Sage Fulfillment, LLC v. Earth Animal Ventures, Inc.

CourtDistrict Court, D. Connecticut
DecidedOctober 31, 2020
Docket3:20-cv-00444
StatusUnknown

This text of Sage Fulfillment, LLC v. Earth Animal Ventures, Inc. (Sage Fulfillment, LLC v. Earth Animal Ventures, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Connecticut primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sage Fulfillment, LLC v. Earth Animal Ventures, Inc., (D. Conn. 2020).

Opinion

UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT

SAGE FULFILLMENT, LLC, Plaintiff,

v. No. 3:20-cv-00444 (VAB)

EARTH ANIMAL VENTURES, Inc., Defendant.

RULING AND ORDER ON MOTION TO DISMISS Sage Fulfillment LLC (“Plaintiff” or “Sage”) has sued Earth Animal Ventures, Inc. (“Defendant” or “EAV”) for breach of contract, improper termination, anticipatory repudiation, and violation of the Connecticut Unfair Trade Practices Act, Conn. Gen. Stat. §§ 42-110 et seq. (“CUTPA”). Compl., ECF No. 1 (Apr. 1, 2020). The Defendants have filed a motion to dismiss all claims, except for the breach of contract claim. For the reasons stated below, Defendant’s motion to dismiss is GRANTED in part and DENIED in part. The claim for declaratory relief will be dismissed; the other claims will continue for now. I. FACTUAL AND PROCEDURAL BACKGROUND A. Factual Allegations 1. Sage Fulfillment, LLC is allegedly “a manufacturer and wholesale distributor of certain products, including cannabinoid (“CBD”) oil.” Compl. ¶ 14. Earth Animal Ventures, Inc. is allegedly “engaged in the business of wholesale marketing, selling and distributing various products for use on animals.” Id. ¶ 15. Sage was allegedly formed “on or about September 10, 2018” to become “EAV’s exclusive supplier of CBD Animal Products.” Id. ¶ 18. The parties allegedly “entered into an agreement concerning Sage’s provision of CBD Animal Products to EAV, memorialized in a Master Exclusive Supply Agreement,” which became effective on November 13, 2018. Id. ¶ 19; see Master Exclusive Supply Agreement, ECF No. 19-2, Exhibit A (May 15, 2020) (“MESA”). The Master Exclusive Supply Agreement allegedly “provides that Sage shall exclusively

manufacture and deliver CBD Animal Products to EAV, and EAV shall exclusively purchase CBD Animal Products from Sage.” Id. ¶ 21. Sage alleges that the Master Exclusive Supply Agreement was set to be effective through December 31, 2021, “unless properly terminated or extended.” Id. ¶ 20. “On or about December 6, 2018,” the parties allegedly “executed Statement of Work No. 1,” which became effective January 1, 2019 and remains effective until December 31, 2021. Id. ¶¶ 22-23; see Statement of Work No. 1, ECF No. 19-3, Exhibit B (May 15, 2020) (“SOW1”). The SOW1 allegedly “provides that EAV shall exclusively purchase of all products from Sage . . . provided that EAV meets certain minimum Product Order commitments.” Id. ¶ 26.

Sage alleges that the products covered by the SOW1 consisted of two components: “(1) a syringe-like device (the ‘Pen’) and (2) cannabinoid oil transdermal gel with ‘Uptake’ (‘CBD Gel’)”. Id. ¶ 28. Starting in or around May 2018, Sage allegedly “provided multiple formulas of CBD Gel for EAV to test, and EAV expressly approved the formula for the CBD Gel that Sage put into production for EAV.” Id. ¶ 30. Sage allegedly chose its device manufacturer, the model for the Pen, and the formula for the CBD Gel solely to satisfy requests made by the Defendant. Id. ¶ 31- 36. Sage alleges that “EAV agreed to order a minimum of 400,000 units of the Products annually beginning January 1, 2019, through December 31, 2021, for a total minimum of 1,200,000 units of Products for the entire SOW1 Term.” Id. ¶ 38. Sage further alleges that “[i]n reliance on EAV’s promise to fulfill the Minimum Purchase Requirements, [it] invested substantial capital to develop capacity to manufacture CBD Gel and other CBD Animal Products

exclusively for EAV.” Id. ¶ 41. 43. Allegedly, “[u]nder the Agreements, EAV is required to purchase 400,000 units of the Products each year through December 31, 2021, which would yield revenues of approximately $5,950,000 each year in 2019, 2020, and 2021.” Id. ¶ 43. Allegedly, “[i]n 2019, EAV submitted purchase orders to Sage for only 75,000 units of the Products” before July 1, 2019, which Sage alleges “yielded revenues of only $1,115,625.” Id. ¶¶ 44-45. Sage alleges that “EAV has not ordered any units of the Products since the second calendar quarter of 2019.” Id. ¶ 45. On or around November 16, 2019, Sage allegedly sent a letter to EAV, stating that “its failure to meet its Minimum Purchase Requirements in the first three quarters of 2019” and

alleged statements by EAV “that it would not meet the Minimum Purchase Requirements during the remainder of the [Statement of Work No. 1] Term, were material breaches” of the Statement of Work No. 1 and the Master Exclusive Supply Agreement (the “Agreements”). Id. ¶ 46. On or around December 6, 2019, EAV allegedly wrote a letter to Sage that accused the company of making various material breaches of the Agreements. Id. ¶ 47. Sage alleges that it cured any and all breaches on or before January 8, 2020. Id. ¶ 48. Still, on or around March 11, 2020, EAV allegedly gave Sage notice that it was terminating the Master Exclusive Supply Agreement and that any further dealing would only occur under a different arrangement. Id. ¶ 49. B. Procedural History On April 1, 2020, Sage Fulfillment LLC filed a Complaint against Earth Animal Ventures, LLC and Earth Animal Ventures, Inc with four causes of action: breach of contract (“Count I”); declaratory judgment for improper termination (“Count II”); anticipatory repudiation (“Count III”); and violation of the Connecticut Unfair Trade Practices Act (“Count

IV”). Compl. at 8–11. On April 15, 2020, Sage moved to dismiss Earth Animal Ventures, LLC from the litigation. Mot. to Dismiss, ECF No. 9 (Apr. 15, 2020). On June 2, 2020, the Court granted this motion, dismissing Earth Animal Ventures without prejudice. Order, ECF No. 21 (June 2, 2020). On May 15, 2020, the remaining defendant, Earth Animal Ventures, Inc., filed a motion to dismiss Counts II, III and IV of the Complaint. Mot. to Dismiss, ECF No. 18 (May 15, 2020); Mem. in Support of Mot. to Dismiss, ECF No. 19 (May 15, 2020) (“Def.’s Mem.”). On June 5, 2020, Sage filed a memorandum in opposition to the Defendant’s motion to dismiss. Mem. in Opp’n, ECF No. 24 (June 5, 2020) (“Pl.’s Mem. in Opp’n”).

On June 19, 2020, Earth Animal Ventures, Inc. filed a reply to Sage’s memorandum in opposition of the motion to dismiss. Reply, ECF No. 25 (June 19, 2020) (“Def.’s Reply”). On October 23, 2020, the Court held a motion hearing. Min. Entry, ECF 50 (Oct. 23, 2020) II. STANDARD OF REVIEW A complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Any claim that fails “to state a claim upon which relief can be granted” will be dismissed. Fed. R. Civ. P. 12(b)(6). In reviewing a complaint under Rule 12(b)(6), a court applies a “plausibility standard” guided by “two working principles.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). First, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id.; see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (“While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need

detailed factual allegations . . . a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” (internal citations omitted)). Second, “only a complaint that states a plausible claim for relief survives a motion to dismiss.” Iqbal, 556 U.S. at 679. Thus, the complaint must contain “factual amplification . . .

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