Crux of Court’s Decision (Not including any subsequent appeals):
Dealer claimed that the Teamsters converted the Dealer’s Territory. The United States District Court for the District of Kansas refused to dismiss the Plaintiff Dealer’s claims that the Teamsters converted the dealer’s territory. The Court held that the Plaintiff sufficiently alleged in its Complaint that with full knowledge of his exclusive distribution rights, the Teamsters conspired with BIMBO, the franchisor/distributor, to have union drivers take over and abruptly terminate plaintiff’s routes.
Facts as Alleged Underlying Court’s Decision (Not including any subsequent appeals):
Bimbo Foods, Bimbo Bakeries and their predecessors (collectively, “BIMBO”) sold individuals and small businesses the exclusive right to sell and distribute certain bakery products throughout the United States, including the Greater Kansas City Area. Specifically, BIMBO’s business model for product distribution involved the formation and operation of an “Independent Operator (IO) Distribution Network” in which BIMBO sold independent distributors the exclusive right to purchase, resell and distribute its bakery products. Under the agreement, plaintiff’s exclusive distribution rights were to continue until such time as plaintiff voluntarily sold or transferred such rights. In 2011, BIMBO’s parent company, Mexico-based “Grupo Bimbo, S.A.B. de C.V.,” purchased Sara Lee Corporation’s North American fresh bakery business, which resulted in overlapping distribution routes with BIMBO’s existing IO distribution network. The Sara Lee distribution model relied on union employee drivers. In 2017, BIMBO negotiated for the drivers of Teamsters to take over the routes owned by plaintiff and other independent route owners in the Kansas City Area. Teamsters knew that BIMBO had not properly acquired the distribution rights from the independent distributors. Although BIMBO had not acquired plaintiff’s exclusive right to distribute BIMBO products, BIMBO and Teamsters have nevertheless taken over operation of plaintiff’s route. BIMBO disclosed to Teamsters confidential information regarding customer data and customer lists for the sale of baked goods to outlets in plaintiff’s exclusive sales area.
Name of Court:
United States District Court for the District of Kansas
Short Case Name:
Andrewjeski v. Bimbo Foods Bakeries
Primary Legal Claims by Franchisor:
Teamsters asserts that plaintiff has not shown that the sales representatives and/or sales professionals working in his route are agents of the Union. Teamsters asserts that such individuals are agents of BIMBO, not the Union, and that the Union has not acquired possession, ownership, or control of the plaintiff’s distribution route.
Primary Legal Claims by Franchisee:
Plaintiff alleges that with full knowledge of his exclusive distribution rights, Teamsters entered into an agreement with BIMBO for its drivers to take over the distribution of BIMBO products in plaintiff’s route. Plaintiff asserts that by agreeing with BIMBO to convert his distribution rights — and by providing drivers to do so — Teamsters conspired with BIMBO to convert his property and actively participated in converting his property and tortiously interfering with Plaintiff’s contract rights.
Some Detail of Court’s Decision (Not including any subsequent appeals):
Plaintiff asserts that with full knowledge of his exclusive distribution rights, Teamsters conspired with BIMBO to have union drivers take over plaintiff’s routes. On this record, plaintiff has sufficiently alleged that Teamsters engaged in intentional misconduct. The Court overrules defendant’s motion on this ground. Plaintiff adequately alleged that defendants misappropriated trade secrets which included his customer lists, customer data, and/or information which plaintiff exclusively possessed regarding customer business needs and operations and/or methods for servicing customer needs and wishes.
Interesting Factual Point:
The case at this early stage seems to suggest that the plaintiff and other distributors were simply “fired” or terminated with no notice or offer of compensation.
Interesting Theoretical Point:
The plaintiff distributor pled ten counts or claims, and not one of them was dismissed upon the motion to dismiss; a rare occurrence. Also, the Court’s discussion of the Economic Loss Doctrine is insightful.
Jeff Goldstein’s Comment:
The Court applied what might be viewed as a very liberal standard for examining the allegations in the Complaint; in my view, putting aside issues of judicial congestion, the Court applied the ‘motion to dismiss’ standard as it was originally intended to be applied when developed. All of the plaintiff’s claims were permitted to proceed to the next level.
Official Case Name and Legal Cite:
Andrewjeski v. Bimbo Foods Bakeries Distribution, LLC, No. 18-2425-KHV, 2019 U.S. Dist. LEXIS 87523 (D. Kan. May 23, 2019)
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