746 F.3d 1008 (11th Cir. 2014), 12-14527, Winn-Dixie Stores, Inc. v. Dolgencorp, LLC

Docket Nº:12-14527, 12-14742, 12-14825, 13-10891, 13-12735, 13-12736
Citation:746 F.3d 1008
Opinion Judge:MARCUS, Circuit Judge
Party Name:WINN-DIXIE STORES, INC., WINN-DIXIE STORES LEASING, LLC, et al., Plaintiffs - Appellants, v. DOLGENCORP, LLC, f.k.a. Dolgencorp, Inc, a Kentucky corporation, Defendant - Appellee. WINN-DIXIE STORES, INC., WINN-DIXIE STORES LEASING, LLC, et al., Plaintiffs - Appellants Cross Appellees, v. DOLLAR TREE STORES, INC., a Virginia corporation, Defendant -
Attorney:For WINN-DIXIE MONTGOMERY LEASING, LLC, WINN-DIXIE STORES, INC., WINN-DIXIE STORES LEASING, LLC, WINN-DIXIE RALEIGH, INC., WINN-DIXIE RALEIGH LEASING, LLC, WINN-DIXIE MONTGOMERY, LLC, Plaintiffs - Appellant-Cross Appellees (12-14527): Dean Angelo Morande, Thomas Edward Warner, Ryan Cobbs, Carlton...
Judge Panel:Before MARCUS and FAY, Circuit Judges, and HODGES,[*] District Judge.
Case Date:March 05, 2014
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit
 
FREE EXCERPT

Page 1008

746 F.3d 1008 (11th Cir. 2014)

WINN-DIXIE STORES, INC., WINN-DIXIE STORES LEASING, LLC, et al., Plaintiffs - Appellants,

v.

DOLGENCORP, LLC, f.k.a. Dolgencorp, Inc, a Kentucky corporation, Defendant - Appellee.

WINN-DIXIE STORES, INC., WINN-DIXIE STORES LEASING, LLC, et al., Plaintiffs - Appellants Cross Appellees,

v.

DOLLAR TREE STORES, INC., a Virginia corporation, Defendant - Appellee Cross Appellant.

WINN-DIXIE STORES, INC., WINN-DIXIE STORES LEASING, LLC, et al., Plaintiffs - Appellants Cross Appellees,

v.

BIG LOTS, INC., an Ohio corporation, Defendant - Appellee Cross Appellant

Nos. 12-14527, 12-14742, 12-14825, 13-10891, 13-12735, 13-12736

United States Court of Appeals, Eleventh Circuit

March 5, 2014

Page 1009

[Copyrighted Material Omitted]

Page 1010

[Copyrighted Material Omitted]

Page 1011

[Copyrighted Material Omitted]

Page 1012

[Copyrighted Material Omitted]

Page 1013

[Copyrighted Material Omitted]

Page 1014

Appeals from the United States District Court for the Southern District of Florida. D.C. Docket Nos. 9:11-cv-80601-DMM, 9:11-cv-80638-DMM. D.C. Docket No. 9:11-cv-80638-DMM. D.C. Docket No. 9:11-cv-80641-DMM.

For WINN-DIXIE MONTGOMERY LEASING, LLC, WINN-DIXIE STORES, INC., WINN-DIXIE STORES LEASING, LLC, WINN-DIXIE RALEIGH, INC., WINN-DIXIE RALEIGH LEASING, LLC, WINN-DIXIE MONTGOMERY, LLC, Plaintiffs - Appellant-Cross Appellees (12-14527): Dean Angelo Morande, Thomas Edward Warner, Ryan Cobbs, Carlton Fields Jorden Burt, PA, WEST PALM BEACH, FL.

For DOLGENCORP, LLC, f.k.a. Dolgencorp, Inc, a Kentucky corporation, BIG LOTS STORES, INC., an Ohio corporation, Defendants - Appellees (12-14527): Shakara Barnes, Brian P. Watt, William N. Withrow, Jr., Troutman Sanders, LLP, ATLANTA, GA; Michael Virgil Elsberry, I, Rebecca E. Rhoden, Wayne " Drew" Sorrell, II, Lowndes Drosdick Doster Kantor & Reed, PA, ORLANDO, FL.

For DOLLAR TREE STORES, INC., Defendant - Appellee-Cross Appellant (12-14527): Jeffrey Michael Berman, Steve Ian Silverman, Marilyn Golub Kohn, Jonathan Korin, Michael T. Landen, Kluger Kaplan Silverman Katzen & Levine, PL, MIAMI, FL.

For WINN-DIXIE STORES, INC., WINN-DIXIE STORES LEASING, LLC, WINN-DIXIE RALEIGH LEASING, LLC, WINN-DIXIE RALEIGH, INC., WINN-DIXIE MONTGOMERY, LLC, Plaintiffs - Appellees (13-10891): Dean Angelo Morande, Ryan Cobbs, Thomas Edward Warner, Carlton Fields Jorden Burt, PA, WEST PALM BEACH, FL.

For DOLLAR TREE STORES, INC., Defendant - Appellant (13-10891): Steve Ian Silverman, Jeffrey Michael Berman, Lindsay Beth Haber, Marilyn Golub Kohn, Michael T. Landen, Kluger Kaplan Silverman Katzen & Levine, PL, MIAMI, FL.

For DOLGENCORP, LLC, f.k.a. Dolgencorp, Inc, BIG LOTS STORES, INC., Defendants - Appellants (13-10891): William N. Withrow, Jr., Shakara Barnes, Brian P. Watt, Troutman Sanders, LLP, ATLANTA, GA; Michael Virgil Elsberry, I, Rebecca E. Rhoden, Wayne Andrew Sorrell, II, Lowndes Drosdick Doster Kantor & Reed, PA, ORLANDO, FL.

For NORTHEAST PLAZA VENTURE I, LLC (13-10891): Jemaine A. Lee MIAMI, FL; Michael Li Puma PHILADELPHIA, PA.

For AVON SQUARE, LTD, Defendant (13-10891): Sergiu Gherman, Gherman Legal PLLC, MIAMI, FL.

For SARRIA HOLDINGS IV, INC., Defendant (13-10891): Alan Michael Burger, McDonald Hopkins, LLC, WEST PALM BEACH, FL.

For SERVICE (13-10891): Shawn David Arbeiter, Suzanne Marie McLean, Webber Hinden & McLean, PA, DAVIE, FL; Robert Alan Brandt, Attorney at Law, NORTH MIAMI, FL; Jessica Serell Erenbaum, Genovese Joblove & Battista, PA, MIAMI, FL; Michelle Garcia Gilbert, Gilbert Garcia Group, PA, TAMPA, FL; Cristopher Stephen Rapp, Robert William Wilkins, Jones Foster Johnston & Stubbs, PA, WEST PALM BEACH, FL; Darryl R. Richards, Johnson Pope Bokor Ruppel & Burns, LLP, TAMPA, FL.

Before MARCUS and FAY, Circuit Judges, and HODGES,[*] District Judge.

OPINION

Page 1015

MARCUS, Circuit Judge

When a Winn-Dixie supermarket signs on to anchor a shopping center, its lease often contains a restrictive covenant sharply limiting grocery sales by other tenants. In this complex lawsuit, Winn-Dixie claimed that, since 2005, it suffered more than $90 million in lost profits because Defendants Dollar General, Dollar Tree, and Big Lots violated, and continue to violate, these restrictive covenants. Trial involved ninety-seven of Defendants' stores across five southeastern states. The district court handled this complicated case with thought and skill.

For fifty-four stores, the district court reached the question of whether the Defendants violated the terms of the restrictive covenants, whose standard language for most stores limited the sale of " staple or fancy groceries" to a discrete " sales area." Applying general principles of Florida law, the district court construed these terms narrowly, reading groceries as only food items and measuring sales area only by shelving space. As a result, the court refused to order injunctions for thirty-seven stores where it found no violation of the terms of the covenants. As for the seventeen other stores, the court issued injunctive relief that limited only the sale of food items measured by shelving space. Being Erie-bound to apply state rules of decision in this diversity jurisdiction case, we must reverse and remand as to the fifty-four stores. We do so for forty-one of these stores found in Florida, compelled by an intermediate appellate decision from that state interpreting a restrictive covenant materially identical to many of those at issue here. See Winn-Dixie Stores, Inc. v. 99 Cent Stuff-Trail Plaza, LLC, 811 So.2d 719 (Fla. 3d DCA 2002). As we read controlling Florida law, " groceries" broadly includes food and " many household supplies (as soap, matches, paper napkins)," and sales area " includes fixtures and their proportionate aisle space." Id. at 722 (emphasis added). Also, for eleven stores in Alabama and two found in Georgia, we are required to reverse and remand for interpretation of the covenant terms in accordance with the appropriate law of each of those states.

For the remaining forty-three stores, the district court denied all relief for a variety of reasons, without deciding whether the Defendants had violated covenant terms. Finding no error, we affirm the judgment of the district court as to these forty-three stores. To begin with, the district court acted well within its considerable discretion in excluding the testimony of Dr. Pacey, Winn-Dixie's expert on damages, based on twin findings that the expert opinion would not assist the trier of fact and was not grounded in reliable methodology. As a result, the court made no error in refusing to award compensatory damages as to any of the stores. Nor did the court err in finding that the restrictive covenants were unenforceable under

Page 1016

the laws of Louisiana and Mississippi, or in refusing to allow Winn-Dixie to enforce a covenant in a grocery store lease created after a Defendant's lease had been signed. Moreover, the trial court made no error in refusing to recognize collateral estoppel because this case involves different stores with different leases signed at different times from the lease for the one store at issue in the prior Florida decision. And the district court did not abuse its discretion in denying punitive damages because a legitimate dispute about the meaning of the grocery exclusives indicated that the Defendants did not intentionally engage in misconduct or act in a grossly negligent manner.

The cross-appeals lodged by Big Lots and Dollar Tree lack merit. As the district court concluded, Big Lots need not have signed the restrictive covenants to be bound by them because section 542.335 of the Florida Statutes does not apply to covenants running with the land. The district court also properly concluded that Big Lots' landlords were not indispensable parties under Federal Rule of Civil Procedure 19(a)(1), and that Winn-Dixie was not required to make a pre-suit demand for compliance upon Big Lots under Florida law. Finally, the district court did not err in granting summary judgment against Dollar Tree's statute of limitations affirmative defense; in Florida, a continuing violation principle applies because the Defendants' stores engaged in ongoing grocery sales.

Thus, we affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.

I.

Plaintiffs (" Winn-Dixie" ) own or operate roughly 500 supermarkets or grocery stores on leased property throughout Alabama, Florida, Georgia, Louisiana, and Mississippi. Most of their stores are found in Florida. Defendants, in turn, run discount general merchandise stores, some of which are colocated in shopping centers featuring a Winn-Dixie supermarket as an anchor tenant. Dolgencorp, LLC (" Dollar General" ) is a Kentucky limited liability company with over 9,600 stores in 36 states. Dollar Tree Stores, Inc. (" Dollar Tree" ) is a Virginia corporation that operates more than 4,400 stores in 48 states. Big Lots Stores, Inc. (" Big Lots" ) is an Ohio corporation that runs over 1,400 stores in 48 states.

Winn-Dixie's commercial leases often include a " grocery exclusive" provision that precludes landlords from renting to other tenants who operate grocery stores in the same shopping center. Many of the leases specify that these tenants may devote a limited " sales area" to certain restricted products, including " staple or fancy groceries." Winn-Dixie argued that these grocery exclusives bind subsequent tenants as covenants running with the land. Based on reports of estimated sales activity compiled by its investigators, Winn-Dixie concluded that a number of colocated Dollar General, Dollar Tree, and Big Lots stores operate in violation of the restrictive...

To continue reading

FREE SIGN UP