MEMORANDUM OPINION AND ORDER BACKGROUND Access Business Group wanted to make sports drinks. So it enlisted Refresco’s expertise. Access would design the drink, and Refresco would manufacture it. Their Original Agreement divided the responsibilities accordingly: Access would set the “Specifications,” such as the drink’s formula and “[p]ackaging testing and specification development,” while Refresco would manufacture the drinks to “conform to the Specifications and industry standards.” Dkt. 84-1 at 9, 28. Those standards included, among others, that the drinks be “merchantable.” Id. at 9. If the goods were “nonconforming for any reason,” Refresco would be responsible for dealing with the nonconforming goods. Id. at 8 §6(b), (d). As the project progressed, Refresco worried that the drinks’ electrolyte levels would corrode Access’s chosen can and can liner. See, e.g., Hagedorn Dep. 255:23-256:6; Moir Dep. 40:9-16. In other words, the drinks were so salty that Refresco thought Access should use a plastic bottle or higher-grade can liner. Id. Given its concerns, Refresco proposed (and Access signed) the First Letter Agreement. Dkt. 84-6. Under that Agreement, Refresco had no liability for any corrosion-related problems “caused directly by the Formulas” and “to the extent due to the Formulas.” Id. at 2. But it clarified that “nothing in this letter releases or modifies Refresco’s obligations and liabilities for problems unrelated to corrosion for the Designated Products due to the Formulas.” Id. at 2. This Agreement expired once “corrosion testing has been completed for the Formulas for the Designated Products and such testing has shown that there is [sic] no corrosion problems with the Formulas.” Id. at 3. The parties dispute whether such testing was completed or revealed any corrosion problems. In any event, Access went ahead with production, ordering more than ten million cans in various flavors. Waddell Dep. 195:21-196:22. A few months into production, Access and Refresco executed the Second Letter Agreement. Dkt. 84-8. This Agreement was similar to the First: It said that “Refresco shall have no liability whatsoever for any damages due to the use of the Formulas in any iterations of the Designated Products or for corrosion problems caused directly by the Formulas” and that Refresco would not be “liable for any damages…to the extent due to the Formulas.” Id. at 2. It also clarified that Refresco’s other obligations remained. Id. at 2-3. But the Second Letter Agreement also went further. Unlike the First Agreement, the Second Letter Agreement would “remain in full force and effect as long as Refresco is producing the Designated Products for Customer,” “notwithstanding any corrosion testing that has already been performed.” Id. at 2-3. Eventually, Refresco’s fears came true. As millions of cans sat in Access’s warehouses unsold, some started leaking. Waddell Dep. 195:21-196:22. And once some cans leaked on other cans, those other cans were damaged too, potentially causing them to leak. See, e.g., Dkt. 84-11 at 3. Faced with this deteriorating supply, Access trashed its remaining inventory. Dkt. 84-5 at 3. It then sued Refresco for breach of contract, seeking reimbursement for both the defective goods and the cleanup costs. Compl., Dkt. 1
