Mr. Mudbug, Inc. v. Bloomin' Brands, Inc.

Filing 138

ORDER AND REASONS denying 93 Motion for Sanctions, as set forth in document. Signed by Judge Jane Triche Milazzo. (ecm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
MR. MUDBUG, INC.

CIVIL ACTION

VERSUS

NO: 15-5265

BLOOMIN BRANDS, INC.

SECTION “H”(4)

ORDER AND REASONS
Before the Court is Defendant Bloomin’ Brands, Inc.’s Motion for
Sanctions (Doc. 93). For the following reasons, the Motion is DENIED.
BACKGROUND
Plaintiff Mr. Mudbug, Inc. d/b/a MMI Culinary Services (“MMI”)
manufactures food products such as soups, sauces, and salad dressings.
Defendant Bloomin Brands, Inc. (“BBI”) operates multiple national and
international restaurant chains. For a period of approximately eight years, the
parties maintained a business relationship in which Plaintiff produced preprepared foods for Defendant. Plaintiff alleges that it expanded its production
facilities twice to accommodate Defendant’s orders, particularly in response to
what Plaintiff alleges was a contract to supply 28 million pounds of salad

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dressings to Defendant (“the Dressing Contact”). 1 However, for reasons that
are disputed, Defendant began to award fewer contracts to MMI following the
expansions. By December of 2014, the business relationship had been
terminated entirely.
On September 25, 2015, Plaintiff filed a state court petition on open
account against Defendant for the payment of two invoices totaling
$242,668.83. 2 Plaintiff alleges that invoice number 1344, dated November 14,
2013 has an outstanding balance of $2,956.56 and that invoice number 5943,
dated March 13, 2015, has an outstanding balance of $239,712.27. 3 Defendant
removed the suit to this Court and asserted a counterclaim against Plaintiff
for redhibition and breach of contract to supply quality products and
ingredients. 4 Plaintiff then amended its Complaint to add claims for breach of
contract, detrimental reliance, and bad faith based on Defendant’s alleged
breach of the Dressing Contract and the resulting lost profits and expansion
costs incurred. 5 The Court ultimately dismissed Plaintiff’s bad-faith claims
with prejudice. 6 The Court also granted Defendant’s request to voluntarily
dismiss its counterclaim. 7
Responding to Defendant’s motion, the Court granted partial summary
judgment for Defendant. The Court dismissed Plaintiff’s claims for breach of
contract and detrimental reliance. 8 The Court found that Plaintiff failed to
carry its burden to produce evidence that Defendant formed a contract for, or

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Doc. 6 at 3.
Doc. 1-3 at 2–3.
Doc. 1-3 at 3; see also Doc. 6 at 4–5 (asserting the same claims in Plaintiff’s First Amended
Complaint).
Doc. 4 at 4–5.
Doc. 6 at 5–9.
See Doc. 30.
Doc. 72.
Doc. 115.

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promised to buy, a particular volume of product from Plaintiff. The Court also
dismissed that part of Plaintiff’s claim on open account regarding $21,879.00
billed for Magic Spice and $116,981.20 of product that Defendant rejected. 9
At the same time that Defendant moved for summary judgment,
Defendant also moved to impose sanctions on Plaintiff pursuant to Rule 11 of
the Federal Rules of Civil Procedure. Defendant argues, with respect to the
claim on open account, that Plaintiff either failed to undertake a factual
investigation or submitted a knowingly false pleading because there is no
evidence that much of the product for which Plaintiff seeks payment actually
existed at the time Plaintiff sent its invoice to Defendant and because Plaintiff
sought payment for goods for which Plaintiff previously waived payment.
Defendant also argues that Plaintiff either failed to undertake a factual
investigation or submitted a knowingly false pleading when Plaintiff asserted
a contract claim with no evidence that a contract existed. Plaintiff opposes the
Motion.
LEGAL STANDARD
Federal Rule of Civil Procedure 11 establishes that “[b]y presenting to
the court a pleading, written motion, or other paper . . . an attorney . . . certifies
that[—]to the best of the person’s knowledge, information, and belief, formed
after an inquiry reasonable under the circumstances[—]the factual contentions
have evidentiary support or, if specifically so identified, will likely have
evidentiary support after a reasonable opportunity for further investigation or
discovery.” 10 “An attorney’s conduct is judged . . . with an objective, not a

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Doc. 115.
FED. R. CIV. P. 11(b).

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subjective, standard of reasonableness.” 11 “Reasonableness is reviewed
according to the ‘snapshot’ rule, focusing upon the instant the attorney affixes
his signature to the document.” 12 A court may impose appropriate sanctions on
an attorney or party that violates the Rule, but is not required to do so. 13
LAW AND ANALYSIS
This Court finds that while the evidence supporting the majority of
Plaintiff’s claims was thin, an additional award of sanctions beyond the
dismissal of Plaintiff’s claims already accomplished via summary judgment is
not warranted.
With respect to the part of Plaintiff’s claim on open account relating to
product that was missing from the warehouse, Plaintiff has presented
sufficient evidence to avoid Rule 11 sanctions. This Court already determined
that the affidavit of Plaintiff’s Chief Operating Officer, Anthony D’Angelo, is
sufficient to establish a question of material fact as to whether the product was
actually manufactured. 14 Defendant argues that Plaintiff’s claim is baseless
because there is no evidence that the product existed at the time Plaintiff
created the invoice, but Defendant has not demonstrated that existence at that
time is a requirement to collect on open account. Therefore the absence of the
product in the warehouse does not indicate a Rule 11 violation.
This Court did find that there was no issue of material fact with respect
to the product that Defendant rejected or for which Plaintiff waived payment,
and therefore dismissed those claims. Similarly, this Court found that there

Snow Ingredients, Inc. v. SnoWizard, Inc., 833 F.3d 512, 528 (5th Cir. 2016).
Id. (quoting Smith v. Our Lady of the Lake Hosp., Inc., 960 F.2d 439, 444 (5th Cir. 1992)).
13 See FED. R. CIV. P. 11(b) (“[T]he court may impose an appropriate sanction . . . .”) (emphasis
added).
14 Doc. 115 at 6.
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was no question of fact as to the existence of a contract, and so dismissed
Plaintiff’s contract claim. Without deciding whether Plaintiff’s actions related
to these dismissed claims violated Rule 11, this Court finds that the proper
sanction for such a violation would only be dismissal of the claims. Additional
sanctions are not necessary to deter repetition of the conduct. As the majority
of Plaintiff’s claims have already been dismissed on a motion for summary
judgment, Defendant’s Motion for Sanctions is DENIED.
To be clear, the Court does not condone Plaintiff’s maintenance of this
suit in the face of the exceedingly weak evidence that Plaintiff was able to
muster, or Plaintiff’s obstruction during discovery. The Court merely finds
that, in the event that Plaintiff’s actions did violate Rule 11, the dismissal
already accomplished is sufficient to deter similar conduct.
CONCLUSION
For the foregoing reasons, Defendant’s Motion for Sanctions is DENIED.

New Orleans, Louisiana this 18th day of April, 2018.

____________________________________
JANE TRICHE MILAZZO
UNITED STATES DISTRICT JUDGE

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