Pure Barnyard v . Organic Laboratories CV-08-501-JL 3/7/11 UNITED STATES DISTRICT COURT DISTRICT OF NEW HAMPSHIRE
Pure Barnyard, Inc.
v. Civil N o . 08-cv-501-JL Opinion N o . 2011 DNH 035 Organic Laboratories, Inc. and Results Capital, Inc.
OPINION AND ORDER
This case arises out of a failed deal to merge two companies
in the fertilizer market, plaintiff Pure Barnyard, Inc. and
defendant Organic Laboratories, Inc. (“Organic Labs”), into a
third entity, Organic Labs Holdings, Inc. (“Organic Holdings”).
Pure Barnyard alleges that, during discussions over the proposed
deal, Organic Labs--acting through its alleged agents, including
defendant Results Capital, Inc.--misrepresented the quantity of
fertilizer material to be provided under an agreement between
Organic Holdings and a supplier. Pure Barnyard further alleges
that, in reliance on these misrepresentations, it committed to
selling that material (instead of its own products) to its
customers, causing it a variety of commercial damage when the
material turned out to be unavailable.
This court has subject-matter jurisdiction under 28 U.S.C.
§ 1332(a)(1) (diversity), because Pure Barnyard is a New
Hampshire corporation and the defendants are Florida corporations. Organic Labs has moved for summary judgment,1 see
Fed. R. Civ. P. 5 6 , arguing that (1) there is no evidence to show
an agency relationship between it and the sources of the alleged
misrepresentations, and (2) any misrepresentations were
“corrected” before Pure Barnyard acted in reliance on them.2
Organic Labs has also moved to strike certain documents submitted
by Pure Barnyard with its summary judgment objection, arguing
that they should have been produced in discovery but were not.
Following oral argument, Organic Labs’ motion for summary
judgment is denied except as to count 1 , which is unconnected to
the alleged misrepresentations and on which Pure Barnyard
concedes summary judgment should enter. First, there is
1 Results Capital, which was just defaulted for failing to have new counsel appear on its behalf after its latest (and fourth) set of attorneys withdrew, did not join in Organic Labs’ motion or file a summary judgment motion of its own. 2 Organic Labs also argued that Pure Barnyard could not recover any of its claimed damages without expert testimony, which had not been properly disclosed, and, on that same basis moved to strike from the record an “expert witness report” by Pure Barnyard’s chief executive officer, John Packard. In a later conference call with the court, however, Pure Barnyard agreed to make Packard available for deposition before trial and to allow Organic Labs the chance to designate a damages expert, even though the deadlines for doing those things expired more than three months ago. At oral argument, Organic Labs agreed that, in light of these accommodations, it was withdrawing its argument for summary judgment based on Pure Barnyard’s lack of a properly disclosed damages expert.
2 sufficient evidence for a rational factfinder to conclude that at
least one of the sources of the alleged misrepresentations made
them while acting as Organic Labs’ agent. Second, there are
factual disputes as to whether Pure Barnyard acted in reliance on
the alleged misrepresentations before Organic Labs “corrected”
them. Because, in reaching these conclusions, the court has not
relied on any of the materials challenged by Organic Labs’ motion
to strike, that motion is denied as moot.3
I. Applicable legal standard
Summary judgment is appropriate where the “pleadings, the
discovery and disclosure materials on file, and any affidavits
show that there is no genuine issue as to any material fact and
that the movant is entitled to a judgment as a matter of law.”
Fed. R. Civ. P. 56(c)(2). Under this rule, “[o]nce the moving
party avers an absence of evidence to support the non-moving
party’s case, the non-moving party must offer ‘definite,
competent evidence to rebut the motion.’” Meuser v . Fed. Express
3 The court also denies Organic Labs’ motion to strike Pure Barnyard’s surreply memorandum for exceeding the page limit set by L.R. 7.1(e)(3). While the better practice would have been for Pure Barnyard to seek leave of court before filing an overlong memorandum, Organic Labs has not claimed any prejudice from the excess pages and, in any event, Organic Labs was given the fullest opportunity to make whatever points it wished at oral argument on its summary judgment motion.
3 Corp., 564 F.3d 5 0 7 , 515 (1st Cir. 2009) (quoting Mesnick v . Gen.
Elec. Co., 950 F.2d 816, 822 (1st Cir. 1991)).
In ruling on a motion for summary judgment, the “court must
scrutinize the record in the light most flattering to the party
opposing the motion, indulging all reasonable inferences in that
party’s favor.” Mulvihill v . Top-Flite Golf Co., 335 F.3d 1 5 , 19
(1st Cir. 2003). The following facts are set forth accordingly,
though the court has made an effort to note Organic Labs’ version
of events where appropriate.
II. Background
A. The underlying facts
Pure Barnyard, based in Portsmouth, New Hampshire, had been
a leader in the organic lawn and garden fertilizer market,
selling to a number of national hardware chains and similar
retailers. John Packard, its founder, serves as its chairman and
chief executive officer. Organic Labs, based in Stuart, Florida,
is also engaged in the business of manufacturing, distributing,
and selling fertilizers and other garden and lawn care products.
Organic Labs is owned by David Keen, who also serves as its
president, and Keen’s wife. Also involved were David Webb, the
chief executive officer and majority owner of Results Capital, a
4 private equity firm based in West Palm Beach, Florida, and Mark
Conboy, an “entrepreneur” from that area.
In February 2008, Conboy, who had known Webb for nearly 15
years, introduced him to Keen, who wanted to sell his and his
wife’s shares in Organic Labs and no longer have responsibility
for the company’s day-to-day operations. The nature of the
resulting relationship is a matter of dispute. Conboy says that,
as he recommended to Keen, Organic Labs “retained Webb and
Results Capital to market Organic [Labs] for sale to a group of
investors,” while Keen says that neither he nor Organic Labs ever
“authorized” Results Capital, Webb, or Conboy to “act as [an]
agent.” Webb agrees with Keen that “neither the Keens nor
Organic [Labs] ever retained [him] or Results Capital as their
investment banking firm, or in any other capacity.” Instead,
Webb explains, he personally “became interested in creating an
opportunity consistent with . . . Keen’s stated desire to get out
of the day-to-day operation” of Organic Labs.
Webb and Conboy also disagree over how Pure Barnyard became
involved in their plan for Organic Labs. Webb says that he
“learned about” Pure Barnyard through research into the organic
fertilizer industry that he conducted after meeting with Keen and
that, as a result, Results Capital began “working toward a
proposed vertical integration of both Organic [Labs] and Pure
5 Barnyard that was entirely of [Webb’s] own conception.” Conboy,
however, says that, “[a]cting on behalf of” both Results Capital
and Organic Labs, he “began to assist” Results Capital in its
“efforts to find investors,” and came to learn of Pure Barnyard
from the former president of a bank that did business with i t .
In June or July 2008, Webb, Conboy, and Keen--joined by
Michael Williams, Organic Labs’ vice president of sales and
marketing--called Packard and “proposed a purchase of Pure
Barnyard” through Organic Holdings.4 As Packard recalls the
terms of the proposal, “Webb, Conboy, and Keen would form [that]
entity to purchase the assets” of both Organic Labs and Pure
Barnyard with capital raised through the sale of stock in Organic
Holdings, “in which Keen would be a shareholder.” Packard says
he understood that “Keen would be a founder and co-owner with
Webb and Conboy” in Organic Holdings. When Organic Holdings was
formed, however, its only shareholders were Webb and Conboy--but
Keen and his wife would have received $570,000 worth of stock in
4 Williams recalls that he “participated in the effort to sell Organic Labs,” including by giving Webb and Conboy information at Keen’s request, and that Keen and Organic Labs “allowed, encouraged, and permitted [Organic] Holdings, Results [Capital], Webb and Conboy to act on their behalf.”
6 the company as the result of the asset purchase agreement between
Organic Labs and Organic Holdings.5
Packard further recalls that Webb and Conboy later “made a
series of representations” to encourage him to commit Pure
Barnyard to the proposed transaction. Chief among them was that
Organic Labs “had a firm contract” to buy from Cargill--which
Packard knew as “one of the biggest, if not the biggest chicken
processor in the United States”--60,000 tons of “feather meal
based material at a price no greater than $200” per ton, as well
as “North American distribution rights” for this material.
Packard explains that chicken feather meal is high in nitrogen,
“which makes it an ideal, but historically expensive base for
organic fertilizer.” Thus, Packard says, Organic Labs’ right to
purchase 60,000 tons of the feather meal at only $200 each “was
critically important because it made organic fertilizer products
cost-competitive” with their non-organic alternatives.
Neither Webb nor Conboy has denied making this statement to
Packard. Conboy, in fact, says that he “advised Pure Barnyard of
the Cargill contract” based on what Keen had told him, i.e.,
5 One version of this agreement, dated August 2 9 , 2008, was notarized on September 9, 2008, and another version was notarized on October 7 , 2008. Both versions, however, provided that the Keens would receive $570,000 in Organic Holdings stock as part of the purchase price, and there is evidence that Keen, Webb, and Conboy had discussed that provision as early as August 8 , 2008.
7 “that Organic [Labs] had a binding supply agreement with Cargill
that obligated [it] to sell Organic [Labs] 60,000 tons of its new
poultry feather, organic fertilizer during 2009” (capitalization
corrected). Packard recalls that, in meetings in July and August
2008, Keen “assured [him] that Cargill had developed a method or
process that made the processing of feather meal easier and
cheaper” and that this “new process explained the $200 [per ton]
cost.” Packard says that Keen even showed him a sample of the
feather meal. Keen has not denied any of this on the record.6
There is some dispute, though, as to when Webb and Conboy
made the representation at issue. Consistent with the
allegations of Pure Barnyard’s first amended complaint, Conboy
says that the representation occurred when he and Webb
“telephoned Packard and the other Pure Barnyard [d]irectors to
convince them to authorize Packard to enter into an asset
6 At oral argument, Organic Labs explained that, while its position is that the alleged misrepresentations were not even made, it did not submit any evidence to that effect for fear of creating a dispute of material fact that would undermine its summary judgment motion. This is difficult to understand, since the motion assumes that the misrepresentations were made, but argues that makes no difference due to the lack of evidence that there was an agency relationship with Webb and Conboy or reliance by Pure Barnyard. A dispute over whether the misrepresentations were made, then, would have had no effect on the outcome of summary judgment. See Celotex Corp. v . Catrett, 477 U.S. 3 1 7 , 323 (1986) (“a complete failure of proof concerning an essential element of the nonmoving party’s case necessarily renders all other facts immaterial,” and summary judgment appropriate).
8 purchase agreement” with Organic Holdings in “July/August 2008.”
Packard’s affidavit says that the representation occurred in July
2008, though it does not reference the other directors’ presence
on the call. But Webb says that the “conference call where the
proposed acquisition of Pure Barnyard by [Organic] Holdings was
discussed with the Pure Barnyard Board of Directors” took place
on September 1 1 , 2008 (without describing the substance of the
call). Finally, an email from Packard to Webb and Conboy refers
to a Pure Barnyard board meeting, to take place on August 2 5 ,
2008, “to discuss a possible merger with Organic Labs.”
The timing of the representation is potentially important
because Pure Barnyard subsequently learned that it was untrue,
i.e., that Cargill had not in fact agreed to provide Organic Labs
with 60,000 tons of the feather meal. There is evidence that, on
or around September 1 9 , 2008, Keen told Packard “there will only
be 750 tons available for the retail market in 2009.”7 Then, on
7 The evidence of what Keen told Packard around this time is an email from Conboy to Webb describing a prior conversation between Conboy and Packard. The email itself, then, is likely inadmissible hearsay, even if offered to prove Packard’s awareness of what Keen told him (because the email is an out-of- court statement by Conboy). See Fed. R. Evid. 801(c), 802; but see James M . Rosenbaum, “In Defense of Rule 8 0 8 , Federal Rules of Evidence,” 12 Green Bag 165, 166 (2009) (facetiously proposing that “if it’s an email, it may be admitted,” despite hearsay or other evidentiary problems). Yet without any objection from Pure Barnyard, the court will consider the email for that purpose. See Perez v . Volvo Car Corp., 247 F.3d 303, 315 (1st Cir. 2001).
9 October 1 , 2008, Keen informed Packard of Cargill’s production
schedule for the next four months, which called for “a minimum of
60 tons per month” of feather meal throughout 2009. Packard
responded, by email, “This is not good!” because the schedule
“obviously puts us out of the [retail] chains and independents
for 2009 and likely 2010.”
Packard explains that, based on the initial representation
about Cargill’s contract to supply Organic Labs with the product,
Pure Barnyard had “reached an agreement” to provide Home Depot
and other “big box” retailers with the new feather meal product
instead of Pure Barnyard’s own products. Pure Barnyard also
convinced the retailers to change the layout of their shelving to
accommodate the new product, and ordered packaging for i t .
Packard maintains that he took these actions before Keen told him
that Cargill could not in fact provide the stated quantity of
feather meal material, and that, by the time he learned the
truth, “Pure Barnyard had already taken itself out of the 2009
market” for its own products.
There is some evidence, largely in the form of
contemporaneous emails from Packard to Conboy, suggesting that
Pure Barnyard had not in fact agreed to sell the feather meal
product to its customers or ordered the packaging for it until at
10 least late September 2008.8 But Packard explains that, insofar
as these imply that Pure Barnyard had not yet committed itself to
selling the product, they were just “threatening innuendos
intended to push [the merger] to completion,” rather than an
accurate account of the status of its business dealings.
Pure Barnyard alleges that, as a further consequence of the
misrepresentations about Organic Labs’s arrangements with
Cargill, Pure Barnyard’s board of directors authorized it to
enter into an asset purchase agreement with Organic Holdings.
There is no question, though, that Pure Barnyard knew that
representation was false by the time it claims to have actually
8 Organic Labs points to four emails. One is the email from Webb from Conboy discussing his conversation with Packard about a conversation he had with Keen around September 1 9 , 2010. See note 7 , supra. After reporting that Keen had told Packard about the limited quantity of feather meal product available, and noting that it was “substantially less than the 12,000 tons [Packard] said they could sell to retail in 2009,” Conboy adds that Packard “is OK with this, better to know the truth than to over promise and not be able to deliver the boxes.” The second is a September 2 , 2008 email from Packard that seems to announce Pure Barnyard’s decision to present its own product at an upcoming trade show, while noting that “[w]e may be showing other product from [Organic Labs] if we can fast forward our merger discussions.” The third is a September 1 7 , 2008 email to Webb and Conboy from Packard stating that he has “bought until next week to give [Pure Barnyard’s] customers a complete analysis of what we’re doing for 2009. If I don’t have anything from Organic Labs, I will have to go with our original blended product. I will be committing to my bag manufacturer on [September 1 9 , 2008] for 2009-2010.” The fourth is a September 2 0 , 2008 email to Conboy from Packard saying that he “will be ordering bags on [September 2 2 ] . Hopefully, they’re yours.”
11 signed the asset purchase agreement, on October 8 , 2010.9
Furthermore, the asset purchase was never consummated--because,
Conboy explains, Keen told Webb “to call the Pure Barnyard part
of the transaction off.” Ultimately, the asset purchase between
Organic Labs and Organic Holdings was not consummated either.
B. Procedural history
In late November 2008, Pure Barnyard commenced this action
against Organic Labs and Results Capital in Rockingham County
Superior Court. The defendants removed the case to this court,
see 28 U.S.C. § 1441, and moved to dismiss for lack of personal
jurisdiction, see Fed. R. Civ. P. 12(b)(2). Following a hearing,
the court denied the motion, based largely on Conboy’s account of
his and Webb’s phone call to Packard, while he was in New
Hampshire, during which the alleged misrepresentations were made.
Order of Sept. 1 1 , 2009.
Pure Barnyard later filed a first amended complaint in six
separately numbered counts:
9 Pure Barnyard has not submitted a version of the asset purchase agreement signed by either party, though Conboy claims to have seen Packard sign it on Pure Barnyard’s behalf and hand it to Webb. And there is no evidence that Organic Holdings ever manifested its assent to the agreement. This dispute is immaterial, though, because Pure Barnyard’s claims do not arise out the asset purchase agreement between it and Organic Holdings (which is not even a party here).
12 • “interference with contractual relations,” arising out of the defendants’ allegedly contacting Pure Barnyard’s employees “to induce them to leave and come work for Organic Labs” (count 1 ) ;
• civil conspiracy, arising out of the defendants’ use of the alleged misrepresentations as part of a plan “to maximize the amount of money which they could take from” merging Organic Labs and Pure Barnyard into Organic Holdings (count 2 ) ;
• fraud, based largely on the alleged misrepresentation as to Organic Labs’ arrangement with Cargill (count 3 ) ;
• negligent misrepresentation, based largely on the same alleged statement (count 4 ) ;
• violation of the New Hampshire Consumer Protection Act, N.H. Rev. Stat. § 358-A, based on the same alleged misrepresentation (count 5 ) ; and
• a “common-law claim for attorneys’ fees, costs, and expenses” (count 6 ) .
Organic Labs then moved to dismiss counts 2 , 3 , 5 , and 6 for
failure to state a claim for relief. See Fed. R. Civ. P.
12(b)(6). Organic Labs argued, among other things, that Pure
Barnyard had not alleged any fraudulent misrepresentation “by
Organic Labs or any of its principals,” but only by Webb. The
court ruled, however, that Pure Barnyard had plausibly alleged an
agency relationship between Webb and Conboy, on one hand, and
Organic Labs, on the other. The court therefore denied the
motion to dismiss except as to count 6 (the common-law claim for
attorneys’ fees). Order of Aug. 1 0 , 2010. The case has since
been scheduled for a bench trial.
13 III. Analysis
In moving for summary judgment on counts 2-5 (civil
conspiracy, fraud, negligent misrepresentation, and violation of
N.H. Rev. Stat. Ann. § 358-A), Organic Labs makes two independent
arguments: (A) there is insufficient evidence for a rational
factfinder to conclude that Webb and Conboy were acting as its
agents when they made the alleged misrepresentations, and
(B) the alleged misrepresentations were “corrected” before Pure
Barnyard acted in reliance on them.10 The court will address
these arguments in turn.
A. Agency
Under New Hampshire law, “the necessary factual elements to
establish agency involve: (1) authorization from the principal
that the agent shall act for him or her; (2) the agent's consent
to so act; and (3) the understanding that the principal is to
exert some control over the agent's actions.” VanDeMark v .
10 Organic Labs also moves for summary judgment on count 1 (arising out of its alleged efforts to lure away Pure Barnyard’s employees) because, among other reasons, none of those employees actually went to work for Organic Labs. Pure Barnyard concedes in its surreply that, on this basis, summary judgment should enter against it on count 1 .
14 McDonald’s Corp., 153 N.H. 753, 760-61 (2006). 11 Organic Labs
argues that Pure Barnyard cannot satisfy this test because it has
no evidence of the requisite “authorization” from Organic Labs
that Webb and Conboy act on its behalf.
In one of his affidavits submitted here, however, Conboy
attests that Organic Labs “retained Webb and Results Capital to
market Organic [Labs] for sale to a group of investors.” Organic
Labs does not question that, if it did in fact retain Webb to try
to sell the company, then that would amount to the authorization
necessary to make Webb the agent of Organic Labs for that
purpose. Instead, Organic Labs argues that, because “none of the
documents . . . produced by [Pure Barnyard] in discovery even
remotely demonstrates that Keen ever authorized” Webb, he “could
not have acted as an agent of Organic Labs.” But a principal
need not authorize its agent in writing. “The granting of actual
authority may be either express or implied from the parties’
conduct or other evidence of intent.” Dent v . Exeter Hosp.,
Inc., 155 N.H. 7 8 7 , 792 (2007).
11 The parties’ summary judgment briefing relies solely on New Hampshire law in addressing the agency issue. The court takes that as a tacit agreement that New Hampshire law controls that question here, see, e.g., Anderson v . Century Prods. Co., 943 F. Supp. 1 3 7 , 150 n.2 (D.N.H. 1996), despite Florida’s substantial relationship to the underlying events, c f . Demers v . Pilkington N . Am., Inc., 2010 DNH 193, 9 n.3.
15 Organic Labs also complains (as it does about much of
Conboy’s affidavit) that his statement that the company “retained
Webb and Results Capital to market Organic [Labs] for sale to a
group of investors” is merely “conclusory” and therefore
insufficient to create a genuine issue of fact.12 It is true that
“[a] properly supported motion for summary judgment cannot be
defeated by relying upon conclusory allegations.” Ahern v .
Shinseki, 629 F.3d 4 9 , 54 (1st Cir. 2010). But Conboy offers
more than just the conclusion that Organic Labs retained Results
Capital; he also describes the surrounding facts in some detail.
As discussed in Part II.A, supra, Conboy attests that, after
learning that Keen wanted to sell his company, Conboy introduced
Keen to Webb, and recommended that Keen retain Webb’s firm,
Results Capital, for that purpose. Conboy says that he and Webb
then undertook “efforts to find investors” toward that end,
12 It could be argued that Conboy’s affidavit fails to show the basis of his personal knowledge that Organic Labs “retained” Results Capital, see Fed. R. Evid. 6 0 2 , and that his statement to that effect is therefore inadmissible on summary judgment, see Fed. R. Civ. P. 56(c)(4). But the closest Organic Labs comes to making this argument is a footnote in its summary judgment memorandum pointing out that Conboy “was not employed in any capacity by Results Capital” and calling his statement “unsupported.” That is insufficient. See Perez, 247 F.3d at 314. It is also worth noting that Williams--who was employed by Organic Labs--says in his affidavit that Organic Labs “allowed, encouraged, and permitted . . . Webb and Conboy to act on [its] behalf.” See note 4 , supra.
16 eventually leading to Pure Barnyard. Conboy also recalls that
both Keen and another Organic Labs employee, Williams, joined
Webb and Conboy in calling Packard to propose the sale of Pure
Barnyard to Organic Holdings. Finally, Conboy says that the deal
was halted at Keen’s request.
Thus, Conboy’s account--though disputed not only by Keen but
by Webb, who insists that Results Capital was working strictly on
its own behalf13--has “substance in the sense that it limns
differing versions of the truth which a factfinder must resolve,”
making summary judgment inappropriate. Nat’l Amusements, Inc. v .
Town of Dedham, 43 F.3d 7 3 1 , 735 (1st Cir. 1995) (quotation marks
and ellipse omitted). Indeed, his account bears little
resemblance to the kinds of “conclusory” statements which the
court of appeals typically deems ineffectual on summary judgment.
See, e.g., Rios-Jimenez v . Principi, 520 F.3d 3 1 , 42 n.7 (1st
Cir. 2008) (finding witness’s statements that plaintiff was
“qualified” to perform her job, “without any explanation or
13 Organic Labs argues that Webb’s account “is inherently reliable because it is akin to a statement against interest,” since Webb’s firm, Results Capital, would be solely liable for his alleged misrepresentation if he had not been acting on Organic Labs’ behalf. While this argument may ultimately have some merit, “credibility determinations are for the factfinder at trial, not for the court at summary judgment.” Simas v . First Citizens’ Fed. Credit Union, 170 F.3d 3 7 , 49 (1st Cir. 1999).
17 reference to evidence,” insufficient to avoid summary judgment on
that issue); Sanchez v . Triple S Mgmt. Corp., 492 F.3d 1 , 11 n.11
(1st Cir. 2007) (finding witnesses’ statements that defendants
acted “in furtherance of a scheme” insufficient to avoid summary
judgment on that issue, given a “complete lack of specificity”).
Conboy’s testimony that Organic Labs “retained” Webb, then,
suffices to create a triable issue of fact as to whether the
company authorized him to act on its behalf so as to make him its
agent. In light of this ruling--together with the evidence that
it was Webb, either alone or in addition to Conboy, who made the
allegedly fraudulent representations--the court need not address
the thrust of Organic Labs’ agency argument, which is that there
is no evidence that Conboy was acting as its agent. The court
also need not address Pure Barnyard’s principal responses, which
are that proof of the alleged agency relationship is inessential
in light of Keen’s own statements to Packard about the Cargill
material, and that, even if Webb and Conboy lacked actual
authority, they acted with apparent authority. If necessary,
those arguments can be addressed in connection with trial in this
matter, where the court will sit as the finder of fact.
18 B. Reliance
Organic Labs also argues that, even if Webb or Conboy were
acting as its agents when they allegedly told Packard that it had
a contract with Cargill for 60,000 tons of the feather meal, Pure
Barnyard still cannot recover on any of its claims because the
alleged misrepresentation was “corrected” before Pure Barnyard
acted in reliance on i t . As Organic Labs points out, Pure
Barnyard can recover under its fraudulent or negligent
misrepresentation theories only for “‘pecuniary loss caused to
[it] by [its] justifiable reliance upon the misrepresentation.’”
Gray v . First NH Banks, 138 N.H. 279, 283 (1994) (quoting
Restatement (Second) of Torts § 525 (1976)). 14
14 Organic Labs argues that the same limitation applies to Pure Barnyard’s Consumer Protection Act claim, relying on the statutory language that “[a]ny person injured by another’s use of any method, act or practice declared unlawful under this chapter may bring an action.” N.H. Rev. Stat. Ann. § 358-A:10, I . This provision goes on to state, however, that “recovery shall be in the amount of actual damages or $1,000, whichever is greater,” id., and the New Hampshire Supreme Court has ruled that this section “does not require a showing of actual damages for a claimant to be awarded the statutory minimum and attorney’s fees” (which the statute also authorizes). Becksted v . Nadeau, 155 N.H. 615, 620 (2007). On this basis, in fact, the court in Becksted reversed a directed verdict against the plaintiffs on their § 358-A claim, which the Superior Court had entered because “they didn’t lose anything as a result of the deceptive acts they claimed.” Id. at 620-21. Nevertheless, this court will assume for purposes of the summary judgment motion that Pure Barnyard cannot prevail on its § 358-A claim without proving that the alleged misrepresentation caused injury to i t .
19 Organic Labs argues that, because Packard knew that Cargill
had not in fact agreed to provide Organic Labs with 60,000 tons
of the feather meal before he signed the asset purchase agreement
on behalf of Pure Barnyard, he could not have done so in reliance
on the alleged misrepresentation. That is correct. But Packard
says that he also caused Pure Barnyard to take other acts in
reliance on the alleged misrepresentation, i.e., entering
agreements to supply its customers with (and buying packaging
for) the feather meal product, rather than Pure Barnyard’s own
product line. As discussed in Part II.A, supra, there are a
number of factual disputes going to whether those acts occurred
before Packard learned the truth about Cargill’s feather meal.
First, there is conflicting evidence as to when the alleged
misrepresentation was made: Packard says it was July 2008,
Conboy says it was “July/August 2008,” a contemporaneous email
from Packard suggests that it was August 2 5 , 2008, and Webb says
(without admitting or denying that he made the misrepresentation)
that it was September 1 1 , 2008. Second, there is conflicting
evidence as to when Packard first learned the alleged
misrepresentation was false: emails suggest that it was either
September 1 8 , 2008, or October 1 , 2008. Third, there is
conflicting evidence as to when (and perhaps even whether) Pure
Barnyard agreed to supply the feather meal product to its
20 customers and ordered the bags for i t : Packard maintains that it
was before he learned the truth, but contemporaneous emails
suggest it was not until later (if at a l l ) , see note 7 , supra.
Resolving all--or even some--of these disputes in Pure
Barnyard’s favor, a rational factfinder could conclude that Pure
Barnyard acted in reliance on the alleged misrepresentation
before learning that it was false. So Organic Labs is not
entitled to summary judgment on the ground that Pure Barnyard
cannot prove detrimental reliance.
At oral argument, Organic Labs maintained that, even if Pure
Barnyard did act in reliance on the alleged misrepresentation
before it was corrected--by committing to sell the feather meal
product, instead of Pure Barnyard’s existing products, to its
customers, and the like--that reliance was not justifiable in
light of the fact that the asset purchase agreement between Pure
Barnyard and Organic Holdings was not yet in place. Out of
fairness, this court does not ordinarily consider points
mentioned for the first time at oral argument. See, e.g., Doe v .
Friendfinder Network, Inc., 540 F. Supp. 2d 2 8 8 , 304 n.19 (D.N.H.
2008). The court sees no reason for an exception here simply
because, just before oral argument, Organic Labs received a
transcript of the September 1 1 , 2008 conference call between Webb
21 and Conboy, on one hand, and Packard and the other Pure Barnyard
board members, on the other.
First, counsel for Organic Labs candidly acknowledged that,
while they had only recently received a transcript of the call,
they had been in possession of a tape recording of it for at
least a year. This is not a case, then, where the non-moving
party failed to turn over discoverable evidence in time for the
moving party to incorporate it into its summary judgment
presentation. Second, Organic Labs could have made its new
justifiable reliance argument without the transcript: while
Packard did state during the call that Pure Barnyard had yet to
commit itself to the merger at that point, the other evidence of
record is largely to the same effect. See notes 8-9, supra.
Indeed, Organic Labs argued exactly that point in its reply
memorandum (which was filed before it had the transcript)--albeit
in support of its argument that Pure Barnyard could not have
acted in reliance on the alleged misrepresentation when it
committed to the merger, rather than its new argument that
nothing Pure Barnyard did in reliance on the alleged
misrepresentation before it committed to the merger could have
been justifiable. This new argument, then, will have to await
consideration at trial.
22 IV. Conclusion
For the foregoing reasons, Organic Labs’ motion for summary
judgment15 is DENIED except as to count 1 , as to which it is
GRANTED by assent; Organic Labs’ motion to strike16 is DENIED as
moot; and Organic Labs’ motion to strike the surreply17 is DENIED.
SO ORDERED.
___ Joseph N . Laplante United States District Judge Dated: March 7 , 2011
cc: Mark F. Weaver, Esq. William S . Gannon, Esq. Robert H . Miller, Esq. Christopher Cole, Esq. Courtney H.G. Herz, Esq. Results Capital Group, Inc.
15 document n o . 6 5 . 16 document n o . 7 7 . 17 document n o . 8 6 .