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MULTI-JUICE, S.A. v. SNAPPLE BEVERAGE CORP.

April 24, 2003

MULTI-JUICE, S.A., SNAPPLE HELLAS, S.A., AND NEW AGE BEVERAGES HELLAS, PLAINTIFFS, AGAINST SNAPPLE BEVERAGE CORP., MISTIC BRANDS, INC. AND TRIARC COMPANIES, INC., DEFENDANTS.


The opinion of the court was delivered by: Robert P. Patterson, Jr., United States District Judge.

OPINION AND ORDER

Defendants Snapple Beverage Corp. ("Snapple"), Mistic Brands, Inc. ("Mistic") and Triarc Companies, Inc. ("Triarc") (collectively, "Defendants") move (1) to dismiss the second, fifth, seventh, eighth, ninth and tenth causes of action of the Complaint and, additionally, and in the alternative, move to dismiss all causes of action asserted against Defendant Triarc, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure; and (2) to disqualify Louis F. Burke, counsel to Plaintiffs Multi Juice, S.A. ("Multi-Juice"), Snapple Hellas, S.A. ("Hellas"), and New Age Beverage Hellas ("New Age") (collectively, "Plaintiffs"), pursuant to DR 5-102 of the New York Rules of Professional Responsibility.

For the forgoing reasons, both Defendants' motion to dismiss and motion to disqualify Plaintiffs' counsel are granted.

The Complaint

On June 14, 2002, Plaintiffs, by their attorney, Louis F. Burke and Ganfer & Shore, LLP, of counsel, brought a Complaint against Defendants containing ten causes of action. According to the Complaint, and by way of background, a previous lawsuit (the "Hellas Action") involved a wrongful termination and breach of a written exclusive import/distribution agreement between Hellas and Snapple, dated March 30, 1994 (the "Hellas Agreement"), pursuant to which Hellas was appointed the exclusive importer/distributor for Snapple beverages throughout Greece. (Complaint ¶ 18.) Snapple is engaged in the business of producing and marketing iced teas, fruit drinks and assorted other such beverages, and until October 2000, was a wholly-owned subsidiary of Triarc. (Id. ¶ 11.) Triarc is a holding company which, from mid-1997 to October 2000, owned Snapple and was likewise engaged in producing and marketing various brands of ice teas, fruit drinks, and other such beverages. (Id. ¶ 13.) Triarc acquired Snapple from Quaker in mid-1997, and then sold Snapple, along with Snapple's Mistic subsidiary, to Cadbury Schweppes in October 2000. (Id. ¶¶ 12, 13) Hellas was organized under the corporate laws of Greece in 1995, and was engaged in the business of importing and distributing Snapple beverages throughout Greece from 1995 until 1997. (Id. ¶ 8.) The principals of Hellas are Arthur and Naoum Tavantzis (collectively, the "Tavantzises"). (Id.) After Quaker's purchase of Snapple in 1996, the distribution of Snapple was assumed by a section of Quaker's sales force, and Quaker subsequently constructively terminated Snapple's distribution agreement with Hellas. (Id. ¶ 22.) In August 1997, following the sale of Snapple to Triarc, the Hellas Action was settled by mutual agreement (the "Hellas Settlement Agreement"). (Id. ¶ 23.) In the course of that settlement, Donna Bimbo, head of international sales at Triarc, Snapple and Mistic, caused the Tavantises to believe that companies owned by them would remain the exclusive importers and distributers of Snapple products in Greece. (Id.)

The Hellas Settlement Agreement provided in part (1) that Snapple pay $400,000 to Hellas and extend a future merchandise credit of $400,000 against the purchase of Snapple beverage products; and (2) that Hellas and Snapple "agree to negotiate in good faith towards entering into a 3-5 year written agreement under which Snapple would convey to Hellas, or a new corporation to be formed in Greece, the exclusive right during the term of the agreement to distribute Snapple beverages in Greece." (Id. ¶ 26.)

In or about mid-1997, the Tavantzises moved to Greece and established Multi-Juice as a Greek corporation, hired personnel, leased a building, purchased equipment and merchandise, and began an advertising campaign. (Id. ¶ 31.) Multi-Juice was established for the specific purpose of entering into an exclusive five year agreement pursuant to which Multi-Juice would become the exclusive importer and distributer of Snapple beverages throughout Greece. (Id. ¶ 9.) Triarc/Snapple and Multi-Juice "operated as if a written exclusive agreement" for the distribution of Snapple product in Greece had been executed among them (the "Multi-Juice Distribution Agreement"). (Id. ¶ 28.) Despite exchanging several written drafts of the Multi-Juice Distribution Agreement, none was ever executed. (See id.) Multi-Juice worked to overcome the destroyed reputation of Snapple products that lingered from when Quaker controlled Snapple sales in Greece. (Id. ¶¶ 32-36.) Bimbo promised to immediately absorb Multi-Juice's expenses in having to replace outdated and stale Snapple products for Greek customers. (Id. ¶ 36.) However, instead of issuing credit immediately, Triarc/Snapple carried the replacement merchandise orders on its books as a Multi-Juice debit for nearly one year, thereby reducing the credit available to Multi-Juice. (Id.) Furthermore, Triarc/Snapple failed to provide the documentation necessary to assist Multi-Juice in reclaiming coolers, needed to attract new customers, as had been promised by Bimbo in 1997. (Id. ¶ 37.) Also, due to delays in deliveries of Snapple beverages promised by Triarc/Snapple, Multi-Juice was unable to properly re-launch Snapple products for the summer months in Greece. (Id. ¶ 38.)

Contrary to Bimbo's express representations that Multi-Juice would not be subject to minimum order requirements, Bimbo notified Multi-Juice that (1) "orders for Snapple products could only be made on a quarterly basis, and would not be accepted on the basis of need"; (2) Triarc/Snapple needed six weeks advance notice to have products manufactured; (3) Triarc/Snapple did not have on-hand inventory available for delivery; and (4) Triarc and Snapple's ability to manufacture hinged on the third party bottling company, a fact of which Multi-Juice was not previously aware. (Id. ¶ 40.) In 1998 and 1999, Bimbo continued to force Multi-Juice to purchase products that it did not need, and threatened to and did withhold those items that it had requested. (Id. ¶¶ 44-47.)

Among other things, Plaintiffs further alleged the following: Triarc/Snapple's rules governing ordering were arbitrarily applied to Multi-Juice, thereby causing severe financial damage (id. ¶¶ 48-51); Triarc/Snapple failed to support Multi-Juice's marketing efforts, as promised (id. ¶¶ 52-54); Triarc/Snapple failed to deliver the Snapple products that Multi-Juice ordered (id. ¶¶ 55-57); Triarc/Snapple sent inaccurate bills of lading to Multi-Juice, delaying sales and increasing expenses (id. ¶ 58); Triarc/Snapple failed to work with Multi-Juice in the sale of Whipper Snapple beverages (id. ¶¶ 59-69); and Triarc/Snapple denied Multi-Juice any commission for introducing Snapple to the United States Navy. (Id. ¶¶ 70-71.)

In or about October 13, 1995, Mistic and New Age entered into an agreement ("New Age Distribution Agreement") whereby New Age was to become the exclusive distributor of Mistic products in Greece. (Id. ¶ 72.) Mistic operated as a wholly-owned subsidiary of Snapple, and until October 2000 was a wholly-owned subsidiary of Triarc, and was, at all times relevant to this case, owned by Triarc. (Id. ¶ 12.) Mistic engaged in the business of producing ice teas, fruit drinks, and other such beverages. (Id.) New Age was organized under the corporate laws of Greece in 1995, and was formed for the specific purpose of entering into an exclusive agreement with Mistic to become the exclusive distributor of Mistic beverages throughout Greece. (Id. ¶ 10.) New Age's principals are the Tavantzises. (Id.) Triarc/Snapple caused Mistic to refrain from giving business to New Age, and instead Mistic sold its products to third party distributors for sale in Greece. (Id. ¶ 73.) Mistic was a direct competitor of Snapple, though both companies were owned by Triarc. (Id. ¶ 74.) Triarc/Snapple used proprietary intelligence and disclosed to Mistic that fruit punch and mango were Multi-Juice's two best selling Snapple flavors. (Id. ¶¶ 75-76.)

The Complaint contains the following specific causes of actions against Defendants*fn1: (1) breach of the Multi-Juice Distribution Agreement; (2) constructive wrongful termination of the Multi-Juice Distribution Agreement; (3) fraud relating to Multi-Juice; (4) breach of the Hellas Settlement Agreement; (5) unjust enrichment; (6) breach of the New Age Distribution Agreement; (7) constructive wrongful termination of the New Age Distribution Agreement; (8) tortious interference as to New Age; (9) price discrimination under Greek competition law; and (10) tying under Greek competition law.

The Pending Motion

Defendants brought a motion on September 6, 2002 to dismiss certain causes of action listed in the Complaint, pursuant to Fed.R.Civ.P. 12(b)(6), and a motion to disqualify Plaintiffs' counsel, Louis F. Burke, pursuant to DR 5-102 of the New York Rules of Professional Responsibility. Oral argument was held on February 19, 2003 at which time Plaintiffs stated that Triarc and Snapple entered into an oral distribution agreement (the Multi-Juice Distribution Agreement) in ...


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