W.G. Pettigrew Distributing Co. v. Borden, Inc.

• Decision Date: 30 August 1996
• Docket Number: Civ. A. No. G-95-147.
• Citation: 976 F.Supp. 1043
• Parties: W.G. PETTIGREW DISTRIBUTING COMPANY and Pettigrew Distributing Company, Inc., Plaintiffs, v. BORDEN, INC., Defendant.
• Court: U.S. District Court — Southern District of Texas

976 F.Supp. 1043

W.G. PETTIGREW DISTRIBUTING COMPANY and Pettigrew Distributing Company, Inc., Plaintiffs, v. BORDEN, INC., Defendant.

Civ. A. No. G-95-147.

United States District Court, S.D. Texas, Galveston Division.

August 30, 1996.

Order Denying Motion to Alter or Amend November 26, 1996.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Thomas R. Fox, Kleberg & Head, Houston, TX, for Plaintiffs.

Arthur M. Meyer, Jr., Richard A. Illmer, Brown McCarroll & Oaks Hartline, Dallas, TX, for Defendant.

ORDER

GIBSON, District Judge.

Before the Court is Defendant's Motion for Summary Judgment. Plaintiffs W.G. Pettigrew Company ("W.G.") and Pettigrew Distributing Company, Inc. ("PDI"), seek damages from Defendant Borden, Inc., for breach of contract, conversion, tortious interference with contract, unfair competition, predatory pricing and slander. In this diversity action, the six causes of action are brought pursuant to Texas law. Defendant requests summary judgment on all claims. Pending also is Plaintiffs' motion to dismiss without prejudice the claims for predatory pricing, slander and unfair competition. The motion to dismiss is opposed because Defendant wants the claims rejected with finality rather than without prejudice to refiling.

Background

After working as a Borden employee for six years, W.G. Pettigrew became an independent distributor of Borden dairy products in 1941. Operating under the name W.G. Pettigrew Distributing Company, a sole proprietorship, he served customers in Brazoria, Matagorda and Galveston Counties, Texas. Sometime during the mid-1940's, W.G. hired his brother, Delmar, to service some of the delivery routes. Delmar claims he became an independent Borden distributor in 1948. Since incorporating his business under Texas law in 1988, Delmar has operated under the name Pettigrew Distributing Company, Inc. Borden knew that Delmar serviced some of W.G.'s routes but asserts that no contractual relationship has ever existed between Borden and Delmar (or between Borden and PDI), and that Delmar (PDI), in actuality, was at all times an employee or independent contractor for W.G.

From the beginning, oral rather than written agreements governed the relationship between Borden and W.G. The general terms of the initial arrangement are not in dispute. W.G. and other "independent distributors" would purchase dairy products from Borden at "dock" prices set by Borden. They would then sell and deliver the products to customers in areas outlying Houston, Texas, with the distributors free to set the prices charged to their own customers. Although distributors had routes designated by numbers for records purposes and each concentrated service in a particular geographic region, Borden policy did not allow exclusive territorial assignments. W.G. also made deliveries to customers Borden dealt with directly and for each merchandise transfer to these customers W.G. was paid a "hauling charge."

As an independent contractor, W.G. owned and maintained his own delivery vehicles. At first he made all the deliveries himself. As the routes expanded, he first hired his brother, then other drivers, to service his customers. By 1994, according to W.G., the Pettigrews' business assets included ten route trucks, two tractor/trailer rigs and two storage vaults.

During the course of their half-century long relationship, Borden modified the terms of the arrangement with W.G. and the other independent distributors numerous times. The dock prices were changed from time to time based upon the cost of raw milk and other economic factors, including competition. Borden also varied the amount which would be credited to W.G.'s account as a "returns" allowance to compensate for losses from broken bottles, spoiled milk, out-of-date products and the like. Additionally, Borden would provide various temporary rebates and allowances as special incentives to assure that Borden products would remain competitive.

The only written document in evidence describing the relationship between Borden and W.G. is a two-page memorandum prepared and promulgated by Borden in 1973. The memo was generated in response to an investigation of Borden's milk delivery system by the Texas Department of Public Safety and broadly outlined how Borden would deal with its independent distributors. It can best be characterized as a policy statement. In fifteen number paragraphs, the memo declared, inter alia, that distributors would take title to products at the dock and would be responsible for all order-taking, pricing and billing of their customers; that all customers outside the Houston commercial zone formerly considered Borden customers would become the distributors' customers and there would be no more "hauling charges;" and, that Borden would continue to accept returns for defective merchandise, spoils and leakers, would continue to pay an advertising and display allowance, and would provide assistance in the preparation of school bids. The memo did not address financial details of the Borden-distributor relationship, such as product pricing, the allowance/incentive payments schedule or the criteria to be utilized for determining the amount of financial assistance available to distributors. Significantly, the memo did not specify the duration of its effect.

After 1973, Borden and W.G. continued to operate much as before, with dock prices and allowances to distributors modified intermittently by Borden. Despite the declaration in the 1973 memo that Borden would not have route customers of its own outside the Houston commercial area, the practice of dealing directly with some outlying customers and paying hauling fees to distributors for deliveries to these customers was re-instituted by Borden. The summary judgment evidence does not indicate when, after 1973, Borden re-adopted this practice.

The Pettigrews assert that, starting in 1988, Borden "began exercising control over" many of the Pettigrews' existing customers by setting prices, invoicing customers, using Borden field representatives to service these customers and setting guidelines that the distributor route salesmen were required to follow. At some point in time, Borden began to negotiate with certain large grocery store chains. According to Borden, these major, high-volume customers demanded to deal with Borden directly. In 1991, Borden began competing with the Pettigrews for retail and grocery store accounts and started taking away the various credits and adjustments previously allowed.

In 1994, Borden announced that virtually all of the financial assistance previously provided to independent distributors was being terminated and that a new hauling fee schedule would be instituted. W.G. objected and asked Borden to either purchase the entire distributorship or purchase the haul accounts. Borden refused, but after negotiating with W.G., offered to provide certain financial assistance. The offer was reduced to writing in the form of a letter from Borden General Manager Bryan Conaway to W.G. dated November 11, 1994. Both Borden and W.G. refer to the terms memorialized in the letter as an "agreement." W.G., however, was not completely satisfied with the provisions as stated in the November 11 letter, and in a note dated November 15, requested that Borden amend the agreement to alter somewhat the basis for calculating the spoilage allowance and to clarify the contract provision pertaining to the "returns" credit. Borden rejected these proposed changes. W.G. continued to make deliveries and accepted payments pursuant to the terms of Borden's November 11 letter.

On December 8, W.G. advised Borden in writing of his intention to terminate the distributorship relationship effective January 15, 1995. W.G. declared that, as a result of the direct competition and the many changes unilaterally imposed by Borden, his distributorship had become unprofitable and his only remaining option was to go out of business. After W.G. signaled his intention to cease doing business with Borden, Delmar made a request to Borden that he (or PDI) be designated an independent distributor. Borden denied the request and, within a few weeks after W.G. went out of business, Delmar became an independent distributor for Land O' Pines, a dairy products company in direct competition with Borden.

The Pettigrews filed the instant lawsuit on March 21, 1995. Borden's summary judgment motion was filed February 2, 1996, a week before the discovery deadline specified in the Court's scheduling order.

Objections to Summary Judgment Evidence

Borden and the Pettigrews submitted summary judgment briefs and evidentiary material, including deposition transcripts, affidavits, answers to interrogatories and business records, for consideration by the Court. Both sides now raise objections to portions of the material tendered. Some objections contest admissibility based on the rules of evidence and Fifth Circuit case law. Others challenge particular statements in the affidavits because they allegedly raise issues which properly should have been revealed during discovery or contradict evidence divulged during discovery.

Evidence on summary judgment may be considered to the extent not based on hearsay or other information excludable at trial. Fowler v. Smith, 68 F.3d 124, 126 (5th Cir.1995). But see Munoz v. International Alliance of Theatrical Stage Employees and Moving Picture Machine Operators, 563 F.2d 205, 213-14 (5th Cir.1977) (inadmissible material considered by court without objection may support summary judgment). The Court, however, has authority to exclude evidence based on a party's failure to comply with discovery deadlines set in the Court's scheduling order. Geiserman v. MacDonald, 893 F.2d 787, 790 (5th Cir.1990). Exclusion of evidence also may be based upon a party's failure to supplement discovery responses as required by Federal Rule of Civil Procedure 26(e)...