A judge has ordered Foodbuy of Charlotte, the country’s largest food service procurement company, to pay $9.26 million to a New Jersey juice manufacturer for over-invoicing it, attorneys report.
Kurt Lindquist, Emily Doll, and Russ Ferguson of Womble Bond Dickinson in Charlotte, who represented Gregory Packaging, the maker of Suncup juice, report that U.S. District Judge Frank Whitney entered the judgment in U.S. District Court in the Western District of North Carolina.
The two companies had a business relationship for several years. Foodbuy aggregates buyers of food products to increase volume and maximize negotiating power with suppliers such as Gregory, the firm said. Gregory gave preferential pricing to Foodbuy members and paid Foodbuy a volume allowance rebate for each case of juice sold through Foodbuy’s program.
The relationship took a turn for the worse during the final four months of a five-year contract. Gregory refused to pay the invoices that Foodbuy submitted, saying Foodbuy was overcharging the company. Foodbuy then sued Gregory for up to $1 million.
Gregory countersued Foodbuy. The company knew that it was being overcharged, but didn’t discover the magnitude of the situation until discovery, Lindquist said, when Foodbuy turned over hundreds of pages of complicated documents and spreadsheets that the attorneys pored over.
“We just really had to press them for information and stay after them on it,” Lindquist said. “Unless you know what you are looking at, it is really difficult to interpret.”
The attorneys also credited other distributors who gave their assistance regarding their own dealings with Foodbuy.
In his ruling Whitney wrote that Gregory had, in fact been over-invoiced over the course of the supplier agreement with Foodbuy, and that Foodbuy had wrongfully collected rebates for sales that weren’t subject to the agreement. He awarded Gregory $7.06 million in compensatory damages and $2.21 million in prejudgment interest.
“Foodbuy simply bills for every case they receive information about from the distributor, and then waits for manufacturers to bring issues to them,” Whitney wrote in his order.
Foodbuy had argued that its over-invoicing was permitted under its interpretation of the supplier agreement, but Whitney disagreed.
“Foodbuy never stated to Gregory Packaging—at any time during the Agreement—that its interpretation was as it interprets the Agreement now—that it was entitled to a volume allowance for every case of juice sold by any entity at any price” despite “numerous opportunities to do so,” Whitney wrote.
Fred Wood Jr. of Nelson Mullins in Charlotte represented Foodbuy. Wood could not be reached for comment.
Follow Bill Cresenzo on Twitter @billcresenzonclw
VERDICT REPORT – BREACH OF CONTRACT
Amount: $9.5 million
Case name: Foodbuy Inc. v. Gregory Packaging LLC
Court: U.S. District Court for the Western District of North Carolina
Case No.: 3:16-CV-00809
Judge: Frank Whitney (bench trial)
Date of verdict: Sept. 25
Special damages: $7.06 million in compensatory damages and $2.21 million in prejudgment interest.
Attorneys for plaintiffs: Fred Wood Jr. of Nelson Mullins in Charlotte
Attorneys for defendants: Kurt Lindquist, Emily Doll and Russ Ferguson of Womble Bond Dickinson in Charlotte