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Leonel & Noel Corp v. Cerveceria Centro Americana

December 20, 2010

LEONEL & NOEL CORP., PLAINTIFF,
v.
CERVECERIA CENTRO AMERICANA, S.A., CENTRAL BEER IMPORT & EXPORT, INC., GK 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), G.K. Skaggs, Inc. (GKS), and GKS president Gregory Skaggs for breach of contract, unjust enrichment, tortious interference with contract and business expectancy, and violations of the Illinois Beer Industry Fair Dealing Act, 815 ILCS 720/1 et seq. (BIFDA), the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505 (ICFA), and section 43(a) of the Lanham Act, 11 U.S.C. § 1125(a).

The defendants other than CCA*fn1 have moved for summary judgment. Each side has also moved to strike various paragraphs in the opposing side's Local Rule 56.1 statement. For the reasons below, the Court grants in part and denies in part the motion for summary judgment and denies the motions to strike.

Factual Background

The Court takes the following facts from the allegations in Tikal's second amended complaint and from the parties' submissions on the summary judgment motion.

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 beers in several states. Rather than purchasing beer directly from CCA, Tikal acquired CCA's products through an intermediary, Central Beer. Tikal contends that CCA asserts complete control over Central Beer's activities.

The relationship between Tikal and CCA/Central Beer proceeded smoothly until 2003. In late summer 2003, CCA and/or Central Beer entered into a "master license agreement" with GKS. 2d Am. Compl. ¶ 32. GKS informed Tikal of the agreement in October 2003 and stated that, as a result, "El Tikal Imports will begin working directly with G.K. Skaggs for . . . product ordering." Letter from Gregory Skaggs, President of GKS, to Leonel Mendia, President of Tikal (October 23, 2003). Subsequently, GKS and Central Beer allegedly requested that Tikal accept inferior terms, including reduced territories. Tikal agreed with the terms requested by GKS and Central Beer in January 2004 but claims to have done so because GKS withheld an October 2003 order until Tikal acquiesced. 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.

In a letter agreement signed by 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." See 2d Am. Compl., Ex. 5. 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 appointing Tikal as GKS's "distributor for the Guatemalan Beer brands within the state of Illinois." 2d Am. Compl., Ex. 4 at 1. The agreement assigned Tikal an "exclusive territory . . . within the state of Illinois" consisting of twelve counties and required that Tikal place its orders with GKS. Id. 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 alleges that CCA, Central Beer, and GKS immediately began planning to terminate Tikal in bad faith. See, e.g., Nov. 25, 2003 e-mail from Cory Strauder to Juan Pedro Morales (attaching draft termination letter to be sent to Tikal "at the time we are ready to appoint a new distributor in the Illinois market"); Dec. 12, 2005 e-mail from Gregory Skaggs to Chris Garoutte and Juan Pedro Morales (stating that "[a] territorial reduction, price increase (announced last summer), increased volumes (along with your marketing plan idea) along with the freshness issue should create sufficient cause" to terminate Tikal).

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." 2d Am. 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. Tikal contends there was no good faith basis for GKS to do so. Tikal filed suit against CCA, Central Beer, GKS, and Gregory Skaggs on September 29, 2008.

Discussion

A. Summary Judgment Standard

Summary judgment is proper when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). On a motion for summary judgment, the Court draws all reasonable inferences in favor of the non-moving party. Id.; Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The Court's "function is not to weigh the evidence but merely to determine if there is a genuine issue for trial."

Bennett v. Roberts, 295 F.3d 687, 694 (7th Cir. 2002). "Summary judgment is not appropriate 'if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Payne v. Pauley, 337 F.3d 767, 770 (7th Cir. 2003) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)).

All parties appear to assume that Illinois law governs Tikal's claims. Accordingly, the Court will apply Illinois law for purposes of the defendants' motion. See Interim Health Care of N. Illinois v. Interim ...


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