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Leonel & Noel Corp. v. Cerveceria Centro Americana

April 13, 2009

LEONEL & NOEL CORP., PLAINTIFF,
v.
CERVECERIA CENTRO AMERICANA, S.A., CENTRAL BEER IMPORT & EXPORT INC., G. K. SKAGGS, INC., AND GREGORY SKAGGS, DEFENDANTS.



The opinion of the court was delivered by: Matthew F. Kennelly, District Judge

MEMORANDUM OPINION AND ORDER

Leonel & Noel Corp. (Tikal) has sued Cerverceria Centro Americana, S.A. (CCA), Central Beer Import & Export, Inc. (Central Beer), and G. K. Skaggs, Inc. (GKS) for breach of contract and violations of the Illinois Beer Industry Fair Dealing Act, 815 ILCS 720/1 et seq. (BIFDA). Tikal has also sued GKS and its president, Gregory Skaggs, asserting various other claims. GKS and Skaggs have moved for judgment on the pleadings. Central Beer has moved to dismiss.*fn1 For the reasons set forth below, the Court denies Central Beer's motion to dismiss. The Court dismisses count seven of Tikal's complaint but otherwise denies the GKS's and Skaggs' motions for judgment on the pleadings.

Factual Background

When considering a motion to dismiss or a motion for judgment on the pleadings, the Court accepts as true the complaint's factual allegations and draws reasonable inferences in favor of the plaintiff. See, e.g., Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614, 617 (7th Cir. 2007); Guise v. BMW Mortgage, LLC, 377 F. 795, 798 (7th Cir. 2004). The Court treats exhibits to a complaint as part of the complaint. Fed. R. Civ. P. 10(c). The Court is not bound by the parties' characterizations of the exhibits attached to the complaint and can independently examine those exhibits for inconsistencies between them and the parties' allegations. See, e.g., 188 LLC v. Trinity Indus., Inc., 300 F.3d 730, 735 (7th Cir. 2002); Rosenblum v. Travelbyus.com, Ltd., 299 F.3d 657, 661 (7th Cir. 2002).

Tikal is an Illinois corporation engaged in the business of importing and distributing food and liquor. Tikal is licensed to distribute beer in Illinois and several other states. CCA produces beer in Guatemala, some of which is sold in the United States. Around 1990, Tikal began to distribute and sell CCA's beers in several states. Rather than purchasing beer directly from CCA, Tikal would acquire CCA's products through an intermediary, Central Beer. Tikal contends that CCA asserts complete control over Central Beer's activities.

CCA and Central Beer confirmed Tikal's status as a distributor of five of CCA's beers in several states in a series of letters that were not signed by Tikal. See Compl. Ex. 1-3. Other than those letters, Tikal has not attached to its complaint any other contract for the period before 2003.

The relationship between Tikal and CCA/Central Beer proceeded smoothly until 2003. In late 2003, CCA and/or Central Beer entered into a "master license agreement" with GKS. Compl. ¶ 32. From that point forward, Tikal was required to purchase CCA's beers from GKS rather than from CCA or Central Beer. GKS thus became a "middleman," according to Tikal. Tikal agreed to this change in writing. See Compl. Ex. 5. Under the new arrangement that began in late 2003, Tikal's Illinois territory was treated differently from other states. In a letter agreement signed by both Tikal and Central Beer, Tikal was named the "exclusive Distributor" for five of CCA's beers in the "states of Ohio, Minnesota, North and South Dakota, Wisconsin and Nebraska." Id. The agreement also provided "Ordering and Payment: Orders are to be placed to G.K. Skaggs Inc. via fax or mail. Payment policies are those provided by G.K. Skaggs." Id. The letter was sent to Tikal's office in Chicago, Illinois.

Tikal signed a separate letter agreement with GKS regarding the Illinois territory. In that letter GKS appointed Tikal as its "distributor for the Guatemalan Beer brands within the state of Illinois." Compl. Ex. 4 at 1. The agreement required Tikal to place its orders with GKS. Though Central Beer was not a party to the letter agreement between Tikal and GKS, the bottom of the letter indicates that a copy of the letter was sent to Central Beer.

Tikal contends that GKS exploited its position for its own benefit and to Tikal's harm. That alleged conduct included artificially raising prices on CCA beer, marketing beer in at least one state, Wisconsin, in which Tikal had exclusive distribution rights, imposing unattainable sales quotas, refusing to sell two of CCA's products to Tikal, and lying to Tikal about whether CCA was still brewing certain beers. Tikal contends that GKS took these actions as part of a plan to take over the markets for CCA's beers that Tikal had expended money and years of effort to develop.

Effective December 31, 2006, CCA and/or Central Beer terminated Tikal as a distributor "in the states of Ohio, Minnesota, North Dakota, South Dakota, Wisconsin and Nebraska." Compl. ¶ 53. Tikal contends that this was done in bad faith and without good cause. On January 15, 2007, GKS terminated Tikal's distribution rights in Illinois, providing thirty-days notice. Similarly, Tikal contends there was no good faith basis for GKS to do so.

Discussion

The Seventh Circuit has emphasized that even after the Supreme Court's ruling in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), federal courts continue to adhere to a notice-pleading standard. E.g., Tamayo v. Blagojevich, 526 F.3d 1074, 1083-83 (7th Cir. 2008). "A plaintiff must still provide only enough detail to give the defendant fair notice of what the claim is and the grounds upon which it rests . . . ." Id. at 1083 (quotation omitted). A court may grant judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) only if the moving party demonstrates that based on the pleadings, there are no material issues of fact to be resolved and it is entitled to judgment as a matter of law. E.g., Bannon v. Univ. of Chicago, 503 F.3d 623, 628 (7th Cir. 2007).

1. Central Beer's Motion to Dismiss

a. Illinois Beer Industry Fair ...


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