Reed Paper v. Procter & Gamble Distributing

• Decision Date: 04 November 1992
• Docket Number: Civ. No. 91-272-P-C.
• Citation: 807 F. Supp. 840
• Court: U.S. District Court — District of Maine
• Parties: REED PAPER COMPANY, Plaintiff, v. PROCTER & GAMBLE DISTRIBUTING COMPANY, Defendant.

807 F. Supp. 840

REED PAPER COMPANY, Plaintiff, v.PROCTER & GAMBLE DISTRIBUTING COMPANY, Defendant.

Civ. No. 91-272-P-C.

United States District Court, D. Maine.

November 4, 1992.

COPYRIGHT MATERIAL OMITTED

Alfred C. Frawley, Brann & Isaacson, Lewiston, ME, for plaintiff, Reed Paper.

John J. O'Leary(lead counsel), Michael Ambler(co-counsel), Pierce, Atwood, Scribner, Allen, Smith & Lancaster, Portland, ME, for defendant, Procter & Gamble.

Phillip D. Buckley, Rudman & Winchell, Bangor, ME, for movants, Robert Lebeau, Robert Allaire, Joseph Gannon.

MEMORANDUM AND ORDER ON DEFENDANT PROCTER & GAMBLE'S MOTION FOR SUMMARY JUDGMENT

GENE CARTER, Chief Judge.

This is an action for wrongful termination brought by Reed Paper Company("Reed"), a former distributor of Procter & Gamble Distributing Company's ("P & G") Attends adult incontinence products.The first five counts of the Complaint are based in common law: Count I, misrepresentation; Count II, breach of contract; Count III, promissory estoppel; Count IV, breach of duty of good faith; and Count V, breach of duty to provide reasonable advance notice of termination.Count VI alleges a violation of the Sherman Anti-Trust Act, 15 U.S.C. § 1.The Court now has before it the Defendant's Motion for Summary Judgment(DocketNo. 30) on all counts of the Plaintiff's Amended Complaint (DocketNo. 2).The Court acts on the motion on the basis of the written submissions of the parties.

A motion for summary judgment must be granted if "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).The Court of Appeals for the First Circuit has aptly articulated the legal standard to be applied in deciding motions for summary judgment:

The movant must adumbrate `an absence of evidence to support the nonmoving party's case.'Celotex Corp. v. Catrett,477 U.S. 317, 325106 S.Ct. 2548, 2554, 91 L.Ed.2d 265(1986).When that is accomplished, the burden shifts to the opponent to establish the existence of a fact issue which is both `material,' in that it might affect the outcome of the litigation, Anderson v. Liberty Lobby, Inc.,477 U.S. 242, 248106 S.Ct. 2505, 2510, 91 L.Ed.2d 202(1986);Hahn v. Sargent,523 F.2d 461, 464(1st Cir.1975), cert. denied,425 U.S. 90496 S.Ct. 1495, 47 L.Ed.2d 754(1976), and `genuine,' in that a reasonable jury could, on the basis of the proffered proof, return a verdict for the opponent.Anderson,477 U.S. at 248106 S.Ct. at 2510;Oliver v. Digital Equipment Corp.,846 F.2d 103, 105(1st Cir.1988).It is settled that the nonmovant may not rest upon mere allegations, but must adduce specific, provable facts demonstrating that there is a triable issue.`The evidence illustrating the factual controversy cannot be conjectural or problematic; it must have substance in the sense that it limns differing versions of the truth which a factfinder must resolve at an ensuing trial'Mack v. Great Atlantic and Pacific Tea Co.,871 F.2d 179, 181(1st Cir.1989).As the Supreme Court has said:

There is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.

Anderson,477 U.S. at 249-50, 106 S.Ct. at 2511.

Brennan v. Hendrigan,888 F.2d 189, 191-92(1st Cir.1989).

The record shows the following undisputed facts.Since the early 1980's, Reed distributed the Attends line of adult incontinence products.Campbell Aff.(Docket No. 44) ¶ 2.Reed was one of several distributors selling Attends to Maine customers.Maine Sysco Incorporated("Sysco") was a distributor of Attends products in the early 1980's, but ceased distributing the products in 1987.Hughes Dep.at 80-81;HughesDep. Ex. 85.Early in 1990, however, Sysco started distributing Attends products again.Lebeau Dep.at 26.Several other Attends distributors operating in Maine were based outside the State.P & G also sold Attends directly to one nursing home in Maine, in competition at the wholesale level with both Reed and Sysco.In Maine, approximately 145 nursing homes are the principal purchasers of adult incontinence products.Mathieu Dep.at 6.

In October 1986, Reed began to distribute a second brand of adult incontinence products, the DriPride/Provide line (Provide) manufactured by Weyeraeuser Corporation. Campbell Dep. IIat 130.Subsequently, an agreement arose between P & G and Reed to the effect that Reed would not convert any of its Attends customers to their other brands of incontinence products and P & G would refrain from converting any of Reed's customers to other Attends distributors.HughesDep. 247, 273;Smith Dep. Iat 42;SmithDep. Ex. 298;Luciano Dep.at 139-40;LucianoDep. Ex. 10;Campbell Aff.(Docket No. 44) ¶¶ 15-16.This agreement, also known as "The Golden Rule," was memorialized in a letter dated July 17, 1989, from Thomas Hughes, Eastern District Manager at P & G to John Campbell, President and majority owner of Reed.¹HughesDep. Ex. 104.Thereafter Reed offered both lines of adult incontinence products to its customers.

On May 17, 1991, P & G's Eastern Division Manager, Daniel Baker, decided Reed should not be offered the P & G distributor rebate promotion on Attends briefs scheduled to be introduced in Maine on June 1, 1991.Baker Aff.(Docket No. 36) ¶¶ 9-10.P & G's New England area manager, Debra Luciano, agreed with this decision.²Luciano Aff.(Docket No. 34) ¶ 13.Thus, the Maine test market promotion was offered only to Sysco.Id.On May 23, 1991, Sysco accepted P & G's offer to participate in the promotion and pass along the P & G rebates to its own customers in the form of lower retail prices on Attends.Baker Aff.(Docket No. 36) ¶ 11.

On May 24, 1991, P & G notified some of Reed's customers, retail purchasers of Attends in Maine, that Sysco would be offering price rebates on the Attends products.Bennett Dep.at 43-46, 56.Reed was notified on May 28, 1991, that Sysco would be distributing Attends with the rebate promotion.Luciano Aff.(Docket No. 34) ¶ 14.On July 16, 1991, Baker made the promotion available to Reed retroactive to its inception date of June 1, 1991.Baker Aff.(Docket No. 36) ¶ 12;LucianoDep. Ex. 7, 8;CampbellDep. III 128-29.At that time, Baker also notified Reed that, effective September 30, 1991, P & G was terminating Reed as an Attends distributor.Id.Reed never accepted P & G's promotion rebate.Instead, Reed brought an action for wrongful termination on September 6, 1991.³

The only written contract in effect at the time of Reed's termination on September 30, 1991 was the "VIP Agreement."That agreement was executed on February 4, 1991, and provided for the promotion of Attends sales by Reed and P & G during the 1991 calendar year.Under the VIP Agreement, P & G agreed to pay Reed for promoting Attends sales.The VIP agreement could be terminated by either party with 30 days notice.Campbell Dep. IIIat 180-81;CampbellDep. Ex. 130;Baker Aff.(DocketNo. 36) App. D. Previously, the parties had entered into two other types of written contracts.In 1989 and 1990, Reed and P & G entered into annual Attends distributorship contracts which contained a provision permitting either party to cancel the contract by giving 60 days notice.CampbellDep. I 141;CampbellDep. Ex. 26A, 27A.The parties did not enter into a written distributorship agreement in 1991.The second type of contract between Reed and P & G was a Government Contract Rebate Agreement.Under the terms of this agreement, Reed agreed to supply qualified facilities with Attends.This contract expired on September 30, 1991.Bennett Aff.(DocketNo. 32) App. C;CampbellDep. Ex. 31C.

COUNT I MISREPRESENTATION

Reed contends that P & G made a misrepresentation, upon which it justifiably relied, concerning its distributorship relationship with P & G.As a result of this reliance, Reed alleges that it suffered substantial business and property damages.In addition, Reed contends that P & G made actionable misrepresentations to Reed's customers.

A.Misrepresentation made to Reed

On May 14, 1991, Reed was awarded a new Maine Health Care Shared Services Co-op ("Co-op")⁴ contract for Attends to extend through May 1992.Reed contends that P & G encouraged Reed to bid on a one-year contract with the Co-op. Campbell Aff.(Docket No. 44) ¶¶ 8-9.Reed further contends that P & G's encouragement came at a time when it knew it was going to terminate Reed as a distributor.Campbell Aff.(Docket No. 44) ¶¶ 20-21.P & G argues that encouragement alone is not a representation of fact and therefore cannot serve as the basis for an actionable misrepresentation.The essence of Reed's claim is that P & G knowingly omitted to inform Reed of the impending termination and, by so doing, misrepresented its distributorship relationship with P & G.

Under Maine law, the essential elements of fraudulent misrepresentation are: (1) a false representation (2) of a material fact (3) with knowledge of its falsity or in reckless disregard of whether it is true or false (4) for the purpose of inducing another to act in reliance upon it, and (5)the plaintiff justifiably relies upon the representation as true and acts upon it to his damage.Diversified Foods, Inc. v. First National Bank,605 A.2d 609, 615(Me.1992)(quotingButler v. Poulin,500 A.2d 257, 260(Me.1985)).Both omissions and affirmative misrepresentations are actionable under Maine law.SeeHorner v. Flynn,334 A.2d 194, 203(Me.1975)(overruled on other grounds, seeTaylor v. Commissioner of Mental Health and Mental Retardation,481 A.2d 139(Me.1984)).

After careful consideration of the record before it, the Court concludes that there is a...