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Heiman v. Bimbo Foods Bakeries Distribution Co.

United States District Court, N.D. Illinois, Eastern Division

October 18, 2017

John Heiman and JTE, Inc., Plaintiffs,
v.
Bimbo Foods Bakeries Distribution Co. f/k/a Bestfoods Baking Distribution Co., Defendant.

          MEMORANDUM OPINION AND ORDER

          MANISH S. SHAH UNITED STATES DISTRICT JUDGE.

         Plaintiffs, John Heiman and JTE, Inc., bring this action against defendant, Bimbo Foods Baking Distribution Company, for breach of contract and tortious interference. Defendant moves to dismiss the complaint. For the following reasons, the motion is granted.

         I. Legal Standards

         Federal courts are courts of limited jurisdiction and “have only the power that is authorized by Article III of the Constitution and the statutes enacted by Congress pursuant thereto.” Transit Express, Inc. v. Ettinger, 246 F.3d 1018, 1023 (7th Cir. 2001). The burden of establishing that a district court has proper jurisdiction lies with the plaintiff. Id. A defendant arguing that a plaintiff has not met this burden may move for dismissal under Federal Rule of Civil Procedure 12(b)(1). When reviewing a 12(b)(1) motion, “[t]he district court may properly look beyond the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject matter jurisdiction exists.” Grafon Corp. v. Hausermann, 602 F.2d 781, 783 (7th Cir. 1979).

         To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a complaint must contain factual allegations that plausibly suggest a right to relief. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The court must accept all factual allegations as true and draw all reasonable inferences in the plaintiff's favor, but need not accept legal conclusions or conclusory allegations. Id. at 678-79. Because “complaints need not anticipate and attempt to plead around defenses, ” it is uncommon for a court to dismiss a case for noncompliance with the statute of limitations. United States v. N. Trust Co., 372 F.3d 886, 888 (7th Cir. 2004). A motion to dismiss a claim as barred by the statute of limitations should be granted only where “the allegations of the complaint itself set forth everything necessary to satisfy the affirmative defense.” United States v. Lewis, 411 F.3d 838, 842 (7th Cir. 2005).

         II. Background

         Plaintiff, John Heiman, entered into a contract with defendant, Bimbo Foods Bakeries Distribution Company, in October 2000, to distribute baked goods in a designated area. [5] ¶¶ 2, 10.[1] Heiman was the founder and owner of JTE, Inc., through which he delivered the baked goods. Id. ¶¶ 2, 6. Heiman later formally assigned the contract to JTE. Id. ¶ 10. Heiman resided in Illinois, and JTE had its primary place of business in Schaumburg, Illinois. Id. ¶ 6. Bimbo Foods was a Delaware corporation with its primary place of business in Pennsylvania. Id. ¶ 7.[2]JTE was dissolved in 2014. Id. ¶ 6.

         The distribution agreement provided, in relevant part: “[Bimbo Foods] hereby recognizes DISTRIBUTOR'S ownership of the Distribution Rights, which ownership will continue until the Distribution Rights are sold or transferred as provided herein. . . . The parties agree that the Distribution Rights can be exercised only pursuant to the terms of this Agreement and that any termination of this Agreement requires DISTRIBUTOR or [Bimbo Foods], for the account of DISTRIBUTOR, to sell Distribution Rights as provided herein.” Id. ¶ 11. The agreement distinguished between curable and non-curable breaches. Id. ¶ 12. For curable breaches, Bimbo Foods was required to give Heiman three days' written notice to cure. Id. Non-curable breaches, which included those involving criminal activity or fraud, threats to public health or safety, and threats to do significant harm to Bimbo Foods, its trademark, or reputation, did not require notice or an opportunity to cure. Id. Repeated curable violations constituted a non-curable breach by threatening significant harm to Bimbo Foods and its reputation. Id. The distribution rights were secured by a note for $50, 600. Id. ¶ 13. The agreement also contained a choice-of-law provision, providing that New York law would govern disputes arising under the contract. [5-1] at 17.

         JTE substantially performed its obligations through January 13, 2011. [5] ¶ 14. In the spring of 2008, JTE alleges, Bimbo Foods, through its employees, began fabricating curable breaches by JTE, including false reports of poor service and out-of-stock products at stores in JTE's distribution area. Id. ¶ 16. Bimbo Foods employees removed JTE-delivered products from customer shelves or pushed the products to the side or back to photograph the empty shelves. Id. ¶ 17. On one occasion, a distributor caught a Bimbo Foods district manager removing products from a shelf and taking a photograph. Id. ¶ 18. When caught, Bimbo Foods assured JTE it would never happen again. Id. But unbeknownst to JTE, Bimbo Foods continued these tactics. Id. Bimbo Foods also spread false statements regarding the quality of JTE's service to damage JTE's reputation and devalue its distribution rights. Id. ¶ 19. These actions were part of Bimbo Foods' larger scheme to intimidate its distributors into selling their routes to new operators, who would earn lower commissions (18 percent, as opposed to the 22-percent commission distributors received under older agreements, like JTE's). Id. ¶ 22. JTE alleges that the breaches Bimbo Foods asserted against it were fabricated to pressure JTE into selling its distribution rights against its will. Id. ¶ 24.

         When JTE refused to sell its distribution rights in January 2011, Bimbo Foods breached the distribution agreement and terminated JTE's distribution rights, citing multiple fabricated, curable breaches. Id. ¶¶ 25, 33-36. Later that year, around September, Bimbo Foods caused JTE to sell a portion of its distribution rights, and in October, caused the sale of the remainder. Id. ¶ 26. The second purchaser bounced the check for the purchase of his portion, and JTE received significantly below fair-market value for the sale. Id. ¶¶ 27-28. JTE first discovered Bimbo Foods' scheme in late 2013 or early 2014. Id. ¶ 22.

         JTE alleges that Bimbo Foods' termination of the distribution agreement expressly violated the terms of that agreement and that fabricating breaches to force JTE to sell its distribution rights breached the implied covenant of good faith and fair dealing. Id. ¶ 39. JTE also alleges that Bimbo Foods caused JTE's rights to be sold for less than fair-market value, in violation of the agreement. Id. ¶ 41. And, JTE states, Bimbo Foods tortuously interfered with its relationships with stores in its distribution area with the intent to harm JTE's relationships and drive down the value of its distribution route. Id. ¶ 46.

         III. Analysis

         Bimbo Foods moves to dismiss Heiman's claims pursuant to Rule 12(b)(1), arguing that Heiman lacks standing. Bimbo Foods also moves to dismiss all claims by both Heiman and JTE under Rule 12(b)(6), as barred by the applicable statutes of limitations. Illinois law governs the analysis, and the motion to dismiss is granted.

         A. ...


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