Brooklyn Bagel Boys v. Earthgrains Refriger

CourtCourt of Appeals for the Seventh Circuit
DecidedMay 8, 2000
Docket99-3055
StatusPublished

This text of Brooklyn Bagel Boys v. Earthgrains Refriger (Brooklyn Bagel Boys v. Earthgrains Refriger) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Brooklyn Bagel Boys v. Earthgrains Refriger, (7th Cir. 2000).

Opinion

In the United States Court of Appeals For the Seventh Circuit

No. 99-3055

Brooklyn Bagel Boys, Inc.,

Plaintiff-Appellant,

v.

Earthgrains Refrigerated Dough Products, Inc.,

Defendant-Appellee.

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 98 C 4421--James F. Holderman, Judge.

Argued February 22, 2000--Decided May 8, 2000

Before Coffey, Easterbrook, and Williams, Circuit Judges.

Williams, Circuit Judge. Plaintiff-Appellant Brooklyn Bagel Boys, Inc. ("Brooklyn Bagel"), brought this diversity action against Defendant- Appellee Earthgrains Refrigerated Dough Products, Inc. ("Earthgrains"), claiming that Earthgrains wrongfully terminated a contract for the supply of bagels. Thereafter, Earthgrains filed a motion for summary judgment, which the district court granted against Brooklyn Bagel. Prior to this determination, the district court also granted Earthgrains’ motion to strike the certification of Gregory Stahl, the former president of Brooklyn Bagel. This appeal followed the district court’s entry of summary judgment in Earthgrains’ favor. For the reasons discussed below, we affirm the judgment of the district court.

I

Brooklyn Bagel produces bagels for third parties who sell them under their own brand name. Earthgrains manufactures, distributes, and sells refrigerated dough products. In April, 1994, Earthgrains began working on a project to develop its own proprietary formula for bagels. After nearly two years, Earthgrains developed a bagel formula and began to contract with different "co- packers" to manufacture bagels for distribution under Earthgrains’ brand name. Earthgrains entered into these "co-packing" relationships in an effort to test the viability of its formula without having to incur the substantial capital expense of building its own bagel manufacturing facility.

In late 1994 or early 1995, Earthgrains approached Brooklyn Bagel about being a co-packer for the distribution of bagels out of Earthgrains’ Fort Payne, Alabama facility. Contract negotiations began, and the parties eventually entered into a Contract Packaging Agreement ("Contract") on March 25, 1996. Under the Contract, Brooklyn Bagel agreed to process and package bagels for Earthgrains in packaging bearing Earthgrains’ brand name or other trademarks owned or licensed by Earthgrains. Brooklyn Bagel also agreed to purchase all of the raw materials and packaging supplies necessary to produce the bagels at its Franklin Park, Illinois facility. Earthgrains, on the other hand, agreed to provide Brooklyn Bagel with all the racks and trays necessary for shipping the bagels. In connection with this obligation, Earthgrains was responsible for picking up the bagels for distribution to its facilities.

The Contract, among other terms, provided a price structure for the bagels. The Contract does not require Earthgrains to purchase a specific quantity of bagels from Brooklyn Bagel. Instead, the Contract stated that Brooklyn Bagel was to process and package the "ordered quantity" of bagels. The Contract required Earthgrains, however, to provide a non-binding forecast every three months, in a form as agreed by the parties, for its expected bagel orders. The parties agreed that the Contract would "continue in effect until either party terminates it upon ninety (90) days prior written notice to the other party of such termination or terminates it as otherwise provided in th[e] Agreement." (Contract para. 6.) Their relationship continued under the Contract until Earthgrains decided to begin manufacturing its own bagels.

In July, 1997, Earthgrains purchased the business of one of its other co-packers. That same month, Brooklyn Bagel’s Customer Service Manager for the Earthgrains’ account, Vicki Abrams, learned of Earthgrains’ plans to install bagel manufacturing equipment in the Fort Payne facility. Abrams then contacted Earthgrains’ Marketing Director, Phil Gruszka, concerning this development, and Gruszka indicated that the relationship between the parties would remain unchanged for now. Later that year, Abrams again contacted Gruszka, this time to ask whether Brooklyn Bagel could budget Earthgrains’ business in 1998. Approximately 80 percent of the bagels sold by Brooklyn Bagel to Earthgrains during 1997 were shipped to and distributed out of the Fort Payne facility. Gruszka informed Abrams that "he didn’t know what [Earthgrains’] long-term plans were, but [he] didn’t think 1998 was an issue." At no point during his conversations with Abrams did Gruszka make any promises to her about Earthgrains’ plans for 1998 bagel production, and Abrams had her doubts about whether Earthgrains would continue ordering bagels from Brooklyn Bagel in 1998.

In late 1997, Earthgrains began installing equipment to manufacture bagels at the Fort Payne facility. Earthgrains completed the installation by March of 1998. Around this time, Earthgrains sent Brooklyn Bagel a letter expressing its intent to terminate the Contract. Earthgrains sent the letter in accordance with the Contract’s ninety-day written notice of termination provision. Gruszka also verbally advised Abrams of the termination. Earthgrains then stopped ordering bagels from Brooklyn Bagel for its Fort Payne facility, but continued to order for its Des Moines, Iowa facility. Once Abrams realized that Earthgrains stopped ordering bagels for the Fort Payne facility, she wrote Earthgrains’ President, William Opdyke, acknowledging receipt of the termination letter. In late March, 1998, Earthgrains sent Brooklyn Bagel a forecast for its expected orders of bagels for distribution out of the Des Moines facility over the remaining months of the Contract, which was to terminate in June, 1998.

In July, 1998, Brooklyn Bagel sued Earthgrains, asserting various state law claims for breach of contract, breach of an implied duty of good faith and fair dealing, promissory estoppel, and unjust enrichment. One year later, the district court granted Earthgrains summary judgment, finding that the terms of the Contract were unambiguous and did not obligate Earthgrains to purchase its bagel needs for the Fort Payne facility from Brooklyn Bagel. The district court ruled that Earthgrains did not breach the parties’ Contract and concluded that summary judgment was appropriate with respect to Brooklyn Bagel’s remaining claims. Prior to this determination, the district court also granted Earthgrains’ motion to strike the certification of Gregory Stahl, the former president of Brooklyn Bagel and a signatory of the parties’ Contract, because the certification was not based on Stahl’s personal knowledge and did not affirmatively demonstrate his competency to testify on matters contained therein as required by Fed. R. Civ. P. 56(e). Brooklyn Bagel now appeals the district court’s summary judgment decision with respect to the dismissal of the breach of contract and breach of the implied duty of good faith and fair dealing claims, as well as the district court’s ruling on Earthgrains’ motion to strike.

II

We review de novo the district court’s decision to grant summary judgment to Earthgrains. See Johnson v. Zema Sys. Corp., 170 F.3d 734, 742 (7th Cir. 1999). In order to overcome a motion for summary judgment, Brooklyn Bagel must show specific facts sufficient to raise a genuine issue of material fact for trial. See Fed. R. Civ. P. 56(c). In determining whether a genuine issue of material fact exists, we construe the record and all reasonable inferences drawn therefrom in the light most favorable to Brooklyn Bagel, the non-movant. See Senner v.

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Brooklyn Bagel Boys v. Earthgrains Refriger, Counsel Stack Legal Research, https://law.counselstack.com/opinion/brooklyn-bagel-boys-v-earthgrains-refriger-ca7-2000.