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Subaru of America, Inc. v. DDB Worldwide Communications Group

July 1, 2010


The opinion of the court was delivered by: Irenas, Senior District Judge


This matter comes before the Court upon Plaintiff's Motion for Reconsideration and Defendant's Cross-Motion for Reconsideration. For the following reasons, the Court will grant Plaintiff's Motion for Reconsideration and vacate the Order without prejudice.


Plaintiff Subaru of America, Inc. ("Subaru") and Defendant DDB Worldwide Communications Group, Inc. ("DDB") entered into an agreement ("the Agreement") on January 1, 2005. Under the Agreement, DDB agreed to be Subaru's advertising agency of record in the United States and provide marketing and advertising communications for Subaru's automobiles in the United States. On October 16, 2007, Subaru provided notice of termination of the Agreement, to take effect 180 days from the date of the letter (in accordance with the Agreement as insisted upon by Subaru). As specified in the Affidavit of Peter Hempel, Subaru at first did not intend to continue to pay the monthly Agency Fee during the Termination Period, but in the end, agreed to continue making the payments. Hempel Affidavit, ¶16. During the termination period, Subaru assigned all of its new advertising work to its new advertising agency, as was its right in accordance with ¶17 of the Agreement. During this termination period, Subaru then conducted an audit of staffing and hours for the years 2005, 2006, 2007 and part of 2008. DDB argued that the termination period should not have been included in the audit. Hempel Aff., ¶24. Yet, the audit did include the termination period, during with DDB did little to no work for Subaru (as all of the advertising responsibilities were now assigned to its new ad agency). According to the conducted audit, Subaru underpaid DDB $359,050.00 and overpaid it $4,398,622.00, in large part due to its monthly payments during the six month termination period. Subaru filed a complaint to this effect, seeking a refund on its overpayment.

In its Motion for Partial Summary Judgment, Subaru contended the Agreement expressly provided for a right to reimbursement on any over- or under-payment revealed by an audit. The motion only sought partial summary judgment on the first count of Plaintiff's complaint: breach of contract arising out of DDB's alleged failure to reimburse Subaru for unearned fees which had been paid in accordance with an estimated fixed fee, as explained below. Thus, Subaru brought the motion to determine the legally correct interpretation of the contract, specifically regarding the rights stemming from the express right to audit the other party's books.

The Agreement specified that Subaru agreed to pay DDB an annual estimated total compensation, based on an estimate of staffing hours, overhead and profit, using a labor-based computation method. The Agreement further provides Subaru with the right to annually audit DDB's:

books and records relating to third party vendor charges, and the actual staffing and hours compared to the applicable Annual Fee/Staffing Schedule. . . . Each party will bear the entire cost of the audits it initiates and will promptly reimburse the other for any properly documented overcharges or undercharges disclosed by audits, as appropriate. . . This provision relating to records and audits will continue to apply for one year following any termination*fn1 of this Agreement. -- Agreement ¶16 (emphasis added).*fn2

This Court denied the Motion for Partial Summary Judgment on the grounds that there was "simply no contextual support for Subaru's contentions."

Plaintiff filed this Motion for Reconsideration contending the Court overlooked not just the word reimburse, but also express terms which provide contextual support for Subaru's contentions. Plaintiff alleges the Court made a number of inaccurate statements with regards to the agreements between the two parties, specifically: "[t]he Order suggests that (a) the word reimbursement (or derivations thereof) are not in the Agreement; (b) the Agreement does not provide any guidance for the use of the audit results; and (c) the only operative language concerning the computation of the agency fee states that it is to be done by mutual agreement." Pl. Br., 6.

Defendant opposes Plaintiff's motion for reconsideration and also file a cross-motion for reconsideration of a limited portion of this Court's order. DDB contends this Court made a manifest error of law by prematurely entertaining the merits of the motion for partial summary judgment because the parties had not yet begun discovery. DDB conditions its cross motion as actionable only in the event that the Court will vacate any portion of its previous order. Def. Br., 23.


Parties may file a motion for reconsideration of an order under the District of New Jersey Local Civil Rules. D.N.J. L.Civ.R. 7.1(I). Motions for reconsideration are the "functional equivalent" of motions to alter or amend judgment under Federal Rule of Civil Procedure 59(e). Jones v. Pittsburgh Nat'l Corp., 899 F.2d 1350, 1352 (3d Cir.1990). The purpose of a motion for reconsideration is to "correct manifest errors of law or fact." Max's Seafood Café ex-rel Lou-Ann, Inc. v. Quinteros, 176 F.3d 669, 677 (3d Cir.1999)(internal quotations omitted). Therefore, a court may exercise its discretion to alter or amend its judgment if the movant demonstrates one of the following: (1) an intervening change in the controlling law; (2) availability of new evidence not available when the judgment was granted; or (3) the need to correct a clear error of law or fact or to prevent manifest injustice. Id.

In the instant case, the only basis for reconsideration is the need to correct a clear error of law or fact or to prevent manifest injustice. "[T]he movants must show that the court overlooked a factual or legal issue that may alter the disposition of the matter, such as when dispositive factual matters or controlling decisions of law were brought to the court's attention, but not considered." Marshak v. Treadwell, 2008 WL 413312 at *5, (D.N.J.2008). A motion for reconsideration "does not permit a Court to rethink its previous decision, rather, the rule permits a reconsideration only when 'dispositive factual matters or ...

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