Treehouse Foods, Inc. v. Sunopta Grains & Foods Inc., Case No. 18-cv-1412
| Decision Date | 31 May 2020 |
| Docket Number | Case No. 18-cv-1412 |
| Citation | 463 F.Supp.3d 802 |
| Parties | TREEHOUSE FOODS, INC., Bay Valley Foods, LLC, Flagstone Foods, Inc., TreeHouse Private Brands, Inc., and Lloyd's Syndicate CVS 1919, as subrogee of Treehouse Foods, Inc., Plaintiffs, v. SUNOPTA GRAINS AND FOODS INC., Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
Gerald G. Saltarelli, Saltarelli Adr LLC, Jason S. Dubner, Randi L. Ellias, Porter, Wright, Morris & Arthur LLP, Marisa L. Saber, Philip T. Carroll, Cozen O'Connor, Chicago, IL, Paul R. Bartolacci, Pro Hac Vice, Cozen O'Connor, Philadelphia, PA, for Plaintiffs Treehouse Foods, Inc., Bay Valley Foods, LLC, Flagstone Foods, Inc., Treehouse Private Brands, Inc.
Marisa L. Saber, Philip T. Carroll, Cozen O'Connor, Gerald G. Saltarelli, Saltarelli Adr LLC, Chicago, IL, Paul R. Bartolacci, Pro Hac Vice, Cozen O'Connor, Philadelphia, PA, for Plaintiff Lloyd's Syndicate CVS 1919.
Elizabeth A. Patton, Pro Hac Vice, Heidi A.O. Fisher, Pro Hac Vice, Fox Rothschild LLP, Minneapolis, MN, Matthew Scot Payne, Fox Rothschild LLP, Chicago, IL, for Defendant.
This case involves a recall of sunflower kernels. SunOpta sold sunflower kernels to food manufacturer TreeHouse, and TreeHouse brought this lawsuit claiming more than $16 million dollars in damages resulting from SunOpta's recall in 2016. TreeHouse has four remaining claims in this case based on breach of contract and breach of warranty. SunOpta also brought three counterclaims seeking a declaration that Treehouse's remedies are limited to the product purchase price and for breach of contract or unjust enrichment, alleging that Treehouse owes SunOpta $893,416.
For the reasons stated below, SunOpta's motion for summary judgment [93] is granted in part and denied in part and Plaintiffs’ partial motion for summary judgment [105] is denied.
Summary judgment is proper where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) ; see also Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A genuine dispute as to any material fact exists if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The substantive law controls which facts are material. Id. After a "properly supported motion for summary judgment is made, the adverse party must set forth specific facts showing that there is a genuine issue for trial." Id. at 250, 106 S.Ct. 2505 (internal quotations omitted).
The Court "consider[s] all of the evidence in the record in the light most favorable to the non-moving party, and [ ] draw[s] all reasonable inferences from that evidence in favor of the party opposing summary judgment." Skiba v. Ill. Cent. R.R. Co. , 884 F.3d 708, 717 (7th Cir. 2018) (internal citation and quotations omitted). In doing so, the Court gives the non-moving party "the benefit of reasonable inferences from the evidence, but not speculative inferences in [its] favor." White v. City of Chi. , 829 F.3d 837, 841 (7th Cir. 2016) (internal citations omitted). "The controlling question is whether a reasonable trier of fact could find in favor of the non-moving party on the evidence submitted in support of and opposition to the motion for summary judgment." Id. (citation omitted).
When cross-motions for summary judgment are filed, the Court construes all facts and draws all reasonable inferences in favor of the party against whom the motion was filed. Indianapolis Airport Auth. v. Travelers Prop. Cas. Co. of Am. , 849 F.3d 355, 361 (7th Cir. 2017). The Court treats the motions "separately in determining whether judgment should be entered in accordance with Rule 56." Marcatante v. City of Chi. , 657 F.3d 433, 439 (7th Cir. 2011). See also Kreg Therapeutics, Inc. v. VitalGo, Inc. , 919 F.3d 405, 416 (7th Cir. 2019) ().
Plaintiffs are TreeHouse Foods, Inc., and its affiliated entities ("TreeHouse"), and its insurer, Lloyd's Syndicate 1919 (collectively "Plaintiffs"). (PSOF ¶¶ 1-5). TreeHouse manufactures and sells an extensive line of ready-to-eat foods, including private-label sunflower products and various granolas that incorporate sunflower kernels obtained from SunOpta. (PSOF ¶ 8). Defendant SunOpta Grains and Foods Inc. ("SunOpta") is a Minnesota company based in Edina, Minnesota;2 it is a manufacturer and seller of many raw materials and food products, including sunflower kernels. (DSOF ¶ 1).
Since at least 2011, SunOpta sold sunflower kernels to ConAgra and Flagstone, which at the time were unrelated companies unaffiliated with TreeHouse. (DSOF ¶ 8).3 In the food industry, parties usually operate based on "forward contracts", which use a set price for buying a product over a period of time (in contrast to "spot buys" which are for smaller, individual orders typically at higher prices). (DSOF ¶¶ 9, 11).
The operative complaint is the Second Amended Complaint (Dkt. 65) (hereafter, "Complaint"). On March 29, 2019, the Court granted SunOpta's motion to dismiss Plaintiffs’ Counts I, II, III, and VII, leaving only Plaintiffs’ breach of contract and breach of warranty claims in the case. (Dkt. 87).
On May 2, 2016, SunOpta issued an "URGENT: FOOD RECALL" notice informing TreeHouse that SunOpta was recalling roasted sunflower kernel products produced at its Crookston, Minnesota, plant between February 1 and February 19, 2016, "due to the potential presence of Listeria monocytogenes ("LM ")." (PSOF ¶ 9). On May 18, 2016, following additional positive Listeria results from a second customer, as well as positive results from SunOpta's testing of retained samples of kernels, SunOpta expanded its recall. (PSOF ¶ 12). Further testing by SunOpta showed that kernels produced in October 2015 were positive for Listeria, and so SunOpta expanded the recall a third time to encompass the full shelf-life of sunflower kernels. (PSOF ¶ 13).4 The recall ultimately involved kernels produced between May 31, 2015 and April 21, 2016, some of which it had sold and shipped to TreeHouse facilities in Minneapolis and Lakeville, Minnesota. (DSOF ¶ 5).
SunOpta instructed TreeHouse to "either destroy the affected product or return the recalled product." (PSOF ¶ 15). In SunOpta's report to the U.S. Food and Drug Administration (FDA) on the reason for the recall, SunOpta identified positive tests from its Crookston facility between September 2015 and January 2016, in addition to the original confirmations of Listeria from production during the weeks of February 1 and February 8, 2016. (PSOF ¶ 18). The FDA classified SunOpta's recall as a Class 1 Recall. (PSOF ¶ 24). TreeHouse then conducted its own recall of products affected by SunOpta's recall. (PSOF ¶ 20).
The parties dispute which documents were part of their contractual agreement: (1) the Sales Contracts; (2) the Guarantees; or (3) the Purchase Orders. (As explained below, the parties do not dispute that the SunOpta Specifications were part of their agreement).
SunOpta argues that five sales contracts ("Sales Contracts") are the only enforceable contracts. These contracts are form contracts drafted by SunOpta that contain identical relevant Terms and Conditions:
Sales Contract 5638 states that its effective date is June 19, 2014; it is signed by TreeHouse on September 2, 2014. (Dkt. 101, Exh. 55). Sales Contract 5639, with an effective date of June 19, 2014 is signed by TreeHouse on September 2, 2014. (Dkt. 101, Exh. 55). Sales Contract 5745 states that its effective date is August 7, 2014. (Dkt. 101, Exh. 104). Sales Contracts 6263 and 6264 have an effective date of October 20, 2015. (Dkt. 101, Exh. 71). Sales Contracts 5745, 6263, and 6264 are not signed by either party. In all the Sales Contracts, the Terms and Conditions appear after the signature block.
All of the Sales Contracts refer to "product specifications." SunOpta provides its customers with specifications for its sunflower kernel products, which specifications the parties agree were part of their agreement (hereafter, "SunOpta Specifications"). (DSOF ¶13).
SunOpta provides "pure food guarantees" to its customers, executing approximately 250 guarantees per year. (Dkt. 119 at 11; PSOF ¶50). The 2014 Guarantee, drafted by TreeHouse, is dated March 20, 2014, and provides, in pertinent part:
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