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Contract – Distributorship – Tort/Negligence – Fiduciary Duty – Unfair Trade Practices

Contract – Distributorship – Tort/Negligence – Fiduciary Duty – Unfair Trade Practices

Troche v. Bimbo Foods Bakeries Distribution, Inc. (Lawyers Weekly No. 15-04-0843, 13 pp.) (Robert Conrad Jr., J.) 3:11-cv-00234; W.D.N.C.

Holding: Although the parties’ “independent operator” contract gives defendant discretion to negotiate prices and promotions with chain stores, such discretion creates a duty to act reasonably. A reasonable jury could find that defendant’s conduct with respect to setting prices and promotions was unreasonable.

Defendant’s motion for summary judgment is granted in part and denied in part.

Plaintiff’s proposed injunction proposes details for the parties’ future dealings. Such details are arguably entirely new contract terms. Furthermore, since the contract has no time limit, performance of the proposed injunction would require protracted supervision and direction by the court. Defendant is entitled to summary judgment as to plaintiff’s proposed injunction.

Plaintiff also asserts that, after acquiring a Sara Lee bakery division, defendant has engaged in the promotion and sale of Sara Lee products in direct competition with the products that plaintiff sells for defendant. The parties’ contract creates an obligation for defendant to use “commercially reasonable efforts” to preserve and develop the quality and marketability of the products (that are the subject of the parties’ contract) and to assist and cooperate with the distributor’s sales efforts. Although the contract expressly contemplates defendant’s acquisition of new products or product lines, a reasonable jury could find that defendant’s promotion and sale of a directly competing product breached the contract with plaintiff.

Because plaintiff has failed to allege a fiduciary duty that defendant owed him separate from the distributor agreement, his breach of fiduciary duty claim fails. Since plaintiff relies on a breach of fiduciary duty as the aggravating factor in support of his unfair trade practices claim, that claim fails, also.

Finally, the complaint sets out a detailed explanation of the sale and delivery process between defendant, its independent operators, and the customer stores, explaining that plaintiff’s income will be earned by buying products from defendant at one price, selling them to a customer at a higher price, and making money on the difference. This arrangement takes plaintiff’s earnings out of the statutory definition of “wages.” Furthermore, the costs allegedly diverted from plaintiff’s earnings for expenses related to operating a handheld computer are non-wages as a matter of law. Therefore, plaintiff’s claim under the North Carolina Wage and Hour Act cannot survive summary judgment.

Motion granted in part, denied in part.


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