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Ramsey v. Bimbo Foods Bakeries Distribution, Inc.

United States District Court, E.D. North Carolina, Western Division

March 24, 2015

RICHARD RAMSEY, Plaintiff,
v.
BIMBO FOODS BAKERIES DISTRIBUTION, INC. formally known as GEORGE WESTON BAKERIES DISTRIBUTION, INC., Defendant.

ORDER

W. EARL BRITT, Senior District Judge.

This matter is before the court on defendant's (Adefendant@ or ABFBD@) motion for summary judgment. The motion is fully briefed and ripe for disposition.

I. BACKGROUND

In 2008, for $130, 000, plaintiff purchased a distribution route which granted him exclusive rights to purchase bakery products from defendant's predecessor, George Weston Bakeries Distribution, Inc. ("GWBD"), and sell those products to grocery store chains and independent grocers in a designated area. (Compl., DE # 1-1, ¶¶ 6, 8, 9.)[1] At the same time, he entered into a Distributorship Agreement with GWBD. (Id., Ex. 1.) As an "independent operator" under the Agreement, plaintiff's income was derived from what he characterizes as "margin, " or a percentage of sales of product. (Id. ¶ 8.) Defendant characterizes it slightly differently-"spread"-"the difference... between the purchase price and the sales price of the product to the customer." (Vickers Decl., DE # 22, ¶ 10.) For purposes of the court's analysis the differing characterizations are not material. At bottom, plaintiff made more money the higher the margin and the lower the price of the products he purchased from defendant. For a period of nearly five years, the margin plaintiff was paid remained the same. (Compl., DE # 1-1, ¶ 17.)

In June 2013, plaintiff's distribution route changed. Plaintiff paid $52, 000 to defendant for the right to distribute Sara Lee and other products. (Ramsey Decl., DE # 41-1, ¶ 1; Vickers Decl., DE # 22, ¶ 7; Barnes Decl., DE # 20, ¶ 15.) The grocery stores on his route decreased from eight to four, (Ramsey Dep., DE # 35-1, at 4), [2] with Harris Teeter store #257 being a newly added store, (Ramsey Decl., DE # 41-1, ¶ 1).

Around the same time, defendant reduced the margins paid independent operators in the Raleigh area. (Compl., DE # 1-1, ¶¶ 10-11, 21.) Although defendant raised the prices of certain products it sold to independent operators, the prices at which the grocery stores purchased those products from the independent operators did not change, [3] resulting in decreased profits independent operators earned on those products. (See Barnes Decl., DE # 20, ¶¶ 10, 14.) In response, a committee of six independent operators, including plaintiff, was organized to resist the change in margins. (Ramsey Dep., DE # 41-2, at 5.) Some correspondence and a meeting of the committee with defendant's representatives took place. (Compl., DE # 1-1, ¶¶ 13-14.) The committee's efforts appear to have culminated with a meeting at the RDU airport between the committee and its attorney and defendant's representatives and its attorney. (See id. ¶ 15.) At that meeting, plaintiff and most of the other members of the committee were outspoken about their dissatisfaction with the change in margins. (Id. ¶ 18; Ramsey Dep., DE # 41-2, at 6.) According to plaintiff, defendant refused to negotiate. (Compl., DE # 1-1, ¶ 15.)

Shortly after that meeting, just prior to Thanksgiving 2013, several items that plaintiff sold to Harris Teeter store #257 were out of stock. (See Hoffman Dep., DE # 35-2, at 7; Ramsey Dep., DE # 41-2, at 9.) The store manager, Paul Hoffman, and the assistant manager, Jason Falcone, decided they no longer wanted plaintiff to service the store. (Falcone Decl., DE # 36, ¶ 13; see also Hoffman Dep., DE # 35-2, at 6.) Falcone inquired of Jay Stanton, sales manager for defendant, (Ramsey Dep., DE # 41-2, at 10), "what steps [they] needed to take to have [plaintiff] ejected from Harris Teeter 257, " (Falcone Decl., DE # 36, ¶ 13). Stanton told Falcone that "it was entirely [their] choice, but that if [they] wanted [plaintiff] gone [they] would have to ban him from the store...." (Id.)

On 4 December 2013, Brant Vickers, defendant's Regional Sales Manager for the Raleigh Region, learned that plaintiff had been banned from the Harris Teeter store. (Vickers Decl., DE # 22, ¶ 19.) On 6 December 2013, Vickers delivered to plaintiff a ANotice of Breach of Distribution Agreement, " stating:

On December 4, 2013, your customer, Harris Teeter #257, reported to us that you are no longer permitted to service its store with the products of Bimbo Foods Bakeries Distribution Inc. (ABFBD@) due to your continuing and continuous failure to provide proper and satisfactory service, including out of stock conditions on core items and promotional products. Accordingly, you are in breach of your Distribution Agreement with BFBD.
You have three days to cure the contract violation. If you do not, we will take appropriate action under the Distribution Agreement.

(Id.; Compl., DE # 1-1, Ex. 5.)

Attempting to rectify the situation, plaintiff and another independent operator agreed to exchange stores or routes such that plaintiff would no longer be servicing the store. (Ramsey Dep., DE # 35-1, at 22; Ramsey Dep., DE # 41-2, at 11.) Plaintiff discussed the proposed exchange with Vickers, who agreed to it. (Vickers Decl., DE # 22, ¶¶ 20-21; Ramsey Dep., DE # 41-2, at 11.) The other independent operator spoke with Falcone, the assistant store manager, about plaintiff and his changing stores or routes; however, Falcone would not agree to that arrangement. (Falcone Decl., DE # 36, ¶ 14.) On 11 December 2013, Vickers delivered a letter to plaintiff terminating the Distribution Agreement effectively immediately. (Vickers Decl., DE # 22, ¶ 22; Compl., DE # 1-1, Ex. 6.)

On 21 January 2014, plaintiff filed this action in state court, asserting claims for breach of contract, fraud, and unfair and deceptive trade practices under North Carolina's Unfair and Deceptive Trade Practices Act ("UDTPA" or "UTPA"). Defendant then removed the case to this court.

Subsequently, defendant moved to dismiss plaintiff's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiff filed a motion for preliminary injunction. On 10 July 2014, the court granted defendant's motion to dismiss plaintiff's fraud claim but denied the motion to dismiss his breach of contract and UDTPA ...


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