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Primarque Products Co., Inc. v. Williams West & Witt's Products Co.

United States District Court, D. Massachusetts

March 29, 2018

PRIMARQUE PRODUCTS CO. INC., Plaintiff,
v.
WILLIAMS WEST & WITTS PRODUCTS COMPANY d/b/a INTEGRATIVE FLAVORS, Defendant.

          ORDER AND MEMORANDUM OF DECISION

          TIMOTHY S. HILLMAN DISTRICT JUDGE.

         Background

         Plaintiff, Primarque Products Co. Inc. (“Plaintiff” or “Primarque”) has filed claims against Defendant, Williams West & Witts Products Company d/b/a Integrative Flavors (“Defendant” or “WWW”) alleging claims for Breach of Contract (Count I), Promissory Estoppel (Count II), Intentional Interference with Business Relations (Count III), and violation of the Massachusetts Consumer Protection Act, Mass.Gen.L. ch. 93A (“Chapter 93A”)(Count IV). WWW has filed a Counterclaim against Primarque alleging a claim for breach of contract (Count I). This Memorandum and Order of Decision addresses Defendant/Counter-Claimant Williams West & Witt's Products Company d/b/a Integrative Flavors' Motion for Summary Judgment (Docket No. 129). For the reasons set forth below, that motion is granted, in part and denied, in part.[1]

         Facts

         The Parties' Relationship

         WWW is a soup base manufacturer and Primarque is a former distributor of WWW's soup base products. Jack Barron (“Barron”) is Primarque's current owner and president. In 1986, Barron acquired Primarque from his father, Selwyn Barron, who owned and operated Primarque from its inception. Dorothy Palmer (“Dorothy”) and Victor Palmer owned and operated WWW between October 1, 1981 and September 15, 2005. Georgeann Quealy (“Georgeann”) and Brian Quealy (“Brian” and together with Georgeann, the “Quealys”) purchased WWW from the Palmers in September of 2005. Primarque and WWW began their relationship in 1976.

         As a distributor, Primarque purchased and resold WWW's soup base products. Primarque was authorized to resell the soup base to third parties under its private label “Primarque” and under WWW's label, “Cook's Delight.” As to the soup base it prepared for Primarque's private label, WWW would affix Primarque labels on the containers of soup base before shipment. Primarque at no time had any ownership interest in any of WWW's proprietary formulas or in WWW. Primarque sold WWW's products under Primarque's private label. Primarque would order product from WWW via purchase orders, and WWW would deliver that product to Primarque or its designated recipients. Primarque would then pay the invoiced amount for the product to WWW.

         WWW and Primarque entered into two distributor/supplier agreements, one in 1987(“1987 Agreement”) and the other in 1990 (“1990 Agreement” and, together with the 1987 Agreement, the “Agreements”). The Agreements each had three year terms and the parties did not enter into a new agreement after the 1990 Agreement expired. Dorothy decided not to enter into a new agreement in 1993 in order to provide flexibility for WWW to work with other distributors in the New England area. From June 30, 1993 until WWW officially ended its relationship with Primarque on March 12, 2015 (the “End Date”), the parties maintained an order-by-order, at-will relationship. That is, their distribution arrangements were defined by written purchase orders and invoices, which established the type of product ordered, quantity of product ordered, cost of product, method of shipping and the location to which the product was to be delivered. Primarque was not obligated to buy its soup base exclusively from WWW. WWW was aware that Primarque purchased soup base from other suppliers.

         Primarque Requests the Drop Ship Arrangement

         At different points in time in the parties' relationship, Primarque asked WWW to ship soup base products directly to certain customers (“Drop Ship Arrangement”). This allowed Primarque to avoid having to receive, store, refrigerate, and then re-ship product to the end customer. The customers to which Primarque asked WWW to ship directly are referred to as the Drop Ship Customers and included: Plenus Group, Inc. (“Plenus”), Rana Meal Solutions, LLC (“Rana”), Whole Foods Kitchen (“Whole Foods”), Blount Fine Foods (“Blount”), Joseph's Gourmet Pasta (“Joseph's”), Nestle U.S.A. (“Nestle”), Southern New England Spice Company (“Southern New England Spice”), Shaw's Southern Belle (“Shaw's”), Meritage Soups, LLC (“Meritage”), West Valley Inn, Inland Market Premium Foods (“Inland Foods”), Ivars, Greencore, Ian's Natural Foods, Meninno Brothers, Boston Salads, Cape Cod Chowder, Cameron's Seafood Market, Legal Seafoods, Newbridge on the Charles (“Newbridge”), Elevation Brands, Foxwood Casino and The Crab Trap. The Drop Ship Customers advertised and also presented at food shows and trade shows; the suppliers, including WWW, were aware of these customers. The Drop Ship Arrangement saved Primarque time and resources. For example, the Drop Ship Arrangement allowed Primarque's pricing to be more competitive. Primarque shared it pricing for its Drop Ship Customers with WWW. Moreover, with respect to Plenus, up until the late summer/early fall of 2014, Primarque arranged for Plenus to submit its Primarque purchase orders directly to WWW.

         The Purported Oral Agreements with WWW's Prior and Current Owners; The Non-Solicitation Agreement and Agreement to Provide Notice of Termination.

         Barron alleges that he entered into an oral non-solicitation agreement of unlimited duration and scope with Dorothy while she was operating WWW. More specifically, according to Primarque Dorothy agreed that in order to facilitate the Drop Ship Arrangement, if Primarque disclosed the identity and purchase needs of a Drop Ship Customer to WWW and Primarque bought its soup base for that customer from WWW, WWW would neither solicit business from the customer, nor sell its soup base to that customer (whether by initiating the sale, or being solicited by the customer), except through Primarque. Based on this promise, Barron disclosed the name and purchase needs of the Drop Ship Customers to WWW. Dorothy denies ever having entered into an oral agreement with Barron and/or Primarque. Also, according to Primarque, when the Quealys took over WWW, they assured Primarque that none of WWW's agreements with it would change, and all arrangements for doing business together would remain the same. Both Georgeann and Dorothy have testified that the Quealys did not purchase WWW subject to any agreements or obligations with regard to Primarque. While WWW sales staff were generally not aware of the identity of Primarque's customers who received their goods from WWW's warehouse, they were aware of the identity of the Drop Ship Customers.

         WWW kept track of which customers were Primarque's customers, and which were WWW's customers, and made sure that Primarque was not selling to WWW's preexisting customers. At the same time, during the period that Primarque served as a WWW distributor, WWW employees never solicited business directly from Primarque customers. Thus, if any Primarque customer contacted WWW seeking to purchase soup base directly from WWW, WWW did not accept the business and referred the customer back to Primarque. Primarque also did not solicit business from customers that had already been buying soup base directly from WWW. If Primarque stopped ordering soup base from WWW for a particular Drop Ship Customer, WWW could then solicit business directly from that customer.

         From 1990-93, the parties had a written private label agreement, which included a provision that “[i]n the event of the sale of either company, this Agreement will remain in effect and be binding on either or both successor owners for a period of one year from the date of sale.” The parties did not renew the agreement after 1993. According to Primarque, Dorothy orally agreed that if WWW intended to sell its business to a third party or to close the business, WWW would give Primarque one year notice.

         Barron also alleges that he entered into an oral agreement with Georgeann when she and Brian purchased WWW in 2005. According to Barron, the purported oral agreement included a non-solicitation agreement of unlimited duration and scope with an alleged obligation for WWW to provide 90-days' notice if it closed or if the business was sold. Barron testified that he and Georgeann entered into the purported oral agreement on a phone call in 2005, but cannot articulate the specifics surrounding the alleged call. Georgeann denies entering into such an agreement. Primarque has described at least three different versions of the alleged oral agreement between it and WWW's current owners:

First, in the Amended Complaint, Primarque alleges that WWW was obligated to provide Primarque 90-days' notice [to allow for Primarque to secure substitute manufacturers] and to refrain from doing business directly with Primarque's customers, indefinitely, provided that Primarque sold exclusively WWW products through Primarque's private label in New England.
Second, Barron testified that WWW was obligated to provide Primarque 90- days' notice if WWW sold or closed its business, and to refrain from selling directly to the Drop Ship Customers, indefinitely, provided that Primarque provided WWW 90-days' notice if Primarque transitioned customers to another supplier.
Third, in its Response to Request for Admission (“RFA”) No. 15, Primarque alleges that the purported non-solicitation agreement required WWW “not to sell directly to any Primarque customer provided Primarque was selling WWW products to that customer.”

         Barron also testified that he could not articulate how Primarque's transition of business from WWW to other soup base suppliers would affect WWW's alleged non-solicitation obligation.

         Barron repeated the third version of the alleged agreement in his deposition, but limited WWW's alleged non-solicitation obligation only to the Drop Ship Customers. He testified that the alleged non-solicitation agreement required WWW not to sell directly to any Drop Ship Customers provided Primarque was selling WWW products to the Drop Ship Customers. Barron further testified that WWW's obligation under the oral agreement to provide Primarque 90-days' notice was contingent on WWW selling or closing its business. Barron testified that the parties never discussed and never agreed that WWW was required to provide Primarque 90-days' notice if the relationship soured and WWW decided to end its relationship with Primarque.

         Specifically, Barron testified as follows:

Q. [F]rom your recollection, a minimum of 90 days' notice of what occurrence?
A. If they [WWW] sold the business, closed the business, stopped selling to Primarque.
Q. And specifically that was discussed, stop selling to Primarque?
A. No. In essence, stopping to do business with Primarque based on closing the business or selling.
Q. Okay. Because that's what all the e-mails include, correct, and we're going to go through those?
A. I don't know. But it was about stopping to sell Primarque, whether through a closing or a sale .....
Q. There wasn't any discussion about the relationship souring...?
A. No, there was no discussion of the relationship souring.

         The Court asked Primarque's counsel to explain the alleged oral agreement during a hearing on October 11, 2016. Primarque's counsel explained the agreement as follows: “WWW was to provide Primarque 90-days' notice if it ended its relationship with Primarque and refrain from ever selling to the Drop Ship Customers; provided Primarque sold exclusively WWW products to the Drop Ship Customers.” According to Primarque's counsel, if Primarque sold other competitors' products to the Drop Ship Customers, WWW was “off the hook” in terms of its obligations under the purported agreement.

         In its statement of material facts, Primarque offers yet another version of the agreement. Primarque asserts that in 2009, while staffing the Boston Seafood Show together, Barron and Georgeann discussed whether their children would eventually take over ownership and operation of their respective companies and discussed how long the Primarque and WWW business relationship would continue. According to Primarque, Georgeann assured Barron that WWW intended to do business with Primarque indefinitely, and that if WWW was ever sold to a third party or WWW otherwise intended to cease doing business with Primarque, WWW would give Primarque at least ninety (90) days' notice.

         Primarque Requests WWW to Enter Into a New Agreement

         On September 23, 2009, Barron sent an e-mail to WWW including the following language about an agreement Barron was proposing to WWW:

Primarque wants to be given a 1 year notice in the event WWW wants to discontinue selling private label products or primarques (sic) customer label products to Primarque and Primarque is willing to give WWW one year notice should they [Primarque] seek to have their soup bases manufactured by a company other than WWW. It is further understood that should a current customer try to circumvent Primarque and go directly to WWW this may only be done with permission of Primarque. This agreement includes any future ...

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