Sodexomagic, LLC v. Drexel Univ.
| Decision Date | 02 August 2018 |
| Docket Number | CIVIL ACTION NO. 16-5144 |
| Citation | 333 F.Supp.3d 426 |
| Parties | SODEXOMAGIC, LLC v. DREXEL UNIVERSITY |
| Court | U.S. District Court — Eastern District of Pennsylvania |
John A. McCreary, Jr., Babst Calland Clements & Zomnir, Pittsburgh, PA, Harry L. Manion, III, Timothy J. Fazio, Hunton Andrews Kurth LLP, Katharine A. Dennis, Manion Gaynor & Manning LLP, Boston, MA, Robert C. Heim, Selby Brown, Dechert LLP, Philadelphia, PA, Stephen D. Dargitz, Manio Gaynor & Manning LLP, Wilmington, DE, for SodexoMAGIC, LLC.
Stephen A. Cozen, Jared Dimock Bayer, Robert W. Hayes, Thomas Aloysius Leonard, IV, Cozen & O'Connor, Philadelphia, PA, for Drexel University.
MEMORANDUM RE: MOTIONS FOR SUMMARY JUDGMENT AND MOTIONS TO STRIKE
At its core, this case concerns a breakdown in business relations between a large, private university and its dining services vendor, with which it had a multimillion-dollar, long-term contract.
The case began with Plaintiff SodexoMAGIC, LLC ("Sodexo") filing a four-count complaint alleging: (1) fraudulent inducement; (2) breach of contract; (3) unjust enrichment; and (4) punitive damages. Since then, Defendant Drexel University ("Drexel") asserted two counterclaims against Sodexo for, (1) fraud, and (2) breach of contract, and Sodexo added one supplemental claim to its original allegations ("Count V") for breach of contract. Accordingly, there are now five claims alleged against Drexel and two counterclaims alleged against Sodexo. The case has featured various motions to dismiss, motions to compel, attorney-client privilege disputes, and motions for sanctions—among many other motions—which have been extensively litigated and decided by this Court in prior opinions (or held in abeyance pending further developments), and will not be restated here.
Presently before the Court are four motions:
Plaintiff SodexoMAGIC is a Delaware limited liability company with its principal place of business in Maryland. (ECF 211 ¶ 1). SodexoMAGIC is a joint venture between Sodexo Operations, LLC, a wholly-owned subsidiary of Sodexo, Inc., and Magic Food Provisions, LLC, a wholly-owned subsidiary of Magic Johnson Enterprises. (ECF 213, at 1 n. 1). Defendant Drexel University is a Pennsylvania non-profit institution based in Philadelphia. (ECF 211 ¶ 2). Marriott Management Services Corp., which was subsequently acquired by Sodexo Management, Inc., began providing dining services at Drexel in 1995. (ECF 11 ¶ 5; ECF 213 ¶ 18). Dining services generally consisted of managing and operating student and faculty dining halls and retail locations and catering University meetings, events, and functions. (Id. ¶ 19).
On April 18, 2014, Aramark Corp. ("Aramark"), a dining services competitor of Sodexo Management, Inc. (see ECF 211 ¶ 4), approached Drexel with an unsolicited proposal to provide dining services at Drexel. (Id. ¶ 6). The operative contract then in place between Drexel and Sodexo Management, Inc., was not due to expire until 2018. (Id. ¶ 7). Nevertheless, following Aramark's proposal, which included an offer to invest $14.5 million in Drexel's campus, Drexel terminated its contract with Sodexo Management, Inc., and began a process of putting their dining services contract out to bid in June, 2014. (Id. ).
Drexel's dining services bidding process occurred in two phases. (Id. ¶ 8). On June 9, 2014, as part of the first phase, Drexel distributed a Request for Proposal Qualification Overview (also knowledge as a Request for Information, or "RFI") to five companies to qualify the firms with the best chance to compete for the contract. (Id. ¶ 9). The RFI sent to potential bidders asked responding firms, among other things, to "commit a minimum of $20M over the 10 year agreement with $12M paid up-front." (Sodexo SOF, Ex. 9). The RFI estimated the contract value "to be between $275M and $300M over the term," but made clear "this is strictly an estimate based on past performance and is in no way to be misconstrued as a firm commitment." (Id. ).
As part of the second phase, following a determination of which companies responded favorably to the RFI, Drexel distributed a Request for Proposal ("RFP") on July 2, 2014 to four companies that remained in contention for the dining services contract. (Id. ¶ 9). Among the four companies remaining in contention were Aramark and SodexoMAGIC. (Drexel SOF, Ex. 3-8). The RFP stated that "The University's Strategic Plan calls for an enrollment increase from our current number of 26,132 to 30,470 students by 2017 and to 34,000 students by 2021." (Sodexo SOF, Ex. 14). The RFP continued, "[p]roposed programs, facilities and infrastructure of services should be aligned to this plan." (Id. ). The RFP made clear that "traditional meal plans (aka residential, ‘all-inclusive,’ board plans, etc.) are required for residential freshmen and may be purchased on a voluntary basis by all other students and customers." (Id. ).
In an appendix to the RFP, Drexel projected the number of dining services participants who would purchase a variety of meal plans, with projections "based on information available at time of budget submission." . Drexel calculated the estimated number of meal plans based on an assumption of 3,100 students in the freshman class. (Resp. to Sodexo SOF ¶ 18; Sodexo SOF, Ex. 16 () ).
In a pre-proposal meeting Drexel held separately with Sodexo and other bidders in July, 2014, Drexel informed the prospective bidders via PowerPoint presentation that the University's "Strategic Growth Plan" was to:
[g]row enrollment commensurate with student demand and academic capacity, initially by adding graduate and transfer students, and then, after a three-year period, gradually growing subsequent undergraduate freshman classes. By 2017, Drexel will increase enrollment from our current number of 23,500 to 30,470 students; by 2021, Drexel will increase to 34,000 students.
The PowerPoint presented to the prospective bidders also stated that the "Strategic Growth Plan" was to:
Grow enrollment commensurate with student demand and academic capacity, initially by adding graduate and transfer students, and then, after a three-year period, gradually growing subsequent undergraduate freshman classes.
(Id. ).
Sodexo submitted its Initial Proposal for the dining services contract to Drexel on July 25, 2014. (Id., Ex. 19). Sodexo's Initial Proposal stated:
The financial terms set forth in this proposal and other obligations assumed by SodexoMAGIC herein are based on conditions in existence on the date SodexoMAGIC commences operations, including, by way of example, Client's attendance history; labor; food and supply expenses; and federal, state and local sales,...
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