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Winter-Wolff International, Inc. v. Alcan Packaging Food and Tobacco Inc.

June 5, 2007

WINTER-WOLFF INTERNATIONAL, INC. PLAINTIFF,
v.
ALCAN PACKAGING FOOD AND TOBACCO INC., DEFENDANT.



The opinion of the court was delivered by: Hurley, Senior District Judge

MEMORANDUM OF DECISION AND ORDER

Plaintiff, Winter-Wolff International, Inc. ("plaintiff" or "Wolff") commenced this action asserting various causes of action arising out of the termination of a manufacturer's representative agreement between Wolff and defendant Alcan Packaging Food and Tobacco Inc. ("defendant" or "Alcan"). Presently before the Court is defendant's motion, made pursuant to Federal Rule of Civil Procedure 12(B)(6), to dismiss Counts 1 (breach of contract), 3 (breach of implied obligations), 4 (tortious interference with contract), 5 (tortious interference with business relations)and 6 (New York Labor Law § 191-c) of the Amended Complaint, together with the demand for punitive damages. For the reasons set forth below, the motion is granted in part and denied in part.

Factual Background

The following facts are taken from the Amended Complaint: In January 2003, defendant*fn1 entered into a contract (the "contract") with plaintiff pursuant to which it engaged plaintiff to serve as its exclusive sales representative for flexible lamination food packaging products for retort applications (the "authorized product") with respect to certain customers (the "authorized customers") located in North America (the "authorized territory"). Plaintiff's compensation was based solely on commissions, which were due on all orders and sales contracts originating in the authorized territory of all authorized products sold and delivered to the authorized customers regardless of whether or not plaintiff initiated the sale.

Under the contract, plaintiff was required to develop and maintain a substantial volume of sales for defendant and to use its best efforts to assist in defendant's development of the retort market in the United States, including getting customers of defendant's European affiliates to switch from imported product and providing technical assistance so that the quality of defendant's product met customer requirements.

As there would be considerable lag time between Wolff's large initial investment of time, effort, and money in developing customers and its receipt of commissions from the new business generated by that investment, the parties agreed to contractual provision protecting Wolff against premature termination. The initial contract term was for three years from January 1, 2003 to December 31, 2005 with automatic renewals thereafter. Prior to the expiration of the initial term, defendant could only cancel the contract for cause as specified therein. Thereafter, either party could cancel the contract upon twelve months written notice.

The contract contains the following provision entitled "controlling law." "The laws of the State of Illinois shall apply and bind the parties in all questions arising hereunder, regardless of the jurisdiction in which any action or proceeding may be initiated or maintained and without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any jurisdiction other than the State of Illinois."

In the summer of 2003, Alcan's corporate parent merged with a former competitor, resulting in a greatly increased capacity to supply authorized product from the manufacturing facilities acquired in the merger. It is alleged that Alcan sold millions of dollars of authorized product manufactured in the acquired plants to authorized customers within the authorized territory but failed to pay commissions to plaintiff.

Beginning in the Spring of 2004, defendant stopped responding to requests for price quotes from Wolff and informed authorized customers that Wolff was no longer authorized to serve as defendant's sales representative. On July 19, 2004, prior to the expiration of the initial term, defendant sent a letter to Wolff terminating the contract without cause effective July 19, 2005 and advising Wolff that it would cease paying any commissions to Wolff on that date. The letter also purported to prohibit Wolff from contacting or soliciting any authorized customers and placed Wolff on notice that defendant did not intend to provide price quotes or accept orders for authorized products from authorized customers in the authorized territory.

Beginning in the Fall of 2004, defendant began to improperly pressure its European affiliates, with whom plaintiff had existing agency or representative contracts that predated the contract with defendant, to terminate their contracts with plaintiff and replace plaintiff with its own employees. By letters dated December 21 and December 22, 2004, the European affiliates terminated their contracts with plaintiff effective December 31, 2005. The amended complaint alleges that the defendant forced the European affiliates to terminate their contracts through improper pressure and induced the termination by agreeing to inter-company transactions.

Discussion

I. Standard for Motion to Dismiss

The court may not dismiss a complaint under Rule 12(b)(6) unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. King v. Simpson, 189 F.3d 284, 286 (2d Cir. 1999); Bernheim v. Litt, 79 F.3d 318, 321 (2d Cir. 1996). The complaint need only provide "a short and plain statement of the claim showing that the pleader is entitled to relief." Swierkiewicz v. Sorema, 534 U.S. 506, 512 (2002) (quoting Fed. R. Civ. P. 8(a)(2)). Thus, "a plaintiff is required only to give a defendant fair notice of what the claim is and the grounds upon which it rests." Leibowitz v. Cornell Univ., 445 F.3d 586, 591 (2d Cir. 2006). Nonetheless, "a plaintiff's allegations, accepted as true, must be sufficient to establish liability." Amron v. Morgan Stanley Investment Advisors Inc., 464 F.3d 338, 344 (2d Cir. 2006).

In construing a complaint on a Rule 12(b)(6) motion, the Court must accept all factual allegations in the proposed complaint as true and draw all reasonable inferences in favor of the plaintiff. King, 189 F.3d at 287; Jaghory v. New York State Dep't. of Educ., 131 F.3d 326, 329 (2d Cir. 1997). The Court must confine its consideration "to facts stated on the face of the complaint, in documents appended to the complaint or incorporated in the complaint by reference, and to matters of which judicial notice may be taken." Leonard F. v. Israel Disc. Bank, 199 F.3d 99, 107 (2d Cir. 1999); Hayden v. County of Nassau, 180 F.3d 42, 54 (2d Cir. 1999).

II. Count 1 of the Amended Complaint

In Count 1 of the amended complaint Wolff alleges that Alcan breached the contract by failing to pay Wolff commissions on authorized products manufactured in the acquired plants and sold by defendant to authorized customers in the authorized territory. Alcan argues that this breach of contract claim must fail as a matter of law for two reasons. First, "public documents" consisting of SEC filings establish that it was not defendant who acquired the additional plants but rather an "indirect" corporate parent who is not a party to the contract and not obligated to pay commissions to Wolff. Second, it is argued that the agreement does not require the payment of commissions on sales by affiliates. Defendant's arguments are without merit.

Under Illinois law,*fn2 the essential elements of a cause of action for breach of contract are "(1) the existence of a valid and enforceable contract; (2) performance by the plaintiff; (3) breach of contract by the defendant; and (4) resultant injury to the plaintiff." Gonzales v. American Exp. Credit Corp., 315 Ill. App. 3d 199, 733 N.E.2d 345, 351 (Ill. App. 1 Dist. 2000) (citing Gallagher Corp. v. Russ, 309 Ill. App. 3d 192, 721 N.E.2d 605 (Ill. App. 1 Dist.1999). Plaintiff has satisfactorily pled each of these elements.

Count 1 alleges that defendant breached the contract when "defendant . . . sold millions of dollars of Authorized Product manufactured in the [acquired] Plants to Winter-Wolff's Authorized Customers in the Authorized Territory" without paying Wolff commissions therefor. AC ΒΆ 19, 21. Contrary to defendant's argument, Count 1 does not allege a breach due to "sales by affiliates." Nor for purposes of a motion to dismiss is it relevant who owns the "acquired plants" given that the allegation is that the defendant sold authorized product to authorized customers in the authorized territory. It may be that the sales were made by affiliates and not, as ...


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