GOVERNING LAW AND LIMITATION. (a) . . .
Any action for breach of the Sales Contract must be
commenced within one (1) year after the cause of action
has accrued and all such claims shall be barred thereaf-
ter notwithstanding any statutory period of limitations
to the contrary.
Deere accepted Ohio Gear’s offer by issuing a written
purchase order confirming the quantity and price, and
stating Deere’s own standard terms and conditions. The
relevant terms included on Deere’s purchase order were:
2. Acceptance. . . . If this Order constitutes an accep-
tance of an offer, such acceptance is expressly made
confidential [sic] on Vendors [sic] assent to the terms of
this Order, and shipment of any part of the goods
covered hereunder shall be deemed to constitute such
assent.
....
9. Non-waiver. The failure of the Buyer to insist upon
strict performance of any terms and conditions hereof,
or failure to delay or exercise any rights or remedies
provided herein or by law . . . shall not release Vendor
of any of the warranties or obligations of this Order,
and shall not be deemed a waiver of any right of
Buyer . . . of its rights and remedies as to any such
goods.
4 No. 05-1990

In November 1997 Kevin Kleman, a supply manager at
Deere, telephoned Gary Justice, Ohio Gear’s general man-
ager, and invited Justice to quote a price at which Ohio
Gear could supply differential assemblies for the transmis-
sion in Deere’s new line of tractors. Deere gave Ohio Gear
its design specifications, and on November 24 Justice sent
a letter to Kleman quoting a price for ring-and-pinion sets
(a subpart of the differential assembly). Justice stated
in his offer letter: “The same terms and conditions apply
as our current business with you.” The “current business”
was the Clark transaction. Two days later Justice sent
another letter to Kleman that quoted prices for the entire
differential assembly. This November 26 letter again
advised Kleman that Ohio Gear’s standard terms and
conditions would apply: “As before, our normal terms and
conditions apply.” Kleman testified at his deposition that he
understood Ohio Gear’s references to the “same” or “normal”
terms and conditions to mean the terms that governed the
parties’ Clark transaction.
Justice and Kleman met in person on December 5 and
agreed on the essential terms under which Ohio Gear would
provide the differential assemblies for Deere’s new tractors.
At this meeting Kleman gave Justice a “verbal” purchase
order that Kleman said was “a commitment for [Ohio Gear]
to move ahead.” Justice said that they concluded the
meeting with a handshake, and that he told Kleman
something to the effect of: “As always, the same terms and
conditions.” Kleman did not recall whether they shook
hands or if Justice mentioned anything about the “same
terms and conditions.” On December 18 Kleman followed up
on his verbal purchase order by sending a written purchase
order to Ohio Gear. Handwritten on the front of the Decem-
ber 18 purchase order were the words, “confirming PO with
Gary Justice 12/5/1997”; Deere’s standard terms and
conditions were printed on the back.
No. 05-1990 5

Ohio Gear manufactured the differential assemblies,
shipped them to Deere, and Deere used them in its tractors.
In early 1999 Deere’s customers started complaining that
their tractors were malfunctioning. Deere investigated the
complaints and discovered that Ohio Gear had used
nonheat-treated washers in some of the differential assem-
blies, contrary to Deere’s manufacturing specifications. Ohio
Gear offered to repair the differential assemblies but denied
responsibility for Deere’s recall costs, lost profits, and other
consequential damages. Deere declined Ohio Gear’s offered
remedy, repaired the assemblies itself, and filed this suit
against Ohio Gear on February 4, 2002.
The litigation was protracted and marked by numerous
discovery disputes and requests for continuances and
extensions, taking nearly three years to reach the eventual
summary judgment disposition. Battles over the timeli-
ness and adequacy of Deere’s disclosures regarding its
damages expert were particularly contentious. By the
summer of 2004, the testimony of Deere’s damages expert
had been barred as a sanction for discovery violations, and
discovery and dispositive motion deadlines were reset for
July 19 and August 9, 2004, respectively. Ohio Gear filed a
timely motion for summary judgment on August 9; Deere
filed its own summary judgment motion late, on August 10.
(The district court did not strike Deere’s motion as un-
timely, however.)
On September 13 Deere moved to reopen expert wit-
ness discovery and, correspondingly, for an extension of
time to respond to Ohio Gear’s summary judgment motion.
Deere asked for these extensions because it had not deposed
Ohio Gear’s two damages experts; it had previously moved
to strike those experts’ disclosures and testimony and that
motion had not yet been decided by the district court.
On October 6 the district court issued an order modify-
ing in part its prior order barring Deere’s damages expert
6 No. 05-1990

and reopening discovery for the limited purpose of allow-
ing the experts to be deposed “on or before October 22.” The
court also extended Deere’s deadline to respond to Ohio
Gear’s summary judgment motion to November 5. On
October 8 Ohio Gear’s counsel told Deere’s counsel that
because of scheduling conflicts he could not produce Ohio
Gear’s damages experts by the new October 22 deadline but
could do so on October 25, 26, or 27. Deere’s counsel
initially agreed to take the depositions on October 25 and
26 but then changed course, advising Ohio Gear that
although he was available on those dates, he had been
“instructed not to agree to the same without an order
from the court in light of how [the court] ruled on the
discovery violations.”
Accordingly, on October 13 Ohio Gear moved for a further
extension of the expert discovery deadline. Deere filed a
response opposing any further extension of time for expert
discovery. Deere did not, however, seek an extension of its
November 5 deadline to respond to Ohio Gear’s summary
judgment motion in light of the deposition scheduling
dispute; that deadline passed without any responsive filing
by Deere. On November 10 the district court entered a “text
order” vacating the previously scheduled final pretrial
hearing and trial dates; this order advised the parties that
the court would reset these events “after the Court rules on
the pending summary judgment motions.” In the meantime,
Deere filed additional requests for relief stemming from the
protracted dispute over each side’s expert witnesses.
The court ruled on the summary judgment motions on
February 3, 2005, granting Ohio Gear’s and denying
Deere’s. Citing Local Rule 7.1(D)(2),1 the district court

1
C.D. ILL. R. 7.1(D)(2) provides: “Within 21 days after service of
a motion for summary judgment, any party opposing the mo-
(continued...)
No. 05-1990 7

observed that “[p]laintiffs have not responded although they
were given an extension of time to do so and have not
requested additional time to respond. . . . Since plaintiffs
have not responded, any facts submitted in support of
Defendants’ Motion for Summary Judgment will be deemed
admitted.” The district court then held that the
uncontroverted evidence showed the one-year limita-
tions period contained in Ohio Gear’s quote form governed
the action; because the suit was commenced after the
expiration of this one-year period, it was untimely. The
court also denied as moot all other accumulated motions.
The district court denied Deere’s subsequent request for
relief under Federal Rules of Civil Procedure 59(e) and
60(b), and Deere took this appeal.2

II. Discussion
We review a district court’s summary judgment ruling
de novo. Velez v. City of Chi., 442 F.3d 1043, 1047 (7th Cir.
2006). A party is entitled to summary judgment when,
viewing the pleadings and record evidence in the light most
favorable to the nonmoving party, “there is no genuine issue
as to any material fact and . . . the moving party is entitled
to a judgment as a matter of law.” FED. R. CIV. P. 56(c);
Velez, 442 F.3d at 1047 (citing Celotex Corp. v. Catrett, 477
U.S. 317, 322-23 (1986)). The district court’s decision to rule
on Ohio Gear’s summary judgment motion in the absence of
a response from Deere is reviewed for abuse of discretion.
Grayson v. O’Neill, 308 F.3d 808, 815-16 (7th Cir. 2002).

1
(...continued)
tion shall file a response. A failure to respond shall be deemed
an admission of the motion.”
2
Deere does not appeal the district court’s denial of its own
summary judgment motion.
8 No. 05-1990

Deere first argues that we should reverse the district
court’s summary judgment order because the district judge
ruled prematurely, before Deere could depose Ohio Gear’s
damages experts and respond to Ohio Gear’s summary
judgment motion. When a party thinks it needs additional
discovery in order to oppose a motion for summary judg-
ment in the manner Rule 56(e) requires, Rule 56(f) of the
Federal Rules of Civil Procedure provides a simple proce-
dure for requesting relief: move for a continuance and
submit an affidavit explaining why the additional discovery
is necessary.3 Farmer v. Brennan, 81 F.3d 1444, 1449 (7th
Cir. 1996) (“When a party is unable to gather the materials
required by Rule 56(e), the proper course is to move for a
continuance under Rule 56(f).”). A Rule 56(f) motion must
state the reasons why the party cannot adequately respond
to the summary judgment motion without further discovery
and must support those reasons by affidavit. FED. R. CIV. P.
56(f); Grayson, 308 F.3d at 816 (citing Kalis v. Colgate-
Palmolive Co., 231 F.3d 1049, 1058 n.5 (7th Cir. 2000)).
Deere should have filed a Rule 56(f) motion when it
became clear that the parties’ expert witness deposition
dispute was not going to be resolved prior to the expiration
of its extended deadline to respond to Ohio Gear’s summary
judgment motion. To recap, on September 13, 2004, Deere
filed what it called a Motion for Further Testimony under
Rule 56(e). In that motion Deere informed the district court
that Ohio Gear had not produced its damages experts for
depositions and asked for an extension of the discovery

3
“Should it appear from the affidavits of a party opposing the
motion that the party cannot for reasons stated present by
affidavit facts essential to justify the party’s opposition, the court
may refuse the application for judgment or may order a con-
tinuance to permit affidavits to be obtained or depositions to
be taken or discovery to be had or may make such other order
as is just.” FED. R. CIV. P. 56(f).
No. 05-1990 9

deadline to allow it to depose these experts before respond-
ing to Ohio Gear’s summary judgment motion. The court
responded with an order entered October 6 that extended
the deadline for taking expert depositions to October 22 and
gave Deere until November 5 to respond to Ohio Gear’s
summary judgment motion. Ohio Gear moved on October 13
for even more time to produce its damages experts, citing
scheduling conflicts. Deere opposed that motion but did not
file a Rule 56(f) motion asking for a continuance of its
summary judgment response deadline in light of the
ongoing expert witness discovery problems.
Deere apparently proceeded on the assumption that
the district court would decide Ohio Gear’s October 13
motion regarding the experts’ deposition schedule before
requiring it to respond to Ohio Gear’s summary judgment
motion. This was a risky assumption. Deere took the chance
that the court would do exactly what it did: apply Local
Rule 7.1(D)(2) and deem Deere’s failure to respond to Ohio
Gear’s summary judgment motion an admission of the
motion.
Having said that, however, under the particular proce-
dural circumstances of this case, the district court’s invoca-
tion of Local Rule 7.1(D)(2) was an abuse of discretion. It is
of course true that district courts have broad discretion to
manage their dockets and that local procedural rules are
important case management tools. Koszola v. Bd. of Educ.
of the City of Chi., 385 F.3d 1104, 1109 (7th Cir. 2004)
(“ ‘[W]e have emphasized the importance of local rules and
have consistently and repeatedly upheld a district court’s
discretion to require strict compliance with its local rules
governing summary judgment.’ ”) (quoting Metro. Life Ins.
Co. v. Johnson, 297 F.3d 558, 562 (7th Cir. 2002) (internal
quotation marks omitted)); see also Smith v. Lamz, 321 F.3d
680, 683 (7th Cir. 2003) (“We have consistently held that
failure to respond by the nonmovant as mandated by the
local rules results in an admission.”).
10 No. 05-1990

But the case history here gives us pause. By granting
Deere’s September 13 Rule 56(e) motion, the district court
had agreed that the disputed expert witness discovery
was necessary to Deere’s response to Ohio Gear’s sum-
mary judgment motion. Ohio Gear’s October 13 motion to
enlarge the previously extended time for the experts’
depositions added some ambiguity to the situation. The
court did not decide that motion in a timely fashion. In the
meantime, the parties made additional written submissions
regarding the scope of the proofs and the need to set new
event dates in the case based on the continuing disputes
over expert witnesses. Oral argument was requested, but
the court did not convene a motion hearing. These matters,
too, were left unaddressed. Yet the court proceeded to
invoke the local rule, treat the facts as admitted, and enter
summary judgment—even though the stack of undecided
procedural motions included ones targeting the disputed
expert discovery that the court had previously determined
was a predicate to Deere’s response to the summary
judgment motion. The history of the motions practice in this
case was such that the court should not have bypassed all
the accumulated discovery motions to grant summary
judgment on the basis of procedural default.
Deere’s backup argument is that the court incorrectly
applied the contractual one-year limitations period to find
Deere’s claims time-barred. The argument is based on UCC
§ 2-207, the “battle of the forms” provision, and arises in
this case because of language in Ohio Gear’s quotation form
and Deere’s purchase order. Specifically, UCC § 2-207(1)
rejects the common law “mirror image” rule and provides
that a “definite and seasonable expression of acceptance or
a written confirmation which is sent within a reasonable
time operates as an acceptance even though it states terms
additional to or different from those offered or agreed upon,
unless acceptance is expressly made conditional on assent to
the additional or different terms.” 810 ILL. COMP. STAT. 5/2-
207(1) (emphasis added).
No. 05-1990 11

Thus, when a buyer’s acceptance is expressly made
conditional on the seller’s assent to the buyer’s terms and
there is no express assent from the seller, the exchange of
forms does not create a formal contract under UCC § 2-
207(1). See, e.g., Northrup Corp. v. Litronic Indus., 29 F.3d
1173, 1179-80 (7th Cir. 1994); Luria Bros. & Co., Inc. v.
Pielet Bros. Scrap Iron & Metal, Inc., 600 F.2d 103, 113 (7th
Cir. 1979); C. Itoh & Co., Inc. v. Jordan Int’l Co., 552 F.2d
1228, 1235-36 (7th Cir. 1977); see also McCarty v. Verson
Allsteel Press Co., 411 N.E.2d 936, 945 (Ill. App. Ct. 1980).
That is, the buyer’s purported acceptance, which expressly
requires the seller’s specific assent to its differing terms, is
effectively a counteroffer and not a “true” acceptance. See C.
Itoh, 552 F.2d at 1235-36; see also McCarty, 411 N.E.2d at
945. However, if the parties perform as if a formal contract
had been created, UCC § 2-207(3) comes into play:
Conduct by both parties which recognizes the existence
of a contract is sufficient to establish a contract for sale
although the writings of the parties do not otherwise
establish a contract. In such case the terms of the
particular contract consist of those terms on which the
writings of the parties agree, together with any sup-
plementary terms incorporated under any other provi-
sions of this Act.
810 ILL. COMP. STAT. 5/2-207(3); see also C. Itoh, 552 F.2d at
1236. The UCC’s default limitations period is four years.
810 ILL. COMP. STAT. 5/2-725(1).
The district court did not confront the UCC § 2-207
argument. Instead, the court applied Local Rule 7.1(D)(2)
and deemed Deere to have admitted that Ohio Gear’s terms
controlled the transaction. The district court thus applied
the contractual one-year limitations period contained in
Ohio Gear’s quotation form and entered summary judgment
on grounds of untimeliness. But for the “admission”—
brought about by application of the local rule—the UCC § 2-
12 No. 05-1990

207 issued outlined above would have come into play. We
will not address it here, however; the factual record remains
incomplete because the district court entered summary
judgment prematurely, in the absence of a response from
Deere. We conclude only that the district court abused its
discretion by invoking Local Rule 7.1(D)(2) under the
particular circumstances of this case, and by entering
summary judgment without having decided the pending
discovery motions and without a response from Deere. The
judgment is vacated and the case is remanded to the district
court for further proceedings consistent with this opinion.
REVERSED.

A true Copy:
Teste:

________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit

USCA-02-C-0072—8-29-06