Statutory Interpretation

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7^th Circuit Court of Appeals

Case Name: Prolite Building Supply, LLC, et al. v. MW Manufacturers, Inc., et al.

Case No.: 17-3149

Officials: EASTERBROOK and ROVNER, Circuit Judges, and GILBERT, District Judge

Focus: Statutory Interpretation

Prolite Building Supply bought Ply Gem windows from MW Manufacturers. (The parties use “Ply Gem” for both the product and its maker; we do the same.) Prolite resold the windows to residential builders in Wisconsin. Some of the homeowners were not satisfied with the windows, which admitted air even when closed. They complained to the builders, which complained to Prolite, which complained to Ply Gem. Working together under a contract that made Prolite the windows’ principal servicer, Prolite and Ply Gem solved some but far from all of the problems. Contractors stopped buying from Prolite, which stopped paying Ply Gem for earlier deliveries.

Prolite and 12 homeowners filed suit in state court. Prolite contended that Ply Gem broke a promise to make the builders and ultimate customers happy. The homeowners made claims under the warranties that accompanied the windows. Ply Gem removed the action to federal court and counterclaimed against Prolite for unpaid bills. It added An‐ drew Johnson and Michael Newman, Prolite’s only two members, as additional parties. (Johnson and Newman had guaranteed payment of Ply Gem’s invoices.) Great Lakes Window, a company affiliated with Ply Gem, filed its own federal suit against Prolite, Johnson, and Newman, seeking to collect other invoices. Additional homeowners intervened in the removed suit. The district court consolidated these actions, and the caption that begins this opinion names the main contestants without going into excessive detail.

Prolite contends that what Ply Gem should have done was either reinstall all of the windows, without specific requests, or design a new line of windows with better attributes and replace the old windows with the new ones, again without requests. Only those two steps could have kept the customers happy, Prolite insists. The problem, as the district judge observed, is that the service agreement does not require Ply Gem to keep the customers happy. (That’s the function of the warranties.) Instead the service agreement requires Prolite to keep the customers happy by performing repairs in exchange for a discount. The district court’s opinion meticulously discusses the contractual language. It is not necessary to repeat that analysis in the Federal Reporter. Nor need we repeat the district court’s convincing resolution of the dispute about expert evidence that Prolite proffered. The homeowners’ claims, by contrast, pose a knotty problem. They can be resolved under the supplemental jurisdiction only if they “are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.” 28 U.S.C. §1367(a). The statute does not define “case or controversy,” nor does Article III. Courts often ask whether the claims share a common nucleus of operative facts. See, e.g., Houskins v. Sheahan, 549 F.3d 480, 495 (7th Cir. 2008). This jiggles the vagueness problem around a little without solving it.

What’s more, we cannot forget that we have two suits, the second one (by Great Lakes) filed initially in federal court with both complete diversity and stakes exceeding $75,000 for every litigant. Each of these consolidated suits must be considered independently. Hall v. Hall, 138 S. Ct. 1118 (2018). The dispute between Prolite and Ply Gem could be resolved under the supplemental jurisdiction in the suit by Great Lakes no matter what one makes of the homeowners’ claims. The judgment of the district court is affirmed, except with respect to the homeowners’ claims. The judgment dealing with those claims is vacated, and the case is remanded to the district court with instructions to remand them to state court.

Affirmed in part. Vacated and Remanded in part.

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.