Assalone v. S-L Distribution Co.

• Decision Date: 17 October 2013
• Docket Number: Civil Action No. 1:12–CV–2395.
• Parties: John A. ASSALONE, et al., Plaintiffs v. S–L DISTRIBUTION COMPANY, INC., f/k/a Soh Distribution Company, Inc., Defendants.
• Court: U.S. District Court — Middle District of Pennsylvania

978 F.Supp.2d 427

John A. ASSALONE, et al., Plaintiffs

v.S–L DISTRIBUTION COMPANY, INC., f/k/a Soh Distribution Company, Inc., Defendants.

Civil Action No. 1:12–CV–2395.

United States District Court,

M.D. Pennsylvania.

Oct. 17, 2013.

Alena A. Eckhardt, Mark R. Kutny, Hamilton Stephens Steele & Martin, PLLC, Charlotte, NC, Charles E. Haddick, Jr., Dickie, McCamey & Chilcote, P.C., Camp Hill, PA, for Plaintiffs.

Arun J. Thomas, Joel L. Lennen, Eckert Seamans Cherin & Mellott, L.C., Pittsburgh, PA, Adam M. Shienvold, Eckert, Seamans, Cherin & Mellott, Harrisburg, PA, for Defendants.

MEMORANDUM

CHRISTOPHER C. CONNER, Chief Judge.

Presently before the court in the above-captioned matter is a motion (Doc. 33) to dismiss the second amended complaint (Doc. 31), pursuant to Federal Rule of Civil Procedure 12(b)(6), filed by defendant S–L Distribution Company, Inc., f/k/a SOH Distribution Company, Inc. (“S–L Distribution”). The motion is fully briefed and the issues are ripe for disposition. For the reasons that follow, the court will grant S–L's motion in its entirety and dismiss plaintiffs' second amended complaint without prejudice.

I. Factual and Procedural History

The instant matter involves the alleged breach of certain distributorship agreements entered into between S–L Distribution and plaintiff John A. Assalone, John Carbone, Richard C. Cook, ENL Snacks Inc., Kenneth M. Geiger, John Jobst, James Levergne, Joseph Mandaro, Scott A. Martello, Martguy Inc., Roy E. Milligan, Craig M. Mollenhauer, James P. Mullholland, David Oliva d/b/a DMO Trucking, David Orgel, Rosario (Russell) Pitta d/b/a R & K Snacks, Robert W. Skidmore, Spare Time Inc., and Footer, Inc. (collectively, “plaintiffs”).¹ Plaintiffs are independent operators who distribute snack products in the greater New York metropolitan area. (Doc. 31, ¶¶ 1–18). Each plaintiff maintains a distributor agreement with S–L Distribution, and it is the scope of that agreement which is at issue in this litigation. ( Id. at ¶ ¶ 76–92).

In approximately March of 1999, Snyder's of Hanover, Inc. (“Snyder's”), a snack food manufacturer and distributor, assigned its entire distribution business and all then existing distributorship agreements to SOH Distribution Company, Inc. (“SOH Distribution”). ( Id. at ¶¶ 19–20). SOH Distribution is a wholly-owned subsidiary of Lance, Inc. (“Lance”), which also manufactures and distributes snack foods. ( Id. at ¶¶ 19–20). On July 21, 2010, Snyder's entered into a triangular merger agreement with Lance. ( Id. at ¶ 20). Pursuant to that agreement, Lance formed a shell corporation to merge with Snyder's, and thereafter, Snyder's continued as the surviving entity, operating as a wholly owned subsidiary of Lance. ( Id.). Lance changed its name to Snyder's–Lance to reflect its new corporate structure, and SOH Distribution became known as S–L Distribution. ( Id. at ¶¶ 20–21). S–L Distribution is a primary distributor of Snyder's–Lance products. ( Id. at ¶ 21).

Prior to the merger, each plaintiff entered into a distributor agreement of indefinite duration with Snyder's or SOH Distribution.² Plaintiffs allege that these agreements, in conjunction with a course of dealing between the parties, “granted each Plaintiff the exclusive right to sell and distribute” certain products in the New York metropolitan area. ( Id. at ¶ 28) (emphasis added). Culled to its essence, resolution of the matter sub judice turns entirely on whether plaintiffs' exclusivity allegations are supported by the language of the agreements.

Although plaintiffs quote extensively from the various distributor agreements throughout the amended complaint, plaintiffs have not attached those agreements as exhibits for the court's consideration. S–L Distribution, however, has attached a copy of each agreement to its motion to dismiss, (see Doc. 33, Exs. A–E), asserting that the court may and should consider the agreements themselves in ruling on its motion. (Doc. 33, ¶ 7 & n. 2 (quoting In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir.1997) (“A document integral to or explicitly relied upon in the complaint may be considered without converting the motion to dismiss into one for summary judgment.”))). Consistent with Burlington, because the vast majority of plaintiffs' quotations are “clearly derived” from the agreements themselves, seeDiFelice v. Aetna U.S. Healthcare, 346 F.3d 442, 444 n. 2 (3d Cir.2003), the court will consider all relevant portions of the actual distributorship agreements in ruling on defendant's motion.

Although some of the language used in the agreements varies depending on when they were executed, the most important provision for purposes of the instant motion remains largely unaltered in each iteration, granting each distributor “the exclusive right to sell and distribute Authorized Products to Authorized Outlets within the Territory ... for as long as [SOH Distribution/Snyder's] continues to do business in the Territory.” (Doc. 33–1 at 3, 13, 30, 47; Doc. 33–2 at 7, 23, 40, 58; Doc. 33–3 at 17, 34, 51; Doc. 33–4 at 10, 27, 44; Doc. 33–5 at 3; Doc. 33–6 at 3; Doc. 33–8 at 4). With the exception of the agreement executed by Snyder's and Spare Time Inc., which grants only “the right to sell and distribute products in the Territory,” (Doc. 33–7 at 3), all agreements contain this exclusivity provision.

Most variations of the agreement define “Authorized Products” as:

those snack food items now or hereafter sold under the name and trademark [Snyder's] or other trade names for which [SOH Distribution] has exclusive distribution rights within the Territory, all of which shall specifically be identified as Authorized Products, from time to time, on the Price List.”

(Docs. 33–1 at 2, 11, 28, 45; Doc. 33–2 at 5, 21, 38, 56; Doc. 33–3 at 15, 32, 49; Doc. 33–4 at 8, 25, 42). Other agreements define Authorized Products as “those pretzel, potato chip, corn chip, popcorn and other snack food items now or hereafter sold under the name and trademark of [Snyder's] which are identified as Authorized Products from time to time on the Price List,” (Doc. 33–5 at 2); “all pretzels, potato chips, corn chips, corn or cheese snacks, popcorn, now or hereafter sold under the name and trademark [Snyder's] ... [which] shall be identified on the Price List as Authorized Products,” (Doc. 33–6 at 3); “those pretzel, potato chip, corn chip, popcorn and other snack food items which are specifically identified ... on the Price List, which shall include, but are not limited to, items sold under the names and/or trademarks of Snyder's,” (Doc. 33–7 at 2); and “all potato chips, pretzels, corn chips, corn or cheese snacks, popcorn, peanuts and related snack-type product ... now or hereafter sold under the name and trademark of [Snyder's] or any other tradename or trademark owned or used exclusively by [Snyder's].” (Doc. 33–8 at 3).

The agreements also contained varying definitions of the term “Price List,” with the majority of agreements defining it as follows:

that document published by SOH from time to time entitled “Contract Sales Retail Price List.” This document identifies all products that SOH has available, from time to time, for purchase by Distributor, the Distributor's cost for each product and the DSD Unit Price for each product. The DSD Unit Price is the suggested sales price to Distributor's customers. Distributor hereby agrees and understands that the Price List may be changed, from time to time, by SOH, upon fifteen (15) days notice to Distributor.

(Doc. 33–1 at 12, 29, 46; Doc. 33–2 at 6, 22, 39, 57; Doc. 33–3 at 16, 33, 50; Doc. 33–4 at 9, 26, 43; Doc. 33–5 at 3; Doc. 33–7 at 2). Still other agreements use the term “Price List” but fail to define it, (see Docs. 33–1; Doc. 33–6), or make no reference to it whatsoever. (Doc. 33–8). All agreements with the exception of those executed with Mandaro (Doc. 33–5), Pitta (Doc. 33–6), and Levergne (Doc. 33–8) further provided that S–L Distribution has the authority to, inter alia, remove Authorized Products from the Price List, cease to supply an Authorized Product, or change a product's designation from Authorized Product to Other Product. (Doc. 33–1 at 2, 11, 28, 45; Doc. 33–2 at 5, 21, 38, 56; Doc. 33–3 at 15, 32, 49; Doc. 33–4 at 8, 25, 42; Doc. 33–7 at 2). Prior to the merger, and pursuant to the agreements, Snyder's and SOH Distribution “paid for and maintained four linear feet of shelf space” in all authorized outlets in the New York metropolitan area. (Doc. 31 at ¶ 61).

With respect to product exclusivity, Plaintiffs allege that “[p]ursuant to the Distributor Agreements, and as is customary in the industry, every time [Snyder's] and [SOH Distribution] became authorized to distribute a new product,” plaintiffs too “automatically acquired” an exclusive right to distribute that product in their designated territories. ( Id. at 62). As an example, plaintiffs aver that when Snyder's launched a new product, Grande Tortilla Chips, in 2009, plaintiffs were directed to distribute the product within their territories. ( Id.). The same is true of Snyder's acquisition of Krunchers! brand kettle cooked potato chips; plaintiffs were given the product for distribution immediately. ( Id.).

After the merger, the Snyder's–Lance portfolio included “combined ‘core’ brands” such as Snyder's pretzels, Lance sandwich crackers, and Cape Cod potato chips, in addition to “combined ‘allied’ brands,” including Jay's brand potato chips, Krunchers! brand kettle cooked potato chips, O–Ke–Doke brand popcorn, Grande brand and Padrinos brand tortilla chips, Eat Smart Naturals brand vegetable chips, Tom's brand snacks, Archway cookies, and Stella D'oro brand cookies. ( Id. at 64). All distributor agreements were assigned to S–L Distribution following the merger, and, according to plaintiffs, all distributors then “acquired the exclusive rights to distribute” the entire Snyder's–Lance portfolio of brands. ( Id. at 65). Plaintiffs ...