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ARASIMOWICZ v. BESTFOODS BAKING CO.

February 7, 2000

WALTER ARASIMOWICZ, JAMES J. HARRINGTON AND EUGENE MEYUNG, PLAINTIFFS,
V.
BESTFOODS, INC. AND BESTFOODS BAKING COMPANY, INC., DEFENDANTS.



The opinion of the court was delivered by: McMAHON, District Judge.

AMENDED MEMORANDUM ORDER AFFIRMING THE REPORT AND RECOMMENDATION OF MAGISTRATE JUDGE YANTHIS DATED NOVEMBER 9, 1999, AND DENYING PLAINTIFFS' MOTION FOR PRELIMINARY INJUNCTION.

Summary

Plaintiff Walter Arasimowicz has been a distributor of Thomas' English Muffins, a well-known bakery product manufactured by Defendant Bestfoods Baking Company, since 1967. As a "multiple" distributor, he controls more than one delivery route. Plaintiffs James J. Harrington and Eugene Meyung are "sub-distributors" of Arasimowicz. Defendant Bestfoods Baking Company is the corporate successor to S.B. Thomas, Inc. and is a wholly-owned subsidiary of Defendant Bestfoods, Inc. (hereinafter "Bestfoods"). In July 1999, Bestfoods notified Arasimowicz that it was terminating his distribution rights. Plaintiffs thereafter brought this suit asserting three claims: (1) breach of contract; (2) breach of common law franchise; and (3) equitable estoppel. They moved for a preliminary injunction to enjoin Bestfoods from terminating the distributorship pending the outcome of this litigation. Pending the outcome of that motion, the parties agreed to stay the termination of Arasimowicz's distributorship and the Defendants' planned restructuring of Arasimowicz's delivery routes.

For the reasons stated below, I affirm Judge Yanthis' Report and Recommendation and deny Plaintiffs' motion for a preliminary injunction.

Review of the Report and Recommendation

I review the findings in the Report and Recommendation of Judge Yanthis de novo. See Fed.R.CivP. 72(b). In considering his recommendation, I have reviewed the Plaintiffs' objections to the R & R, along with Defendants' response to those objections.

A. Factual Background

The distributorship arrangements at issue here are well known to this Court, as they are substantially the same as the Thomas' distributorship arrangements at issue in two other cases pending before me: Smith, et al. v. CPC Int'l Inc., et al., 97 Civ. 1547, and McGuiggan, et al. v. CPC, Int'l, Inc., et al., 97 Civ. 7241. In addition, the Second Circuit addressed facts and issues nearly identical to those present here in Petereit v. S.B. Thomas, 63 F.3d 1169 (2d Cir. 1995), cert. denied, 517 U.S. 1119, 116 S.Ct. 1351, 134 L.Ed.2d 520 (1996).

On October 3, 1967, Stephen Kalinger, then District Sales Manager for S.B. Thomas, Inc., met with Arasimowicz to discuss Arasimowicz's planned purchase of a Pepperidge Farm distribution route from Peter Coleman and Mike Todara. At that time, Thomas was just beginning to sell its baked products in northeast Pennsylvania, and Coleman and Todara distributed Thomas' products along with the Pepperidge Farm products to the stores on their routes. At their meeting, Kalinger and Arasimowicz discussed the terms and conditions under which Arasimowicz would be permitted to distribute Thomas' products. The informal nature of the commencement of his distributorship was a common business practice of S.B. Thomas, Inc. in the late 1960s. See Petereit, 63 F.3d at 1173.

Arasimowicz paid $13,500.00 to Todara and Coleman for the Pepperidge Farm franchise and the rights to deliver the Thomas' products, and began delivering Thomas' products on October 9, 1967.

Defendant contends that, following the meeting, Kalinger prepared a letter (hereinafter "Confirmation Letter"), dated October 5, 1967, confirming what was discussed at the meeting. Defendant further contends that the Confirmation Letter was a standard form letter that was routinely sent to new Thomas' distributors to confirm what was discussed at the initial interview. A carbon copy of this letter, which was found in the Arasimowicz distributor file at Bestfoods, was submitted by Defendants as evidence of the terms of the contract between Arasimowicz and Thomas (Adair Decl. ¶ 3). The address on the copy of the letter was, and still is, Arasimowicz's mailing address. (Tr. 43-45).

In 1973, Bestfoods acquired S.B. Thomas, becoming its successor in interest. Beginning around that time, Bestfoods asked Arasimowicz to sever portions of his routes. As a result of Bestfoods' request, Arasimowicz sold off parts of his route. He contends that he did not sell off his "rights" when he sold off portions of his route, since he retained a "multiple" distributorship, whereby sub-distributors paid him a percentage of their sales. He currently has three sub-distributors of Thomas' products: Harrington, Meyung and Tony Quinnan (not a party to this suit). He continues to also own the Pepperidge Farm franchise and to deliver Pepperidge Farm products.


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