Ramsey v. Bimbo Foods Bakeries Distribution, Inc.
ORDER granting in part and denying in part 12 Motion to Dismiss for Failure to State a Claim, denying 14 Motion for Preliminary Injunction and denying as moot 16 Motion for Hearing. Signed by Senior Judge W. Earl Britt on 7/10/2014. Counsel should read order in its entirety for critical deadlines and information. (Marsh, K)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
BIMBO FOODS BAKERIES
DISTRIBUTION, INC. formally known as )
GEORGE WESTON BAKERIES
This matter is before the court on defendant’s (“defendant” or “BFBD”) motion to
dismiss plaintiff’s complaint and plaintiff’s motion for a preliminary injunction and request for
joint hearing. (DE ## 12, 14, 16.) The motions have been fully briefed and are ripe for
In 2008, for $130,000, plaintiff, as an “independent operator,” purchased a distribution
route which granted him exclusive rights to purchase bakery products from defendant and sell
those products to grocery store chains and independent grocers in a designated area. (Compl.,
DE # 1-1, ¶¶ 6, 8, 9.) At the same time, he entered into a Distribution Agreement with defendant
and was “to be paid on a percentage of sales or a margin on the sale of product.” (Id. ¶ 8 & Ex.
In June 2013, defendant informed plaintiff and other local independent operators that it
was reducing the margins to be paid to them. (Id. ¶ 10.) Plaintiff and most of the other
independent operators “united in an effort to fight the Defendant’s effort to unilaterally reduce
margins.” (Id. ¶ 12.) A committee of six independent operators was formed to communicate and
negotiate with defendant about the reduced margins. (Id.) Plaintiff was one of the committee
members and took an active role in the committee, being “outspoken with regard to the
sentiment of the 30 independent operators relative to the payment of commissions and/or
reduction of margins received for services.” (Id. ¶¶ 12, 18.) Various forms of communication
between the committee, its counsel, representatives of defendant, and defense counsel occurred.
(See id. ¶¶ 14-16.) According to plaintiff, defendant refused to negotiate. (Id. ¶ 15.)
In the meantime, plaintiff continued to operate his distribution route. (Id. ¶ 20.) On 6
December 2013, defendant, through its sales representative Brant Vickers, issued to plaintiff a
“Notice of Breach of Distribution Agreement.” (Id. ¶ 25 & Ex. 5.) That Notice states,
Dear Mr. Ramsey:
On December 4, 2013, your customer, Harris Teeter #257, reported
to us that you are no longer permitted to service its store with the
products of Bimbo Foods Bakeries Distribution Inc. (“BFBD”) due
to your continuing and continuous failure to provide proper and
satisfactory service, including out of stock conditions on core
items and promotional products. Accordingly, you are in breach of
your Distribution Agreement with BFBD.
You have three days to cure the contract violation. If you do not,
we will take appropriate action under the Distribution Agreement.
(Id., Ex. 5.) On 11 December 2013, Vickers issued to plaintiff a “Notice of Termination of
Distribution Agreement.” (Id. ¶ 25 & Ex. 6.) That document refers to the 6 December 2013
notification of violation of the Distribution Agreement and states that plaintiff failed to cure the
breach and that, accordingly, the Distribution Agreement is terminated effectively immediately.
(Id., Ex. 6.)
According to plaintiff, he and the Harris Teeter manager referenced in the Notices had
“personality problems resulting in the manager of the store deciding not to let the Plaintiff enter
the business.” (Id. ¶ 25.) “The Plaintiff did everything within his power to attempt to placate the
Harris Teeter store manager but without any success whatsoever.” (Id. ¶ 26.) Plaintiff and
another independent operator agreed to exchange stores, yet apparently the Harris Teeter store
manager rejected this option. (See id. ¶ 27.) Then, plaintiff negotiated with Vickers to exchange
his (plaintiff’s) distribution route with another independent operator. (Id. ¶ 28.) The Harris
Teeter store manager would not agree to this arrangement either. (Id.) This event prompted
defendant’s issuance of the Notices of Breach and Termination to plaintiff. (Id.) Plaintiff
requested a hearing with management to produce evidence of his agreement reached with the
other independent operator to cure the problem, but his request was refused and plaintiff was
informed that he could not return to defendant’s premises. (Id. ¶ 30.)
Since defendant’s termination of the Distribution Agreement, defendant has been
operating the distribution route in plaintiff’s name at a loss. (Id. ¶¶ 37-38.) Plaintiff claims that
“[t]he allegations set forth in the Notice of Breach and Notice of Termination do not allege a
valid reason for termination under the true facts” and that “[t]he attempt to terminate the
Plaintiff’s independent operator agreement is for the purpose of punishing the Plaintiff for taking
an active role in attempting to negotiate a return to the margins paid prior to the actions taken by
the Defendant in reducing margins” and to profit from the resale of the distribution route. (Id. ¶¶
32, 36; see also Resp., DE # 17, at 6.)
On 21 January 2014, plaintiff filed the instant complaint in state court, asserting claims
for breach of contract, fraud, and unfair and deceptive trade practices under Chapter 75 of the
North Carolina General Statutes. Plaintiff seeks injunctive and compensatory relief, including
punitive damages. On the same day plaintiff filed the case, defendant removed it to this court.
On 12 February 2014, defendant filed the motion to dismiss plaintiff’s complaint. On 24
February 2014, plaintiff filed the motion for preliminary injunction along with the request for
joint hearing on his motion for preliminary injunction in this case and the motion for preliminary
injunction in Martin v. Bimbo Foods Bakeries Distribution, Inc., No. 5:14-CV-17-BR
(E.D.N.C.). On 3 March 2014, plaintiff filed his response in opposition to defendant’s motion to
dismiss, to which defendant filed its reply on 20 March 2014. Also, on 20 March 2014,
defendant filed its documents in opposition to plaintiff’s motion for preliminary injunction and
in opposition to plaintiff’s request for joint hearing. Plaintiff did not file any reply.
Motion to Dismiss
Defendant moves to dismiss all of plaintiff’s claims pursuant to Federal Rule of Civil
To survive a motion to dismiss pursuant to Rule 12(b)(6), [the
plaintiff’s] “[f]actual allegations must be enough to raise a right to
relief above the speculative level,” thereby “nudg[ing] [its] claims
across the line from conceivable to plausible.”
The plausibility standard requires a plaintiff to
demonstrate more than “a sheer possibility that a
defendant has acted unlawfully.” It requires the
plaintiff to articulate facts, when accepted as true,
that “show” that the plaintiff has stated a claim
entitling him to relief, i.e., the “plausibility of
‘entitlement to relief.’”
To emphasize the Federal Rules'
requirements for stating claims that are warranted
and therefore form a plausible basis for relief, the
Supreme Court has held that a complaint must
contain “more than labels and conclusions, and a
formulaic recitation of the elements of a cause of
action will not do.” To discount such unadorned
conclusory allegations, “a court considering a
motion to dismiss can choose to begin by
identifying pleadings that, because they are no more
than conclusions, are not entitled to the assumption
of truth.” This approach recognizes that “naked
assertions” of wrongdoing necessitate some “factual
enhancement” within the complaint to cross “the
line between possibility and plausibility of
entitlement to relief.”
At bottom, determining whether a complaint
states on its face a plausible claim for relief and
therefore can survive a Rule 12(b)(6) motion will
“be a context-specific task that requires the
reviewing court to draw on its judicial experience
and common sense. But where the well-pleaded
facts do not permit the court to infer more than the
mere possibility of misconduct, the complaint has
alleged— but it has not ‘show[n]’— ‘that the
pleader is entitled to relief,’” as required by Rule 8.
Vitol, S.A. v. Primerose Shipping Co., 708 F.3d 527, 543 (4th Cir. 2013) (most alterations in
original) (citations omitted).
In making this determination, the court does not normally consider matters outside of the
complaint. See Fed. R. Civ. P. 12(d) (“If, on a motion under Rule 12(b)(6) . . ., matters outside
the pleadings are presented to and not excluded by the court, the motion must be treated as one
for summary judgment under Rule 56.”). The court may, however, consider those documents
attached to the complaint itself “so long as they are integral to the complaint and authentic.”
Philips v. Pitt Cnty. Mem’l Hosp., 572 F.3d 176, 180 (4th Cir. 2009) (citation omitted).
Under North Carolina law, “[t]he elements of a claim for breach of contract are (1)
existence of a valid contract and (2) breach of the terms of that contract.”1 Ahmadi v. Triangle
Although the Distribution Agreement provides that its “validity, interpretation and performance . . . shall
be controlled by and construed in accordance with the laws of the Commonwealth of Pennsylvania,” (Compl., Ex. 1,
DE # 1-1), plaintiff relies on North Carolina law to support his breach of contract claim, (Resp., DE # 17, at 5), and
defendant does not contend any other state’s law applies, (see Reply, DE # 18, at 4 (citing Atlantic v. E. Carolina
Ry. Co v. S. Outdoor Adver., Inc. 501 S.E.2d 87 (N.C. Ct. App. 1998)).
Rent A Car, Inc., 691 S.E.2d 101, 103 (N.C. Ct. App. 2010) (citation and quotation omitted). “In
order for a breach of contract to be actionable it must be a material breach, one that substantially
defeats the purpose of the agreement or goes to the very heart of the agreement, or can be
characterized as a substantial failure to perform.” Long v. Long, 588 S.E.2d 1, 4 (N.C. Ct. App.
2003) (citation and quotation omitted). Defendant contends that plaintiff has not sufficiently
alleged that it improperly terminated the Distribution Agreement.
According to the relevant terms of the Agreement, defendant may terminate the
Agreement when the distributor (also known as the independent operator) does not cure a
breach. Specifically, the Distribution Agreement provides in Article 8:
§8.3 CURABLE BREACH: In the event of breach by
DISTRIBUTOR other than under §8.2,[i.e., a “non-curable”
breach,] GWBD shall give DISTRIBUTOR three (3) business
days written notice within which DISTRIBUTOR may cure the
breach. If DISTRIBUTOR fails to cure such breach within said
three (3) day period, GWBD may thereafter terminate this
Agreement and DISTRIBUTOR shall have no further right to cure
(Compl., Ex. 1, DE # 1-1.) Under the Agreement, plaintiff is obligated to “develop and
maximize sales of Products to Outlets within [his] Sales Area by maintaining an adequate and
fresh supply of Products in all Outlets” and by “providing service on a basis consistent with good
industry practice to all Outlets requesting service in the Sales Area.” (Id. §4.1.) Failure to fulfill
these obligations “shall be considered a breach” and “entitle [defendant] to terminate [the
Distribution] Agreement as more specifically set forth in Article 8 . . . .” (Compl., Ex. 1, DE #
Defendant was previously known as George Weston Bakeries Distribution, Inc. or “GWBD.” (Compl.,
DE # 1-1, ¶ 2.)
Outlets are “all retail stores which purchase Products by store door delivery.” (Compl., Ex.1, Sch. B, DE #
1-1.) No one suggests that a Harris Teeter grocery store does not meet this definition.
Defendant argues that because plaintiff was banned from entering the subject Harris
Teeter store, he was unable to service all stores on his distribution route and thus was in breach
of the Distribution Agreement, and its termination was proper. (Mem., DE # 13, at 4-5.)
Plaintiff does not deny that he was prohibited from entering the store. Rather, he claims that the
Distribution Agreement does not state that it could be terminated if the distributor has a
disagreement with a store manager, and he argues that any breach by him (which he does not
concede) was not material. (Resp., DE # 17, at 5-6; see also Compl., DE # 1-1, ¶¶ 25-26 (“The
fact that the Plaintiff had a problem with one of his customers was not a material matter that
needed to be considered by the Defendant. . . . The Defendant allowed an irate and disgruntled
manager of Harris Teeter #257 to dictate that the Plaintiff be terminated by the Defendant.”).)
Therefore, he alleges, defendant breached the Agreement by terminating it without just cause.
(Compl., DE # 1-1, ¶¶ 25, 55(1); Resp., DE # 17, at 6.)
Plaintiff is correct that the Distribution Agreement does not expressly provide that
defendant may terminate it if the distributor and a store manager have some sort of disagreement.
However, as previously recognized, defendant does have the right to terminate if the distributor
cannot maximize sales to retail stores by maintaining the product supply. Whether the inability
to service one retail store constitutes a material breach of the Distribution Agreement cannot be
determined now. It is enough that plaintiff alleges defendant unjustifiably terminated the
Agreement as a pretext to punish plaintiff for his role on the committee negotiating about the
reduced margins and to profit financially from the resale of the distribution route. Therefore, the
court will not dismiss plaintiff’s breach of contract claim.
Turning to his next claim, plaintiff alleges:
The Defendant committed fraud by intentionally and
fraudulently making false and untrue allegations in the Notice of
Termination for the purpose of attempting to create some sort of
claim that would justify the termination of Plaintiff’s independent
operator's contract. The Defendant acted with fraudulent intent
and for the purpose of fraudulently and unlawfully attempting to
terminate the Plaintiff’s independent operator's agreement.
(Compl., DE # 1-1, ¶ 59.) Hence, plaintiff’s fraud claim is based on his contention that
defendant’s stated reason for terminating the Distribution Agreement was pretextual. (See
Resp., DE # 17, at 7.)
“The essential elements of actionable fraud are: ‘(1) [f]alse representation or concealment
of a material fact, (2) reasonably calculated to deceive, (3) made with the intent to deceive, (4)
which does in fact deceive, (5) resulting in damage to the injured party.’” Cobb v. Pa. Life Ins.
Co., 715 S.E.2d 541, 549 (N.C. Ct. App. 2011) (citation omitted) (alteration in original). The
court agrees with defendant that plaintiff has not adequately pled such a claim.
First, one cannot transform a breach of contract claim into a fraud claim based solely on
the failure to perform in accordance with the contract’s terms. See Broussard v. Meineke Disc.
Muffler Shops, Inc., 155 F.3d 331, 346 (4th Cir. 1998) (“But it is plain that ‘[t]he mere failure to
carry out a promise in contract . . . does not support a tort action for fraud.’” (quoting Strum v.
Exxon Co., 15 F.3d 327, 331 (4th Cir. 1994) (citing Hoyle v. Bagby, 117 S.E.2d 760, 762 (N.C.
1961); In re Baby Boy Shamp, 347 S.E.2d 848, 853 (N.C. Ct. App. 1986))). Second, plaintiff
challenged the termination from the outset. (See Compl., DE # 1-1, ¶ 30 (“request[ing] a hearing
with management so he could produce testimony and produce agreements that he had reached
with another independent operator that would cure the problem for which the Plaintiff has lost
his distribution rights under his independent operator’s agreement.”). Thus, he was in no way
deceived by defendant’s purportedly false statements in the Notice of Termination. Accordingly,
plaintiff has failed to state a claim for fraud.
Finally, the court considers plaintiff’s claim under North Carolina’s Unfair and Deceptive
Trade Practices Act (“UDTPA”), N.C. Gen. Stat. § 75-1.1 et seq.
The UDTPA is meant to prevent “unfair or deceptive acts
or practices in or affecting commerce.” In order to state a claim
under the UDTPA, a plaintiff must show “(1) defendant committed
an unfair or deceptive act or practice; (2) the action in question
was in or affecting commerce; and (3) the act proximately caused
injury to the plaintiff.” Whether conduct is “unfair” or “deceptive”
is a legal issue for the court to decide.
[A] mere breach of contract claim “is not unfair or
deceptive, . . . absent substantial aggravating circumstances.” The
North Carolina Court of Appeals has further explained,
Egregious or aggravating circumstances must be
alleged before the provisions of the [UDTPA] may
take effect. Aggravating circumstances include
conduct of the breaching party that is deceptive.
Finally, in determining whether a particular act or
practice is deceptive, its effect on the average
consumer is considered.
Indeed, “it is unlikely that an independent tort could arise in the
course of contractual performance, since those sorts of claims are
most appropriately addressed by asking simply whether a party
adequately fulfilled its contractual obligations.”
Ellis v. Louisiana-Pac. Corp., 699 F.3d 778, 787 (4th Cir. 2012) (citations omitted).
Defendant contends that plaintiff’s allegations amount to nothing more than a standard
breach of contract action. (Mem., DE # 15, at 9.) The court disagrees. At this stage of the
proceedings, the facts of this case are sufficiently analogous to those in Johnson v. Colonial Life
& Accident Ins. Co., 618 S.E.2d 867 (N.C. Ct. App. 2005). In Johnson, the plaintiff’s
employment as an insurance sales representative could only be terminated for cause. 618 S.E.2d
at 869. The letter terminating the plaintiff’s employment stated that he was being terminated for
filing a fraudulent claim for benefits (which would be cause for termination under the terms of
the contract). Id. However, the plaintiff claimed that the real reason for his termination was his
employer’s dissatisfaction with his assisting policyholders in filling out insurance claims. Id.
The employer’s motion for summary judgment was denied, and the case was submitted to the
jury on the issues of breach of the employment contract and whether the employer had engaged
in specified, aggravated circumstances associated with the breach, among other issues. Id. at
870. The jury found that the employer breached the contract, i.e., the termination was not for
cause. Id. at 870-71. The North Carolina Court of Appeals found that, based on the conflicting
evidence regarding the issue of whether plaintiff filed a fraudulent claim for benefits, the breach
of contract claim was properly submitted to the jury. Id. In considering the employer’s appeal
of the trial court’s determination that there was a violation of the UDTPA, the appellate court
[The Plaintiff] presented evidence that false accusations were
deceptively made against him as a pre-text forming the basis of
termination and the jury agreed. Therefore, where the jury found
that there was a breach of contract accompanied by aggravating
factors, it was proper for the judge to conclude as a matter of law
that a claim under N.C. Gen. Stat. § 75-1.1 had been satisfied.
Id. at 871.
In this case, plaintiff is claiming that not only did defendant terminate their agreement
contrary to its terms but also defendant acted unfairly and deceptively by pretextually
terminating the agreement. Under Johnson, that pretextual termination may constitute a
substantial aggravating circumstance attendant to the breach of contract. Therefore, the court
concludes that plaintiff has sufficiently alleged a UDTPA claim.
Plaintiff’s Motion for Preliminary Injunction and Request for Joint Hearing
Plaintiff requests that the court preliminarily enjoin defendant “from in any way
interfering with Plaintiff[’s] . . . operation of his bakery products distribution route . . . and from
taking any action or invoking any timeline to force the sale of Plaintiff[’s] . . . independent
operator’s agreement.” (Mot., DE # 14, at 1.) “Federal decisions have uniformly characterized
the grant of interim relief as an extraordinary remedy involving the exercise of a very
far-reaching power, which is to be applied only in [the] limited circumstances which clearly
demand it.” Direx Int’l, Ltd. v. Breakthrough Med. Corp., 952 F.2d 802, 811 (4th Cir. 1991)
(internal quotation marks and citations omitted) (alteration in original). “To obtain a preliminary
injunction, a moving party must establish the presence of the following: (1) ‘a clear showing that
it will likely succeed on the merits’; (2) ‘a clear showing that it is likely to be irreparably harmed
absent preliminary relief’; (3) the balance of equities tips in favor of the moving party; and (4) a
preliminary injunction is in the public interest.” United States v. South Carolina, 720 F.3d 518,
533 (4th Cir. 2013) (citation omitted). Each of these requirements must be satisfied. The Real
Truth About Obama, Inc. v. FEC, 575 F.3d 342, 347 (4th Cir. 2009), vacated on other grounds,
559 U.S. 1089 (2010).
Plaintiff seeks a preliminary injunction only in regards to his breach of contract claim.
Therefore, the court considers plaintiff’s likelihood of success on the merits only as to plaintiff’s
claim that defendant breached the Distribution Agreement.
According to plaintiff, the reason for the dispute with the Harris Teeter store manager is
largely due to defendant, specifically its computerized product ordering system. (See Pl. Aff.,
DE # 14-1, at 1-2.) Plaintiff explains that around Thanksgiving the subject store ran out of bread
on one occasion, (id.), which plaintiff blames on defendant’s ordering system, (see id. at 3). The
issue was exacerbated by the fact that Harris Teeter officials “did a walk-through of the store,
and they were upset with the store manager by virtue of the fact that the supply of products on
the shelves was low or depleted.” (Id.) When plaintiff was finally able to speak with the store
manager directly, the store manager informed plaintiff “that the problem was bigger than
[plaintiff] and him and that he would not permit [plaintiff] to deliver bakery products in the
future to his store.” (Id.) Thereafter, the store manager would not agree to plaintiff’s proposals
to have another independent operator service the store, whereupon plaintiff received the Notice
of Termination of Distribution Agreement. (Id. at 2-3.)
According to plaintiff’s evidence, two other independent operators had “been run out of
some of the stores that they serve.” (Martin Aff., DE # 14-2, at 1.) “In each of those cases,
[defendant] has assisted [the independent operators] in getting back into the stores where the
store manager had denied them access,” with defendant “act[ing] as an intermediary in assisting
the independent operator in getting back into the store.” (Id.) Although plaintiff testifies that
defendant’s representative Vickers approved plaintiff’s proposal to exchange or transfer his
distribution route with that of another independent operator, (Pl. Aff., DE # 14-1, at 2-3),
plaintiff characterizes defendant’s conduct as a refusal “to cooperate for the reason that
[defendant] wanted to terminate Plaintiff Ramsey by reason of his involvement with the other
independent operators in seeking some relief as it relates to the arbitrary reduction in margins or
manner of payment,” (Pl. Mem., DE # 15, at 4 (citation omitted)).
Defendant lays blame for the Harris Teeter store incident entirely on plaintiff. According
to defendant, for the Thanksgiving time period at issue for the subject Harris Teeter store,
plaintiff substantially altered the amount of product ordered from that suggested by defendant’s
computerized system. (Vickers Aff., DE # 22, ¶ 15.) Defendant contends that “[plaintiff’s]
reduction of the historically predicted sales number was the specific cause of the Harris Teeter
store running out of Product on November 26, not [defendant].” (Id.) Two days after Vickers
learned that plaintiff had been banned from the Harris Teeter store for failure to keep the store
adequately stocked over a period of time, Vickers delivered to plaintiff the letter notifying him of
breach of the Distribution Agreement and providing him with three days to cure the breach. (Id.
¶ 19.) In subsequent, separate conversations with plaintiff, Vickers agreed to both of plaintiff’s
proposals regarding another independent operator servicing the store. (Id. ¶¶ 20, 21.) After
being made aware that the store manager would not agree to either proposal, Vickers delivered
the letter to plaintiff terminating the Distribution Agreement. (Id. ¶¶ 21, 22.) Defendant
maintains that because plaintiff was banned from servicing the one Harris Teeter store, he could
not comply with his obligation under the Distribution Agreement to maximize product sales by
maintaining adequate supply in all outlets.
Because there is a factual dispute as to whether plaintiff breached the Distribution
Agreement thereby entitling defendant to terminate it, plaintiff has not clearly shown that he will
likely succeed on the merits of his breach of contract claim. See Wellin v. Wellin, No. 2:13-cv1831-DCN, 2013 WL 6175829, at *4 (D.S.C. Nov. 22, 2013) (recognizing “a number of courts
have declined to issue a preliminary injunction when there are significant factual disputes” and
finding the plaintiff had not clearly shown likelihood of success on the merits on breach of
fiduciary duty and securities claims based on “significant factual disputes impossible to resolve”
at the time); Torres Advanced Enter. Solutions LLC v. Mid-Atl. Prof’ls Inc., No. PWG-12-3679,
2013 WL 531215, at *3 (D. Md. Feb. 8, 2013) (“Relevant to the present case is that post-Real
Truth courts have ‘declined to issue a preliminary injunction when there are significant factual
disputes’ in breach of contract cases.” (citation omitted)); Chattery Int’l, Inc. v. Jolida, Inc., Civil
No. WDQ-10-2236, 2011 WL 1230822, at *9, 11 (D. Md. Mar. 28, 2011) (concluding that
based, in part, on the existence of factual questions, plaintiff had not clearly shown likelihood of
success on its trademark infringement claim).
Even if plaintiff could make such a showing, the court also concludes that plaintiff has
failed to clearly show that he will likely be irreparably harmed unless a preliminary injunction
issues. “Generally, irreparable injury is suffered when monetary damages are difficult to
ascertain or are inadequate. Thus, when the record indicates that [plaintiff's loss] is a matter of
simple mathematic calculation, a plaintiff fails to establish irreparable injury for preliminary
injunction purposes.” Multi-Channel TV Cable Co. v. Charlottesville Quality Cable Operating
Co., 22 F.3d 546, 551-52 (4th Cir. 1994) (internal quotation marks and citations omitted)
(alteration in original); see also Bethesda Softworks, LLC v. Interplay Entm't Corp., 452 F.
App'x 351, 353 (4th Cir. 2011).
Plaintiff argues that his damages are incalculable based on the harm to his reputation and
goodwill. (Pl. Mem., DE # 15, at 9-10.) Specifically, he points out that he has built up his route
and has a stake in maintaining his customer relationships, which the persons now operating the
route do not. (Id. at 9.) He questions how his damages might be calculated with any accuracy if
a sale of the route (which is permitted upon termination of the Distribution Agreement) is forced.
(Id. at 9-10.) While there is authority for the general proposition that loss of goodwill may
satisfy the irreparable harm requirement, see Multi-Channel, 22 F.3d at 552 (“[W]hen the failure
to grant preliminary relief creates the possibility of permanent loss of customers to a competitor
or the loss of goodwill, the irreparable injury prong is satisfied.”), a court still must look at the
specific facts of each case to determine whether the harm to goodwill makes damages difficult to
ascertain, see MicroAire Surgical Instruments, Inc. v. Arthrex, Inc., 726 F. Supp. 2d 604, 637
(W.D. Va. 2010) (“Although the authorities upon which [the plaintiff] relies, namely the Fourth
Circuit decision in Multi–Channel, contain broad language regarding the availability of
injunctive relief when the loss of future customers or harm to goodwill renders the calculation of
damages difficult, they do not hold [ ] that injunctive relief is automatic and required in such
circumstances, and they proceed[ ] to analyze the specific facts of the case before determining
that the loss of future customers or the harm to goodwill makes damages difficult to ascertain.”
(most alterations in original) (citation omitted)). Depending on the facts, goodwill can often be
valued in monetary terms. Compare Dexter 345 Inc. v. Cuomo, 663 F.3d 59, 63 (2d Cir. 2011)
(affirming the district court’s denial of a preliminary injunction on the ground that the appellants
had failed to make the requisite showing of irreparable harm and stating “[t]he district court
correctly found that any loss of goodwill would result from the Appellants’ inability to continue
operating their budget hotel business as they had in the past[, and] [t]he long history of operation
. . . ensures that they will be able to calculate money damages for any loss of goodwill”);
Spacemax Int’l LLC v. Core Health & Fitness, LLC, Civil Action No. 2:13-4015-CCC-JAD,
2013 WL 5817168, at *2 (D.N.J. Oct. 28, 2013) (where the plaintiff claimed the defendant had
breached the exclusive distributorship agreement in terminating it and by entering into a new
agreement with another party and where the plaintiff argued it would lose market share and
potentially its entire business without a preliminary injunction, finding the plaintiff had not
sufficiently demonstrated irreparable harm given the plaintiff’s decade-long history of selling the
subject equipment as “any loss in sales or harm to reputation can be given a monetary value by
looking at sales records, profits, and financial analysis of what Plaintiff contends is a small,
limited market”); Torres, 2013 WL 531215, at *5 (where the plaintiff argued loss of goodwill
constituted irreparable harm as a result of the defendant’s termination of a portion of a
subcontract, taking judicial notice of the Financial Accounting Standards Board’s “voluminous
standard for dealing with goodwill in order to calculate its value on a balance sheet” and
concluding “[t]his ability to calculate money damages from the impairment of goodwill
demonstrates an adequate remedy at law”); Walter v. CPC Int’l Inc., 22 Phila. C. 240, 253-59
(Pa. Com. Pl. 1991) (dissolving preliminary injunction because the plaintiffs demonstrated that
their losses could be compensated in money damages by evidence of resale value of bakery
product distribution route, loss of profits, and goodwill), aff’d, 610 A.2d 73 (Pa. Super. Ct. 1992)
(table), with Blackwelder Furniture Co. of Statesville v. Seilig Mfg. Co., Inc., 550 F.2d 189,
196-97 (4th Cir. 1977) (reversing denial of a preliminary injunction where the defendant
manufacturer had terminated the plaintiff’s furniture line dealership because the harm posed to
the plaintiff’s goodwill was incalculable inasmuch as the plaintiff would be unable to fill
customer orders and then gain a reputation for unreliability and it would impact the plaintiff’s
efforts to be known as a “‘full-line’ furniture discounter”); Fairfield Resorts, Inc. v. Fairfield
Mountains Prop. Owners Ass’n, Inc., No. 1:06CV191, 2006 WL 2524188, at *4 (W.D.N.C. Aug.
29, 2006) (recognizing customer confusion resulting from the defendant’s changing of the
signage at a resort to a completely different name as “irreparable harm in the form of losses of
goodwill, reputation and future business”); Fairfield Resorts, Inc. v. Fairfield Mountains Prop.
Owners Ass’n, Inc., No. 1:06CV191, 2006 WL 1889152, at *4-5 (W.D.N.C. July 7, 2006)
(finding that if the defendant property owner were not enjoined from evicting the plaintiff real
estate management company, the plaintiff faced a present threat of irreparable harm in “the loss
of customers, loss of good will, damage to its business reputation, and significant interference
with the possession and enjoyment of certain real property”).
Here, plaintiff had been operating the distribution route for five years when defendant
terminated it. Based on the fact that plaintiff’s distribution route was well established at the time
of termination, there should be more than sufficient historical data from which to calculate
monetary damages. Additionally, any goodwill plaintiff has built up in the distribution route is
included in the valuation of the route, as evidenced by plaintiff’s own testimony that he has
created equity in the route and its value has increased from $130,000 to in excess of $140,000.
(Compl., DE # 1-1, ¶¶ 8, 9.) There is a monetary value that can be placed on the loss of
goodwill. Defendant has come forward with evidence that there is an active market for the sale
of rights to distribute defendant’s products in North Carolina, (Pokallus Decl., DE # 21, ¶ 4), and
that the fair market value of any such distributorship is based on a formula of the weekly average
of net product sales revenue times a multiple, (Barnes Decl., DE # 20, ¶ 16). Because plaintiff’s
breach of contract damages are calculable, he has not clearly shown that he is likely to be
irreparably harmed absent preliminary relief. But see Williams v. Bimbo Foods Bakeries
Distrib., Inc., Civil Action No. 3:10-CV-167-DCK, 2010 WL 1994847, at *5 (W.D.N.C. May
18, 2010) (“If BFBD is permitted to terminate Williams' Distribution Agreement and force him
to sell his distribution rights, or sell them for him after ninety days, . . . Williams is likely to
suffer irreparable harm. . . . [I]t would be difficult, if not impossible for Williams to articulate
and set forth with any specificity, the damages he would sustain were BFBD permitted to force a
sale or sell the route for him. . . . If the Court were not to enter this Preliminary Injunction and
the route were taken from Williams and sold, Williams would lose his livelihood.”); Waldron v.
George Weston Bakeries, Inc., 575 F. Supp. 2d 271, 278 (D. Me. 2008) (“[I]it is clear that
Plaintiffs' absence and the operation of Plaintiffs' routes by substitutes will continue to impact
the good will each of them establish through regular weekly contact with their customers. It will
be very difficult, if not impossible, for the Court to determine how and if that good will would
have increased sales during the period that GWBD was operating Plaintiffs' routes. Under these
circumstances, a finding of irreparable harm is warranted.” (citations omitted)); aff’d, 570 F.3d 5
(1st Cir. 2009).
With plaintiff failing to make the required showing of irreparable harm, the balance of
equities necessarily does not tip in his favor. See Z–Man Fishing Prods., Inc. v. Renosky, 790 F.
Supp. 2d 418, 434 (D.S.C. 2011) (“Here, the Court has found that Plaintiffs failed to show they
will suffer irreparable harm in the absence of a preliminary injunction; therefore, the balance of
equities does not favor Plaintiffs.”). Finally, the court recognizes that the public interest is
served by the enforcement of valid contractual obligations. Williams, 2010 WL 1994847, at *5.
Nonetheless, in this case, given the factual dispute over the termination of the Distribution
Agreement, that interest is furthered no matter whether the court grants or denies preliminary
In sum, plaintiff has not made the requisite showing to justify entry of a preliminary
injunction. Plaintiff’s request for a consolidated hearing on his preliminary injunction motions
in this case and a companion case (which the court has since ruled on) is moot.
For the foregoing reasons, defendant’s motion to dismiss is ALLOWED IN PART and
DENIED IN PART. Plaintiff’s fraud claim is DISMISSED WITH PREJUDICE. Plaintiff’s
breach of contract and UDTPA claims remain. Plaintiff’s motion for a preliminary injunction is
DENIED and his request for joint hearing is DENIED as moot.
Trial is hereby SET for 3 August 2015 in Raleigh, North Carolina.
This 10 July 2014.
W. Earl Britt
Senior U.S. District Judge
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