Preview:

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
FRESH N' PURE DISTRIBUTORS, INC.,
Plaintiff,
v.                                                                                                            Case No. 11-C-470
FOREMOST FARMS USA, et al.,
Defendants.
DECISION AND ORDER ON THE DEFENDANTS’ MOTIONS TO DISMISS
I. PROCEDURAL HISTORY
On May 17, 2011, Fresh N’ Pure Distributors, Inc. (“Fresh N’ Pure”) filed a complaint in
this court against Dean Foods Company (“Dean”) and Foremost Farms USA (“Foremost”) alleging
breach of contract (counts one and two), violations of the Clayton Act, 15 U.S.C. § 1, et seq.,
specifically the Robinson-Patman Act of 1936, 15 U.S.C. § 13, (count three), and violations of
Illinois Antitrust Act, 740 ILCS 10/1, et seq. (count four). (Docket No. 1.) The matter was randomly
assigned  to  this  court  and  these  parties  subsequently  consented  to  the  full  jurisdiction  of  a
magistrate judge. (Docket Nos. 6, 7, 8.)
On July 15, 2011 and July 18, 2011, Foremost and Dean, respectively, moved to dismiss the
complaint. (Docket Nos. 10, 13.) Also on July 18, 2011, Dean Foods of Wisconsin, LLC filed a
related action against Fresh N’ Pure in this district, which was docketed as case number 11-C-684,
and assigned to this court pursuant to Civil Local Rule 3(b).
Fresh N’ Pure failed to timely respond to the defendants’ motions and counsel for Foremost
wrote to this court on August 17, 2011 asking that the motions be granted as unopposed. (Docket




No. 19.) Later the same day, counsel for Fresh N’ Pure filed a motion seeking more time to respond
to the pending motions, (Docket No. 21), which the court granted, (Docket No. 23).
On August 29, 2011, Fresh N’ Pure responded to certain aspects of the defendants’ motions
but also filed a motion seeking leave to amend the complaint. (Docket Nos. 24, 25, 26.) In the
proposed amended complaint, Fresh N’ Pure named two additional defendants—Dean Foods of
Wisconsin, LLC, and Dean Transportation, Inc. (“DTI”)—and added a claim for tortious inference
with contract (count five). (Docket No. 34.) Foremost and Dean subsequently replied to Fresh N’
Pure’s response, (Docket Nos. 27, 28), and a week later, both submitted briefs in opposition to
Fresh N’ Pure’s motion to amend the complaint, (Docket Nos. 30, 31).
On September 20, 2011, the court held a scheduling conference with the parties during
which the court discussed the parties’ pending motions. The court granted the plaintiff’s motion to
file an amended complaint and denied the motions to dismiss the complaint without prejudice.
(Docket No. 32,  33.) With respect to the defendants’ responses in opposition to the plaintiff’s
motion to amend the complaint, the court converted these filings to motions to dismiss the amended
complaint, (Docket Nos. 30, 31), and permitted the plaintiff to respond, (Docket No. 36, 37), and
the defendants to reply, (Docket No. 38, 39).
As noted above, in its amended complaint, the plaintiff names two additional defendants:
Dean Foods of Wisconsin, LLC and Dean Transportation, Inc. (Docket No. 34.) Following a request
from the court for clarification as to the status of these newly-added parties, (Docket No. 40),
counsel for Dean Foods Company responded and indicated she is appearing on behalf of Dean
Foods Company, Dean Foods of Wisconsin, LLC, and Dean Transportation, Inc., (Docket No. 41).
These parties  also consented to the full jurisdiction of a magistrate judge.                         (Docket No.  41.)
Therefore, the defendants’ motions to dismiss the amended complaint are now ready for resolution.
2




II. FACTS ALLEGED IN AMENDED COMPLAINT
Dean and Foremost were competitors in the sale of fluid milk in northeastern Illinois,
Wisconsin, and the Upper Peninsula of Michigan, and Fresh N’ Pure was the exclusive distributor
for Foremost’s products under the trade label Golden Guernsey. (Docket No. 34 at ¶¶9, 41-42.)
According to Fresh N’ Pure, Dean sought to restrict competition in the sale of dairy products by
offering rebates and intentionally underselling its products. (Docket No. 34 at ¶38.)
Dean subsequently purchased Foremost and Fresh N’ Pure understood that in light of its
agreement with Foremost, Fresh N’ Pure would be able to continue to sell Foremost products as
well as Dean products. (Docket No. 34 at ¶¶20, 24-27.) In reliance upon Dean’s representations,
Fresh N’ Pure negotiated the sale of Dean products to both current and potential customers. (Docket
No.  34 at  ¶29.) However, Dean subsequently refused to sell Dean products to Fresh N’ Pure.
(Docket No. 34 at ¶30.) Instead, Dean’s other distributors, one of whom was Dean Transportation,
Inc., sold Dean products to Fresh N’ Pure’s former customers. (Docket No. 34 at ¶¶31-36.) Fresh N’
Pure attempted to fill its customers’ orders for Dean products by purchasing Dean products from
one of Dean’s other distributors, a competitor of Fresh N’ Pure, rather than from Dean directly, but
Dean refused to permit this practice. (Docket No. 34 at ¶32.)
III. MOTION TO DISMISS STANDARD
A civil complaint need contain only “a short and plain statement of the claim showing that
the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). “The Rule reflects a liberal notice pleading
regime, which is intended to ‘focus litigation on the merits of a claim’ rather than on technicalities
that might keep plaintiffs out of court.” Brooks v. Ross, 578 F.3d 574, 580 (7th Cir. 2009) (quoting
Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002)); see also                                            Swanson v. Citibank, N.A., 614
F.3d 400, 404 (7th Cir. Ill. 2010) (quoting 5 Charles Alan Wright & Arthur R. Miller, Federal
3




Practice and Procedure § 1215 at 165-173                                                            (3d ed. 2004) (“[A]ll that is necessary is that the claim
for relief be stated with brevity, conciseness, and clarity.”).
In recent years, the Supreme Court addressed the question of just how short and plain that
statement may be. See Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009); Erickson v. Pardus, 551 U.S. 89
(2007)  (per curiam); Bell Atl. Corp. v. Twombly,  550 U.S.  544  (2007). The Seventh Circuit
synthesized the recent holdings of the Court regarding the pleading standard set forth in Rule
8(a)(2) and stated:
First, a plaintiff must provide notice to defendants of her claims. Second, courts must
accept a plaintiff's factual allegations as true, but some factual allegations will be so
sketchy or implausible that they fail to provide sufficient notice to defendants of the
plaintiff's claim. Third, in considering the plaintiff's factual allegations, courts should
not accept as adequate abstract recitations of the elements of a cause of action or
conclusory legal statements.
Brooks, 578 F.3d at 581.
This  trio  of  Supreme  Court  cases  did  not  somehow  reinstate  the  old  fact-pleading
requirements and it remains true that specific facts are not necessary. Swanson, 614 F.3d at 404.
Although detailed factual allegations are not required, Rule 8 “demands more than an unadorned,
the-defendant-unlawfully-harmed-me accusation.” Iqbal, 129 S. Ct. at 1949 (citing Twombly, 550
U.S. at 555).
To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to state a claim to relief that is plausible on its face. A claim has
facial plausibility when the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable for the misconduct alleged.
The plausibility standard is not akin to a probability requirement, but it asks for more
than a sheer possibility that a defendant has acted unlawfully. Where a complaint
pleads facts that are merely consistent with a defendant's liability, it stops short of the
line between possibility and plausibility of entitlement to relief.
Id. at 1949 (quoting Twombly, 550 U.S. at 556, 557, 570) (internal citations and quotation marks
omitted).
Determining whether a complaint states a plausible claim for relief will . . . be a
context-specific  task  that  requires  the  reviewing  court  to  draw  on  its  judicial
4




experience and common sense. But where the well-pleaded facts do not permit the
court to infer more than the mere possibility of misconduct, the complaint has
alleged -- but it has not shown -- that the pleader is entitled to relief.
Id.  at                                                                                                     1950  (internal  citations,  brackets,  and  quotation  marks  omitted).  A  complaint  is  not
insufficient merely because “it strikes a savvy judge that actual proof of those facts is improbable,
and that a recovery is very remote and unlikely.” Twombly, 550 U.S. at 556 (internal quotation
marks omitted).
As this court has said before,
The amount of facts that must be alleged in a complaint to present a plausible claim
will vary based upon the nature of the claim. Certain claims may require a relatively
minimal factual recitation to present a plausible claim (e.g. a claim to recover on a
contract for nonpayment) whereas others might require substantially more detailed
factual allegations to demonstrate plausibility (e.g. an antitrust claim). In Twombly,
the plaintiffs attempted to allege a violation of § 1 of the Sherman Act, 15 U.S.C. §
1. In Iqbal, the plaintiff attempted to defeat a claim of qualified immunity and
demonstrate  that  high-ranking  government  officials  violated  the  First  and  Fifth
Amendments by approving a policy that allegedly harmed the plaintiff. The natures
of the claims in both these cases were such that they would necessarily require
substantially more factually intensive pleadings than many more routine cases. Thus,
courts must be cautious so as to not interpret Twombly and Iqbal as requiring
detailed factual recitations for all complaints simply because more detailed factual
allegations were required in those cases due to the nature of the claims alleged.
EEOC v. Universal Brixius, 264 F.R.D. 514, 517 (E.D. Wis. 2009). “[I]n many straightforward
cases, it will not be any more difficult today for a plaintiff to meet that burden than it was before the
Court’s recent decisions.” Swanson, 614 F.3d at 404.
IV. ANALYSIS
A. Robinson-Patman Act of 1936 Claim against Dean Foods Company
The Robinson-Patman Act of  1936, also known as the Anti-Price Discrimination Act,
codified at 15 U.S.C. § 13 as part of the Clayton Antitrust Act, prohibits anti-competitive price
discrimination. See Volvo Trucks N. Am., Inc. v. Reeder-Simco GMC, Inc., 546 U.S. 164, 176
(2006). In order to sustain a claim under the Robinson-Patman Act, the plaintiff must be able to
show that (1) at least two contemporaneous sales were made in interstate commerce from the same
5




seller; (2) the commodity in each sale was of like grade and quality; (3) the seller discriminated
against the plaintiff with respect to price in favor of another purchaser; and (4) “the effect of such
discrimination may be to injure, destroy, or prevent competition to the advantage of a favored
purchaser, i.e., one who received the benefit of such discrimination.” Id. at 176-77 (internal ellipses,
quotation marks, and brackets omitted).
Dean contends that, for a number of reasons, Fresh N’ Pure’s amended complaint fails to
state a claim for a violation of the Robinson-Patman Act. Most significantly, Dean alleges that
Fresh N’ Pure has failed to point to a single sale from Dean to a Fresh N’ Pure competitor where the
competitor was allegedly charged a significantly lower price than that paid by Fresh N’ Pure.
(Docket No. 30 at 5-9.)
Fresh N’ Pure’s amended complaint focuses upon allegations that Dean refused to sell to it.
However, a refusal to do business with a particular entity generally does not violate the Robinson-
Patman  Act  because  one  who  unsuccessfully  seeks  to  purchase  a  commodity  cannot  be  a
“purchaser”  within  the  meaning  of  the  Act.  See,  e.g.,  Republic  Packaging  Corp.  v.  Haveg
Industries, Inc., 406 F. Supp. 379, 380 (N.D. Ill. 1976); Loren Specialty Mfg. Co. v. Clark Mfg.
Co., 241 F. Supp. 493, 498 (N.D. Ill. 1965) (citing Shaw’s, Inc. v. Wilson-Jones Co., 105 F.2d 331
(3d Cir. 1939); Chicago Seating Co. v. S. Karpen & Bros., 177 F.2d 863 (7th Cir. 1949)). Rather, to
state a claim, Fresh N’ Pure must point to instances where Dean sold products to Fresh N’ Pure’s
competitors at a price lower than that it offered to Fresh N’ Pure.
Fresh  N’  Pure  mentions  six  competitors  in  its  amended  complaint:  Cloverleaf  Farms
Distributors, Inc. (“Cloverleaf”), Freshline Dairy Distributors, Inc. (“Freshline”), C&C Dairy, Inc.
(“C&C”), Lockwood Dairy Company (“Lockwood”), J&R Dairy Services, Inc. (“J&R”), and DTI.
However, the complaint offers very little detail with respect to these competitors. Cloverleaf is
identified simply as the competitor from whom Fresh N’ Pure bought Dean products in an effort to
6




satisfy its customers’ orders. (Docket No. 34 at ¶¶32, 36, 77, 81.) C&C and Freshline are two
competitors to whom Foremost allegedly began selling its products in violation of the exclusive
distribution agreement it had with Fresh N’ Pure. (Docket No. 34 at ¶¶18, 19, 59, 65.) Lockwood is
identified simply as one of the competitors to whom Fresh N’ Pure believes it lost profits but the
complaint contains no further support for this allegation. (Docket No. 34 at ¶¶59, 65.) J&R is the
competitor to whom Fresh N’ Pure lost Michael’s Fresh Market as a customer, but the complaint
offers nothing more. (Docket No. 34 at ¶¶33, 78.)
The amended complaint offers the most information with respect to DTI, which is named as
a defendant, but again, the details are sparse. DTI is identified as “one of the Buyers of Foremost’s
Assets under the Asset Purchase Agreement.” (Docket No. 34, ¶ 34.) However, as set forth in the
amended complaint, DTI is characterized as the competitor to whom Fresh N’ Pure lost Tischler’s
Finer Foods, Inc. as a customer, (Docket No. 34, ¶¶34, 79), that offered coupons and discounts to
Tischler’s “for sale in Tischler’s Grocery stores at a price less than Fresh N’ Pure could purchase
from Dean,” and that assumed that distribution agreement between Foremost and Fresh N’ Pure,
(Docket No. 34, ¶¶35, 80).
At  no  point  does  Fresh  N’  Pure  allege  that  Dean  sold  products  to  any  of  these  six
competitors for less than it charged to Fresh N’ Pure. The closest Fresh N’ Pure comes to this target
is when it alleges “DTI specifically assumed the Distribution Agreement between Foremost and
Fresh N’ Pure, and then offered coupons and promotions to Tischler, Fresh N’ Pure’s customer, for
sale in Tischler’s Grocery stores at a price less than Fresh N’ Pure could purchase from Dean.”
(Docket No. 34 at ¶35.) The court understands Fresh N’ Pure to be alleging that as a result of
promotions and coupons, the distributor DTI was able to sell milk to its retail customer for less than
what Fresh N’ Pure would have paid to its supplier, Dean.
7




Without more, this allegation does not support a conclusion that Dean offered DTI a lower
price than it offered to Fresh N’ Pure. It should go without saying that there are innumerable
reasons why a competitor might offer a lower price, even to the extent of offering promotions that
result in its selling a product at a loss, in order to win over a customer. (Selling at a loss, of course,
might present other issues but those are not raised in this action.) In addition, there is the fact that
DTI was a subsidiary of Dean which raises the question of whether a subsidiary of a supplier may
even count as a competitor for purposes of the Robinson-Patman Act. See, e.g., Bell v. Fur Breeders
Agric. Coop., 348 F.3d 1224, 1235-37 (10th Cir. 2003); O’Byrne v. Cheker Oil Co., 727 F.2d 159,
164 (7th Cir. 1984); Security Tire & Rubber Co. v. Gates Rubber Co., 598 F.2d 962 (5th Cir. 1979);
Brewer v. Uniroyal, Inc., 498 F.2d 973, 977 n.2 (6th Cir. 1974); Accurate Control Sys. v. Neopost,
Inc., 2002 U.S. Dist. LEXIS 11340, *5 (N.D. Ill. June 25, 2002). But this is a question the court
need not resolve because the plaintiff has plainly failed to allege an essential element of a claim
under the Robinson-Patman Act, i.e. that Dean sold a commodity of like grade and quality to a
competitor for a lower price than it charged to Fresh N’ Pure. Therefore, count three of the amended
complaint shall be dismissed.
B. Illinois Antitrust Act Claim against Dean Foods Company
Dean also contends that Fresh N’ Pure has failed to properly state a claim for any violation
of the Illinois Antitrust Act and therefore moves to dismiss count four of the amended complaint.
Fresh N’ Pure’s response to this aspect of Dean’s motion could more accurately be characterized as
a lack of response.
The portion of Fresh N’ Pure’s response addressing this aspect of Dean’s motion spans
about four pages. (Docket No. 37 at 9-13.) However, more than 85% of this portion of Fresh N’
Pure’s response, essentially three-and-a-half pages, consists entirely of a footnote wherein Fresh N’
Pure quotes from the Illinois Antitrust Act. The only argument Fresh N’ Pure can muster in support
8




of this claim is a conclusory sentence, which again is composed nearly entirely of a quotation of the
Act, and a portion of the Act not even referenced in its complaint. Fresh N’ Pure states:
The anticompetitive conduct that Dean’s engaged in throughout its “relationship”
with FNP is also  clearly violative of the  Illinois Antitrust Act, specifically its
prohibitions against “restraints of trade which are secured through monopolistic or
oligarchic practices and which act or tend to act to decrease competition between and
among  persons  engaged  in  commerce  and  trade,  whether  in  manufacturing,
distribution, financing, and service industries or in related for profit pursuits.” 740
ILCS 10/2.
(Docket No. 37 at 13.)
The  absence  of  any  legal  argument  to  support  the  allegations  made  in  the  amended
complaint is reason enough for the court to grant Dean’s motion to dismiss this claim; it is not the
court’s role to create plausible legal arguments to support a party’s claim. If a party fails to even put
forth an argument in support of its position, the court presumes that the opponent’s motion is
unopposed. Therefore, it is on this basis that the court shall grant Dean’s motion to dismiss count
four.
Nonetheless, the court shall very briefly discuss why even if the court were overlook Fresh
N’ Pure’s failure to present any opposition to this portion of Dean’s motion, the court would
conclude that Fresh N’ Pure has failed to state a claim under the Illinois Antitrust Act.
Fresh N’ Pure alleges that the following acts  “constituted unlawful price discrimination
which was violative of The Illinois Antitrust Act, 740 ILCS 10/1 et seq:”
1) denying FRESH N’ PURE THE [sic] ability to sell its products; 2) selling fluid
milk to FRESH N’ PURE’s customers with knowledge that FRESH N’ PURE had
already negotiated a price for Dean’s fluid milk products;                                                  3) continuing to sell and
distribute its products through its long term distributors to FRESH N’ PURE’s
customers in an attempt to unlawfully stifle completion [sic] with FRESH N’ PURE;
4) offering rebates and/or intentionally underselling Dean products including fluid
milk to certain customers in an attempt to unlawfully stifle competition with FRESH
N’ PURE.
(Docket No. 34 at ¶74.)
9




According to the conclusions contained in paragraph 73 of its amended complaint, Fresh N’
Pure is attempting to allege that Dean violated specifically subsections (3) and (4) of 740 ILCS 10/3
which, in relevant part, make it illegal to:
(3)  Establish,  maintain,  use,  or  attempt  to  acquire  monopoly  power  over  any
substantial part of trade or commerce of this State for the purpose of excluding
competition  or  of  controlling,  fixing,  or  maintaining  prices  in  such  trade  or
commerce; or
(4) [M]ake a sale or contract for sale of . . . commodities . . . on the condition,
agreement, or understanding that the . . . purchaser thereof shall not use or deal
in the . . . commodity . . .   of a competitor or competitors of the . . . seller, where
the effect of such . . . condition, agreement, or understanding may be to substantially
lessen competition or tend to create a monopoly in any line of commerce.
The statutory languate quoted above is contained in paragraph 73, but the bolded portions
represent essential language that the plaintiff omitted when quoting the statute.
Including the essential language that Fresh N’ Pure omitted from its amended complaint
makes clear how subsection (4) is inapplicable to the facts alleged in this case. This provision
addresses a situation where a supplier seeks to decrease competition by refusing to sell to a
customer unless that customer agrees to buy only from it. There is no allegation that would tend to
suggest that such exclusivity occurred in the present case. Therefore, the court shall not further
consider this provision.
Subsection                                                                                                (3)  is  obviously  broader  and  would  encompass  a  wider  variety  of  anti-
competitive behavior. This provision, like the entire Illinois Antitrust Act, is modeled upon the
Sherman Antitrust Act, and thus to the extent the statute is similar, it is construed “in accordance
with the construction given its Federal counterpart.” Laughlin v. Evanston Hosp., 133 Ill. 2d 374,
384, 550 N.E.2d 986, 990 (1990); see also Gilbert's Ethan Allen Gallery v. Ethan Allen, Inc., 162
Ill.                                                                                                      2d 99, 104, 642 N.E.2d 470, 472-73 (1994) (comparing section 3(3) of the Illinois Act and
section 2 of the Sherman Act). Nonetheless, little analysis is necessary to conclude that the plaintiff
has failed to state a claim under the subsection (3).
10




Without substantially more, an allegation that a supplier refused to sell to a prospective
distributor is insufficient to state a claim under the Illinois Antitrust Act. See, e.g.,   Gilbert's Ethan
Allen Gallery, 162 Ill. 2d at 104-09, 642 N.E.2d at 473-74. As for that allegation that Dean sold
milk to Fresh N’ Pure’s customers, the complaint fails to elaborate on exactly what occurred. Fresh
N’ Pure’s competing distributors may have done so but there is no allegation that defendant Dean
Foods Company, the only defendant named in count four, did so.
With respect to Fresh N’ Pure’s third allegation, it appears that the plaintiff believes that
Dean should have refused to allow its other distributors to sell to Fresh N’ Pure’s former customers
after Dean decided to no longer do business with Fresh N’ Pure. The court is unaware of any basis
in law for this argument (Fresh N’ Pure certainly does not point the court to any such authority) but
the court finds it safe to conclude Dean’s failure prevent its distributors from selling to Fresh N’
Pure’s former customers did not violate the Illinois Antitrust Act.
Finally, in the absence of substantially more support, the allegations related to pricing
contained in the fourth part of paragraph 74 of the amended complaint are insufficient to state a
claim under the Illinois Antitrust Act. Such alleged price discrimination is not proscribed by the
Illinois Antitrust Act. Laughlin, 133 Ill. 2d at 388, 550 N.E.2d at 992; see also Siegel v. Shell Oil
Co., 480 F. Supp. 2d 1034, 1048 (N.D. Ill. 2007).
C. Tortious Interference with Contract Claim against Dean Foods Company
Fresh N’ Pure alleges in its amended complaint that when it lost customers as a result of
Dean refusing to sell to it and precluding other Dean suppliers from selling Dean products to Fresh
N’ Pure, Dean tortiously interfered with the contracts that Fresh N’ Pure entered into with its
customers. (Docket No. 34 at ¶¶77-79.) Dean contends that this claim fails as a matter of law
because Dean was not a stranger to the contracts with which it allegedly interfered and even if a
stranger, its actions were privileged. (Docket No. 30 at 13-17.)
11




Although Dean initially relied upon Wisconsin law in its brief, its reply does not challenge
Fresh N’ Pure’s assertion that Illinois law governs this claim. (Docket No. 38 at 12-14.) Thus, the
court shall apply Illinois law. The court also notes that Fresh N’ Pure refers to a claim for
“interference  with  a  business  expectancy”  in  its  brief.                                           (Docket  No.  36  at  9.)  The  amended
complaint, however, refers to only the similar but not identical claim for “tortious interference with
contract.” (Docket No. 34, count five.) A party cannot amend its pleadings through its briefs, and
therefore the court shall consider only the tortious interference with contract claim alleged in the
amended complaint.
In order to state a cause of action for tortious interference with a contract, the
plaintiff must allege: (1) the existence of a valid and enforceable contract between
the  plaintiff  and  a  third  party;                                                                    (2)  defendant's  awareness  of  the  contract;   (3)
defendant’s  intentional and  unjustified inducement  of a breach;                                       (4)  defendant’s
wrongful conduct caused a subsequent breach of the contract by the third party; and
(5) damages.
Purmal v. Robert N. Wadington & Assocs., 354 Ill. App. 3d 715, 727, 820 N.E.2d 86, 98 (App. Ct.
2004) (citing Kehoe v. Saltarelli, 337 Ill. App. 3d 669, 676-77, 786 N.E.2d 605, 612 (App. Ct.
2003)).
Fresh N’ Pure’s amended complaint obviously fails to plead each of these elements. With
respect to any alleged tortious interference resulting from Dean preventing its other distributors
from selling to Fresh N’ Pure, the plaintiff does not allege that any contract existed between it and
these other distributors, which the distributors subsequently breached. Thus, the court shall not
further consider this aspect count five.
As for the potential claim that Dean tortiously interfered in Fresh N’ Pure’s contracts with
its customers, the complaint does not allege that any third party, i.e. Fresh N’ Pure’s customers,
breached a contract with Fresh N’ Pure, but rather alleges that Dean’s actions towards Fresh N’
Pure resulted in Fresh N’ Pure’s breach of its contracts with its customers. Thus, Fresh N’ Pure’s
claim is not the ordinary tortious interference with contract claim embodied in the Restatement
12




(Second) of Torts  §  766, but rather reflects the cause of action set forth in                            §  766A of the
Restatement, which provides:
One who intentionally and improperly interferes with the performance of a contract
(except a contract to marry) between another [the plaintiff] and a third person, by
preventing the other  [the plaintiff] from performing the contract or causing his
performance to be more expensive or burdensome, is subject to liability to the other
[the plaintiff] for the pecuniary loss resulting to him.
Scholwin v. Johnson, 147 Ill. App. 3d 598, 608, 498 N.E.2d 249, 255 (App. Ct. 1986) (quoting
Restatement (2d) Torts § 766A).
In Scholwin, the appellate court reversed the trial court’s dismissal of a complaint wherein
the plaintiff alleged that the defendant tortiously interfered with a contract it had with a third party
when the defendant refused to complete a real estate contract with the plaintiff, thus resulting in the
plaintiff being unable to complete a dependent real estate deal with the third party. Therefore, under
Scholwin, a claim for tortious interference with contract “encompasses the situation in which the
defendant prevents the plaintiff from performing the contract and, as a result, he is unable to require
the third party to perform.” Id. Illinois, however, has not adopted the latter portion of § 766A
whereby merely making performance more expensive or burdensome would constitute tortious
interference; only if a defendant’s actions makes the plaintiff’s compliance with the third party
contract impossible will there be a viable claim under Illinois law. Catapult Communs. Corp. v.
Foster, 2010 U.S. Dist. LEXIS 94922, *9-10 (N.D. Ill. Sept. 13, 2010); Triple Canopy, Inc. v.
Moore, 2005 U.S. Dist. LEXIS 14219, *21-23 (N.D. Ill. July 1, 2005) (citing Hidrovia v. Great
Lakes Dredge & Dock Corp., 2002 U.S. Dist. LEXIS 21784, *10 (N.D. Ill. Nov. 5, 2002). The
distinction is immaterial for present purposes because the amended complaint adequately alleges
that Dean’s complete refusal to sell to Fresh N’ Pure made it impossible for Fresh N’ Pure to
comply with its contracts with its customers to supply Dean and/or Golden Guernsey brand milk.
13




However, Scholwin may be an anomaly because subsequent Illinois courts have held that a
tortious interference claim requires that the defendant’s actions be directed towards a third party
other than the plaintiff, albeit without acknowledging Scholwin or discussing § 766A. See Dawson
v. W. & H. Voortman, Ltd., 853 F. Supp. 1038, 1044 (N.D. Ill. 1994) (citing Mitchell v. Weiger, 87
Ill. App. 3d 302, 305, 409 N.E.2d 38, 41 (1980); IK Corp. v. One Financial Place Partnership, 200
Ill. App.  3d 802,  819,  558 N.E.2d 161, 172  (App. Ct. 1990)); Continental Mobile Tel. Co. v.
Chicago S M S A Ltd. Partnership, 225 Ill. App. 3d 317, 325, 587 N.E.2d 1169, 1174-75 (App. Ct.
1992). One court mentioned Scholwin but did not discuss it because the court dismissed the
complaint on a different basis. Delcon Group, Inc. v. Northern Trust Corp., 187 Ill. App. 3d 635,
651, 543 N.E.2d 595, 604-05 (App. Ct. 1989).
At least one federal court has applied Scholwin, Freight Handler Enters. v. Advantage
Logistics Midwest, Inc., 2005 U.S. Dist. LEXIS 29831 (N.D. Ill. Nov. 23, 2005), and the Court of
Appeals for the Seventh Circuit also referred to Scholwin and § 766A as an alternative basis to
affirm a jury’s verdict, Havoco of America, Ltd. v. Sumitomo Corp. of America, 971 F.2d 1332,
1344-45 (7th Cir. 1992).
The court need not attempt to resolve this apparent conflict in Illinois law because the court
concludes that the plaintiff has failed to adequately allege that Dean’s actions were unjustified, and
therefore this claim must be dismissed. Fresh N’ Pure alleges that “Dean’s conduct constituted an
intentional and unjustified inducement of Plaintiff’s breach of its contracts with these third parties.”
(Docket No. 34 at ¶86.) However, the court is “not bound to accept as true a legal conclusion
couched as a factual allegation,” Iqbal, 129 S. Ct. at 1950, and the plaintiff fails to adequately
support this legal conclusion. The plaintiff simply baldly asserts that Dean’s actions were part of an
effort to “stifle competition” and constituted “anticompetitive behavior.” (Docket No. 34 at ¶¶81-
83.)
14




Fresh N’ Pure was not a competitor of Dean but rather was essentially a customer. Without
substantially more factual detail in the amended complaint, it is not readily possible to infer how
Dean’s decision to no longer do business with one of its customers was “anticompetitive,” would
“stifle competition,” or was otherwise unjustified. Thus, these bald assertions which, as discussed
above, the plaintiff has failed to support, are insufficient to plausibly satisfy the elements of a
tortious interference with contract claim. Therefore, Fresh N’ Pure’s claim for tortious interference
with contract shall be dismissed.
D. Breach of Contract Claims against Dean and Foremost
Fresh N’ Pure contends that both Foremost and Dean breached the distribution agreement.
As for Fresh N’ Pure’s breach of contract claim against Foremost, Foremost acknowledges that
Fresh N’ Pure has adequately alleged a claim, at least with respect to Foremost’s alleged sale to
competing distributors prior to its acquisition by Dean. (Docket No. 31 at 4-5.) However, Foremost
does seek to dismiss the alternative theory of liability set forth in paragraph 60 of the amended
complaint, which states:
Upon information and belief, the written Distribution Agreement between Plaintiff
and Foremost, was not assumed by Dean as part of its acquisition of Foremost’s
Assets, and accordingly, Foremost continues to be liable for the continued sale of
Foremost products to competitors of Fresh N’ Pure.
(Docket No. 34 at ¶60.)
Foremost contends that this alternative theory amounts to an effort to hold Foremost liable
for Dean’s breach of a contract Dean never assumed. The distribution agreement was between Fresh
N’ Pure and Foremost, and thus in Foremost’s view, its obligation was limited to ensuring that the
products it manufactured that were within the scope of the distribution agreement were distributed
by Fresh N’ Pure. When Foremost was acquired by Dean, Foremost ceased to manufacture any
products, and thus it could not have sold its products to other distributors because there were no
products to sell.
15




Resolving the question of whether after its acquisition by Dean, there were Foremost
products within the scope of the distribution agreement that were distributed by other distributors is
not appropriate at this stage. The relevant question is whether Fresh N’ Pure has adequately alleged
that products that were within the scope of the distribution agreement were improperly distributed
by other distributors.
If the distribution agreement was not assumed by Dean, then it is plausible that Foremost
would remain responsible for the sale of Foremost products to other distributors even after the
Foremost’s acquisition by Dean. Therefore, the court shall deny Foremost’s motion to dismiss this
alternative aspect of Fresh N’ Pure’s complaint.
This  question  about  whether  Foremost  might  be  liable  for  an  alleged  breach  of  the
distribution agreement after its acquisition by Dean, however, is relevant only if Dean is found to
not have assumed the distribution agreement. It is on this basis that Dean seeks to dismiss Fresh N’
Pure’s breach of contract claim against it.
On this claim against Dean, Fresh N’ Pure comes dangerously close to pleading itself out of
court. It alleges that Dean assumed the distribution agreement between Fresh N’ Pure and Foremost
when Dean purchased the assets of Foremost. (Docket No. 34 at ¶65.) Dean then allegedly breached
this agreement by subsequently selling Foremost products to other distributors. (Docket No. 34 at
¶65.) Fresh N’ Pure makes clear that the distribution agreement it had with Foremost was written,
(Docket No. 34 at ¶¶ 9, 12, 24, 27, 28, 56, 60, 62), but yet the only agreement between Fresh N’
Pure and Foremost that Fresh N’ Pure explicitly alleges Dean assumed was an “Oral Contract with
Fresh ‘N [sic] Pure Distribution of Streamwood, Illinois,” (Docket No. 34 at ¶22). The amended
complaint does not allege that this reference to an oral contract was mistaken and it actually referred
to the written distribution agreement, although Fresh N’ Pure does make this argument in its present
brief, (Docket No. 36 at 5).
16




Dean’s liability for any breach of the distribution agreement is dependent upon a finding that
Dean assumed this obligation of Foremost when it purchased the assets of Foremost, and thus
whether Fresh N’ Pure has adequately pled a breach of contract claim against Dean depends upon
whether it has adequately pled that Dean assumed the distribution agreement. Fresh N’ Pure does
explicitly allege that Dean assumed the distribution agreement between Foremost and Fresh N’
Pure, (Docket No. 34 at ¶65), but this is arguably simply a legal conclusion masquerading as a
factual allegation. Based upon the factual allegations contained in the amended complaint, Fresh N’
Pure has alleged that an oral contract between Fresh N’ Pure and Foremost was explicitly assumed
in  the  asset  purchase  agreement  and  the  distribution  agreement  was  undisputedly  written.
Consequently, Fresh N’ Pure has not adequately pled a claim for breach of contract, unless the
amended complaint contains additional allegations that would tend to support the conclusion that
Dean assumed the distribution agreement between Fresh N’ Pure and Foremost.
The court finds the requisite support for Fresh N’ Pure’s allegations in the portion of the
amended complaint where it alleges that its agents met with representatives of Dean and Foremost
following the acquisition and were assured that things would remain as they had been. (Docket No.
34 at ¶24.) Although not necessarily strong, this allegation read together with the remainder of the
amended complaint, including the fact that Foremost never notified Fresh N’ Pure that the written
distribution agreement would be terminated upon its acquisition by Dean, is nonetheless sufficient
to raise the reasonable inference that Dean assumed the distribution agreement. Therefore, Dean’s
motion to dismiss Fresh N’ Pure’s breach of contract claim shall be denied.
V. DEAN FOODS OF WISCONSIN, LLC AND DEAN TRANSPORTATION, INC.
Fresh N’ Pure added Dean Foods of Wisconsin, LLC and Dean Transportation, Inc. as
named defendants in the plaintiff’s amended complaint. Other than being identified as a Dean
subsidiary, (Docket No. 34 at ¶7), Dean Foods of Wisconsin, Inc. is not mentioned in the amended
17




complaint. As for Dean Transportation, Inc., the court previously discussed the alleged activities of
this Dean subsidiary in regard to plaintiff’s anti-trust claim. Dean notes in a footnote that the
amended complaint fails to address how these newly-named entities are part of this litigation,
(Docket No. 30 at fn.2), but these parties have not formally moved to be dismissed.
Simply being mentioned in a complaint is insufficient to make an entity a defendant.
Because the complaint is devoid of any basis for these entities to continue as defendants, especially
in regard to the remaining claim, the court on its own motion shall dismiss these defendants.
VI. CONCLUSION
Dean’s alleged refusal to do business with Fresh N’ Pure did not violate the Robinson-
Patman Act, and Fresh N’ Pure has failed to allege that Dean sold its products to a Fresh N’ Pure
competitor for less than what it charged Dean. Therefore, count three shall be dismissed.
Fresh N’ Pure has failed to offer any support for its claim under the Illinois Antitrust Act,
and therefore the court shall grant the motion to dismiss count four as unopposed. Even if the court
were to overlook Fresh N’ Pure’s lack of any substantive response to this aspect of Dean’s motion,
the court would nonetheless grant Dean’s motion to dismiss count four.
The court shall also dismiss Fresh N’ Pure’s tortious interference with contract claim against
Dean. Fresh N’ Pure has failed to allege that any contract existed between it and any distributor that
Dean refused to permit to sell to Fresh N’ Pure. As for the possibility that Dean tortiously interfered
with contracts that existed between Fresh N’ Pure and its customers, there is a question of whether
such a claim, which would arise under § 766A of the Restatement (Second) of Torts, is recognized
under Illinois law in the circumstances presented in this case. If such a claim was viable, Fresh N’
Pure has nonetheless failed to adequately plead the essential elements of this cause of action
because Fresh N’ Pure offers nothing but unsupported legal conclusions.
18




The court, however, will deny the defendants’ motions to dismiss the breach of contract
claims, which are counts one and two. Although lacking certain detail and clarity that the court
would ordinarily expect, the court nonetheless concludes that the claims are sufficient to clear the
relatively low threshold imposed at this stage of litigation.
Finally,  because  the  amended  complaint  is  devoid  of  any  basis  for  Dean  Foods  of
Wisconsin, LLC and Dean Transportation, Inc. to be defendants in this action, the court shall
dismiss these entities from this action.
IT IS THEREFORE ORDERED that Dean Foods Company’s motion to dismiss, (Docket
No. 30), is granted in part and denied in part. The motion to dismiss is denied as to count two of
the amended complaint and granted as to counts three, four, and five of the amended complaint.
IT IS FURTHER ORDERED that Foremost Farms USA’s motion to dismiss count one,
(Docket No. 31), is denied.
IT  IS  FURTHER  ORDERED  that  Dean  Foods  of  Wisconsin,  LLC  and  Dean
Transportation, Inc. are dismissed from this action.
The Scheduling Order, (Docket No. 33), entered on September 20, 2011 remains in effect.
Dated at Milwaukee, Wisconsin this 28th day of November, 2011.
AARON E. GOODSTEIN
U.S. Magistrate Judge
19

Download 28019.pdf

Wisconsin Law