Reser's Fine Foods, Inc. v. Bob Evans Farms, Inc., Case No. 3:13-cv-00098 AA

CourtUnited States District Courts. 9th Circuit. United States District Court (Oregon)
Writing for the CourtAIKEN, Judge
PartiesRESER'S FINE FOODS, INC., a domestic business corporation, Plaintiff and Counterclaim Defendant, v. BOB EVANS FARMS, INC., a Delaware corporation; BOB EVANS FARMS LLC, an Ohio limited liability company; and BEF FOODS, INC., an Ohio-based corporation, Defendants and Counterclaim Plaintiffs.
Decision Date13 July 2016
Docket NumberCase No. 3:13-cv-00098 AA

RESER'S FINE FOODS, INC., a domestic business corporation, Plaintiff and Counterclaim Defendant,
BOB EVANS FARMS, INC., a Delaware corporation; BOB EVANS FARMS LLC, an Ohio limited liability company;
and BEF FOODS, INC., an Ohio-based corporation, Defendants and Counterclaim Plaintiffs.

Case No. 3:13-cv-00098 AA


July 13, 2016


AIKEN, Judge:

In January 2013, plaintiff Reser's Fine Foods, Inc. (Reser's) filed suit against defendants alleging breach of a non-disclosure agreement, misappropriation of trade secrets, and conversion. Defendants subsequently brought counterclaims for intentional interference with economic relations, violations of the Lanham Act, unfair competition, breach of contract, fraud, and promissory estoppel. Ultimately, Reser's dismissed its claims, and defendants dismissed one intentional interference claim and their Lanham Act and unfair competition claims. The parties also agreed that BEF Foods, Inc. (BEF) was the sole party in interest asserting counterclaims.

Page 2

Reser's now moves for summary judgment on BEF's remaining counterclaims for breach of contract, promissory estoppel, fraud, and intentional interference with economic relations, and BEF moves for partial summary judgment on a pricing contract counterclaim. Reser's also moves to exclude the opinion of BEF expert Robert Nardone.

For the reasons explained below, Reser's motion for summary judgment is granted on BEF's formula pricing promissory estoppel claim (Fourth Claim for Relief, Count 3) and BEF's implied-in-fact ongoing and holiday supply contract claims (Third Supplemental Claim for Relief, Counts 2 and 4). Reser's motion is denied in all other respects, as is BEF's motion for partial summary judgment. Reser's motion to exclude the expert testimony of Robert Nardone is granted in part and denied in part, with leave to renew prior to trial.


Reser's is a family-owned and operated Oregon corporation that develops and manufactures refrigerated food products to sell to restaurants and grocery retailers across the United States. Reser's sells refrigerated side dishes under its own brand and also manufactures products to be sold under other companies' brands. Hawkes Decl. Ex. 1 (Mark Reser Decl. 3).1 BEF is an Ohio-based corporation that operates full-service restaurants and sells retail food products under the Bob Evans brand to grocery retailers across the United States.

Until late 2013, Reser's and BEF had a long-standing business relationship in which Reser's developed, produced, and packaged a variety of food products, including "hot-fill" side dishes, for BEF to sell under the Bob Evans brand.2 See Hawkes Decl. Ex. 12 at 2 (letter to BEF

Page 3

from Reser's noting that the parties' relationship began in the mid-1990s). The parties' business relationship is commonly known as a "co-packing" relationship, in which a manufacturer, or co-packer, manufactures and packages a food product under the brand of another company. The brand owner then markets and sells the product to retailers. Here, Reser's served as a co-packer for BEF by providing food items to be sold under the Bob Evans brand.

In 2005, the parties entered into a Master Supply Agreement (MSA) governing their co-packing relationship. Hawkes Decl. Ex. 3. The MSA required Reser's to manufacture and to sell to BEF, and BEF to order and purchase from Reser's, certain side dish products according to a fixed pricing schedule. Id. Ex. 3 at 4. The MSA also permitted BEF to purchase similar products from third parties "if, based on [Bob Evans'] reasonable determination, [Bob Evans] is purchasing Products [from Reser's] at a rate greater than eighteen (18) million annualized pounds." Id. Ex. 3 at 3. The MSA governed the time period from January 31, 2005 to July 31, 2008, and it specifically provided that it "may not be amended, superseded or altered except by an instrument in writing duly executed and delivered on behalf of each of the parties." Id. Ex. 3 at 10.

In 2006 and 2007, the parties negotiated a price increase at Reser's request, effectively modifying the pricing schedule of the MSA. Hall Decl. 3-4 & Exs. 3-6. BEF agreed to the price increase, which became effective on May 1, 2007.

As the termination date of the MSA approached, the parties discussed entering into another supply agreement. The parties could not agree on several terms, and no new written agreement was signed by Reser's. Nonetheless, in 2008 the parties negotiated and agreed to raise

Page 4

prices by a fixed increase per unit through May 1, 2010, allow Reser's to sell sides similar to BEF's in grocers' deli cases, end a rebate program included in the written MSA, and establish a new online auction program. Hall Decl. 4-11 & Exs. 11-17.

Beginning in 2006, Reser's had developed a process to create the browned topping that is characteristic of a baked casserole dish for some of its hot-fill side dishes (referred to as "baked side dishes"). Mark Reser Decl. 4. In 2009, Reser's launched its baked side dish products and offered to co-pack the new items for BEF, and BEF began ordering baked side dishes.

In 2010, as the end of the 2008 fixed pricing agreement approached, Reser's and BEF negotiated a formula-pricing arrangement for side dishes containing commodities such as butter, milk, or margarine (referred to as "commodity sides"). See Hall Decl. 13-18 & Exs. 24-31. For these products, Reser's would adjust prices quarterly to account for changes in the commodities market and would adjust prices annually to account for non-commodity factors. Hawkes Decl. Ex. 4 (Hall Dep. 100:23-103:21). The parties abided by this agreement until November 2012.

In May 2012, Reser's made an annual price adjustment for commodity and non-commodity sides, and, due to the amount of the price increase, BEF responded that it would order some of its side dish requirements from another supplier. Brunette Decl. Exs. 41-44; Hall Decl. 19. In June 2012, Reser's requested that BEF provide fall and winter supply forecasts to anticipate the reduced volume; BEF's forecast reflected a reduction in anticipated orders, though BEF maintains that the forecast increased orders for baked side dishes and "would have boosted" the total volume of orders "substantially." Gerber Decl. 2-6 & Ex. 6; Brunette Decl. Exs. 37-39, 48, 49, 68; Townsley Decl. 5 & Ex. 3. Reser's contends that the volume of BEF's forecast was higher than the amount it actually expected to order from Reser's. Hawkes Decl. Ex. 10.

Page 5

In August 2012, BEF purchased Kettle Creations, a company also in the business of producing hot-fill side dishes. BEF did so to "vertically integrate" a portion of its supply chain rather than rely on outside sources for all of its supply needs. Townsley Decl. 4-5 & Ex. 1; Hawkes Decl. Ex. 8. After BEF purchased Kettle Creations, Reser's began to view BEF as a competitor rather than a client and suspected that BEF would begin to produce its own line of baked side dishes. In fact, BEF did so and began delivering its version of baked sides to retail customers in November 2012.

On August 23, 2012, as a result of BEF's acquisition of Kettle Creations, Reser's informed BEF that it would no longer supply baked side dish items as of October 19, 2012. Hawkes Decl. Ex. 12. Reser's assured BEF that it would continue to provide other types of hot-fill side dishes. Id. Ex. 12 at 2 ("To be clear, [Reser's] will continue to fill all other products orders with the quality and service you've come to expect from Reser's over the years.").

On September 21, 2012, BEF emailed a one-year supply forecast to Reser's and stated:

In light of Resers' recent decision to cease providing Oven Bake products to BEF Foods Inc, by this e-mail we are requesting that Resers confirm that it will manufacture and supply the products listed on the attached Forecast materials for non Oven Bake products for the period as provided in the Forecast and under the same terms and conditions as Resers have [sic] previously supplied such products.

Hawkes Decl. Ex. 18. BEF also asked that Reser's confirm supply through September 2013 in writing. Id. Reser's did not provide the written commitment sought by BEF.

On November 1, 2012, Reser's sent BEF an email with new quarterly pricing for commodity sides. Hawkes Decl. Ex. 24. Between November 2 and November 12, 2012, BEF submitted orders for commodity items at the November 1 quoted prices, and Reser's apparently accepted those orders.

Page 6

On November 14, 2012, Reser's informed BEF of another price increase for commodity sides, effective December 3, 2012, "due to the recent change in our relationship coupled with the competitive landscape." Hawkes Decl. Ex. 26 at 5. Apparently, Reser's increased its prices in response to BEF's decision to move some of its business to another supplier. Brunette Decl. Ex. 8 (Mark Reser Dep. 168:12-21) ("In mid summer of '12, we received verbal notification [from BEF] of significant volume declines or projections...They had very, very favorable pricing based on their book business. Half that book of business goes away, they do not receive the same favorable pricing they received previously."). BEF protested the November 14 price advance, asserting that Reser's was committed to the November 1, 2012 price quote for the remainder of the quarter, or through January 30, 2013. Hawkes Decl. Ex. 27. Reser's refused to reverse the November 14 price advance.

On November 27, 2012, BEF submitted purchase orders for commodity sides pursuant to the November 1, 2012 pricing. Reser's rejected those purchase orders. BEF revised its purchase orders to reflect the price increase of November 14, 2012 and continued to submit purchase orders pursuant to that pricing schedule. Gerber Decl. 8-19 & Exs. 9-10 (doc. 214).

During this time, BEF began developing contingency plans to find an alternative source of hot-fill sides or to produce its own side dishes at...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT