Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

MS PRODUCE, INC. v. BURGER KING CORPORATION

May 8, 2003

MS PRODUCE, INC., PLAINTIFF,
v.
BURGER KING CORPORATION; RESTAURANT SERVICES, INC. AND REINHART FOODSERVICE, INC., DEFENDANTS.



The opinion of the court was delivered by: John W. Darrah, Judge, United States District Court

MEMORANDUM OPINION AND ORDER

Plaintiff, MS Produce, Inc. ("Plaintiff"), filed a three-count complaint against Defendants, Burger King Corporation ("Burger King"); Restaurant Services, Inc. ("RSI"); and Reinhart Foodservice, Inc. ("Reinhart"), alleging tortious interference with contract (Count I), tortious interference with business relationships (Count II), and conspiracy to tortiously interfere (Count III), Burger King and RSI move, pursuant to Federal Rule of Civil Procedure 12(b)(6), to dismiss the complaint. For the reasons that follow, Burger King's and RSI's Motions to Dismiss are denied.

LEGAL STANDARD

When considering a motion to dismiss, well-pleaded allegations in the complaint are accepted as time. Turner/Ozanne v. Hyman/Power, 111 F.3d 1312, 1319 (7th Cir. 1997). Any ambiguities in the complaint are construed in favor of the plaintiff Kelly v. Crosfield Catalysts, 135 F.3d 1202, 1205 (7th Cir. 1998). Dismissal is proper only when it appears beyond doubt that Plaintiff can prove no set of facts to support the allegations in his or her claim. Strasburger v. Board of Education, 143 F.3d 351, 359 (7th Cir. 1998).

"Although the Federal Rules of Civil Procedure do not require a plaintiff "to set out in detail the facts upon which he bases his claim," . . . he must `set out sufficient factual matter to outline the elements of his cause of action or claim, proof of which is essential to his recovery.'" Benson v. Cady, 761 F.2d 335, 338 (7th Cir. 1985) (internal citation omitted). A complaint will not avoid dismissal if it contains "bare legal conclusions" absent facts outlining the basis of the claims. Perkins v. Silverstein, 939 F.2d 463, 467 (7th Cir. 1991).

BACKGROUND

For purposes of these Motions to Dismiss, the following allegations are taken as true.

Plaintiff is an Illinois corporation with its principal place of business in Lyons, Illinois. Burger King is a Florida corporation with its principal place of business in Miami, Florida. RSI is a Delaware corporation with its principal place of business in Coral Gables, Florida. Reinhart is a Wisconsin corporation with its principal place of business in LaCrosse, Wisconsin.

Burger King is one the largest restaurant operators in the world. RSI was formed by Burger King and Burger King franchisees in 1991 to act as their exclusive purchasing agent for all Burger King restaurants in the United States. RSI negotiates contracts annually with a select number of Burger King-approved vendors and distributors. These approved vendors sell approved products at approved prices to approved distributors, The approved distributors approved products in various areas of the country to Burger King restaurants at final selling prices approved by Burger King and RSI. One of the approved products that is sold to Burger King franchisees is produce, which includes onions, lettuce and tomatoes.

Reinhart is a Burger King approved distributor who sells products to most of the Burger King restaurants owned and operated by AmeriKing, a Delaware corporation that is one of the largest franchisees of Burger King restaurants.

Plaintiff is a wholesale produce distribution company. Beginning in or around 1999, Plaintiff's employees approached AmeriKing, introducing Plaintiff's produce program as a way to improve AmeriKing's overall produce quality and service levels and provide significant savings. Beginning in 2000, Plaintiff's president, James J. Kubeck, discussed the produce program with Larry Jaro, the then-Chairman and Chief Executive Officer of AmeriKing. Kubeck told Jaro that the produce program would allow AmeriKing to share Plaintiff's profits by joint venturing in a non-produce procurement, distribution and pricing system, which would be developed after establishing its produce program at AmeriKing. In or around late 2000, Kubeck and Jaro began negotiating a contract.

In February 2001, Plaintiff received a trial contract*fn1 from AmeriKing, which provided for Plaintiff to supply produce to forty-one Chicagoland Burger King restaurants owned and operated by AmeriKing for three months. Subsequently, these restaurants reported produce of superior quality and better service at a cheaper price. Due to the favorable results of the trial contract, the trial contract was extended to a month-to-month arrangement.

At that time, Plaintiff was not an approved vendor. On or around May 1, 2001, AmeriKing informed Plaintiff that Plaintiff would receive Burger King's and RSI's approval if a Burger King sponsored and supervised inspection found Plaintiff's facility complied with Burger King/RSI regulations. On or around May 22, 2001, Ken Fittz, a Burger King employee, inspected Plaintiff's facility. Fittz stated that he did not want Plaintiff to receive Burger King/PSI approval. After the inspection, Fittz instructed Plaintiff to make approximately $10,000.00 worth of facility changes and further instructed Plaintiff to alter the way it received product recall protocols. Plaintiff made the changes.

After Fittz's inspection, Redi-Cut Foods, Inc., a Burger King/PSI-approved vendor, refused to do any business with Plaintiff due to its "non-approved" status; but Redi-Cut later admitted that it had been instructed by Burger King and RSI not to sell to Plaintiff, specifically mentioning Fittz by name. Due to Redi-Cut's refusal to do business with Plaintiff, Plaintiff incurred greater transportation costs to obtain its produce elsewhere as well as other unnecessary procurement and operational challenges. Additionally, Plaintiff was unable to purchase produce in boxes bearing the Burger King logo because it was not an approved distributor.

On August 12, 2001, Kubeck sent Jaro a letter, which stated that a new contract would be ready as soon as AmeriKing was prepared to sign it. On August 23, 2001, Jaro, on behalf of AmeriKing, entered into two contracts with Plaintiff, one entitled "MS Produce, Inc. Credit, Terms and Account Conditions Letter" and another styled simply "Agreement". The Credit, Terms and Account Conditions Letter stated (with the included emphasis):

Pursuant to this Letter, the attached Agreement and Attachment A, which are incorporated herein, and subject to MS Produce, Inc. 1.) Attaining and maintaining an approved distributor status with Burger King Corporation, and 2.) AmeriKing-Burger King's positive performance evaluation of MS Produce, Inc.'s produce product/quality and 6A-3P deliver time service levels, MS Produce, Inc. will exclusively serve all AMERIKING-BURGER KING/CHICAGO, IL. AREA RESTAURANT locations between August 27, 2001 and December 31, 2005. This Letter, the attached Agreement and Attachment A, can be cancelled by either/both parties, at any time, for any reason(s), with ninety . . . Days written notice to the other party, and is binding upon both pates' successors, heirs and assigns. However, MS Produce, Inc. must attain and maintain an approved distributor status with Burger King Corporation. In the event that MS Produce, Inc. does not attain, or attains and then loses its approved distributor status from Burger King Corporation, or does not perform to acceptable produce product/quality and 6A-3P delivery time service levels, AmeriKing-Burger King can cancel this Letter and the attached Agreement with twenty . . . days written notice to MS Produce, Inc. . . .
(RSI's Mem. Supp. Mot. Dismiss Ex. C) (footnote omitted, Plaintiff continued to serve AmeriKing's Chicagoland restaurants.

On August 31, 2001, Bruce Burnham, an employee of Burger King, informed Plaintiff in a letter that it had achieved approved distributor status. The August 31, 2001 letter noted that such approval (1) was limited to a twelve-month expanded test, beginning September 1, 2001; (2) required Plaintiff to "source" produce from suppliers in Burger King's Approved Brands List and to deliver the produce in boxes bearing the Burger King logo; and (3) required Plaintiff to participate in inspections of its facilities.

On September 7, 2001, Burnham sent another letter, which revoked Plaintiff's approved distributor status effective September 11, 2001. The September 7, 2001 letter stated that:

[i]t has come to my attention that MS Produce has been soliciting business from Burger King franchised restaurants other than those owned by AmeriKing, Inc. These activities are in direct violation of the terms set forth in my August 31, 2001 letter to you which govern. MS Produce's approval to distribute produce to certain Burger King restaurants on a limited test basis.
Therefore, Burger King Corporation . . . has decided to place the produce distribution test on hold. Effective Tuesday September 11th, MS Produce is no longer approved to distribute or sell produce to the Burger King restaurant system. [Burger King] will further evaluate whether to continue the produce test and notify you of its decision as soon as possible.
(Burger King's Mem. Supp. Mot. Dismiss Ex. D.) However, some of these franchisees had contacted Kubeck as early as 1999. The revocation of Plaintiff's approved distributor status occurred as a result of Reinhart's pressure on RSI to eliminate Reinhart's competitors.

When Kubeck contacted Burnham upon receiving the September 7, 2001 letter, it was made clear that "outside forces" and "inside bureaucrats" were seeking to interfere with Plaintiff's growth and its contract with AmeriKing. AmeriKing ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.