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Waytec Electronics v. Rohm and Haas, 06-2242 (2007)

Court: Court of Appeals for the Fourth Circuit Number: 06-2242 Visitors: 30
Filed: Nov. 28, 2007
Latest Update: Feb. 12, 2020
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 06-2242 WAYTEC ELECTRONICS CORPORATION, Plaintiff - Appellant, versus ROHM AND HAAS ELECTRONIC MATERIALS, LLC; NORTHERN LAMINATE SALES, INCORPORATED, d/b/a NLS Technologies, Defendants - Appellees. Appeal from the United States District Court for the Western District of Virginia, at Lynchburg. Samuel G. Wilson, District Judge. (6:05-cv-00024-sgw) Argued: November 2, 2007 Decided: November 28, 2007 Before MOTZ and GREGORY, Circ
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                             UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT


                             No. 06-2242



WAYTEC ELECTRONICS CORPORATION,

                                              Plaintiff - Appellant,

           versus

ROHM AND HAAS ELECTRONIC MATERIALS, LLC;
NORTHERN LAMINATE SALES, INCORPORATED, d/b/a
NLS Technologies,

                                            Defendants - Appellees.



Appeal from the United States District Court for the Western
District of Virginia, at Lynchburg. Samuel G. Wilson, District
Judge. (6:05-cv-00024-sgw)


Argued:   November 2, 2007              Decided:     November 28, 2007


Before MOTZ and GREGORY, Circuit Judges, and Claude M. HILTON,
Senior United States District Judge for the Eastern District of
Virginia, sitting by designation.


Affirmed by unpublished per curiam opinion.


ARGUED: Frank Kenneth Friedman, WOODS ROGERS, P.L.C., Roanoke,
Virginia, for Appellant. William R. Rakes, Monica Taylor Monday,
GENTRY, LOCKE, RAKES & MOORE, Roanoke, Virginia, for Appellees. ON
BRIEF: Mark D. Loftis, James F. Douthat, WOODS ROGERS, P.L.C.,
Roanoke, Virginia, for Appellant. Victor S. Skaff, III, GENTRY,
LOCKE, RAKES & MOORE, Roanoke, Virginia, for Appellees.


Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:

     Waytec Electronics Corporation (“Waytec”), a manufacturer of

printed    circuit      boards,   brought     this     action    against     the

manufacturer, Rohm and Haas Electronic Materials, LLC (“Rohm and

Haas”), and distributor, Northern Laminate Sales, Inc. (“NLS”), of

Copper Gleam PPR, a chemical solution used in the production of

circuit boards. Although Waytec used Copper Gleam PPR successfully

for a number of years, the company began to notice cracking in the

copper plating on some of its circuit boards in 2000 and 2001, and

executives attributed the problem to the use of Copper Gleam PPR.

Waytec    sued   Rohm   and   Haas   and    NLS,   alleging     fraud   in   the

inducement, breach of express and implied warranties, negligence,

and conspiracies to defraud and willfully injure Waytec through the

sale of the Copper Gleam PPR.        The district court granted judgment

to Rohm and Haas and NLS; we affirm.



                                      I.

     To ensure the conductivity of its circuit boards, Waytec

employs an electrolytic copper plating process that results in the

addition of a layer of copper to the exposed surfaces and holes of

the circuit boards.       That process entails immersing the boards in

a chemical bath and then sending an electric charge through the

bath to create a chemical reaction that causes copper deposits to

adhere to the surfaces of the boards.                If the plating process


                                      2
produces copper deposits that are insufficiently thick, the plating

will crack during use.   Those cracks destroy the circuit boards’

electrical conductivity and cause the boards to fail.

     Prior to 1997, Waytec used a direct current process, in which

the electrical current flows in only one direction through the

chemical bath.   In 1997, Robert Welch, who now serves as Waytec’s

Process Engineering Manager, elected to switch from the direct

current process to a pulse periodic reverse process, in which the

electric current flows in both directions.     The pulse periodic

process requires a chemical product suitable for periodic pulse

applications; Waytec purchased Copper Gleam PPR for that purpose.*

From 1997 through 2000, Waytec experienced no difficulties with

Copper Gleam PPR.

     In 2000, Waytec began to notice cracking in its circuit

boards, and, by 2001, customers started to complain about the

problem. The development of this problem coincided with changes in

Waytec’s manufacturing process; the company began to produce multi-

layered, rather than double-sided, boards and also reduced the

total volume of boards it was producing, decreasing the number of

units produced by forty to fifty percent.    As a result of these

changes to its production process, Waytec left the tanks idle for


     *
      When Waytec implemented the pulse periodic reverse process in
1997, it purchased Copper Gleam PPR from Shipley Company. Shipley
acquired LeaRonal, Inc. in 1999, and the combined company was known
as Shipley/Rohm and Haas. In 2004, the company became Rohm and
Haas Electronic Materials.

                                 3
longer periods of time than it had previously.                  When production

resumed after such periods, Waytec engineers observed higher levels

of organic materials accumulating in the chemical solution, a

problem that experts in the field often link to cracking problems.

     Shortly after Waytec began to experience the higher incidence

of cracking, representatives from Rohm and Haas and NLS traveled to

Waytec to help diagnose the cause of the problem and recommend ways

to prevent its occurrence in the future.                  These representatives

suggested that Waytec make a number of process improvements. Welch

followed   their    recommendation      that   he    periodically     treat   the

chemical   bath    with   carbon   to   remove      the    build-up   of   organic

products in the treatment solution.              The Rohm and Haas and NLS

representatives also made several other suggestions, e.g., improve

quality control, use deionized water, and install new technology to

better regulate temperature in the chemical baths, but Waytec

declined to implement any of these proposals.                   At trial, Welch

acknowledged that a number of these operational controls were also

included as recommendations on the Copper Gleam PPR data sheets,

but he explained that he did not believe that all of the changes

were necessary at his particular facility.                Welch also declined to

switch to a newer generation product recommended by Rohm and Haas

and NLS, citing concerns that the new product was more costly than

Copper Gleam PPR.




                                        4
      By 2004, Waytec was the only one of Rohm and Haas’ customers

still using Copper Gleam PPR; others had switched to the newer

product.     At this time, Rohm and Haas requested that Waytec

executives sign a waiver of liability if Waytec continued to use

the product without adopting the majority of Rohm and Haas’ process

improvement recommendations. Waytec executives refused to sign the

waiver.    Instead, Welch selected another supplier for the chemical

bath product and began to switch from the pulse periodic reverse

process back to the direct current plating process Waytec had

employed prior to 1997.        In order to convert to the new chemical

product and complete the transition to the direct current system,

Waytec cleaned the tanks that circulated the chemical solution

during the plating process.         The copper plating ceased cracking

after Waytec made these changes.         Both Welch and Kenneth Shirley,

the   company’s   current   Chief   Executive        Officer,    attribute     the

cessation in cracking solely to Waytec’s use of a product other

than Copper Gleam PPR.



                                    II.

      Rohm and Haas and NLS moved for summary judgment on multiple

grounds,    including   that   Waytec     had   no    evidence    of   fraud   or

causation and that Waytec had disclaimed all warranties except for

one, and with respect to that warranty, Rohm and Haas and NLS had

disclaimed all consequential and incidental damages.              The district


                                     5
court held the defendants’ motion under advisement and proceeded to

trial in stages; at the first stage, it required Waytec to prove

its   fraud   case   with   clear   and   convincing   evidence.   At   the

conclusion of the first stage, the court found that Waytec had

failed to present scientifically reliable evidence that Copper

Gleam PPR caused Waytec’s cracking problems and also determined

that there was no evidence that either Rohm and Haas or NLS

fraudulently induced Waytec to purchase the Copper Gleam PPR.

Accordingly, the court granted the defendants’ motion for judgment

with respect to Waytec’s actual and constructive fraud claims and

dismissed Waytec’s breach of warranty claims.          Waytec appeals.

      Waytec asserts that the district court improperly exercised

jurisdiction over the case because Rohm and Haas and NLS did not

comply with the procedural requirements for removing the case from

state to federal court.       Waytec next contends that the district

court abused its discretion in excluding evidence that other

circuit board manufacturers suffered similar cracking problems when

using Copper Gleam PPR and in striking the opinion testimony of

Waytec’s proffered experts.          Finally, Waytec claims that the

district court erred in granting judgment as a matter of law on

Waytec’s actual fraud claim and summary judgment on Waytec’s

constructive fraud claim and dismissing Waytec’s breach of warranty

claims.   Waytec contends that it met its evidentiary burdens by

demonstrating that Rohm and Haas and NLS concealed their knowledge


                                     6
about defects in Copper Gleam PPR and intentionally provided Waytec

with faulty guidance about how to resolve its cracking problems.

We deal first with the removal issue and then consider Waytec’s

remaining arguments.



                                      III.

      Waytec contends that Rohm and Haas and NLS failed to comply

with the procedural requirements for removing this case from state

to federal court, because NLS never filed its own notice of removal

and Rohm and Haas did not file an electronic joint notice of

removal containing the signatures of attorneys for both Rohm and

Haas and NLS. See 28 U.S.C.A. § 1446(b); Administrative Procedures

for   Filing,   Signing,     and   Verifying    Pleadings    and   Papers   by

Electronic Means 12 (W.D. Va. rev. Jan. 2005) (local rule of

procedure).     We need not determine whether removal was proper,

however, because any such procedural defect in the removal process

would   not   constitute    grounds    to    vacate   the   district   court’s

judgment and remand the case to state court.

      In Caterpillar Inc. v. Lewis, 
519 U.S. 61
, 73, 77-78 (1996),

the Supreme Court held that after a district court has allowed a

case to be removed to federal court, the mere fact that “removal

did not comply with statutory prescriptions” does not require that

the appellate court vacate the lower court judgment and remand the

case to state court.       The Court explained that “[o]nce a diversity


                                       7
case has been tried in federal court, with rules of decision

supplied by state law . . . considerations of finality, efficiency,

and    economy    become   overwhelming.”          
Id. at 75. Accordingly,
although an appellate court must vacate a district court judgment

when a “jurisdictional defect remains uncured” at the end of a

proceeding, the appellate court is not similarly required to vacate

the judgment below when the asserted error is merely procedural.

Id. at 77. Rather,
“[t]he procedural requirements for removal

remain enforceable [only] by the federal trial court judges to whom

those    requirements      are   directly     addressed.”        
Id. The Court reasoned
that, “[t]o wipe out the adjudication postjudgment, and

return [such a case] to state court[,] . . . would impose an

exorbitant cost on our dual court system, a cost incompatible with

the fair and unprotracted administration of justice.”                    
Id. We have held
that failure of all defendants to properly join

in    removal    proceedings     is   merely   a   procedural        defect,    not   a

jurisdictional one.        See Payne ex rel. Estate of Calzada v. Brake,

439 F.3d 198
, 203 (4th Cir. 2006).             The asserted procedural error

in this case, which arises from NLS’s failure to file its own

notice of removal and Rohm and Haas’ failure to file an electronic

joint    notice    of   removal       containing    the    signatures      of    both

defendants, does not overcome the “considerations of finality,

efficiency, and economy” held by the Supreme Court to be paramount.

See 
Caterpillar, 519 U.S. at 75
.              Such error, if it exists, does


                                          8
not   supply   sufficient   grounds   to   vacate   the   judgment   of   the

district court and remand this case to state court.         See 
id. at 77. Accordingly,
we turn to Waytec’s remaining arguments.



                                  IV.

      Prior to trial, Rohm and Haas and NLS moved in limine to

exclude evidence that other circuit board manufacturers experienced

cracking problems similar to those that occurred at Waytec when

they used Copper Gleam PPR.           The district court provisionally

granted the defendants’ motion, finding that the danger that the

evidence would confuse the issues or mislead the jury substantially

outweighed its probative value.       See Fed. R. Evid. 403.     The court

reasoned that proof that cracking occurred at other facilities, and

that Rohm and Haas settled some of the complaints lodged by other

circuit board manufacturers, did not demonstrate that Copper Gleam

PPR caused the cracking at Waytec.           The court also noted that

Federal Rule of Evidence 408 prohibited admission of evidence of

the settlements, because the claims underlying those settlements

were never adjudicated, and Rohm and Haas disputed the validity of

those claims.

      At trial, the court also excluded the expert opinions of the

two Waytec witnesses who testified that Copper Gleam PPR caused

Waytec’s cracking problems.     The court determined, pursuant to its

role as a “gatekeeper” responsible for ensuring the relevance and


                                      9
reliability of scientific testimony, “that Waytec presented no

scientifically reliable evidence that Copper Gleam rather than its

own process or other external factors caused the cracking it sought

to attribute to Copper Gleam.” See Daubert v. Merrell Dow Pharms.,

Inc., 
509 U.S. 579
, 589 (1993); Kumho Tire Co. v. Carmichael, 
526 U.S. 137
, 157 (1999).        Because Waytec’s experts failed “to take

serious account of other potential causes,” Westberry v. Gislaved

Gummi   AB,   
178 F.3d 257
,   265   (4th      Cir.    1999),    or   “offer    an

explanation for why the proffered alternative cause[s] w[ere] not

the sole cause” of the problem, Cooper v. Smith & Nephew, Inc., 
259 F.3d 194
, 202 (4th Cir. 2001) (citing 
Westberry, 178 F.3d at 265-
66), the district court determined that the experts’ opinions on

causation     lacked   sufficient   reliability          and   so   would    not    be

admitted into evidence.

     At the conclusion of the first stage of the trial, the court

found that Waytec failed to carry its burden of proof that Copper

Gleam   PPR   caused   the   problems        in   its    manufacturing      process.

Waytec’s failure to prove causation doomed its fraud claims.                       The

court additionally observed that the fraud claims also failed

because Waytec had not demonstrated that representatives of Rohm

and Haas and NLS had either made a false representation to Waytec

about Copper Gleam PPR or intended to mislead Waytec.                       Nor had

Waytec demonstrated that it detrimentally relied on representations

by Rohm and Haas or NLS.          Because the court found that Waytec


                                        10
failed to prove that Rohm and Haas and NLS fraudulently induced

Waytec to enter into contracts for the sale of Copper Gleam PPR,

the court also dismissed Waytec’s breach of warranty claims.

      Having had the benefit of oral argument and briefing from the

parties, and after carefully reviewing the record, we conclude that

the district court did not abuse its discretion in excluding either

the   “similar   incidents”   evidence   or   the   challenged   expert

testimony.   We also find that the district court did not err in

granting judgment as a matter of law to Rohm and Haas and NLS on

Waytec’s fraud claims and in dismissing Waytec’s breach of warranty

claims.   Accordingly, we affirm those rulings on the basis of the

district court’s well-reasoned opinion.



                                  V.

      For the foregoing reasons, the judgment of the district court

is

                                                             AFFIRMED.




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