Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Milton Abeles, Inc. v. Farmers Pride

March 19, 2009


The opinion of the court was delivered by: Dora L. Irizarry, United States District Judge


Before the court is defendant Farmers Pride, Inc.'s second summary judgment motion seeking to dismiss plaintiff Milton Abeles, Inc.'s remaining claims for quantum meruit and unfair competition. Defendant contends that it was plaintiff's decision to terminate their distribution agreement that caused the ensuing injuries for which plaintiff now seeks recovery. As such, defendant argues that its conduct could not have injured plaintiff. Defendant also argues that plaintiff cannot sustain its claims for quantum meruit and unfair competition. For the reasons set forth below, the court finds no reason to disturb its earlier decision allowing plaintiff to proceed on these two counts. The court assumes the parties' familiarity with the facts and procedural history, and incorporates the summary judgment standard that it provided in the prior decision. See Milton Abeles, Inc. v. Farmers Pride, Inc., 03-CV-6111, 2007 WL 2028069, at *1-2 (E.D.N.Y. July 11, 2007).


I. Causation

The central factual dispute is who terminated the distribution relationship between the parties that lasted from mid-July 2000 to November 2003. Both parties agree that this termination occurred sometime between September 9 and November 25, 2003. According to defendant, plaintiff ended the distribution relationship on or around November 25, 2003, and is therefore responsible for the ensuing consequences. Defendant argues that plaintiff terminated the relationship by: (1) refusing to pay its outstanding balance; (2) telling defendant to pick up its remaining inventory; (3) initiating this lawsuit; and (4) ceasing to place new orders, which defendant was ready to ship once plaintiff paid its outstanding balance.

Not surprisingly, plaintiff blames defendant for ending their distribution arrangement. According to plaintiff, defendant terminated the relationship prior to November 20, 2003, by taking steps to cut plaintiff out of the distribution arrangement and sell poultry directly to the subdistributors. In order to accomplish this, plaintiff alleges that defendant disclosed plaintiff's confidential pricing information to the subdistributors. This information consists of the prices that defendant charged plaintiff for the poultry ("Master-Distributorship Pricing") and the prices that defendant would charge the subdistributors if it sold the poultry directly to them ("Direct-Purchase Pricing"). Plaintiff argues that defendant's disclosure "guaranteed that the only way Abeles could continue to do business with such subdistributors ultimately was to sell at either no profit or even at a loss." (Pl.'s Mem. of Law in Opp'n to Def.'s Second Summ. J. Mot. to Dismiss Pl.'s Remaining Causes of Action (Doc. 117) at 13.)

Defendant denies that it disclosed the pricing information to the subdistributors. Additionally, it argues that even if such disclosures did occur, they did not impact plaintiff's ability to sell poultry to the subdistributors. As such, defendant's conduct could not have caused the termination of the parties' distribution relationship.

With respect to the alleged pricing disclosures, the court agrees with defendant that the record does not sustain plaintiff's contention that defendant disclosed the Master-Distributorship Pricing, but finds that there is a triable issue as to the disclosure of the Direct-Purchase Pricing. Defendant and subdistributors are the only parties that could have personal knowledge of the alleged disclosures of the Master-Distributorship Pricing, and they deny that such disclosures took place. The only evidence that supports plaintiff's allegation is the testimony of Richard Abeles (President and Chief Executive Officer of Milton Abeles, Inc.) explaining that the subdistributors told him that defendant had disclosed such information. This testimony is inadmissible hearsay and cannot be used to survive summary judgment. Fed. R. Civ. P. 56(e); Patterson v. County of Oneida, N.Y., 375 F.3d 206, 219, (2d Cir. 2004).

There is enough evidence, however, indicating that, prior to November 25, 2003, defendant disclosed the Direct-Purchase Pricing. Defendant's contemporaneous documents as well as the deposition testimony of Bart Castellano (Vice President of Fort Meat) and Scott Sechler (Chairman and Principal Owner of Farmer's Pride) reveal that defendant sold poultry directly or arranged direct sales to the subdistributors prior to November 25, 2003. (Pl.'s Resp. to Def.'s Rule 56.1 Statement of Undisputed Material Facts at ¶ 13.) These sales create a reasonable inference that defendant provided the Direct-Purchase Pricing to the subdistributors before November 25, 2003. It is worth noting that defendant would not necessarily have to disclose the Master-Distributorship Pricing in order to take advantage of it. It is undisputed that defendant knew plaintiff's margins. Using this knowledge, defendant can provide sufficiently low direct-purchase pricing to the subdistributors to make it economically unfeasible for plaintiff to compete.

Defendant argues that even assuming that it did disclose the pricing information, such disclosures had no impact on plaintiff's ability to sell poultry to the subdistributors. To support this position, defendant relies on the deposition testimony of Richard Abeles admitting that plaintiff's business continued as usual at the same profit margins from September 9 to November 25, 2003. (Def.'s Rule 56.1 Statement of Undisputed Material Facts at ¶ 14.) According to defendant, this belies any assertion that its conduct somehow crippled plaintiff's ability to sell poultry to the subdistributors, thus allowing defendant to usurp those business relationships. Had this been Abeles only statement on this issue, the court may be inclined to agree; however, Abeles repeatedly provided contradictory testimony that defendant's release of the pricing information made it an economic impossibility for plaintiff to continue its business. (See, e.g., R. Abeles Deposition at 134:24-135:3.) Neither party has offered sufficient evidence to resolve this conflicting testimony. Therefore, the court denies summary judgment as to the remaining counts for lack of causation.

II. Unfair Competition

Defendant erroneously argues that a required element of an unfair competition claim under New York law is a showing of actual customer confusion or deception as to the origin of the product or service. The Second Circuit rejected this position in Telecom Int'l America, Ltd. v. AT&T Corp., 280 F.3d 175, 198 (2d Cir. 2001), holding that an "unfair competition claim under New York law is not, therefore, as conceived by the district court, dependent upon a showing of confusion or deception as to the origin of the product or service." See also, Robotic Vision Systems, Inc. v. General Scanning, Inc., 96-CV-3884, 1997 WL 1068696, at *5 (E.D.N.Y. Sept. 8, 1997) (explaining that unjust enrichment is not limited to allegations involving "some sort of palming off . . . ."). Unfair competition under New York law is a "broad and flexible doctrine that depends more upon the facts set forth . . . than in most causes of action." Telecom, 280 F.3d at 197. "[I]t is taking the skill, expenditures and labors of a competitor, and misappropriati(ng) for the commercial advantage of one person . . . a benefit or property right belonging to another." Id. at 197-98 (citation omitted).

Here, plaintiff claims a property right to its distribution list of customers and subdistributors. According to plaintiff, it invested significant labor, skill, and money in developing the distribution list. Misappropriation of such confidential information may give rise to a claim of unfair competition. See Berman v. Sugo LLC, 580 F. Supp. 2d 191, 209 (S.D.N.Y. 2008) (explaining that a claim of unfair competition may be based on the misappropriation of client lists, internal company documents, and business strategies) (citing LinkCo, Inc., v. Fujitsu Ltd., 230 F. Supp. 2d 492, 503 (S.D.N.Y. 2002) ("New York courts have recognized that unfair competition is broadly construed to include misappropriation of competitor's property, even if such property does not qualify as a trade secret."). Plaintiff originally supplied defendant with the list in order to further their joint business interests: the distribution of Bell and Evans poultry through plaintiff as the master distributor. For example, once plaintiff identified and developed the potential retail outlets for Bell and Evans poultry, it would submit those names to defendant for approval. Sometime between September 9 and November 25, 2003, plaintiff alleges that defendant converted this confidential list for an entirely different purpose. Using plaintiff's confidential ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.