Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—E.D. N.C.: Distributor’s unfair practices claims proceed against Bimbo Bakeries, (Mar 27, 2015)

By Greg Hammond, J.D.

An independent operator who purchased a bakery products distribution route could move forward with claims that a bakery company breached the distribution agreement and violated North Carolina’s Unfair and Deceptive Trade Practices Act. The federal district court in Raleigh, North Carolina, denied the defendant’s motion for summary judgment, concluding that a reasonable juror could find that the bakery company breached the distribution agreement by improperly terminating the distributor (Ramsey v. Bimbo Foods Bakeries Distribution, Inc., March 24, 2015, Britt, W.).

Background. In 2008, plaintiff Richard Ramsey purchased a distribution route from George Weston Bakeries Distribution, Inc., the predecessor of Bimbo Foods Bakeries Distribution, Inc. The agreement provided Ramsey with exclusive rights to purchase bakery products from George Weston and to sell those products to grocery store chains and independent grocers in a designated area. Ramsey’s distribution agreement was terminated in December 2013, however, for an alleged failure to provide proper and satisfactory service, including running out of stock on core items and promotional products. Ramsey filed suit, alleging—in part—breach of contract and violation of North Carolina’s Unfair and Deceptive Trade Practices Act. The defendant moved for summary judgment on those two claims.

Breach of contract. In opposition to the motion for summary judgment, Ramsey argued that the defendant terminated the distribution agreement in retaliation for his membership on the committee speaking out against the change in margins paid to independent operators. Although he was banned from a store due to out-of-stock items, Ramsey argued that the defendant’s computer system suggested low amounts of items to order, which he increased; management at the store where he was banned never complained about out-of-stock products; the procedure in place was for the store to call defendant or plaintiff directly if a product needed to be restocked; defendant did nothing to assist plaintiff in regaining entry to the store; and plaintiff’s termination occurred shortly after a meeting at which he was vocal in objecting to the decrease in margins paid to independent operators. The court determined, in considering the facts in the light most favorable to plaintiff, that it could not conclude that no reasonable juror could find that the defendant breached the distribution agreement by improperly terminating it.

Deceptive trade practices. The defendant further requested that the court grant judgment against Ramsey’s Unfair and Deceptive Trade Practices claim because the claim was based solely on Ramsey’s breach of contract claim. The court concluded, however, that genuine issues of material fact exist as to whether defendant’s termination of the distribution agreement was pretext for retaliating against Ramsey for his membership on the committee speaking out against the change in margins. The motion for summary judgment was therefore denied.

The case number is 5:14-CV-26-BR.

Attorneys: Edgar R. Bain (Bain, Buzzard & McRae, LLP) for Richard Ramsey. Deborah L. Edney (Parker, Poe, Adams & Bernstein, LLP) for Bimbo Foods Bakeries Distribution, Inc.

Companies: Bimbo Foods Bakeries Distribution, Inc.

Cases: FranchisingDistribution NorthCarolinaNews