Kehoe Component Sales Inc. v. Best Lighting Products, Inc. (933 F. Supp. 2d 974, 2013)

United States District Court for the Southern District of Ohio 2013-03-20

Citations

Full opinion text

OPINION AND ORDER

EDMUND A. SÁRGUS, JR., District Judge.

These consolidated diversity cases stem from a contractual dispute between Plaintiff/Counter-Defendant Kehoe Component Sales, Inc., d/b/a Pace Electronic Products (hereinafter “Pace Electronic”); Plaintiff/Counter-Defendant Pace Technology Co., Ltd. (hereinafter “Pace Technology”); and Defendani/Counter-Claimant Best Lighting Products, Inc. (hereinafter “Best”). This matter is before the Court for consideration of the parties Cross-Motions for Summary Judgment. (See ECF Nos. 54, 64, 66.) For the reasons that follow:

• Defendant/Counter-Claimant Best Lighting Products, Inc.’s Motions for Summary Judgment are DENIED. (ECF Nos. 54, 66.)

• Plaintiffs’ Motion for Summary Judgment is. GRANTED in part and DENIED in part subject to the conditions outlined in this Opinion and Order. (ECF No. 64.)

• Plaintiffs’ Complaint in Case No. 2:10-cv-789 is DISMISSED without prejudice subject to the conditions outlined in this Opinion and Order.

• The Clerk is DIRECTED to STRIKE the Declaration of James J. Hooley. (ECF No. 72-1.)

L BACKGROUND

A. Factual Background

1. Best’s Pre-2007 Relationship with the Pace Companies

Alvin Katz (“A. Katz”) founded Best, an Ohio corporation, in 1995. (A. Katz Dep. 5, ECF No. 52-1.) Best sells emergency lighting products, emergency ballasts, exit lighting, and related products. A. Katz testifies that, in creating Best’s product line, he came up with hand-drawn concepts and designs for Best products. (IcL at 40, 71.) A. Katz states that he would sometimes start with samples from other manufacturers when making Best products. (Id. at 42, 72.)

In approximately 2000, Pace Electronic — a New York corporation — approached Best offering to manufacture its products. (See id. at 56-57; Kehoe Dep. 38, ECF No. 52-4.) Eventually, a relationship developed in which Pace Electronic and its affiliates manufactured products for Best. (See Katz Dep. 62.) According to F. Patrick Kehoe (“Kehoe”) — the CEO of Pace Electronic and partial owner of the other Pace companies' — -Pace Technology, a Pace affiliate based in China, began making molds (also referred to as “tooling”) to produce Best products beginning in 2000. (Kehoe Dep. 7, 40, ECF No. 52-4.) Kahoe avers that the Pace companies made this tooling from “garden variety samples that we got from the marketplace.” (Id. at 89.) A. Katz testifies that Best also submitted orders to other suppliers from 2000 to 2006. (See A. Katz Dep. 81-83.)

Beginning in 2004, and more prominently in 2005, Best became concerned that the Pace companies'were selling lighting products to Best’s customers. (See id. at 96-99.) In August 2004, A. Katz sent Kehoe an email indicating that Best did not want the Pace companies giving quotes to Best’s customers. (Id. at 96; PL’s Mot. Summ. J. Ex. D, ECF No. 64-3.) In March 2005, Kahoe emailed A. Katz assuring him that Pace Electronic, Pace Technologies, and another Pace affiliate, would not offer emergency lighting products to any of Best’s customers in North America without Best’s permission. (A. Katz Decl. Ex. 6, ECF No. 54-1.) A. Katz avers, however, that during 2005 Best discovered that — despite written assurance from Pace Electronic — Pace Electronic and its affiliates had been selling lighting products to Best’s customers. (A. Katz Decl. ¶ 4, ECF No. 54-1.) On October 11, 2005, A. Katz sent two emails to Kehoe expressing considerable displeasure based on his belief that Pace Electronic and its affiliates were “back door selling” products made with Best’s tooling.to multiple customers. (Pl.’s Mot. Summ. J. Ex. D at 2-3.) Kahoe responded to these emails maintaining that he had not purposely competed with Best and that he considered Best to be a partner. (A. Katz,Decl. Ex. 4, ECF No. 54-1.)

During this same general period, in April 2005,’ a dispute arose between the Pace companies and Best regarding defective products and the ownership of tooling. (A. Katz Dep. 102-04.) A. Katz testifies that he had a disagreement with Peter Yang, a part owner of Pace Technology, regarding whether Pace Technology or Best owned the tooling that the Pace companies were using to make Best’s products. (Id. at 102-03.) During his deposition, A. Katz expressed' the belief that “over the course of the years” he had paid for some of the tooling in question but that he had not paid for all of the tooling. (Id. at 106.) According to Jeffrey Katz (“J. Katz”), the CEO of Best, during this period the Pace companies sent Best a bill for outstanding tooling payments. (J. Katz Dep. 100, ECF No. 96.) . During the same period, Best claimed' that it was forced to pay approximately $300,000 to. correct defective products from the Pace companies. (A. Katz Dep. 103-04.) In a transaction that the parties refer to as the “big wash,” Best received ownership' of the tooling in question in exchange for the expenses it was claiming to repair the alleged defect in products. (See id. at 104-05; ■ J. Katz Dep. 100.) An April 19, 2005 email from Kehoe described the transaction as follows: “[t]ooling — Pace will- accept the proposal to wash all pending tooling cost against the pending rework charge without any contingency.” (Katz Decl. Ex. 3.) Pace Electronic also submitted a list dated March 23, 2005 — which was originally an exhibit to the Kehoe deposition — that sets forth various tooling charges purportedly pending at that time. (Hull Decl. Ex. B, ECE No. 71-1.)

In 2006, the relationship' between Best and the Pace companies continued to dissolve. During 2006, A. Katz avers that Best still'believed that the Pace companies were actively selling lighting products to Best’s customers. (See A. Katz Decl. ¶ 4.) Moreover, according to Kehoe, Best owed the Pace companies approximately $ 1.5 million and was refusing to pay. (Kehoe Dep. 46.)

In light of these circumstances, the companies engaged in negotiations during late 2006 and into 2007. (Katz Decl. ¶ 5.) A. Katz avers that in light of Best’s concern over Pace companies selling competing products, it was seeking “enforceable assurances” in order to continue the relationship. (Id. at ¶ 6.) During this general period, Kehoe made a number of statements to Best assuring them of his trustworthiness. For example, on November 27, 2006 Kehoe emailed Katz stating “I swear on my saintly mother’s grave my motivation is not to raid your customer list” and promising that he would not violate a non-compete under any circumstances. (Katz Decl. Ex. 1, ECF No. 54-1.) Two days.later, Kehoe stated that the Pace companies would accept a one year non-compete agreement. (Katz Decl. Ex. 5, ECF No. 54-1.) Finally, A. Katz avers that during a meeting in which the companies negotiated the final terms of an agreement, Kehoe specifically represented that the Pace companies would not sell lighting products to any of Best’s North American customers without written authorization. (A. Katz Decl. ¶ 10.)

Despite Kehoe’s representations, the record reflects that Best still mistrusted him during the course of negotiations. During his deposition, A. Katz specifically stated “[n]o way in God’s name did I trust [Kehoe] in 2006 ....” (A. Katz Dep. 118.) Moreover, within his Declaration, A. Katz avers that because Best mistrusted Kehoe it would not have entered an agreement with Pace without “a strict- written agreement” limiting Pace’s ability to sell products in North America. (A. Katz Decl. ¶¶ 8,12.) Richard Melbourne Háughton, a former Vice-President at Best, similarly testified:

The purpose of [the negotiations] was to put in place what we believed to be a legally enforceable agreement that would govern the conduct of the parties moving forward in a commercial relationship, because the past had indicated to us things like a handshake or my word, quote/unquote, from Pat Kehoe, would not provide us with any reasonable security that the relationship would proceed on acceptable terms, and we needed something enforceable.

(Melbourne Haughton Dep. 64-65, ECF No. 52-2.)

2. 2007 Supply Agreement

Best, Pace Electronic, and Pace Technology ultimately entered into an agreement (the “Supply Agreement”) which became effective on January 10, 2007. Pace Products, Ltd. (formerly known as Max-Lion Corporation Limited), another Pace affiliate (hereinafter “Pace Products”), was also a party to the agreement. Under the Supply. Agreement, Best agreed to purchase $ 7,000,000 worth of products from the'Pace companies annually. The Supply Agreement fixed prices for the relevant products with the caveat that “the Parties agree[d] to review prices for Products on a bi-annual basis based on the Effective Date....” (Supp. Agr. 1.) The Supply Agreement required Best to place purchase orders directly with Pace Electronic. (Id.) The duration of the Supply Agreement was one year from the effective date, January 10, 2007, with either party having the ability to submit a written request for renewal within thirty days of expiration. (Id.)

The Supply Agreement contained non-' compete provisions that provided as follows: <'

During the term of the agreement, Pace shall not sell emergency lights or exit sighs nor ballasts, nor solicit sales of these items to any party in North America without Best’s prior written consent. Such sales, if approved by Best, shall be subject tc a commission to be paid by Pace to Best. Penalties for violation of the non-compete provision shall be paid by Pace to Best at the rate of $500,000 per occurrence.

Pace shall be authorized to sell [to] customers specified in the Schedule “B” to this Agreement under the conditions specified therein;

Pace shall disclose to Best all emergency lighting/exit/ballast product shipments by customer including selling price and terms made by Pace to all customers in North America for the last two years. If Pace terminates this Agreement, Pace shall not sell emergency lighting, exit signs or exit lighting or ballast products in North America for a period of one year from the effective date of termination of the Agreement ....

(Id. at 2.)

In addition to the various non-compete provisions, the Supply Agreement also included an' assignment provision that provided as follows:

.Pace shall not use any tooling owned by Best other than for. the manufacturer of products for sale to Best, and assigns to Best all designs and intellectual property. (and all derivations thereof) for products developed or to be developed at or by Pace for Best,

(Id.) Finally, the Supply Agreement also included a warranty provision stating that “Pace shall warrant the goods as to quality and conformance with specifications; Pace shall bear all costs of replacement and rework of any Products proven to contain manufacturing defects, including but not limited to return of defective goods to source of manufacture....” (Id.)

3. Supply Agreement Disputes

As detailed further below, this controversy centers around the parties actions following the 2007 Supply Agreement and how to interpret such actions in light of the Supply Agreement. The parties dispute how to characterize the Pace companies product shipments in 2007; the nature of price increases during the course of the Supply Agreement; the creation of products and the use and ownership of tooling; and remaining payment obligations under the Supply Agreement. The Court will summarize the relevant factual evidence concerning these issues.

a. 2007 Product Shipments

Best maintains that shortly after January 10, 2007 the Pace companies sold products to non-approved third parties in North America in violation of the agreement. Best specifically provides the business records of four companies: Astralite, Inc. (“Astralite”); Mule Lighting, Inc. (“Mule Lighting”); Lightworld, Inc. (“Lightworld”); and Heiser, Inc. (“Heiser”). Astralite records reflect that it received ‘ shipments of emergency lighting products (and invoices) from Pace Electronic on at least ten separate occasions— ranging from January 17, 2007 until September 11, 2007 — during the life of the Supply Agreement. (See Yu Decl. Exs. 3-26, ECF No. 54-2.) Additionally, business records from Mule Lighting reflect that it received a shipment of lighting products from Pace Products during the life of the Supply Agreement and paid for these products in June 2007. (See Cross Decl. Exs. 6, 11, ECF No. 54^4.) Light-world records similarly indicate that it received lighting products from Pace Products during the Supply Agreement period and paid for these products in June 2007. (See Cross Decl. Exs. 2-5, ECF No. 54-3.) Finally, the record shows that Heiser received emergency lighting products from Pace Electronic in April 2007 and that it ultimately paid for those products in May. 2007. (Dick Decl. ¶3, ECF No. 87-4, Case No. 2:08-cv-752; see also Dick Decl. Ex. 1., ECF No. 54-5.) According to Best, it began to suspect that the Pace companies had been selling identical emergency lighting products when, sometime in 2009, a customer returned to Best a product bearing Pace’s name. (See Pratha Dep. 87-91, ECF No. 74.)

Pace Electronic does not dispute that the Pace companies shipped products to non-approved North American companies during the effective period of the 2007 Supply Agreement. (See Kehoe Dep. 103-04.) Pace Electronic asserts, however, that all of the 2007 shipments in question were pursuant to purchase orders that pre-dated the Supply Agreement. Specifically, Pace Electronic highlights that the business records of Astralite include only two purchase orders, dated October 23, 2006 and November 9, 2006. (Yu Decl. Exs. 1-2, ECF No. 54-2.) Moreover, Pace Electronic submits a purchase order between- Pace Products and Mule Lighting dated December 19, 2006. (Zimmer Decl. Ex. 2, ECF No. 87-2, Case No. 2:08-cv-752.) Likewise, Lightworld business records state that the date of the purchase order in question was December 19, 2006. (Cross Decl. Ex. 2, ECF No. 54-3.) .Finally, with regard to Heiser, John K. Dick, CEO of Heiser, avers that Heiser placed the relevant purchase order with Pace Electronic on January 3, 2007. (Dick Decl. ¶ 3.) According to Kehoe, he discussed these pending purchase orders with Best when the parties negotiated the Supply Agreement. (Kehoe Dep. 104-05.)

b. Price Increases

The parties also dispute the nature of price increases that occurred during the effective period of the Supply Agreement. The evidence indicates, and Pace Electronic concedes, that the Pace companies sought increases from the prices listed in the Supply Agreement. For example, In April 2007, Kehoe sent an email to Dave Melanson, a Best employee, asking him to confirm an increase in price of Polycarbonate Vandal/Environmental Shield Guards from $13.15 (under the Supply Agreement) to $14.30 due to “material price increase.” (Def.’s Mem. Opp’n Summ. J. Ex. C at 2, ECF No. 75-1.) On May 21, 2007, Kehoe sent various Best employees, including A.Katz, an email discussing increase in battery costs due to the increased cost of metal and asking for approval to proceed with “unacknowledged orders.” (Id. at 3.) A June 4, 2007 email from Kehoe to A. Katz and other Best employees indicates that the parties were negotiating increased prices due to the cost of materials. (Def.’s Mem. Opp’n Summ. J. Ex. B, ECF No. 75-1.)

The record evidence reflects that employees for both Best and the Pace companies continued to exchange emails regarding price increases, at least sporadically, throughout the remainder of 2007. (See Def.’s Mem. Opp’n Summ. J. Ex. D, ECF No. 75-1). In July 2007, J. Katz -sent Kehoe an email expressing frustration with a price increase. (Id. at 3.) J. Katz told Kehoe that he would not reissue the orders in question based on the higher quoted price. (Id.)

In discussing price increases, A. Katz testified that Kehoe would force him to accept price increases for pending orders. (A. Katz Dep. 149.) According to A. Katz, he had no other place to go at the time Kehoe demanded price increases. (Id. at 150.) A. Katz further stated that Kehoe would threaten not to ship orders unless Best agreed to the price increases. (Id. at 149-50.) At the same time, however, A. Katz and other Best employees indicated that they did use other suppliers during 2007. (See A. Katz Dep. 153; Melbourne Haughton Dep. 27.) Finally, deposition testimony reflects that Best also, on at least one occasion, attempted to renegotiate a price within the Supply Agreement, (A. Katz Dep. 138; see also Def.’s Mem. Opp’n Summ. J. Ex. C at 1.)

c. Creation of Products and Use of Tooling

The parties have presented evidence regarding Pace’s production of emergency lighting products involving the ownership and use of tooling. As detailed above, Kéhoe states that the Pace companies originally made tooling when they began working with Pace in 2000, based on “garden variety samples” available in the marketplace. (Kehoe Dep. 88-89.) Kehoe further states that the tooling for such products would wear out and have to be replaced and that the Pace companies would pay to replace it. (Id. at 87.) Kehoe estimates that Pace had replaced tooling ten times for high volume products. (Id.) During his deposition, Kehoe went through the products listed within “Schedule A” of the Supply Agreement, indicating that the Pace companies made some products using Best’s' tooling, while they made other products using the tooling of the Pace companies. (Id. at 77-83.) Kehoe avers that Pace manufactured certain select “die cast” fixtures, for its own account, using Best’s tooling with Best’s approval. (Id. at 81, 91.) Kehoe denies that there was any design or intellectual property that Pace developed for Best. (Id. at 99.) According to Kehoe, Best provided the Pace companies with “existing jelly bean” samples and the Pace companies made the necessary tooling to manufacture the product, (Id. at 127.)

The parties also cite to the testimony of Imo Wang, a former Pace Technology employee, concerning the creation of products and tooling. Imo Wang was a factory manager for Pace Technology from 2004 until 2012, and was involved in the manufacturing of emergency lighting products. (Wang Dep. 8-9, ECF No. 52-3.) Mr. Wang avers that, in all but one instance, when Best wanted a new product it would bring Pace Technology a sample product and have Pace Technology copy the product. (Id. at 9.) Mr. Wang testifies that due to the high volume of products Pace Technologies had more than one set of tooling. (Id. at 42.) Mr. Wang also confirms that Best paid for its tooling in the big wash. (Id. at 67.) Mr. Wang further explains that the relevant emergency lighting products have date codes. (Id.) According to Mr. Wang, the date codes indicate when a product was assembled and tested, not when the product’s parts were molded and cast. (Id. at 72.) Mr. Wang avers that sometimes molded parts could sit' for up to five years before assembly and testing. (Id. at 72-74)-

In addressing the Pace companies’ use of tooling, Best further directs the Court to evidence regarding the similarity between Pace and Best products. For example, Best submits the expert reports of Joshua Broehl. (See, e.g., Decl. Barwell Ex. 3, ECF No. 66-1 (August 3, 2010 Report).) Mr. Broehl compared various Pace and Best product pairings. (Id.) According to Mr. Broehl the Pace and Best products he compared were all “very similar” with many products sharing identical features and/or characteristics. (See id. at 3-18.) Best also highlights the testimony of Kelvin Pong. Mr.' Pong worked for Pace Products from 2005 until 2010. (Pong Dep. 47, 159, ECF No. 61.) Mr. Pong testifies that while he was with Pace Products the company always used the exact same molds to manufacture Pace and Best products. (Id. at 155.) Similarly, Ping Shuo Kuan, an employee of Pace Technology from 2002 until 2006, avers that, at least in 2006, Pace Technology was making Pace products using tooling that Best owned. (Kuan Decl. ¶ 17, ECF No. 75-1.)

Witnesses also compared five specific sets of products within deposition testimony. (See Decl. Barwell Exs. 4-10, ECF No. 66-1.) With regard to the first set of products, Mr. Pong testifies — based on date codes — that the Best product was manufactured in 2005 and the Pace product was manufactured in 2009. (Pong Dep. 202.) According to Richard Arndt, a molding expert that the Pace companies retained, the case and cover for these products appear to come from the same mold and “[a]ll other molded parts may have come from the same mold.” (Arndt Dep. 34, ECF No. 56.) With regard to the second pairing of products, Mr. Pong avers that the Best version was manufactured in 2006 and that the Pace version was manufactured in 2009. (Pong Dep. 207-08.) Mr. Arndt testifies that the plastic parts of these products came from the same mold. (Arndt Dep. 39.) Comparison of the other sets of products yields similar results. (See, e.g., Pong Dep. 212-13; Arndt Dep. 31-33.) Best also submits evidence, through its product comparisons, that the Best and Pace products at times included identical instruction sheets and matching product numbers. (Pong Dep. 210, 260.)

d. Remaining Payment Obligations

The parties did not renew the Supply Agreement beyond its initial year period. (Melbourne Haughton Dep. 68.) According to Alan Zimmer (“Zimmer”), the CFO of Pace Electronic, in December 2007 — as the Supply Agreement was coming to an end — the Pace companies began discussing forming a new company, Pace Lites. (Zimmer Dep. 121-22. ECF No. 52-5.) Zimmer avers that the Pace companies ultimately formed Pace Lights in January 2008. (Id. at 122.)

The parties dispute what, if any, payment obligations remain under the Supply Agreement, Zimmer contends that Best still owes Pace Electronic $893,734.90 for goods the Pace companies delivered to Best. (Zimmer Decl. ¶ 7, ECF No. 64-5.) According to Zimmer, Best has not returned any of the products for which it owes payment. (Id. at ¶ 8.) Additionally, Zimmer avers that Best’s total Supply Agreement purchase, $4,475,137.00, fall $2,524,863.00 short of the $7,000,000.00 minimum purchase requirement that the Supply Agreement required. (Id. at ¶ 12-14.) Zimmer calculates lost profits and overhead, at 20.42% of the sales shortfall, as $515,457.38 to Pace Electronic, Pace Technology, and Pace Products. (Id. at ¶ 15.) Pace Technology concedes that it has retained custody and control over Best’s tooling because of Best’s failure to make payments. (See Pis.’ Mot. Summ. J. 40-41, ECF No. 64.)

Best, however, maintains that various goods the Pace companies delivered under the Supply Agreement were defective. A series of emails from July 2007 reflect that Best had problems with a shipment of Edgelit exit signs. (Decl. J. Katz Ex. C, ECF No. 94-5.) The emails indicate, however, that the companies resolved this issue and Best received credit to its account for its replacement costs and labor. (See id.) The record also includes other communications between Best and Pace Electronic employees regarding defective products later in 2007 and into 2008. (See, e.g., Decl. J. Katz Exs. B, D, ECF Nos. 94-4, 94-6, Case No. 2:08-cv-752.) For example, on April 15, 2008, J. Katz sent Kehoe and Zimmer a follow-up email referencing a previous conversation. (Decl. J. Katz Ex. B.) Within the email, J. Katz stated that Best had received defective products; had incurred labor bills based on replacement of defective products; and had quarantined Pace products due to defects. (Id.) Finally, during his deposition Zimmer testified that in 2010 he visited Best facilities to inspect allegedly defective products on behalf of the Pace companies. (Zimmer Dep. 36-38.) Zimmer testified that his inspection did reveal some defective Pace products that the Pace companies manufactured for Best, specifically ballasts. (Id, at 38-39.)

B. Procedural History

Pace Electronic brought the initial action in this Court, Case No. 2:08-cv-752, in August 2008, seeking damages based on Best’s failure to pay for goods the Pace companies delivered as well Best’s failure to meet the minimum purchase requirement within the Supply Agreement. In August 2010, Pace Electronic, along with Pace Technology, brought a second action against Best in the Franklin County (Ohio) Court of Common Pleas, alleging misappropriation of trade secrets and tortious interference with contract based on Best’s hiring of Pace employees. Best removed this case, which is now Case No. 2:10-cv-789, on the grounds of diversity jurisdiction. On May 2, 2011, 2011 WL 1740969, the Court consolidated the two cases. Best asserts several counterclaims against Pace Electronic, Pace Technology, and F, Patrick Kehoe, including breach of contract, breach of warranty, tortious interference with business relationships, misappropriation of trade secrets, violations of the Lanham Act, patent infringement, conversion, and fraud.

As detailed above, this matter is currently before the Court for consideration of the parties’ various Motions for Summary Judgment. Best has filed two Motions for Partial Summary Judgment. Within its first Motion, Best maintains that it is entitled to judgment on its counterclaim that Plaintiffs breached the non-compete provision within the 2007 Supply Agreement prohibiting the Pace companies from selling emergency lighting products in North America. Within its second Motion, Best contends that it is entitled to judgment on its breach of contract counterclaim for violation of the Supply Agreement provision assigning design/intellectual property to Best and prohibiting the Pace companies from using Best’s tooling.

Pace Electronic and Pace Technology have also filed a Motion for Summary, requesting various forms of relief. First, both Plaintiffs move for voluntary dismissal of their Complaint in Case No. 2:10-ev-789. Second, Pace Electronic moves for judgment on its Amended Complaint in Case No. 2:08-cv-752. Finally, Pace Electronic, Pace Technology, and Counter-Defendant Kehoe move for summary judgment dismissing Best’s counterclaims.

In July 2012, after they had filed their Motion for Summary Judgment, Pace Electronics, Pace Technologyj and Kehoe moved to amend their Answer to Best’s Counterclaims to assert additional affirmative defenses. The Court granted leave to amend over Best’s opposition, but allowed Best to file a supplemental memorandum contra the motion for summary judgment. Best did not file a supplemental memorandum.

II. STANDARD

Summary judgment is appropriate “if the movant shows that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The Court may therefore grant a motion for summary judgment if the nonmoving party who has the burden of proof at trial fails to make a showing sufficient to establish the existence of an element that is essential to that party’s case. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

The “party seeking summary judgment always bears the initial responsibility of informing the. district court of the basis for its motion....” Id. at 323, 106 S.Ct. 2548. The burden then shifts to the nonmoving party who “must set forth specific facts showing that there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (quoting Fed.R.Civ.P. 56). “The evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor.” Id. at 255, 106 S.Ct. 2505 (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970)). A genuine issue of material fact exists if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Liberty Lobby, Inc., 477 U.S. at 248, 106 S.Ct. 2505; see also Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (the requirement that a dispute be “genuine” means that there must be more than “some metaphysical doubt as to the material facts”). Consequently, the central issue is “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Liberty Lobby, Inc., 477 U.S. at 251-52,106 S.Ct. 2505.

III. ANALYSIS

A. Preliminary Matters

Before considering the various substantive issues the parties raise regarding summary judgment, the Court will address two preliminary matters. First, the Court will consider Plaintiffs’ request for voluntary dismissal of their Complaint in Case No. 2:10-cv-789. Second, the Court will address Best’s request to exclude the Declaration of James J. Hooley (“Hooley Declaration”), which Pace Electronic and Pace Technology attached to their responsive briefing. (See ECF No. 72-1.)

1. Voluntary Dismissal

Pace Electronic and Pace Technology request dismissal of their Complaint in Case No. 2:10-cv-789 — which sets forth claims for misappropriation of trade secrets and tortious interference with contract based on Best’s hiring of Pace employees — pursuant to Federal Rule of Civil Procedxxre 41(a)(2). Plaintiffs maintain that although they still believe Best improperly targeted Pace Technology employees, they seek to dismiss the cause of action due to the practical difficulties and expense of bringing such claims. Best does not oppose dismissal, but seeks to maintain all of its counterclaims against both Plaintiffs and requests that the Court award attorney fees and costs to Best. Pace Electronic and Pace Technology oppose an award of costs, asserting that they had a good faith basis for bringing the relevant claims.

Rule 41(a)(2) provides in pertinent part:

[A]n, action may be dismissed at the plaintiffs, request [ ] by court order, on terms that the court considers proper. If a defendant has pleaded a counterclaim before being served with the plaintiffs motion to dismiss, the action may be dismissed over the defendant’s objection only if the counterclaim can remain pending for independent adjudication. Unless the order states otherwise, a dismissal under this paragraph (2) is without prejudice.

Fed.R.Civ.P. 41(a)(2). Determinations regarding a Rule 41(a)(2) motion are within the Court’s broad discretion. See Commodities Export Co. v. Detroit Intern. Bridge Co., 695 F.3d 518, 530 (6th Cir.2012) (applying abuse of discretion).

“[T]he purpose of Rule 41(a)(2) is to protect the nonmovant ... from unfair treatment.” Bridgeport Music, Inc. v. Universal-MCA Music Pub., Inc., 583 F.3d 948, 953 (6th Cir.2009). “The mere prospect of having to face a second lawsuit” is not the type of prejudice that Rule 41(a)(2) addresses. Jones v. W. Reserve Transit Auth., 455 Fed.Appx. 640, 643 (6th Cir.2012). Rather, in considering whether voluntary dismissal would result in “plain legal prejudice” the Court “consider[s] the defendant’s effort and expense of preparation for trial, excessive delay and lack of diligence on the part of the plaintiff in prosecuting the action, insufficient explanation for the need to take a dismissal, and whether a motion for summary judgment has been filed by the defendant.” Bridge port, 583 F.3d at 953 (internal quotations omitted).

Under Rule 41(a)(2), the Court may impose conditions on dismissal such as “the payment of costs incurred by a defendant.” Id. at 954. The United States Court of Appeals for the Sixth Circuit, however,' “has expressly rejected the contention that the payment of defense costs is universally required for voluntary dismissal under Rule 41(a)(2).” Id.; see also Waldman v. Pitcher, No. 1:10-cv-238, 2011 WL 4337046, at *2 (S.D.Ohio 2011) (“Rule 41(a)(2) is not a fee-shifting statute such that attorney fees are automatically awarded.”) (internal quotations omitted) (Report and Recommendation later adopted). Relevant factors in determining whether to award costs and attorney fees include “whether a plaintiff acted in good faith in bringing the suit ... and whether costs were wasted ....” Perron v. ill Web Directory, No. 2:09-cv-153, 2010 WL 2998607, at *4 (S.D.Ohio July 28, 2010). Moreover, a separate way to avoid waste is to allow the nonmovant to úse evidence obtained in discovery in any subsequent action. Id. at *5.

In this case, the Court will allow for dismissal without prejudice. The Court acknowledges that Plaintiffs’ request for voluntary dismissal comes at a late stage in this action. Moreover, the Court does not doubt that Best has incurred defense costs relating to Plaintiffs’ claims. At the same time, however, Best has not filed a motion for summary judgment on these claims and Plaintiffs should not be discouraged from engaging in a cost-benefit analysis as to continuing litigation. See Bridgeport, 583 F.3d at 954 (“It would be speculative to conclude that defendants would have prevailed on a motion for summary judgment when no motion for summary judgment was pending, and plaintiffs had-at the district court’s urging-weighed the costs and benefits of continuing to litigate these cases.”).

Moreover, the Court will not require Plaintiffs to pay Best’s defense costs and attorney fees as a condition to voluntary dismissal. Best seeks costs and attorney fees maintaining that Plaintiffs’ Complaint in Case No. 2:10-cv-789 is frivolous. The current record, however, does not reflect that the Pace Companies brought the second action in bad faith. Moreover, the Court is not convinced, and Best has failed to demonstrate, that the filing of the second action was a purposeful maneuver to delay the initial case. Rather, the record evidence suggests that the Pace Companies had some basis to believe that Best engaged in misconduct through the hiring of Pace Technology employees. {See Kehoe Dep.' 140; Hull Decl. ¶¶ 1-2, ECF No. 77.) At most, Best’s contentions raise only a speculative suspicion regarding improper motives. Notably, as described further below, Best has also decided in light of discovery not to pursue some of its claims.

Accordingly, under the circumstances of this case, Plaintiffs’ Complaint in Case No. 2:10-cv-789 is DISMISSED without prejudice subject to two conditions. First, as the language of Rule 41(a)(2) requires, Best’s counterclaims against Pace Electronic and Pace Technology shall remain pending for independent adjudication. Second, the parties may use any discovery materials in any subsequent action.

2. Hooley Declaration

The Court next addresses the Hooley Declaration. Plaintiffs attached the Hooley Declaration to their Memorandum in Opposition to Best’s Second Motion for Partial Summary Judgment, which they filed on July 9, 2012. Mr. Hooley avers to being a specialist in emergency and exit lighting, having worked in the industry since the, 1960s. (Hooley Deck ¶¶ 1-2, ECF No. 72-1.) Mr. Hooley states that he has personal knowledge of emergency lighting and exit products marketed in the United States . since 1969. (Id. at ¶ 5.) Based on his review of Best products, and his personal knowledge of the field, Hooley describes the originality of, various Best products. (See Hooley Deck ¶¶ 13-28.)

Best indicates that it was unaware that Plaintiffs would be offering testimony from Mr. Hooley until July.6, 2012, three days prior to the filing of Plaintiffs’ responsive briefing. Best specifically prpvides a letter from opposing counsel, stating, “[e]n-closed, and being served upon you, please find Plaintiffs Supplement to Initial Disclosures identifying a newly discovered fact witness with personal information regarding the development and origination of emergency lighting products and illuminated exit signs.” (Def.’s Reply 2nd Mot. Summ. J. Ex. A, ECF No. 79-1.) Best maintains that Plaintiffs failed to disclose Mr. Hooley during discovery despite requests from Best that they identify all witnesses. The discovery deadline in this case was March 16, 2012. -(See ECF No. 43.) Furthermore, primary expert reports were due on September 23, 2011, with rebuttal expert reports due on November 23, 2011. (See ECF No. 38.)

In light of these circumstances, Best moves to strike Plaintiffs’ Memorandum in Opposition to Best’s Second Motion for Partial Summary Judgment (ECF No. 72) in its entirety. In the alternative, Best requests that the Court strike the Hooley Declaration. Additionally, Best contends that the Court should not,allow Mr. Hooley to provide any further testimony in this action. Finally, Best asserts that the Court should consider holding Plaintiffs in contempt for violating the Court’s sched-' ule; Plaintiffs have not responded to Best’s objections to the Hooley Declaration.

Federal Rule of Civil Procedure 37(c)(1) states:

Failure to Disclose or Supplement. If a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless. In addition to or instead of this sanction, the court, on motion and after giving an opportunity to be heard:

(A) may order payment of the reasonable expenses, including attorney’s fees, caused by the failure;

(B) may inform the jury of the party’s failure; and

(C) may impose other appropriate "sanctions, including any of the orders listed in Rule 37(b) (2) (A) (i)-(vi).

Fed.R.CivJP. 37(c)(1).

In this case, Rule 37(c)(1) applies. The record reflects that Plaintiffs failed to identify Mr. Hooley in a timely fashion in light of the Court’s scheduling order. Moreover, Plaintiffs have failed to provide any substantial justification for their delay. Because of the timing of events, it is clear that allowing Mr. Hooley’s testimony would unduly delay the now closed discovery and prejudice Best. Finally, although Mr. Hooley appears to have some personal knowledge of Best products, the value of his testimony appears tó be his expertise in the emergency lighting field and his ability to opine as to whether Best products are copies of pre-existing products.

Under these circumstances, the Court will not consider the Hooley Declaration in resolving the current Motions for Summary Judgment. The Clerk is DIRECTED to STRIKE the Declaration (ECF No. 72-1) from the record. The Court finds it unnecessary, however, to strike Plaintiffs’ responsive briefing in its entirety as much of the briefing deals with matters independent from the Hooley Declaration. Having stricken the Affidavit, the Court finds no need for sanctions. . ■

B. Best’s First Breach of Contract Claim — Non-Compete Provision

The Court next addresses Best’s first Motion for Summary Judgment contending that the Pace companies breached the Supply Agreement by selling emergency lighting and exiting products to non-approved companies within North Aunerica. Pace Electronic and Pace Technology also move for summary judgment as to this claim. At issue in this claim is the interpretation of the following provision of the Supply Agreement:

During the term of the agreement, Pace shall not sell emergency lights or exit signs nor ballasts, nor solicit sales of these items to any party in North America without Best’s prior written consent. Such sales, if approved by Best, shall be subject to a commission to be paid by Pace to Best. Penalties for violation of the non-compete provision shall be paid by Pace to Best at the rate of $500,000 per occurrence.

(Supp. Agr. 2.) The parties dispute centers around how to interpret the timing of the Pace companies’ sales to various non-approved customers. Additionally, the parties disagree as to whether the damage provision of “$500,000 per occurrence” is enforceable. Finally, Plaintiffs also maintain that the Pace companies breached the Supply Agreement through other methods of competition.

1. Applicable Law

As noted above, the parties bring this action, including their various breach of contract claims, based on diversity. “A court sitting in diversity applies the law of the forum state and, in the absence of direct state court precedent, must make its best prediction as to how the highest state court would resolve the issues- presented.” Travelers Prop. Cas. Co. of Am. v. Hillerich & Bradsby Co., Inc., 598 F.3d 257, 264 (6th Cir.2010). Furthermore, in this case, the Supply Agreement explicitly incorporates Ohio law. (Supp. Agr. 3.)

. Under Ohio law, “the elements for a breach of contract are that a plaintiff must demonstrate by a preponderance of the evidence that (1) a contract existed, (2) the plaintiff fulfilled his obligations, (3) the defendant failed to fulfill his obligations, and (4) damages resulted from this failure.” Anzalaco v. Graber, 970 N.E.2d 1143, 1148 (Ohio Ct.App.2012). In interpreting contractual language, the Court’s purpose “is to ascertain and give effect to the intent of the parties.” Foster Wheeler Enviresponse, Inc. v. Franklin Cnty. Convention Facilities Auth., 78 Ohio St.3d 353, 361, 678 N.E.2d 519 (Ohio 1997). The Court generally presumes that the intent of the parties rests within the language of the contract. Id. “Common words appearing in a written instrument will be given their ordinary meaning unless manifest absurdity results, or unless some other meaning is clearly evidenced from the face or overall contents of the instrument.” Id. (internal quotations omitted).

“[T]he interpretation of written contract terms, including the determination of whether those terms are ambiguous, is a matter of law for initial determination by the court.” Savedoff v. Access Grp., Inc., 524 F.3d 754, 763 (6th Cir.2008) (applying Ohio law). “[I]n cases where ambiguity exists, interpretation of the parties’ intent is a question to be determined by the trier of fact.” Schafer v. Soderberg & Schafer, 196 Ohio App.3d 458, 477, 964 N.E.2d 24 (Ohio Ct.App.2011) (internal quotations omitted); see also PNC Bank, N.A. v. May, No. 98071, 2012 WL 4243807, at *2 (Ohio Ct.App. Sept. 20, 2012) (“If ... the contract is ambiguous, ascertaining the parties’ intent constitutes a question of fact that may require the consideration of parol evidence.”).

“Contractual language is ambiguous only where its meaning cannot be determined from the four comers of the agreement or where the language is susceptible of two or more reasonable interpretations.” Covington v. Lucia, 151 Ohio App.3d 409, 414, 784 N.E.2d 186 (Ohio Ct.App.2003) (internal quotations omitted). Generally, “[u]nder the parol-evidence rule, if a contract is unambiguous, a court may not use extrinsic evidence to interpret the agreement.” Lindsley v. Roe, 196 Ohio App.3d 596, 604, 964 N.E.2d 1063 (Ohio Ct.App.2011). The Ohio Uniform Commercial Code (“UCC”), applicable to the sale of goods, does allow for the use of certain types of extrinsic evidence, such as course of performance, to “explain!] or supplement!]” a written agreement. Ohio Rev.Code § 1302.05.

“!W]here a contract is ambiguous, a court may consider extrinsic evidence to ascertain the parties’ intent.” Westfield Ins. Co. v. Galatis, 100 Ohio St.3d 216, 219, 797 N.E.2d 1256 (Ohio 2003). “Such extrinsic evidence may include (1) the circumstances surrounding the parties at the.time the contract was made, (2) the objectives the parties intended to accomplish by entering into the contract, and (3) any acts' by the parties that demonstrate the construction they gave to their agreement.” Covington, 151 Ohio App.3d at 414, 784 N.E.2d 186. Although the resolution of any ambiguity is a question of fact, if extrinsic evidence reveals only one reasonable interpretation, the Court may enter summary judgment. Comtide Holdings, LLC v. Booth Creek Mgmt. Corp., No. 07-CV-01190, 2011 WL 5520954, at *5 (S.D.Ohio Nov. 14, 2011) (applying Ohio law).

2. Liability as to the Non-Compete Provision

The facts surrounding the Supply Agreement’s non-compete provision are largely undisputed. Best contends — and Plaintiffs do not contest — that the Pace companies shipped, invoiced, and received at least some payment for emergency lighting and exit products to non-approved companies during the life of the Supply Agreement. The Pace companies assert, however, that they made all of the relevant shipments pursuant to purchase orders that they entered into prior to the effective date of the Supply Agreement. In light of these circumstances, the parties propose different interpretations of the Supply Agreement’s prohibitions on selling and soliciting sales. Best maintains that the Court should consider the shipment, and receipt, of goods to constitute sales within the meaning of the Supply Agreement. The Pace companies, on the other hand, contend that the Supply Agreement provision was not designed to impact pending purchase orders, but was instead created to restrict the companies’ ability to enter into new sales contracts.

Based on the language of the Supply Agreement, the Court finds thát the terms in question are ambiguous. First, as Best maintains, it is reasonable to interpret the timing of a sale, for the purposes of the Supply Agreement’s non-compete provision, as applying to the actual time of shipment and receipt of the products in question. After all, a sale is commonly defined with reference to the transfer of the items in question. For example, the Ohio 'UCC defines sale, for the purposes of its various provisions, as “consisting in the passing of title from the seller to the buyer for a price.” Ohio Rev.Code § 1302.01(A)(11). The UCC further distinguishes sale from a “contract for sale” which can “include[ ] both a present sale of goods and a contract to sell goods at a future time.” Id. Best’s interpretation is also consistent with the Supply Agreement as a whole. Most notably, under Schedule B of the Supply Agreement, Best permitted the Pace companies to sell to certain companies, suggesting the exclusion of other companies regardless of the nature of previous business relationships. (See Supp. Agr. 11.)

The Court also finds, however, that the Pace companies proposed interpretation of the Supply Agreement is reasonable. To begin with, the terms “sell” and “solicit sales”- are relatively imprecise, naturally lending themselves to more than one possible meaning. The Supply Agreement does not offer any definition of these terms. Under such circumstances, it is reasonable to read the Supply Agreement as prohibiting new sales arrangements, or the solicitation of new sales, as opposed to the completion of prior sales agreements. Such an approach can also be reconciled with Schedule B of the Supply Agreement. As Plaintiffs highlight, Schedule B did not simply allow the Pace affiliates to complete pre-existing sales agreements. Rather, Schedule B allowed the Pace companies to actively sell to the listed customers throughout the effective period of the Supply Agreement.

Considering extrinsic evidence, in light of the Supply Agreement’s ambiguity, a genuine issue of fact remains as to the intent of the parties. In light of the evidence, including the parties’ circumstances at the time of contracting, a reasonable jury could reach alternative conclusions regarding the intent of the parties On the one hand, the evidence indicates that, in forming the Supply Agreement, Best officials strongly distrusted the Pace companies and, therefore, required a restrictive non-compete provision applying to any activities associated with the selling of products. Moreover, from the evidence a reasonable jury could infer that Best was unaware of -the Pace companies pre-existing contracts with the four non-approved companies, and' that the Pace companies made an independent decision to enter into the Supply Agreement knowing that its terms conflicted with pre-existing purchase orders.

On the other hand, a reasonable jury could also infer that the parties did not intend for the Supply Agreement’s non-compete provision to interfere with the Pace companies’ pre-existing purchase orders. Most obviously, because the evidence reflects that the Pace companies had purchase orders with non-approved customers prior to the Supply Agreements effective date, a reasonable jury could conclude that Plaintiffs had no intention of entering an agreement that would force them to breach various other contracts. Moreover, if it found Kehoe credible, the trier of fact could also conclude that Best had at least some knowledge of the Pace companies’ pending order at the time of contracting. (See Kehoe Dep. 104-06.)

Because there is an issue of fact regarding the intent of the parties with regard to the non-compete agreement, the Court cannot determine, as a matter of law, whether the Pace companies 2007 actions violated the Supply Agreement’s non-compete provision. Accordingly, neither party is entitled to summary judgment as to this claim.

3. Penalty Provision

In addition to liability, the parties also dispute whether the damages provision embedded within the Supply Agreement’s non-compete provision is enforceable. The final sentence of the non-compete provision stated that “[penalties for violation of the non-compete provision shall be paid by Pace to Best at the rate of $500,000 per occurrence.” (Supp. Agr. 2.) Best contends that this is an enforceable liquidated damages provision designed to protect the “immeasurable loss” Best would suffer from the Pace companies competing for its customers. Plaintiffs on the other hand, assert that this provision is an unenforceable penalty disproportionate to the amount of damages Best actually suffered.

Under Ohio law, although parties are generally free to enter into contracts with damage provisions, “complete freedom of contract is not permitted for public policy reasons.” Lake Ridge Academy v. Carney, 66 Ohio St.3d 376, 381, 613 N.E.2d 183 (Ohio 1993). “Penalty provisions in contracts are invalid on public policy grounds because a penalty attempts to coerce compliance with the contract rather than represent damages which may actually result from the failure to perform.” Heskett Ins. Agency, Inc. v. Braunlin, No. 11CA3234, 2011 WL 5903484, at *6 (Ohio Ct.App. Nov. 16, 2011). On the other hand, Ohio law allows liquidated damages provisions “as long as the provision does not disregard the principle of compensation.” Lake Ridge, 66 Ohio St.3d at 381, 613 N.E.2d 183 (internal quotations omitted).

Ohio courts generally apply the following three part analysis to distinguish between penalty and liquidated damage provisions:

Where the parties have agreed on the amount of damages, ascertained by estimation and adjustment, and have expressed this agreement in clear and unambiguous terms, the amounts so fixed should be treated as liquidated damages and not as a penalty, if the damages would be (1) uncertain as to amount and difficult of proof, and if (2) the contract as a whole is not so manifestly unconscionable, unreasonable, and disproportionate in amount as to justify the conclusion that it does not express the true intention of the parties, and if (3) the contract is consistent with the conclusion that it was the intention of the parties that damages in the amount stated should follow the breach thereof.

Kurtz v. W. Property, L.L.C., No. 10AP-1099, 2011 WL 6916196, at *6 (Ohio Ct. App. Dec. 27, 2011) (quoting Samson Sales, Inc. v. Honeywell, Inc., 12 Ohio St.3d 27, 27, 465 N.E.2d 392 (Ohio 1984)). The Ohio UCC explains the distinction as follows:

Damages for breach by either party may be liquidated in the agreement but only at an amount which is reasonable in the light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or non-feasibility of otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated damages is void as a penalty.

Ohio Rev. Code § 1302.92.

“The issue of whether a contract clause provides for liquidated damages or an unenforceable penalty presents a question of law .... ” Heskett Ins. Agency, Inc. v. Braunlin, No. 11CA3234, 2011 WL 5903484, at *6 (Ohio Ct.App. Nov. 16, 2011). The Court, however, “must step back and examine [the stipulated damages provision] in light of what the parties knew at the time the contract was formed and in light of an estimate of the actual damages caused by the breach.” Lake Ridge, 66 Ohio St.3d at 382, 613 N.E.2d 183.

At least some courts have suggested that the burden is initially on the party seeking liquidated damages to prove that such a clause is enforceable. See Hitachi Medical Systems America, Inc. v. Choe, No. 5:10CV384, 2012 WL 4475496, at *5 (N.D.Ohio Sept. 26, 2012) (finding that Ohio law place an initial threshold burden on a party seeking liquidated damages to satisfy “the estimation and adjustment requirement” within the Samson Sales test); Tremco Inc. v. Kent, No. 70920, 1997 WL 284744, at *9 (Ohio Ct.App.1997) (noting that some Ohio courts have indicated “that the party seeking to enforce the stipulated damages provision demonstrate that the three prongs of the [Samson Sales ] test are satisfied). Nevertheless, courts have also considered opposition to such damage provision to be an affirmative defense, placing the burden on the defendant. Tremco, 1997 WL 284744, at *9.

Upon review, the Court finds that the “$500,000 per occurrence” clause of the Supply Agreement is an unenforceable penalty. Even assuming that damages from the Pace companies’ sales to North American customers was sufficiently difficult to calculate at the time of contracting, the record reflects that $500,000 was not a reasonable estimate of the damages Best would suffer per sales occurrence. Best has produced evidence indicating that, at the time of the formation of the Supply Agreement, the Pace companies were conducting business with other North American customers. Nevertheless, nothing in the record suggests that the Pace companies were selling at a high enough volume that Best would incur $500,000 worth of damages for every competing sale that the Pace companies completed. Albeit hindsight information, it is noteworthy that the thirteen transactions in question that purportedly violated the Supply Agreement only reached a total sales price of approximately $250,000. Instead of reflecting the amount of damages that it would suffer, Best appears to concede that the parties intended the $500,000 damage amount to be a “draconian provision” to “punish nonperformance” and deter the Pace companies from selling products in North America. (Def.’s Reply 1st Mot. Summ. J. 8, ECF No. 78.) Such a purpose is not permissible under a breach of contract theory.

The Court also finds the remainder of Best’s contentions in favor of the damage provision unconvincing. The fact that sophisticated parties negotiated the penalty provision is not enough to make it enforceable. Cf. Lake Ridge, 66 Ohio St.3d at 382, 613 N.E.2d 183 (holding that “the parties’ actual intention as to [a damage provision’s] validity” is not significant in determining whether such a provision is valid) (internal quotations omitted). Moreover, Best cannot utilize a breach of contract theory to punish, and apply punitive damages to, the Pace companies for tort-like behavior. See id. at 381, 613 N.E.2d 183 (explaining why contractual law does not allow for punitive remedies).

4. Related Breach of Contract Claims

Within its first counterclaim for breach of contract, Best also asserts claims for breach of contract based on other methods of competition. In particular, Best maintains that Plaintiffs breached the Supply Agreement by “undercutting prices” to customers to whom they were able to directly sell under Schedule B of the Supply Agreement. (Am. Counterclaim ¶ 33(b), ECF No. 27.) Additionally, Best alleges that Plaintiffs breached the Supply Agreement by establishing business entities and “procuring a warehouse and distribution center” for the purpose of selling competing emergency lighting products. {Id. at ¶ 33(c).) The Pace companies move for summary judgment to the extent Best asserts breach of contract on these two grounds. They specifically maintain that the activities Best alleges do not breach the terms of the Supply Agreement.

Upon review of the Supply Agreement, the Court agrees that Plaintiffs are entitled to judgment as a matter of law to the extent Best bases its breach of contract claims on the undercutting of prices and the establishment of a business. First, under the Supply Agreement the only companies that the Pace companies were able to directly sell to were Lithonia Lighting and Chloride Systems. (Supp. Agr. 11.) The Supply Agreement, and more specifically Schedule B, did not place any limitations on the Pace companies ability to set product prices to these customers. Accordingly, even assuming that the Pace companies were undercutting Best’s prices, such action would not constitute a breach.

The Court reaches a similar conclusion as to Best’s claims based on the establishment of a separate business and procurement of facilities. The Supply Agreement prohibited the Pace companies from selling emergency lighting products, and soliciting such sales, during the course of the agreement. The Supply Agreement, however, did not prohibit the Pace companies from developing, and taking action toward, a business plan for after the effective date of the Supply Agreement. If the Pace companies had established a separate business, and that business had sold competing products during the effective period of the Supply Agreement, such actions would likely constitute breach. Best fails to demonstrate, or even allege, that such sales took place. Accordingly, the Pace companies are entitled to judgment as a matter of law as to this aspect of Best’s breach of contract claim.

C. Best’s Second Breach of Contract Claim — Use of Tooling and Assignment of Rights

Within its first and seventh counterclaims, Best alleges that Plaintiffs violated the assignment provision of the Supply Agreement. As detailed above, the provision provided:

Pace shall not use any tooling owned by Best other than for the manufacturer of products for sale to Best, and assigns to Best all designs and intellectual property (and all derivations thereof) for products developed or to be developed at or by Pace for Best.

(Supp. Agr. 2.) Best contends that it is entitled to summary judgment because Plaintiffs violated this provision in two separate ways. First, Best maintains that the Pace companies violated the assignment of designs and intellectual property by copying Best’s products. Second, Best asserts that the Pace companies used Best’s tooling to produce Pace products.

1. Assignment of Designs

In light of the evidence before the Court, and the terms of the Supply Agreement, the Court finds that there is a genuine dispute of fact as to whether the Pace companies violated the Supply Agreement. Best essentially contends that because the Pace companies produced the same products for themselves that they produced for Best, the Pace companies automatically violated the assignment provision. The language of the assignment provision, however, is not this broad. Specifically, the assignment provision extends to “designs and intellectual property ... for products developed or to be developed at or by Pace for Best.” (Supp. Agr. 2 (emphasis added).) The plain meaning of the term “design,” especially when read in concert with “intellectual property,” connotes at least some level of creativity, originality, or inventiveness, as opposed to the copying of an already existing product. Accordingly, to the extent the Pace companies — in making both Best and Pace products — simply copied pre-existing readily available products, there were no applicable designs or intellectual property.

In this case, a reasonable jury could find that the Pace companies manufacturing of Pace products did not violate the assignment provision. Specifically, viewing the evidence in the light most favorable to Plaintiffs, a reasonable jury could find that, in manufacturing Best and Pace products, the Pace companies were merely copying products available on the market and not rely