Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—9thCir: California Unfair Competition Law Claim Dismissed for Failure to Allege Facts Warranting Injunctive Relief, Restitution , (Nov 2, 2012)

By John W. Arden, J.D., LLM.

Dismissal of an ice cream distributor’s California Unfair Competition Law claim against an ice cream manufacturer for termination of its grocery store accounts and initiation of direct distribution was proper because the Unfair Competition Law provides only injunctive and restitutionary relief and the distributor alleged no facts entitling it to either remedy, the U.S. Court of Appeals in San Francisco has ruled (Ice Cream Distributors of Evansville, LLC v. Dreyer’s Grand Ice Cream, Inc., November 1, 2012, Per Curiam).

Ice Cream Distributors of Evansville (ICD) had a business relationship with Dreyer’s Grand Ice Cream, under which ICD distributed Dreyer’s products to grocery and convenience stores. When ICD refused to enter into an exclusivity agreement with Dreyer’s, the manufacturer terminated the distributor’s grocery store accounts and began distributing its own products. ICD claimed that it lost much of its business and that Dreyer’s spread false and disparaging information about ICD to its customers.

ICD brought an action under the Racketeer Influenced and Corrupt Organizations Act, the California Cartwright Act, the Sherman Act, and the California Unfair Competition Law. The federal district court in Oakland dismissed all claims, but ICD appealed only the dismissal of the Unfair Competition Law claim.

The California Unfair Competition Law provides only injunctive and restitutionary relief, the appeals court said. To state a claim, a plaintiff generally must plead facts that “plausibly give rise to an entitlement to relief.” Although ICD requested an injunction and restitution, it failed to allege facts that would entitle it to either, the court found.

ICD did not plead entitlement to injunctive relief, since Dreyer’s alleged misconduct ended in 2007 and ICD did not allege a threat of continuing misconduct. ICD failed to plead entitlement to restitution, since it did not allege that Dreyer’s took money or property directly from it and did not claim a vested interest in money it sought to recover. The indirect connection between ICD’s losses and Dreyer’s gains might entitle ICD to damages, which simply are not available under the Unfair Competition Law.

The case is No. 10-17256.

Michael Robert Bracamontes (Bracamontes & Vlasak, P.C.) for Ice Cream Distributors of Evansville, LLC. Iris Sockel Mitrakos (Kilpatrick Townsend) for Dreyer’s Grand Ice Cream, Inc.

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