Andrea Distributing, Inc. v. Dean Foods of Wisconsin, LLC
Filing
29
ORDER denying 10 Motion for Preliminary Injunction. Signed by District Judge James D. Peterson on 9/1/2015. (kwf)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN
ANDREA DISTRIBUTING, INC.,
v.
Plaintiff,
ORDER
15-cv-341-jdp
DEAN FOODS OF WISCONSIN, LLC,
Defendant.
Plaintiff Andrea Distributing, Inc. has a distribution agreement with defendant Dean
Foods of Wisconsin, LLC. But Andrea failed to make payments on a past due balance for
dairy products that it purchased from Dean Foods, and consequently, Dean Foods intends to
terminate the agreement effective September 3, 2015. Andrea alleges that the termination
violates the Wisconsin Fair Dealership Law (WFDL), Wis. Stat. § 135.01 et seq., and it seeks
an injunction against the termination, contending that it will face certain insolvency unless
the court intervenes.
Preliminary injunctive relief is not appropriate. Andrea has made, at best, only a
modest showing of likely success on the merits, and the balance of harms and the public
interest do not weigh strongly in favor of an injunction. The court will therefore deny
Andrea’s motion.
ALLEGATIONS OF FACT
The court draws the following facts from Andrea’s complaint and from the materials
that the parties submitted to address Andrea’s motion for preliminary injunction.
Andrea is a distribution company, headquartered in Spooner, Wisconsin. In 2007,
Andrea and Dean Foods formed two oral agreements: (1) a hauling agreement; and (2) a
distribution agreement. Under the hauling agreement, Andrea received compensation for
transporting Dean Foods’s products to Dean Foods’s customers in northwestern Wisconsin.
Under the distribution agreement, Andrea was able to purchase products from Dean Foods at
a reduced price and resell them to Andrea’s own customers.
In 2014, Andrea fell behind on its payments for the products that it purchased under
the distribution agreement, and so Dean Foods asked Andrea to come up with a plan to pay
down the past due balance. Andrea submitted three proposals in December 2014, all of
which proposed to increase Andrea’s cash flow by raising rates under the hauling agreement.
Dean Foods accepted one of these proposals on a temporary basis, while it canvassed the
market to see whether other companies would charge similar rates to serve the same area.
Dean Foods found other haulers that were prepared to take over Andrea’s routes for less
money.
Because Andrea’s rates were above market rates, Dean Foods decided to replace
Andrea with a new hauler. But many of Dean Foods’s customers in the area were schools, and
it would have been disruptive to change haulers in the middle of the academic year. Thus,
Dean Foods agreed to continue using Andrea for hauling for the remainder of the 2014-15
school year. In a letter dated March 20, 2015, Dean Foods indicated that it would terminate
the hauling agreement effective June 8, 2015.
Meanwhile, Andrea has still not made payments on its past due balance. In another
letter—this one dated June 4, 2015—Dean Foods informed Andrea that it intended to
terminate the distribution agreement for nonpayment. The letter explained that Andrea could
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avoid termination by making a payment within 10 days. But Andrea did not make any
payments, and the distribution agreement is now set to expire on September 3, 2015.
Andrea filed suit in the Wisconsin Circuit Court for Washburn County, alleging that
Dean Foods violated the WFDL. Dean Foods removed the case to federal court, pursuant to
28 U.S.C. § 1441. This court has subject matter jurisdiction under 28 U.S.C. § 1332, because
the parties are diverse and the amount in controversy exceeds $75,000. 1
ANALYSIS
Andrea asks the court to enter an injunction “awarding [it] the routes that were
terminated and given to competing dealers.” Dkt. 11, at 10. To obtain preliminary injunctive
relief, Andrea must show that it has no adequate remedy at law and will suffer irreparable
harm without an injunction. Am. Civil Liberties Union of Ill. v. Alvarez, 679 F.3d 583, 589 (7th
Cir. 2012). Andrea must also show “some likelihood of success on the merits.” Id. If Andrea
makes these threshold showings, then the “court weighs the balance of harm to the parties if
the injunction is granted or denied and also evaluates the effect of an injunction on the
public interest.” Planned Parenthood of Ind., Inc. v. Comm’r of Ind. State Dep’t of Health, 699 F.3d
962, 972 (7th Cir. 2012). The strength of Andrea’s case affects the court’s balancing analysis.
“The more likely it is that [Andrea] will win its case on the merits, the less the balance of
harms need weigh in its favor. . . . Conversely, if it is very unlikely . . . that [Andrea] will win
1
Andrea’s proposed facts in support of its motion for preliminary injunction state that Dean
Foods is incorporated in Wisconsin. Dkt. 14, at 1. But Dean Foods’s notice of removal
explains that it is actually a Delaware limited liability company. Dkt. 1, ¶ 3. By virtue of the
citizenship of Dean Foods’s members (and its members’ members), Dean Foods is a citizen of
Delaware and of Texas. Id. Thus, the parties are completely diverse.
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on the merits, the balance of harms need weigh much more in [its] favor.” Girl Scouts of
Manitou Council, Inc. v. Girl Scouts of U.S., Inc., 549 F.3d 1079, 1100 (7th Cir. 2008).
Andrea does not have a persuasive case on the merits. There are two agreements at
issue in this case, but Andrea has not explained how Dean Foods violated the WFDL in
terminating either of them. With regard to the hauling agreement, Andrea has failed to
demonstrate that the WFDL even applies. Andrea’s claims arise under statutes that apply
only to “dealerships,” a term that the WFDL defines as:
1. A contract or agreement, either expressed or implied, whether oral or written,
between 2 or more persons;
2. by which a person is granted the right to sell or distribute goods or services, or
use a trade name, trademark, service mark, logotype, advertising or other
commercial symbol;
3. in which there is a community of interest in the business of offering, selling or
distributing goods or services at wholesale, retail, by lease, agreement or
otherwise.
Wis. Stat. § 135.02(3)(a). Both the Seventh Circuit and the Wisconsin Supreme Court have
held that agreements concerning only the transport and delivery of goods—like the hauling
agreement at issue in this case—are not dealerships within the meaning of § 135.02(3) either
because these agreements do not meet the second requirement, Van Groll v. Land O’Lakes,
Inc., 310 F.3d 566, 568-70 (7th Cir. 2002); Rakowski Distrib., Inc. v. Marigold Foods, Inc., 193
F.3d 504, 506-08 (7th Cir. 1999), or because they do not meet the third requirement, Kania
v. Airborne Freight Corp., 99 Wis. 2d 746, 772-76, 300 N.W.2d 63 (1981). Andrea’s hauling
agreement with Dean Foods appears to be outside the scope of the WFDL, and it is therefore
unlikely that Andrea can succeed on claims relating to that agreement.
As for the distribution agreement, the court will assume without deciding that the
WFDL’s provisions apply. But Andrea’s own evidence suggests that Dean Foods adhered to
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these provisions. Under the WFDL, a grantor must provide a dealer with at least 90 days’
written notice before terminating a dealership, and that notice must provide the reasons for
termination. Wis. Stat. § 135.04. If the reason for termination is nonpayment of sums due
under the dealership, then the grantor must give the dealer 10 days to cure the deficiency. Id.
Here, Dean Foods sent Andrea a letter indicating its intent to cancel the distribution
agreement in 90 days. Dkt. 11-1, at 4. The letter explained that Andrea had a past due
balance of $144,169.31 for products that it purchased from Dean Foods, and that Andrea
had 10 days to make a payment on that balance to avoid termination of the distribution
agreement. Id. It is undisputed that Andrea did not make any payments.
Andrea’s theory of this case is that notwithstanding Dean Foods’s apparent
compliance with the WFDL, it had “already transferred hauling routes to competitive
haulers, rendering any distribution agreement invalid prior to any formal termination.”
Dkt. 11, at 8. But this argument construes the hauling and distribution agreements as one
unified contract, and Andrea offers no authority to support combining them for purposes of
the WFDL. The evidence of record suggests that the agreements were separate, and that
Andrea’s rights under the distribution agreement were distinct from its rights under the
hauling agreement. For example, Dean Foods’s June 4 letter suggests that if Andrea had paid
its past due balance, then the distribution agreement would have continued regardless of the
fact that the hauling agreement had already been terminated. Because there is no evidence
that Dean Foods improperly terminated the distribution agreement, Andrea has not made a
persuasive showing of its likely success on the merits.
Even if Andrea were to overcome the threshold hurdles for preliminary injunctive
relief, the balance of harms and the public interest weigh against an injunction. Andrea
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asserts (without citing to record evidence) that it will go out of business if the court does not
require Dean Foods to continue paying Andrea for hauling products to Dean Foods’s
customers. Dkt. 9, at 11. 2 But Andrea does not appear to be in immediate danger of
insolvency. Indeed, during a deposition, Andrea’s corporate designee explained that the
company has a “hand-shake deal” with another dairy supplier for whom Andrea will
distribute products once its distribution agreement with Dean Foods expires. Dkt. 18
(Andrea Dep. 98:5-14). Andrea expects to retain all but one of its current customers (and
Andrea plans to try to win that customer back). Id. (Andrea Dep. 105:3-106:11).
Cast against this evidence, Andrea’s conclusory statements regarding impending
insolvency do not demonstrate that an irreparable injury will occur absent an injunction. And
opposite any possible harm to Andrea is the difficulty that preliminary injunctive relief would
create for Dean Foods, who would be stuck with a non-paying distributor. The Seventh
Circuit has recognized that locking a grantor “into an intimate and continuous relationship
with a dealer it no longer wishes to be associated with . . . is a great hardship.” Roland Mach.
Co. v. Dresser Indus., Inc., 749 F.2d 380, 392 (7th Cir. 1984) (internal citations omitted).
Thus, the balance of harms does not weigh in favor of an injunction.
The public interest is less prominent in this case, although it weighs against an
injunction as well. Andrea suggests that the people of Wisconsin have an interest in enforcing
the provisions of the WFDL, but Dean Foods responds that any such interest actually weighs
2
Andrea also invokes Wis. Stat. § 135.065, which states that “[i]n any action brought by a
dealer against a grantor under this chapter, any violation of this chapter by the grantor is
deemed an irreparable injury to the dealer for determining if a temporary injunction should
be issued.” But other federal courts in Wisconsin have held that this provision raises only a
rebuttable presumption of irreparable harm. See, e.g., S & S Sales Corp. v. Marvin Lumber &
Cedar Co., 435 F. Supp. 2d 879, 885 (E.D. Wis. 2006). Here, Dean Foods has rebutted the
presumption by showing that Andrea’s allegedly impending insolvency is not likely to occur.
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against an injunction because Dean Foods scrupulously complied with the law’s requirements
in this case. Andrea also suggests (again, without citing to record evidence) that without an
injunction, some consumers in Andrea’s service area will be unable to receive dairy products.
But the record belies this assertion: Andrea has lined up a new supplier, Dkt. 18 (Andrea
Dep. 104:8-105:10), and Dean Foods has hired new haulers to serve its customers, Dkt. 26,
¶¶ 15-16. The evidence of record indicates that there will be few customers, if any, who will
not have access to dairy products once Dean Foods terminates the distribution agreement.
Andrea has offered a relatively weak showing of its chances of success on the merits.
And Dean Foods has identified evidence to contradict Andrea’s conclusory statements
regarding the balance of harms and the public interest. Andrea has failed to demonstrate that
it is entitled to preliminary injunctive relief.
ORDER
IT IS ORDERED that plaintiff Andrea Distributing, Inc.’s motion for preliminary
injunction, Dkt. 10, is DENIED.
Entered September 1, 2015.
BY THE COURT:
/s/
________________________________________
JAMES D. PETERSON
District Judge
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