Vista Food Exchange, Inc. v. Champion Foodservice, L.L.C. et al
Filing
22
OPINION re: 5 MOTION to Remand to State Court filed by Vista Food Exchange, Inc., 10 MOTION to Dismiss for Lack of Personal Jurisdiction, Improper Venue, and Failure to State a Claim, and in the alternative Transfer filed by Li nda Atkinson, Tyrone Weithman, Champion Foodservice, L.L.C., Ashley Simpson, BC&G Weithman Construction Co., Inc. Based upon the facts and conclusions of law set forth above, Plaintiff's motion to remand is denied. Defendants' motions to dismiss the complaint is granted and Defendants' motion to transfer venue is denied. (Signed by Judge Robert W. Sweet on 8/4/2014) (lmb)
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
DOCU!v.!FNT
ELEC1RONJCALLY FILED I
------------------------------------x
DOC#:
VISTA FOOD EXCHANGE,
-I
DATE FIIB~);··-~·-:.'.:5-:-\ 4~
INC.,
Plaintiff,
14 Civ. 804
- against CHAMPION FOODSERVICE, L.L.C., BC&G
WEITHMAN CONSTRUCTION CO., TYRONE
WEITHMAN, ASHLEY SIMPSON, and LINDA
ATKINSON,
Defendants.
------------------------------------x
A P P E A RA N C E S:
Attorneys for the Plaintiff
JONATHAN C. SCOTT, P.C.
100 Highland Park Village, Suite 200
Highland Park, TX 75205
By:
Jonathan Cory Scott, Esq.
Attorneys for the Defendants
BAILEY & OROZCO, L.L.C.
744 Broad Street
Newark, NJ 07102
By:
Michael Andrew Orozco, Esq.
OPINION
(RWS)
---~---------
~"-----
------------------
Sweet, D.J.
Plaintiff Vista Food Exchange,
Inc.
("Plaintiff" or
"Vista") has moved to remand its action against defendants
Champion Foodservice, L. L. C.
Construction Co., Inc.
("Champion") , BC&G Wei thman
("BC&G," together with Champion, the
"Entity Defendants"), Tyrone Weithman ("Weithman"), Ashley
Simpson ("Simpson"), and Linda Atkinson ("Atkinson," and,
together with the Entity Defendants, Weithman and Simpson, the
"Defendants") to the Supreme Court of the State of New York.
Defendants have moved to dismiss the complaint of Plaintiff or,
in the alternative, transfer the action to the United States
District Court for the Northern District of Ohio.
Based on the conclusions set forth below, Plaintiff's
motion to remand is denied and Defendants' motion to dismiss is
granted.
Defendants' motion to transfer is denied.
Prior Proceedings
On January 10, 2014, Plaintiff filed its complaint
alleging as to all defendants breach of contract, breach of
implied duty of good faith and fair dealing, and fraud and, as
to Weithman, breach of guaranty.
On February 7, 2014,
1
Defendants removed this action from the Supreme Court of the
State of New York on the basis of diversity jurisdiction.
On February 18, 2014, Plaintiff filed a motion to
remand to state court on the grounds that forum selection
agreements signed by Defendants BC&G and Weithman precluded
removal.
On February 19, 2014, Defendants filed a motion to
dismiss Plaintiff's complaint for lack of personal jurisdiction,
improper venue, and failure to state a claim.
In the
alternative, Defendants requested venue transfer.
All motions
were marked fully submitted on April 17, 2014.
Facts
The allegations of the complaint are assumed to be
true and are summarized herein only to the extent necessary to
dispose of Defendant's motion to dismiss or transfer venue and
Plaintiff's motion to remand.
Plaintiff is a wholesale food business incorporated in
New York.
(Compl.
~
2.)
BC&G is an Ohio corporation; Champion
is a corporation organized under the laws of Ohio, which
Plaintiff alleges, upon information and belief, is a shell
company with no significant assets, credit lines or capital.
2
(Compl.
~~
3, 5-6.)
The complaint further alleges, upon
information and belief, that the Entity Defendants have been
operated as alter egos of one another, or have been treated by
Weithman as if they were one and the same.
(Compl.
4.)
~
Each
Entity Defendant is alleged to be in the business of purchasing
food items from vendors and then assembling and packaging them
for distribution.
(Compl.
~
17.)
Weithman is believed to be a resident of Ohio and
President of BC&G and alleged to be the "architect of the
misconduct that Vista complains about."
(Compl.
~
7.)
Simpson
is a resident of Michigan and was during all times relevant the
comptroller of the Entity Defendants and is alleged to have
prepared and/or submitted invoices to Vista in New York that she
knew or should have known were inflated.
(Compl.
~~
8.)
Atkinson is a resident of Ohio and employed by the Entity
Defendants in various capacities and is alleged to have prepared
and/or submitted invoices to Vista in New York that she knew or
(Compl.
should have known were inflated.
~
9.)
Plaintiff's complaint alleges that on or about
March 1, 2011, BC&G sent an application for credit to Vista's
office in New York (the "Credit Agreement").
(Compl.
The Credit Agreement was submitted in connection with
3
~
12.)
establishing an account with Vista to purchase wholesale food
products.
(Compl.
~
13.)
Included in the Credit Application
was a promise to pay for all costs, expenses, and fees incurred
in enforcing the obligations thereunder and the costs of
collection.
Id.
The Credit Application also included the
following language (the "venue language"):
Litigation of all kinds arising from
transactions subject of this guaranty shall
be subject to venue in the State and County
of New York.
New York law shall apply.
(Compl.
~
12.)
Plaintiff approved the Credit Application,
accepted a personal guarantee by Weithman (the "Guaranty
Agreement"), and established an account at Vista in New York for
BC&G.
(Compl.
~
14.)
In or about March 2011, Plaintiff alleges that the
Entity Defendants and Vista entered into an oral contract (the
"Oral Agreement")
in which Vista agreed to sell to Champion's
food products at one cent above Vista's wholesale item cost and
Champion agreed that it would use Vista as its primary supplier
in connection with the Credit Application.
(Compl.
~
16.)
Champion agreed that while initially Champion would estimate its
packaging or non-food costs to be charged to Vista, Champion
would adjust the estimate on past and future orders to reflect
4
Champion's actual cost for packaging and that Vista would be
charged for non-food costs at Champion's actual cost.
Id.
The
premise of the Oral Agreement was that Champion would handle
packaging of Vista meals for its customers by passing through to
Vista the non-food costs without a markup, and that Champion
would source its food products from Vista.
(Compl.
~
20.)
On or about June 20, 2012, a continuing guarantee was
executed by Weithman that guaranteed the payment of all debts,
obligations, and liabilities of every kind and description
whether of the same or different nature than those arising from
the previous, current or subsequent grant of credit to BC&G (the
"Continuing Guaranty").
(Compl.
~
15.)
The Continuing Guaranty
contained the same venue language as the Credit Agreement.
Id.
Plaintiff contends that the venue language contained in both
agreements constituted a binding agreement that venue would be
laid in state court in New York County in the event of a
conflict.
(Pl.'s Mem. Supp. Remand 3-5.)
The complaint alleges that Defendants inflated their
invoices and charges in order to avoid paying Vista sums due for
products and services provided by Vista for a period of
approximately two years.
(Compl.
~~
18, 23.)
It contends that
the Defendants knew that their packaging costs were much less
5
than the amount they initially estimated, and much less than
their true cost, and that Champion went directly to suppliers in
order to cut Vista out of the sale.
(Compl.
~~
18-19.)
The
complaint alleges that, by paying Vista less than what was usual
and customary, by overcharging Vista on the non-food costs in
packaging hundreds of thousands of meals and by circumventing
Vista by establishing relationships directly with Vista's
suppliers, the Entity Defendants dishonored the Oral Agreement.
(Comp.
~
20.)
As a result of the Defendants conduct, Plaintiff
alleges that it was deprived of the benefit of the Oral
Agreement, that Defendants avoided paying the reasonable value
of the products that they purchased from Vista, that Defendants
hurt Vista's relationships with its suppliers, that Defendants
avoided paying Vista the sums due for products or services
provided by Vista, and that Vista was misled into paying to the
Entity Defendants funds to which they were not entitled.
(Compl.
~~
21-24.)
Discussion
1. Defendants' Removal of the State Court Action Was Proper
6
Under 28 U.S.C. § 1441, a civil action brought in a
state court for which federal district courts have original
jurisdiction may be removed by defendants to the federal
district court for the district and division embracing the place
where such action is pending.
28 U.S.C.
§
144l(a).
The party
who removes the action and asserts federal jurisdiction "bears
the burden of establishing jurisdiction" is proper.
Synergy
Advanced Pharms., Inc. v. CapeBio, LLC, 797 F. Supp. 2d 276, 282
(S.D.N.Y. 2011)
53, 57
(quoting Blockbuster, Inc. v. Galeno, 472 F.3d
(2d Cir. 2006)).
Forum selection clauses may "trump what would
otherwise be a right to remove cases to federal court."
v. Tyler Hill Corp., 566 F.3d 72, 76 (2d Cir. 2009).
Yakin
Absent
extraordinary or unusual circumstances, forum selection clauses
are enforced.
Atlantic Marine Construction Co. v. United States
District Court for the Western District of Texas, 134 S. Ct.
568, 583 (2013); see also Bense v. Insterstate Battery Sys. of
Arn.,
683 F.2d 718, 721-22
(2d Cir. 1982).
In the event the
language of a forum selection clause is vague or ambiguous,
however, the clause must be construed against the drafter.
Morgan Chase Bank, N.A. v. Reijtenbagh,
(S.D.N.Y. 2009).
JP
611 F. Supp. 2d 389, 391
A waiver of a "party's statutory right to
remove a case to federal court must be clear and unequivocal."
7
Rabbi Jacob Joseph Sch. v.
124, 128
(E.D.N.Y. 2004)
Province of Mendoza,
(citing to Karl Koch Erecting Co. v.
New York Convention Ctr. Dev. Corp.,
1988)
342 F. Supp. 2d
838 F.2d 656,
659
(2d Cir.
(clause providing that no action shall be commenced
"except in the Supreme Court of the State of New York" operated
as a waiver)).
Plaintiff alleges that,
in removing this case, BC&G
and Weithman dishonored the forum selection clauses in the
Credit Agreement and Continuing Guaranty and contends that the
forum selection language in both agreements constituted an
agreement that,
in the event of litigation, venue would be laid
in the New York state courts of New York County.
Pl.'s Mem. Supp. Remand 3-5.)
(Comp.
~
12;
These arguments, however, cannot
be credited.
The language contained in both documents is,
ambiguous.
indeed,
The text of each the Credit Agreement and Continuing
Guaranty reads as follows:
"Litigation of all kinds arising from
transactions subject of this guaranty shall be subject to venue
in the state and county of New York."
The clause does not
specify whether venue will be laid in state or federal court,
only simply that venue will be in New York County, New York.
Were it the case that only state courts existed in New York
8
County, the designation of state courts would be clear, even if
only implied, by factual necessity.
However, because there are
also federal courts existing in New York County, it is uncertain
which court is preferred and courts in this Circuit have
generally found waiver only when a document contains explicit
language evidencing waiver or "where the forum selection clause
identifies a particular court in which disputes will be heard."
Rabbi Jacob Joseph School, 342 F. Supp. 2d at 128
Creations, Inc. v. Trafcon Indus.,
110 (E.D.N.Y. 2001))
(quoting Unity
Inc., 137 F. Supp. 2d 108,
(emphasis added).
Construing the clause in favor of the non-drafting
party, as the Court must, the Credit Agreement and Continuing
Guaranty cannot be found to clearly require venue exclusively in
state court.
Furthermore, because the defendants have
demonstrated original jurisdiction pursuant to 28 U.S.C.
their removal of the action was proper. 1
28 U.S.C.
§
§
1441,
144l(b)
(diversity of citizenship is an original basis of federal
jurisdiction) .
2. Vista's Complaint Fails To Establish Personal Jurisdiction
Though not entirely clear in Plaintiff's motion to remand, it appears the
Plaintiff has only asserted the forum selection clause against the defendants
party to the Credit Agreement and Continuing Guaranty - BC&G and Weithman.
To the extent the Plaintiff has implied otherwise, the motion to remand would
be denied on personal jurisdictional grounds as to the remaining defendants,
as further discussed below.
1
9
Under 12(b) (2) For All Defendants Except BC&G And Fails To
State A Claim Under 12(b) (6)
A. The Complaint Fails to Establish Personal Jurisdiction
for All Defendants Except BC&G
Plaintiff bears the burden of demonstrating that
personal jurisdiction over each defendant is proper.
See Metro.
Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 567
(2d Cir.
1996); see also Troma Entm't, Inc. v. Centennial Pictures Inc.,
729 F.3d 215, 217
(2d Cir. 2013).
To determine whether personal
jurisdiction is, indeed, proper, courts conduct a two prong
analysis.
First, a federal court must look to the forum state's
long-arm statute, in this instance, New York.
Corp. v. King, 126 F.3d 25, 27
(2d Cir. 1997).
Bensusan Rest.
If the state
statute permits the exercise of jurisdiction, courts must then
decide whether personal jurisdiction comports with the
requisites of the Due Process Clause of the Fourteenth Amendment
of the federal Constitution.
Id.; see also Grand River Enters.
Six Nations, Ltd. v. Pryor, 425 F.3d 158, 165 (2d Cir. 2005);
Tianbo Huang v. iTV Media, Inc., 13-3439, 2014 WL 1377500, *3
(E.D.N.Y. Apr. 8, 2014).
A plaintiff, in the pre-discovery
phase, may defeat a motion challenging jurisdiction by pleading
"in good faith
legally sufficient allegations of
jurisdiction."
Ball v. Metallurgie Hoboken-Overpelt, S.A.,
F.2d 194, 197
(2d Cir. 1990).
10
902
i.
Personal Jurisdiction Is Lacking Under New York's
Long-Arm Statute
There are two bases for personal jurisdiction over
non-domiciliary defendants under New York law:
and Legal Rule
Civil Practice
("CPLR") § 301 provides a basis for general
personal jurisdiction, while CPLR § 302 provides bases for
specific, long-arm jurisdiction.
§ 302(a) states that "a court
may exercise personal jurisdiction over any non-domiciliary ...
who in person or through an agent:
1. transacts any business within the state or contracts
anywhere to supply goods or services in the state; or
2. commits a tortious act within the state (except
defamation); or
3. commits a tortious act without the state causing injury
within the state (except defamation), if he
(i) regularly does or solicits business, or engages in
any other persistent course of conduct, or derives
substantial revenue from goods used or consumed or
services rendered, in the state, or
(ii) expects or should reasonably expect the act to
have consequences in the state and derives substantial
revenue from interstate or international commerce."
CPLR § 302(a).
Here, Plaintiff appears to plead personal jurisdiction
is appropriate under all three subsection of§ 302(a).
~
10; Pl.'s Mem. in Opp'n 14.)
11
(Compl.
1. Jurisdiction Is Lacking Under§ 302(a) (1)
Under§ 302(a) (1), a court may exercise personal
jurisdiction over a non-domiciliary defendant who "transacts any
business within the state or contracts anywhere to supply goods
or services in the state."
CPLR § 302(a) (1).
To establish
whether this basis of jurisdiction has been established, courts
are required to determine "(1) whether the defendant 'transacts
any business' in New York and,
action 'aris[es]
from'
Lines, Inc. v. Walker,
if so,
(2) whether this cause of
such a business transaction."
490 F.3d 239, 246
Best Van
(2d Cir. 2007).
CPLR § 302(a) (1) provides no specific guidelines as to
what constitutes a transaction of business for purposes of
establishing specific personal jurisdiction over non-domiciliary
defendants.
Reinecke,
See Longines-Wittnauer Watch Co. v. Barnes &
Inc., 15 N.Y.2d 443,
456 (1965).
This Circuit has
acknowledged, however, that "the overriding criterion necessary
to establish a transaction of business is some act by which the
defendant purposefully avails itself of the privilege of
conducting activities within New York."
Canadian Bank, SAL,
673 F.3d 50,
Ehrenfeld v. Bin Mahfouz,
61
Licci v. Lebanese
(2d Cir. 2012)
9 N.Y.3d 501, 508
12
(2007))
(citing
Put
another way, it is "the quality of the defendants' New York
contacts that is the primary consideration."
Fischbarg v.
Doucet, 9 N.Y.3d 375, 380, 849 N.Y.S.2d 501, 880 N.E.2d 22
(2007) .
Second Circuit case law further counsels that courts
should consider the "totality of a defendant's conduct" when
determining whether a non-domiciliary defendant has transacted
business in New York, including "whether [he] has an on-going
contractual relationship with a New York corporation[,
.]
whether the contract was negotiated or executed in New York and
whether, after executing a contract with a New York business,
the defendant .
visited New York for the purpose of meeting
with parties to the contract regarding the relationship."
Pincione v. D'Alfonso, 506 F. App'x 22, 24-25
(2d Cir. 2012)
(quoting Sunward Elecs., Inc. v. McDonald, 362 F.3d 17, 22
Cir. 2004))
(internal citations omitted).
(2d
Courts may also
consider choice of law clauses and whether the contract requires
parties to send notices and payments into the forum state.
Sunward Elecs., 362 F.3d at 22.
See
Telephone calls and other
communications to New York, standing on their own, however, do
not necessarily confer jurisdiction.
F. Supp. 76, 78-79 (S.D.N.Y. 1996).
See Carlson v. Cuevas, 932
Such communications must be
evaluated with an eye towards whether a defendant has
13
"purposefully availed himself of the privilege of conducting
activities in New York and thereby invoked the benefits and
protections of its laws[.]"
Thorsen v. Sons of Norway, No. 13-
CV-2572, 2014 WL 507466, *5 (E.D.N.Y. Feb. 6, 2014)
(quoting
Parke-Bernet Galleries v. Franklyn, 26 N.Y.2d 13, 308 N.Y.S.2d
337, 256 N.E.2d 506, 508-09 (1970)).
The Plaintiff alleges that personal jurisdiction may
be exercised by this Court over all defendants under
§
302(a)(l).
a. Personal Jurisdiction Over Simpson and
Atkinson
Personal jurisdiction does not automatically extend to
an employee from the corporation which employees him.
Hustler Magazine,
Keeton v.
Inc., 465 U.S. 770, 781 n. 13 (1984); see also
Weiner v. Lex, No. 13-CV-1511, 2014 WL 325698, *4
(S.D.N.Y. Jan.
23, 2014) (" [i] t is well established that individual .
employees of a corporation are not automatically subject to
personal jurisdiction in New York because a court can exercise
jurisdiction over the corporation")
(quoting In re Terrorist
Attacks on Sept. 11, 2001, 714 F.3d 659, 681 (2d Cir. 2013))
(internal citation marks omitted); Thorsen, 2014 WL 507466 at
14
*12
("individual officers, directors, and other agents of a
corporation (or organization) are not automatically subject to a
court's jurisdiction simply because the Court may have
jurisdiction over the corporation").
Non-domiciliary corporate
officers can still be subject to personal jurisdiction if it can
be shown that the corporation transacted business in New York as
the officer's agent.
Kreutter v. McFadden Oil Corp., 71 N.Y.2d
460, 467, 522 N.E.2d 40, 44
(1988)
(stating that a plaintiff
must show that the corporation was controlled by the corporate
officer and that the corporation engaged in purposeful
activities in relation to the transaction for the benefit of and
with the knowledge and consent of that corporate officer).
However, at "the heart of this inquiry is whether the out-ofstate corporate officers were 'primary actor[s] in the
transaction in New York' that gave rise to the litigation, and
not merely 'some corporate employee[s]
in' it."
who played no part
Karabu Corp. v. Gitner, 16 F. Supp. 2d 319, 323
(S.D.N.Y. 1998)
(quoting Retail Software Servs., Inc. v.
Lashlee, 854 F.2d 18, 22
(2d Cir. 1988)).
The only allegation made in the complaint regarding
Simpson and Atkinson is that both were "involved" in the scheme
and that they "participated in the preparation and/or submission
of invoices to Vista in New York that [they]
15
knew or should have
known were inflated," and that they were "otherwise actively
participating in defrauding Vista."
(Comp.
~~
8-9, 38.)
While
New York courts have found out-of-state corporate officers
liable for corporations' allegedly wrongful actions in some
cases, New York courts have also found claims such as those
alleged in the instant case insufficient.
See, e.g., Nelson A.
Taylor Co., Inc. v. Technology Dynamics Group Inc., 1997 WL
176325, *5 (N.D.N.Y. Apr. 7, 1997)
(personal jurisdiction
imputed when defendants were alleged to have negotiations and
signed the agreements in dispute, personally controlled all
transactions, and authored virtually all correspondence);
Sterling Interiors Group, Inc. v. Haworth, No. 94-CV-9216, 1996
WL 426379, *15 (S.D.N.Y. July 30, 1996)
(finding that
participation in a scheme and the belief that individual, nonshareholding defendants were "believed to be or to have been
fully aware of .
. condoned and directed the perpetuation of
the scheme" were insufficient to establish personal
jurisdiction).
Plaintiff's complaint relies solely on the fact that
Simpson and Atkinson physically prepared and sent invoices, and
the availability of information to Simpson as comptroller, to
establish misconduct.
(Compl. ]] 8-9; Pl.'s Mem. in Opp'n 13.)
Unlike in cases where courts have imputed personal jurisdiction
16
to individual defendants, neither Simpson nor Atkinson
negotiated or even signed or were parties to the agreements
cited in the complaint as linked to the transaction, nor do
Plaintiff's pleadings sufficiently establish that either Simpson
or Atkinson exercised sufficient control over the transactions
complained of to reasonably consider them "primary actors"
rather than lower-level employees.
Plaintiff's opposition
papers do not lend any additional strength to the complaint's
claims. 2
Without some additional facts as to specific acts
committed by Simpson and Atkinson to intentionally further a
fraudulent scheme, Plaintiff's vague allegations of fraud are
insufficient to hold Simpson and Atkinson accountable in their
individual capacities.
As such, this Court declines to exercise
personal jurisdiction over Simpson and Atkinson.
3
Plaintiff states in its opposition papers that "Simpson and Atkinson would
like the Court to believe that they had only a ministerial role in executing
Defendants' fraudulent scheme, but they in fact played a substantial,
deliberate and central role .
. Both Simpson and Atkinson admit that they
were personally and intimately involved in preparing and submitting invoices
to Vista."
(Pl.'s Mem. in Opp'n 12-13 (citing Simpson Aff. 11 10-11 and
Atkinson Aff. 11 9-11.))
The mere fact that Simpson and Atkinson admit to
physically preparing and sending invoices does not lend any additional
credibility to the notion that Simpson and Atkinson were intentionally
involved in or exercised sufficient control over either Entity Defendant in
relation to a scheme to defraud Vista.
2
Plaintiff cites to magistrate opinion Bus. Yellow Pages v. Wells, No. 93-CV3856, 1995 WL 386500, (S.D.N.Y.
June 29, 1995) from this year to support its
argument that the intentional sending of fraudulent invoices constitutes
"transacting of business in New York."
(Pl.'s Mem. in Opp'n 13.)
Plaintiff's reliance on this case does not sway the Court's analysis,
3
17
b. Personal Jurisdiction Over Champion
The Court declines to exercise personal jurisdiction
over Champion for similar reasons.
Champion,
like Simpson and
Atkinson, was not a party to either the Credit Agreement or the
Guaranty Agreement and, while Champion is alleged to have sent
invoices to Vista, these invoices, without any specific facts
regarding how they are fraudulent, prove an insufficient basis
for the exercise of jurisdiction.
Plaintiff further contends that Champion is BC&G's
alter ego and asserts that the forum selection clause contained
in the Credit Agreement and Continuing Guaranty should be
however, as Vista has not plead sufficient facts to support the imputation
and exercise of personal jurisdiction over these individual employees.
Additionally, the facts of Wells differ greatly from the facts in the instant
case.
In Wells, Plaintiff managed a directory that listed businesses for a
fee.
Each year Plaintiff mailed renewal notices and invoices to seek payment
for the customer to be listed in the directory the following year.
Defendants were two individuals and a Canadian corporation of which one of
the individual defendants was an officer.
None of the Defendants published a
directory of any kind, but Defendants took names and addresses from the
Plaintiff's listing and mailed counterfeit invoices to Plaintiff's customers
that looked strikingly similar to Plaintiff's.
The fact that defendants did
not manage a directory and mailed invoices directly to decoy businesses
established by Plaintiff to catch exactly the kind of fraud perpetrated by
defendants was damning evidence in Plaintiff's favor.
See generally Wells,
1995 WL 386500. In the instant case, Plaintiff has failed to allege
sufficient facts to support an inference in its favor that Simpson and
Atkinson are anything but employees carrying out their regular duties of
sending invoices to customers for their employer.
See also Sterling
Interiors Grp., 1996 WL 426379 at *15 ("Neither defendant is alleged to be a
shareholder of the corporation, so the corporation cannot be viewed as having
acted on their behalf, for their benefit.
To the contrary, those defendants
were agents of the corporation.
Thus, the Kreutter decision does not
authorize the Court to exert long arm jurisdiction over them pursuant to
section 302(a) (1) .").
18
enforced against Champion as a "closely related" non-signatory.
(Compl.
~~
3-4, 26; Pl.'s Mem. in Opp'n 9.)
To support this
allegation, Plaintiff cites to the fact that Champion benefited
from the credit Vista extended to BC&G through the Credit
Agreement, in connection with which the Oral Agreement is
alleged to have been formed.
Opp'n 9-10.)
(Compl.
~~
14-16; Pl.'s Mem. in
Plaintiff asserts, upon information and belief,
that Champion is a subsidiary of BC&G, and in their dealings
with Vista, the Entity Defendants operated as a single
enterprise, making enforcement of the forum-selection clause in
the Credit Agreement foreseeable and appropriate.
In a diversity case, courts must apply the choice of
law rules of the forum to determine which law governs alter ego
or piercing the corporate veil analysis.
American Fuel Corp. v.
Utah Energy Development Co., Inc., 122 F.3d 130, 134
1997)
(2d Cir.
(citing Wm. Passalacqua Builders v. Resnick Developers S.,
Inc., 933 F.2d 131, 137 (2d Cir. 1991).
Under New York's choice
of law principles, "the law of the state of incorporation
determines when the corporate form will be disregarded."
Fillmore East BS Fin. Subsidiary LLC v. Capmark Bank, No. 11-CV4491, 2013 U.S. Dist. LEXIS 47608, *31
(internal quotations omitted).
(S.D.N.Y. Mar. 30, 2013)
However, where the parties have
agreed to the application of the forum law, their consent
19
concludes the choice of law inquiry.
American Fuel Corp, 122
F.3d at 134.
In this case, while the Credit Agreement contains a
clear statement that "New York law shall apply," Champion has
not signed the Credit Agreement and thus is not subject to the
provision.
Arguably, whether the choice of law provision
contained within the Credit Agreement does apply is predicated
upon whether Champion is an alter ego of BC&G.
However, under
either Ohio or New York veil-piercing precedent, Vista's claims
must fail.
Under Ohio law, a court may pierce the corporate veil
"when (1)
control over the corporation by those to be held
liable was so complete that the corporation has no separate
mind, will, or existence of its own,
(2)
control over the
corporation by those to be held liable was exercised in such a
manner as to commit fraud,
[an illegal act, or a similarly
unlawful act] against the person seeking to disregard the
corporate entity, and (3)
injury or unjust loss resulted to the
plaintiff from such control and wrong."
Inc.,
905 N.E.2d 613,
617 n.
1
See Minno v.
(Ohio 2009)
(citing to Belvedere
Condominium Unit Owners' Assn. v. R.E. Roark Cos.,
N.E.2d 1075
(Ohio 1993)).
Pro-Fab,
Inc.
617
This test has also been applied to
20
ascertain whether a parent corporation can be liable for its
subsidiary's misconduct.
Minno,
905 N.E.2d at 617.
However, a
Plaintiff cannot pierce the corporate veil of one corporation to
reach another corporation in which it holds no ownership
interest, even if the two corporations are controlled by the
same, or substantially the same, owners.
Id.
Vista alleges that Champion is a subsidiary of BC&G,
but provides little factual support for the allegation save for
BC&G's extension of its credit to Champion (and subsequent
execution of the Guaranty Agreement on its behalf) and
Champion's alleged participation in the forming of the Oral
Agreement.
(Compl.
~~
14-15).
In fact, Vista's allegation that
Champion is a subsidiary appears to be directly contradicted by
Vista's President's affidavit, in which he states: "an account
was established at Vista in BC&G's name and for the use of a
subsidiary which became [Champion]
[and] that the
subsidiary that became Champion was a startup entity with no
credit history, no significant revenue or business, and so it
could not have established an account without the use of BC&G's
credit."
(Pacifico Aff.
~
5.)
Stating that Champion once used
to be a subsidiary of BC&G which then became its own business
does not support a theory of alter ego or close-relatedness
under Ohio law.
In fact, plainly read,
21
Pacifico's statement
stands for exactly the opposite proposition - that Champion once
used to be a subsidiary, but has since become a separate
corporate entity and that such separation occurred prior to the
actions at issue in this case.
Vista's allegation that Champion
is "upon information and belief a shell company" is conclusory
and, taken with Pacifico's statement, does not meet Plaintiff's
(See Compl.
pleading burden.
~
3-4.)
As a result, Vista's
assertion of personal jurisdiction over Champion on alter ego
grounds must fail.4
Vista's alter ego allegations would also fail under
New York law.
Alter egos are treated as one entity for purposes
of jurisdiction and liability.
Passalacqua,
933 F.2d at 143.
Ten factors may be considered in determining the sufficiency of
parent domination over the subsidiary:
formalities and paraphernalia;
(2)
(1) absence of corporate
inadequate capitalization;
(3) movement of funds for personal rather than corporate
purposes;
(4) overlap in ownership, officers, directors and
personnel;
( 5) common office space and contact information;
( 6)
limited amount of business discretion exercised by the
subsidiary;
(7)
lack of arms'
and the subsidiary;
(8)
length dealings between the parent
failure to treat the relevant entities
4 This is further supported by Defendants'
submissions, which aver that
Champion and BC&G are separate entities and neither has an ownership interest
in the other.
(Def.'s Mem. Supp. Mot. to Dismiss 15; Weithman Aff. 11 35-
4 0.)
22
as independent profit centers;
(9) payment or guarantee of the
subsidiary's debts by the parent; and (10) use by the parent of
the subsidiary's property as if the property were owned by the
parent. See In re Saba Enterprises, Inc., 421 B.R. 626,
650
(Bankr. S.D.N.Y. 2009) (citing Passalacqua,. 933 F.2d at 139).
The analysis of parent domination is a fact-intensive inquiry,
and no one factor listed above is dispositive.
Id.
While "a plaintiff may plead facts alleged upon
information and belief 'where the belief is based on factual
information that makes the inference of culpability plausible,'
such allegations must be 'accompanied by a statement of the
facts upon which the belief is founded.'"
Munoz-Nagel v. Guess,
Inc., No. 12-CV-1312, 2013 WL 1809772, *3 (S.D.N.Y. Apr. 30,
2013)
(quoting Arista Records, LLC v. Doe 3,
604 F.3d 110, 120
(2d Cir. 2010)) and Prince v. Madison Square Guarden, 427 F.
Supp. 2d 372, 384
(S.D.N.Y. 2006); see also Williams v.
Calderoni, No. ll-CV-3020, 2012 WL 691832, *7
(S.D.N.Y. Mar. 1,
2012) .
Here, Plaintiff's sole factual allegations in support
of its claim of alter ego is the benefit Champion received by
BC&G's extension of its credit to Champion (and subsequent
execution of the Guaranty Agreement on its behalf) and
23
Champion's participation in the forming of the Oral Agreement.
(Compl.
~~
14-15)
At most, Plaintiff has solidly satisfied one
of ten factors in alleging - and substantiating with the
submission of the Corporate Agreement, Guaranty Agreement and
Continuing Guaranty - that the 'parent,' in this case BC&G
guaranteed Champions debts.
Vista has also alleged overlap in
personnel, but without sufficient clarity.
For example, Vista
states in its complaint, upon information and belief, that
Simpson and Atkinson were employed by the Entity Defendants.
(Compl.
~~
8-9).
No other corroborative facts are given save
for the mailing of invoices, all of which appear to have been on
Champion letterhead.
(See generally Compl. Ex. 2.)
Of note is
Atkinson's affidavit, which avers that she has never been an
employee of BC&G, never done any work for BC&G, has always been
paid by Champion.
(Atkinson Aff.
~
5.)s
Without additional, non-conclusory factual allegations
as to corporate structure and the relationship between the
5 Similarly,
Plaintiff's assertions regarding the closely related nature of
the Entity Defendants must fail as they, too, rely on the same set of vague
and conclusory facts.
Furthermore, Plaintiff's comparisons to LaRoss
Partners, LLC v. Contact 911 Inc., 874 F. Supp. 2d 147 (S.D.N.Y. 2012), In re
Optimal U.S. Litig., 813 F. Supp. 2d 351 (S.D.N.Y 2011) and Leviton Mfg. Co.
v. Reeve, 942 F. Supp. 2d 244 (E.D.N.Y. 2013) do not assist their claim.
In
contrast to LaRoss Partners, Plaintiff does not sufficiently allege that
Champion is a subsidiary of BC&G.
Neither has Plaintiff sufficiently alleged
that champion was hired out by BC&G to carry out any contractual obligation
of BC&G, as in In re Optimal, or sufficiently alleged that Champion's
interest are "completely derivative of or directly related to" BC&G's
interests, as in Leviton.
24
Entity Defendants, however, the extension of liability to
Champion under the Credit Agreement - and its venue provision is not sufficiently supported.
c. Personal Jurisdiction Over Weithman
Additionally, the complaint fails to adequately
establish personal jurisdiction over Weithman.
The complaint
alleges that in his capacity as a guarantor and by virtue of
signing the Continuing Guaranty, Weithman should be subject to
personal jurisdiction in New York.
(Compl.
~~
3, 7.)
A guaranty is "the promise to answer for the payment
of some debt or the performance of some obligation, on default
of such payment or performance, by a third person who is liable
in the first instance
. It is an obligation to answer for
the debt of another."
See Terwilliger v. Terwilliger, 206 F.3d
240, 246
(2d Cir. 2000)
(citing 63 N.Y. Jur. 2d Guaranty and
Suretyship § 2 (1987)); see also Weissman v. Sinorm Deli,
Inc., 88 N.Y.2d 437,
(1996)
646 N.Y.S.2d 308,
669 N.E.2d 242, 246
("A guaranty ... is a contract of secondary liability
[A] guarantor will be required to make payment only when the
primary obligor has first defaulted.").
25
Weithman's guaranty is as a guaranty of payment of
monies owed pursuant to the Credit Agreement, and not of
performance.
The obligation to pay an outstanding debt is of a
different character entirely than that of an obligation to be
held accountable for a difference in money instigated by fraud.
As such, while Weithman could perhaps expect to be haled to New
York to answer for a default in payments under the Credit,
Guaranty Agreement, and Continuing Guaranty, that expectation
does not extend to claims of fraud.
The complaint makes no
allegation, apart from its fraud allegations, of money being
owed in violation of the Credit, Guaranty Agreement, and
Continuing Guaranty.
Additionally, Weithman cannot reasonably be held to
meet the "primary actor" standard.
Control cannot be shown
based merely upon a Weithman's title or position within the
corporation, or upon conclusory allegations that he controlled
Champion or BC&G.
See Pilates, Inc. v. Current Concepts, 1996
WL 599654, at *3 (S.D.N.Y. Oct.18, 1996); see also Kinetic
Instruments v. Lares, 802 F.Supp. 976, 984-85
(S.D.N.Y.1992)
("[t]he fact that [the defendant]
is the
President and majority shareholder of [the corporation] does not
necessarily mean that the corporation will be considered his
agent").
Plaintiff's allegation that Weithman was the
26
"architect of the misconduct that Vista complains about," or
that he "used false pretenses to obtain an extension of credit"
and "contacted Vista's suppliers and without notice to Vista
established relationships with them, to Vista's detriment and
damage" are too vague to be credited for the purposes of
establishing personal jurisdiction.
(Compl.
~~
7, 38.)
d. Personal Jurisdiction Over BC&G
BC&G, in contrast to Simpson, Atkinson, Weithman (in
his individual capacity), and Champion, did sign the Credit
Agreement, which contains a valid forum selection clause which
constitutes a "significant contact" with the forum under §
302 (a) (1).
See Uniroyal, Inc. v. Heller, 65 F.R.D. 83, 91
(S.D.N.Y. 1974).
Generally, a choice of law provision in a
contract alone is insufficient to confer jurisdiction and does
not constitute a voluntary submission to personal jurisdiction.
CutCo Industries, Inc. v. Naughton, 806 F.2d 361, 366-67
Cir. 1986).
(2d
However, because the Credit Application contains
specific language regarding litigation, stating that
"[l]itigation of all kinds arising from transactions subject of
this guaranty shall be subject to venue in the state and county
of New York, New York," this Court finds that BC&G is subject to
jurisdiction, despite the questionable relation between the
27
Credit Agreement and the events complained of, by consent.
(See
Compl. Ex. 2.)
2. Jurisdiction Is Lacking Under§ 302(a) (2)
Under§ 302(a) (2), a court may exercise personal
jurisdiction over a non-domiciliary defendant who "commits a
tortious act within the state."
CPLR
§
302(a) (2).
Physical
presence in New York is almost always a prerequisite to
jurisdiction under§ 302(a) (2).
See Pincione v. D'Alfonso, 506
Fed. App'x 22, 25 (2d Cir. 2012)
(declining to revisit Bensusan
Rest. holding and affirming that "CPLR § 302(a) (2) reaches only
tortious acts performed by a defendant who was physically
present in New York when he performed the wrongful act").
Plaintiff's complaint contains no facts to suggest that
Defendants committed any acts, tortious or otherwise, within and
while physically present in New York.
(Comp.
~~
12, 26, 33.)
CPLR § 302(a) (2) cannot, therefore, be relied upon to establish
personal jurisdiction over any named defendant in this case.
3. Jurisdiction Is Lacking Under§ 302(a) (3)
Under§ 302(a) (3), a court may exercise personal
jurisdiction over a non-domiciliary defendant who "commits a
28
tortious act without the state" if that defendant "regularly
does or solicits business in the state" or "expects or should
reasonably expect the act to have consequences in the state and
derives substantial revenue" from the act.
For either
§
302 (a) (3) (i) or
§
CPLR
§
302 (a) (3).
302 (a) (3) (ii) to apply, "(1) a
defendant must have committed a tortious act outside New York,
(2) the cause of action must arise from that tortious act, and
(3) the act must have caused injury to a person or property
within New York."
Doe v. Delaware State Police, 939 F. Supp. 2d
313, 325-26 (S.D.N.Y. 2013)
(citing LaMarca v. Pak-Mor Mfg. Co.,
95 N.Y.2d 210, 713 N.Y.S.2d 304, 735 N.E.2d 883, 886 (2000).
In order to establish jurisdiction under 302 (a) (3) (i),
a plaintiff must demonstrate one of "four alternative forms of
ongoing New York activity by [the] defendant .
. regularly
doing business in New York, regularly soliciting business in New
York, engaging in a 'persistent course of conduct' in New York,
or deriving 'substantial revenue from goods used or consumed or
services rendered in New York.'"
Delaware State Police, 939 F.
Supp. 2d at 326 (internal citations omitted).
Additionally, a
plaintiff "must demonstrate more than substantial revenue from
sales to a New York entity, they must make some showing that the
associated goods are 'used or consumed' in New York."
F.2d at 200.
29
Ball,
902
Under § 302 (a) ( 3) (ii) , a plaintiff must demonstrate
that a defendant "'expected or should reasonably have expected
the [tortious] act to have consequences in [New York],' and that
[the] defendant 'derived substantial revenue from interstate or
international commerce.'"
Delaware State Police,
939 F. Supp.
2d at 326 (citing Pak-Mor, 713 N.Y.S.2d 304, 735 N.E.2d at 886)
See Lawson v. Full Tilt Poker Ltd., 930 F. Supp. 2d 476, 484
(S.D.N.Y. 2013)
(citing Penguin Grp.
(USA)
Inc. v. Am. Buddha,
640 F.3d 497, 498-99 (2d Cir. 2011).
Plaintiff argues that, by sending fraudulent invoices
to Vista in New York, "Defendants" have fulfilled the
requirements of§ 302(a) (3) by sending fraudulent invoices to
Vista.
6
(Pl.'s Mem. in Opp'n 13.)
Specifically, Plaintiff
argues that personal jurisdiction can attach to both Simpson and
Atkinson under each subsection of§ 302(a) (3) because (1) their
sending of allegedly fraudulent invoices qualify as a
"persistent course of conduct" and (2) they knew or should have
known that sending fraudulent invoices would have consequences
Plaintiff's complaint itself appears to allege jurisdiction under only§
302 (a) (1) and § 302 (a) (2).
(See Compl. 'lI 10 (making no specific allegation
regarding commission of tortious acts 'without' the State of New York).)
However, because the complaint points only to § 302 generally, and not
specific subsections, and because Plaintiff's make arguments in their later
submission in opposition to Defendants' motion to dismiss under§ 302(a) (3),
the Court will consider whether the application of§ 302(a) (3) is proper.
(See Pl.'s Mem. in Opp'n 13.)
6
30
in New York.
Id.
Plaintiff further alleges that, as "employees
and officers of a business engaged in the purchase and resale of
packaged food products, it is likely that a substantial portion
of their income derives from interstate commerce."
Id.
Plaintiff's arguments must fail as to all defendants.
There are insufficient facts alleged to hold Simpson and
Atkinson to account for 'regularly soliciting business' or
'engaging in persistent course of conduct' or 'deriving
substantial revenue' from New York separate from their employers
under
§
302 (a) (3) (i).
As discussed above, Vista has further
failed to supply facts supporting an allegation of fraud with
respect to the invoices or why Weithman should be held to
account as a guarantor or as an officer of BC&G.
Conclusory,
"nonfact-specific jurisdictional allegations" are insufficient
without further details, especially when Plaintiff could have
included such details in the complaint or appended affidavits.
Delaware State Police, 939 F. Supp. 2d at 329 (quoting Jazini v.
Nissan Motor Co., 148 F.3d 181, 185 (2d Cir. 1998) and S. New
England Tel. Co. v. Global NAPs Inc., 624 F.3d 123, 138
2010)).
under
§
(2d Cir.
As such, this Court declines to exercise jurisdiction
302 (a) (3). 7
7
Additionally, Plaintiff fails to allege sufficient facts to show that
associated goods are 'used or consumed' in New York under § 302 (a) (3) (i).
See Ball, 902 F.2d at 200.
Plaintiff also fails to allege sufficient factual
31
ii.
Personal Jurisdiction Is Lacking Under the Due
Process Clause
When determining whether the exercise of jurisdiction
over non-domiciliary defendants comports with the Due Process
Clause, courts must determine whether defendants have "minimum
contacts" with New York such that the maintenance of the suit
does not offend traditional notions of fair play and substantial
justice.
Licci, 732 F.3d at 169.
A court's inquiry must focus
on (1) "the quality and nature of the defendant's contacts with
the forum state under a totality of the circumstances test" and
(2) whether the assertion of personal jurisdiction would be
reasonable.
( 1985) .
Burger King Corp. v. Rudzewicz,
471 U.S.
462,
476
When engaging in this analysis, courts consider whether
a defendant has committed an act by which they purposefully
availed themselves of the privilege of conducting activities
within New York and whether the defendant's conduct and
connection with New York must be such that they should
matter under § 302 (a) (3) (ii) that Defendants derives substantial revenue from
interstate or international commerce.
Plaintiff states that "it is likely
that a substantial portion of [Defendants'] income derives from interstate
commerce," but does not allege any additional facts to support the allegation
- evidence of the transaction at issue is not sufficient to establish that
Defendants do enough business in New York to derive a substantial portion of
their income from the state.
See Delaware State Police, 939 F. Supp. 2d at
330 ("Thus, while 'purchases from companies located in New York can . . .
demonstrate regular business dealings with the forum,' . . . those purchases
must be of a sufficient amount and regularity to constitute 'ongoing
activity' in New York.") (quoting Del Ponte v. Universal City Dev. Partners,
Ltd., No. 07-CV-2360, 2008 WL 169358, *4 (S.D.N.Y. Jan. 16, 2008)).
32
reasonably expect to litigate here.
See Rudzewicz, 471 U.S.
462, 475 (1985); see also World-Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 297
(1980); Chloe v. Queen Bee of Beverly
Hills, LLC, 616 F. 3d 15 8, 1 71
( 2d Cir. 2010) .
However, as previously stated, this Court finds that
jurisdiction as to BC&G is proper under a minimum contacts
analysis because BC&G expressly consented to jurisdiction in New
York as a result of executing the Credit Agreement, which
contained a clear consent to litigate in New York. 8
By signing
an agreement with such a clause, it is indisputable that BC&G
could reasonably expect to litigate in New York on claims having
to do with its relationship with Vista.
B. The Complaint Fails to Allege Sufficient Factual
Matter to Survive a Motion to Dismiss As To BC&G
Because the court has found that New York's long-arm statute does not allow
the exercise of personal jurisdiction over Simpson, Atkinson, Weithman and
Champion, there is no need to conduct a due process analysis for those
defendants, though Plaintiff's claims would necessarily fail as Plaintiff
does not plead sufficient factual matter to satisfy the minimum contacts
analysis.
There is very little nexus between Plaintiff's claims and New York
apart from the domicile of the Plaintiff and the mailing of invoices to the
Plaintiff. While the complaint alleges Simpson, Atkinson, and Champion sent
invoices to Vista in New York, Plaintiff pleadings lack the requisite factual
specificity to sufficiently allege fraud in connection with their mailing.
Neither Simpson, Atkinson, nor Champion were party to the written agreements
at issue in the litigation and, as such, they could not have reasonably
expected to be haled to New York to participate in litigation arising out of
those documents.
Weithman signed both the written agreements, but as to the
first, only signed in his capacity as President of BC&G and, as to the two
guaranties, signed in his individual capacity to guaranty debt of BC&G
arising out of the credit extension.
Because a debt separate from the
allegation of fraud is not alleged, the Continuing Guaranty cannot reasonably
be treated as a document conferring jurisdiction over him in respect to the
instant litigation.
8
33
On a motion to dismiss pursuant to Rule 12(b) (6), all
factual allegations in the complaint are accepted as true, and
all inferences are drawn in favor of the pleader.
Polar Molecular Corp., 12 F.3d 1170, 1174
Mills v.
(2d Cir. 1993).
However, "a plaintiff's obligation to provide the grounds of his
entitlement to relief requires more than labels and
conclusions."
(2007)
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(internal quotation marks omitted).
A complaint must
contain "sufficient factual matter, accepted as true, to 'state
a claim to relief that is plausible on its face.'"
Iqbal, 556 U.S. 662, 663
(2009)
Ashcroft v.
(quoting Twombly, 550 U.S. at
570) .
A claim is facially plausible when "the plaintiff
pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged."
550 U.S. at 556).
Iqbal, 556 U.S. at 663 (quoting Twombly,
In other words, the factual allegations must
"possess enough heft to show that the pleader is entitled to
relief."
Twombly, 550 U.S. at 557
omitted).
34
(internal quotation marks
As part of a 12(b) (6) analysis, the Court may consider
outside documents that are integral to the complaint, regardless
of whether they are attached to the complaint, so long as the
pleader has notice of them or refers to them.
Daly, 243 F.3d 687, 691
See Gregory v.
(2d Cir. 2001); Schnall v. Marine
Midland Bank, 225 F.3d 263, 266 (2d Cir. 2000); Garcia v. Lewis,
No. 05-CV-1153, 2005 WL 1423253, *3 (S.D.N.Y. June 16, 2005)
("[W]hile courts generally do not consider matters outside the
pleadings, they may consider documents attached to the
pleadings, documents referenced in the pleadings, or documents
that are integral to the pleadings in order to determine if a
complaint should survive a 12(b) (6) motion.").
Plaintiff's complaint sets forward four claims: breach
of contract, breach of duty of good faith and fair dealing,
breach of guaranty, and fraud.
i.
Plaintiff Does Not Plead Sufficient Facts to
Support A Breach of Contract Claim Or Breach of
Duty Of Good Faith And Fair Dealing
To state a claim for breach of contract under New York
law in federal court, a complaint need only allege:
(1) the
existence of an agreement,
(2) adequate performance of the
contract by the plaintiff,
(3) breach of contract by the
35
defendant, and (4) damages.
348
(2d Cir. 1996)
Harsco Corp. v. Segui, 91 F.3d 337,
(citing to Tagare v. Nynex Network Sys. Co.,
921 F.Supp. 1146, 1149 (S.0.N.Y.1996); 5 CHARLES A. WRIGHT
R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1235
&
ARTHUR
(1990))); see also
Eternity Global Master Fund Ltd. v. Morgan Guar. Trust Co. of
N.Y., 375 F.3d 168, 177
(2d Cir. 2004).
Plaintiff alleges that BC&G, in conjunction with
Champion and Weithman, entered into the Oral Agreement whereby
Vista agreed to sell wholesale food products to Champion at once
cent above cost and Champion agreed to use Vista as its primary
supplier.
(Compl.
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