Watkins & Son Pet Supplies v. The Iams Company

254 F.3d 607, 44 U.C.C. Rep. Serv. 2d (West) 708, 2001 U.S. App. LEXIS 13731, 2001 WL 686370
CourtCourt of Appeals for the Sixth Circuit
DecidedJune 20, 2001
Docket00-3243
StatusPublished
Cited by55 cases

This text of 254 F.3d 607 (Watkins & Son Pet Supplies v. The Iams Company) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Watkins & Son Pet Supplies v. The Iams Company, 254 F.3d 607, 44 U.C.C. Rep. Serv. 2d (West) 708, 2001 U.S. App. LEXIS 13731, 2001 WL 686370 (6th Cir. 2001).

Opinion

OPINION

ALDRICH, District Judge.

This case arose out of the termination of a longstanding agreement between Watkins, the plaintiff below, and lams, the defendant, under which Watkins distributed Iams’s products in Michigan. In summary, Watkins alleges that lams made parol representations to Watkins that if it became an exclusive lams distributor, lams would make it the exclusive lams distributor in a territory in Michigan when lams moved to an exclusive territory distribution system. Watkins alleges that it relied on those representations to its detriment, but that lams terminated its distributorship agreement and gave an exclusive contract to a competing distributor. The district court dismissed Watkins’s claim under the Michigan Franchise Investment Law pursuant to Fed.R.Civ.P. 12(b)(6) and granted summary judgment on its claims under the Clayton Act, the Robinson Pat-man Act, and the Sherman Act, and on its common law claims. 1 We affirm the judgment.

1. Facts

lams is in the business of manufacturing and selling pet foods. For many years, Watkins was a non-exclusive distributor of lams products in Michigan. In 1986 or 1987, lams began to require Watkins (as well as its other distributors) to sign yearly written distributorship agreements. Until 1987, Watkins was the sole distributor of lams products in Michigan, but in 1987, Wolverton, Inc. also began selling lams products in the state. 2

In 1989, lams began offering its distributors a 2% discount on its products in return for a commitment from the distributors to sell lams products exclusively. The discount was significant, given the low profit margins customary in the business. Watkins alleges that in 1990, lams promised it that if it became an exclusive lams distributor, lams would grant it an exclusive sales territory in Michigan when lams changed to a distribution system of exclusive territories. Watkins claims that it became an exclusive distributor in rebanee on this promise. It entered into an exclusivity agreement in July 1990 and annually thereafter through 1993. Nevertheless, lams notified Watkins in September, 1993, that it would not renew its distributorship contract, and the contract expired, in accordance with its terms, on January 31, 1994. lams subsequently entered into an exclusive distribution contract in Michigan with Wolverton.

The contract of January 31, 1993 between lams and Watkins contains the following provisions:

*610 Notwithstanding the appointment herein the Company [lams] reserves the right for itself to sell Products within the Territory. In addition, the Company may appoint any other distributor to sell Products within the Territory. (§ 2.1). This Agreement shall be effective on February 1, 1993, and shall automatically expire, without any further action by either party required, on January 31, 1994 unless earlier terminated as set forth in Section 4.2 or 4.3 or otherwise in accordance with the provisions of this Agreement. This Agreement may be renewed thereafter on terms mutually agreeable to the parties only in a writing signed by the parties hereto.... (§ 4.1). The distributor [Watkins] shall: ... (c) maintain in stock at all times an inventory of products in such quantities as in the Company’s opinion, after consultation and review with the Distributor, either directly or through the Company’s representative, are needed to meet sales requirements for the Territory. (§ 5.1).
With the exception of Schedule I, which may be unilaterally amended by the Company as provided in this Agreement ... and except as otherwise provided in this Agreement, no change, modification or amendment of any provision of this Agreement will be binding unless made in writing and signed by the parties hereto. (§ 11).
This Agreement shall be governed by the laws of the State of Ohio (exclusive of its rules on conflict of laws) and the United States of America. (§ 13).
THIS AGREEMENT TOGETHER WITH THE COMPANY’S STANDARD TERMS AND CONDITIONS OF SALE REPRESENT THE ENTIRE AGREEMENT BETWEEN THE PARTIES AND SUPERSEDES ALL PRIOR, EXISTING, AND CONTEMPORANEOUS AGREEMENTS, WHETHER WRITTEN OR ORAL, BETWEEN THE PARTIES HERETO RELATING TO THE DISTRIBUTION OR SALE OF THE COMPANY’S PRODUCTS. ALL SUCH OTHER AGREEMENTS ARE HEREBY TERMINATED, AND EACH PARTY HEREBY RELEASES THE OTHER FROM ANY AND ALL CLAIMS ARISING AS A RESULT OF OR IN ANY WAY RELATING TO THE RELATIONSHIP BETWEEN THE COMPANY AND THE DISTRIBUTOR UNDER SUCH OTHER AGREEMENTS OR AS A RESULT OF SUCH TERMINATION, WITH THE EXCEPTION OF CLAIMS BY THE COMPANY FOR MONEY DUE FOR GOODS AND SERVICES SOLD TO THE DISTRIBUTOR. THE UNDERSIGNED INDIVIDUALS ON BEHALF OF THE COMPANY AND THE DISTRIBUTOR, AS THE CASE MAY BE, HEREBY AFFIRM THAT THEY HAVE CAREFULLY READ THIS AGREEMENT AND FULLY UNDERSTAND THE TERMS CONTAINED IN THE AGREEMENT. (§ 16).

2. Discussion

A. Choice of Law

The parties agree that Ohio law governs the claims for promissory estoppel and breach of the implied duty of good faith and fair dealing. Watkins argues that Michigan law governs its fraud claim and that the public policy of Michigan preserves its statutory claim under the Michigan Franchise Investment Law (MFIL) despite the choice of law provision in the contract. lams argues that the district court properly applied Ohio law to the fraud claim and that because the parties chose Ohio law to govern their agreement, *611 Watkins cannot prevail on its Michigan statutory claim.

We review choice of law rulings de novo. Northland Ins. Co. v. Guardsman Prods., Inc., 141 F.3d 612, 616 (6th Cir.1998). Because the case was transferred from the Eastern District of Michigan to the Southern District of Ohio pursuant to 28 U.S.C. § 1404(a), we apply the choice of law rules of Michigan, the forum of the transferring court. Northland, supra at 616. For the following reasons, we hold that the district court did not err in applying Ohio law to the fraud claim. We need not decide the choice of law problem presented by the MFIL claim, because we hold, infra, that even if the choice of law clause does not bar the MFIL claim, the district court did not err in dismissing the claim for failure to state a claim upon which relief could be granted.

Under Michigan law, a tort claim is governed by the law of the forum unless a “rational reason” exists to displace it. Olmstead v. Anderson, 428 Mich. 1, 29-30, 400 N.W.2d 292, 305 (1987). In Imaging Fin. Servs. v. Lettergraphics/Detroit, Inc., 39 U.C.C. Rep. Serv.2d (CBC) 1116, 1999 U.S.App.

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254 F.3d 607, 44 U.C.C. Rep. Serv. 2d (West) 708, 2001 U.S. App. LEXIS 13731, 2001 WL 686370, Counsel Stack Legal Research, https://law.counselstack.com/opinion/watkins-son-pet-supplies-v-the-iams-company-ca6-2001.