Barry Wright Corp. v. ITT Grinnell Corp.

Facts

Pacific Scientific was the only domestic manufacturer of mechanical snubbers, controlling 47% of all snubbers sold in 1976, increasing to 94% by 1979. Grinnell, a major customer accounting for approximately 50% of all mechanical snubber purchases, sought to develop an alternative supplier by contracting with Barry Wright in 1976. Under this agreement, Grinnell would help fund Barry’s development costs in exchange for Barry becoming Grinnell’s exclusive supplier between 1977-1979. When Pacific learned of this arrangement, it offered Grinnell special discounts (30% for small snubbers, 25% for larger ones) on large orders. Barry failed to meet its production deadlines, and in January 1977, Grinnell placed a $4.3 million order with Pacific at the special discount rates. Pacific included an option for Grinnell to buy its 1978 requirements at the same prices and inserted a non-cancellation clause making it costly for Grinnell to break the agreement. By May 1977, Grinnell and Pacific agreed to additional purchases for 1978 ($6.9 million) and 1979 ($5 million). In June 1977, Grinnell terminated its relationship with Barry, which subsequently abandoned its snubber development efforts and filed this lawsuit.