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.
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
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.
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,
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.
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.
In an undated letter sent sometime on or after July 7, 1999,
Arasimowicz in writing that it was terminating his
distributorship as a result of company restructuring. Bestfoods
offered to pay Arasimowicz $30,627.00 in exchange for releasing
all his rights and claims against Bestfoods. (McLeod letter to
Arasimowicz, undated). In a subsequent letter dated July 13,
1999, Bestfoods notified Arasimowicz that, based on "plans to
restructure [Bestfoods'] distribution system in this market
area," effective August 28, 1999, his distributorship would be
terminated. (McLeod letter to Arasimowicz, July 13, 1999). The
letter to Arasimowicz indicated that Harrington and ...