The opinion of the court was delivered by: McDADE, District Judge.
Before the Court is a Report and Recommendation that
Defendants' Motion to Dismiss Plaintiff's Amended Complaint be
Denied. Defendant has filed an objection to the Recommendation;
therefore, pursuant to 28 U.S.C. § 636(b)(1), the Court will
conduct a de novo review of those portions of the
recommendation to which objections were made.
To sustain a dismissal of allegations under Fed.R.Civ.P.
12(b)(6), the Court must take all well-pleaded allegations as
true and construe the Complaint in the light most favorable to
the Plaintiff to determine whether Plaintiff is entitled to
relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99,
101-02, 2 L.Ed.2d 80 (1957). "The issue is not whether
Plaintiff will prevail but whether the [Plaintiff] is entitled
to offer evidence to support the claim." Scheuer v. Rhodes,
416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974).
Plaintiff is an Illinois corporation with its principal place
of business in Rock Island, Illinois. Plaintiff promotes,
sells, and distributes spirits, beer, and wine to taverns,
restaurants, and retail liquor outlets throughout western
Illinois. Defendant is an Indiana corporation with its
principal place of business in New York. Defendant imports and
produces spirits and wines for distribution and sale throughout
the United States. (Amended Complaint, p. 1). The Court has
jurisdiction over this case pursuant to 28 U.S.C. § 1332
because the parties are of diverse citizenship, and the amount
in controversy is alleged to exceed $50,000.00. Venue is proper
in this district and division because a substantial part of the
events giving rise to the claim are alleged to have occurred in
this district and division.
Since 1965, Plaintiff has distributed Defendant's products,
earning substantial income and profits from its efforts on
Defendant's behalf. The relationship between the parties has
been governed by a series of oral and written agreements
pursuant to which Plaintiff was granted distribution rights for
Defendant's spirits. (Id. at 2).
On February 1, 1988, the parties entered into a written
distribution agreement which provided, in part, as follows:
This Agreement shall expire on January 31, 1989.
If Company does not intend to renew this Agreement
or enter into another agreement with Distributor
upon the expiration hereof, or upon the expiration
of any renewal agreement. Company shall give
Distributor at least thirty (30) days advance
written notice on such intention, and this
Agreement shall expire at the end of said thirty
(30) day notice period. If Company fails to give
said notice, then this Agreement shall continue in
full force and effect on a month-to-month basis
until such time as said notice is given and for
thirty (30) days thereafter, at which time this
Agreement shall expire.
(Amended Complaint, Ex. A, p. 23).
On February 4, 1989, Defendant notified Plaintiff that the
agreement would remain in full force and effect from month to
month until a written notice of termination was given. Notice
would be given at least 30 days prior to termination of the
agreement. (Amended Complaint, Ex. B).
During the following years, Plaintiff operated its business
according to Defendant's policies and requirements. In 1991,
Plaintiff sold Defendant's spirits with a value of more than
$1,100,000.00 wholesale to its customers. The sales constituted
a significant portion of Plaintiff's sales and profits.
(Amended Complaint p. 3).
Plaintiff's Amended Complaint is in four counts. Counts I and
II allege causes of action under the Illinois Franchise
Disclosure Act, Ill.Rev.Stat., ch. 121 1/2, para. 1701 et seq.
These counts allege unlawful termination of a franchise
agreement. Counts III and IV are Illinois common-law counts
alleging breach of implied covenant of good faith and
intentional interference with business relationships resulting
from the termination of the distribution agreement.
In its Motion to Dismiss, Defendant argued that Counts I and
II fail because the written agreement has not been breached and
that the Illinois Franchise Act does not apply to this case.
Defendant further argued that Counts III and ...