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Andrea Distributing, Inc. v. Dean Foods of Wisconsin, LLC

United States District Court, W.D. Wisconsin

June 7, 2016

ANDREA DISTRIBUTING, INC., Plaintiff,
v.
DEAN FOODS OF WISCONSIN, LLC, Defendant.

          OPINION & ORDER

          JAMES D. PETERSON DISTRICT JUDGE

         For nearly a decade, plaintiff Andrea Distributing, Inc. transported dairy products to defendant Dean Foods of Wisconsin, LLC’s customers in northern Wisconsin. During the same time, Andrea also had a distribution agreement with Dean Foods that permitted it to purchase dairy products from Dean Foods and resell them to Andrea’s own customers. The parties’ relationship deteriorated in 2014, when Andrea tried to insist on higher hauling rates. Dean Foods briefly accommodated Andrea, but it found alternative haulers at rates lower even than Andrea’s original rates.

         In March 2015, Dean Foods informed Andrea that it was terminating the hauling relationship. The termination dealt a financial blow to Andrea. In protest, Andrea stopped paying down its past-due balance for the products that it had purchased under the distribution agreement. But that just led Dean Foods to terminate the distribution relationship a few months later for nonpayment.

         With the business relationship soured, Andrea sued Dean Foods in state court for violating the Wisconsin Fair Dealership Law (WFDL), Wis.Stat. § 135.01 et seq. Dean Foods removed the case to this court and counterclaimed to recover Andrea’s past-due balance.

         Dean Foods has now moved for summary judgment on Andrea’s affirmative claim and on the counterclaim. Dkt. 31. The court will grant Dean Foods’s motion. Based on the undisputed facts, the court reaches four conclusions. First, the parties’ relationship involved two separate agreements: a distribution agreement and a hauling agreement. Second, although the parties’ distribution agreement was covered by the WFDL, Dean Foods properly terminated it for nonpayment. Third, the parties’ hauling agreement was not covered by the WFDL, and Dean Foods was within its rights to terminate it. Fourth, Andrea breached the distribution agreement and it owes Dean Foods for the products that it purchased. Dean Foods is entitled to judgment as a matter of law.

         UNDISPUTED FACTS

         Andrea did not comply with this court’s procedures for presenting factual information at summary judgment. First, Andrea did not respond to Dean Foods’s proposed findings of fact. As the court’s preliminary pretrial conference order explained, “[a] fact properly proposed by one side will be accepted by the court as undisputed unless the other side properly responds to the proposed fact and establishes that it is in dispute.” Dkt. 15, at 9; see also Id. at 13-15. Second, Andrea did not present its own proposed findings of fact, instead submitting an affidavit from Scott Andrea generally verifying “[t]hat the contents of [Andrea’s] brief are true and accurate.” Dkt. 40, ¶ 4.[1] The court’s preliminary pretrial conference order provided clear instructions for submitting responsive proposed findings of fact, Dkt. 15, at 13-15, and Andrea’s catchall affidavit did not comply with these instructions. The Seventh Circuit has “routinely held that a district court may strictly enforce compliance with its local rules regarding summary judgment motions.” Schmidt v. Eagle Waste & Recycling, Inc., 599 F.3d 626, 630 (7th Cir. 2010). Dean Foods’s reply brief aptly catalogued the shortcomings of Andrea’s summary judgment evidence. Dkt. 41, at 2-4. The court will accept Dean Foods’s proposed facts as undisputed, unless the record obviously contradicts them (and it does not). With this consideration in mind, the court finds that the following facts are material and undisputed.

         Andrea is a Wisconsin corporation with its principal place of business in Spooner, Wisconsin. Andrea is in the business of hauling and distributing milk and other dairy products. It is a small company with four employees, a single warehouse and office building, and three refrigerated trucks for making deliveries. Dean Foods is a dairy distribution company, organized under Delaware law and, by virtue of the citizenship of its members, a citizen of Delaware and Texas.

         Before it began working with Dean Foods, Andrea had a longstanding business relationship with another dairy distributor, Kemps (not a party to this suit). Although the business was successful, Andrea decided to explore other options. Andrea concluded that Dean Foods offered “spectacular” pricing for hauling and distributing. Dkt. 18 (Andrea Dep. 27:22-24). In 2007, Andrea decided to conclude its relationship with Kemps and switch to Dean Foods.

         The relationship between Andrea and Dean Foods was two-fold: Andrea hauled products to Dean Foods’s customers in northern Wisconsin, and Andrea purchased products from Dean Foods to resell to its own customers. Most of Dean Foods’s customers in the area were institutional customers, such as schools and large stores or retail chains. Most of Andrea’s customers were smaller retail stores. The parties’ relationship was governed by two separate agreements, both of which were part oral and part written.[2] Dean Foods assigned different managers to handle the hauling and distribution agreements.

         For the hauling agreement, Dean Foods provided Andrea with a list of deliveries to make and then reimbursed Andrea for those deliveries. Dean Foods reimbursed Andrea regardless of whether the customer paid Dean Foods for the products. For the distribution agreement, Dean Foods provided Andrea with a price list for its products. Andrea ordered products by fax or phone, Dean Foods invoiced Andrea for the order and delivered the products to Andrea, and Andrea resold the products to its own customers. Neither the hauling agreement nor the distribution agreement required Andrea to purchase new trucks, lease new buildings, display Dean Foods’s logo, or purchase clothing or uniforms for Andrea’s employees. In fact, some of Andrea’s employees continued to wear Kemps-branded apparel after the switch.

         Andrea began to have financial difficulties in 2014. By September 2014, Andrea had built up a substantial past-due balance for products that it had purchased from Dean Foods under the distribution agreement. At Dean Foods’s request, Andrea proposed three plans for paying down the past-due balance. All three plans provided for increased minimum “per stop” rates under the parties’ hauling agreement: a $43 rate that would allow Andrea to “break even”; a $47 rate that would allow Andrea to make a modest profit; and a $52 rate that would allow Andrea to make a substantial profit. Dkt. 28-1. Dean Foods cautioned Andrea that its demand for a higher rate might lead Dean Foods to look for other haulers. When Andrea insisted on a higher rate, Dean Foods agreed to pay the $47 rate while it investigated whether other haulers could do the same job for less money.

         In February 2015, Dean Foods discovered that other haulers could take over Andrea’s hauling routes for between $20 and $30 per stop. Dean Foods contemplated dropping Andrea immediately, but ultimately decided against doing so because it might disrupt service to Dean Foods’s customers, many of which were schools. In March 2015, Dean Foods offered a compromise solution: it would pay Andrea $40 per stop for the rest of the 2014-15 school year. Dean Foods again warned that if Andrea would not accept the hauling rates that were in effect for the earlier part of 2014, then Dean Foods would consider dropping Andrea altogether after the school year. Andrea again responded that it would be losing money at those rates.

         Faced with Andrea’s insistence on higher hauling rates, Dean Foods arranged to have a different company take over Andrea’s hauling routes after the 2014-15 school year. On March 20, 2015, Dean Foods sent Andrea a letter indicating that it was terminating hauling services with Andrea, effective June 7, 2015.[3]

         After receiving the March 20 letter, Andrea stopped making payments toward its past-due balance. As Andrea’s corporate designee testified during his deposition, Andrea was withholding payments “in contest” because “Dean’s violated the law and owed us it or some of it” for terminating the hauling agreement. Dkt. 18 (Andrea Dep. 89:1-22). Andrea also filed a complaint against Dean Foods in the Wisconsin Circuit Court for Washburn County on May 28, 2015, bringing a claim under the WFDL. Dean Foods removed the case to this court on June 4, 2015.

         Because of Andrea’s continued nonpayment, Dean Foods also decided to terminate the distribution agreement. On June 4, 2015, Dean Foods wrote a letter to Andrea indicating that Andrea had a past-due balance of $144, 169.31. The letter informed Andrea that Dean Foods was terminating the parties’ distribution relationship, effective 90 days after Andrea received the letter. But the letter also explained that Andrea could cure the deficiency and prevent termination of the distribution agreement by paying the entire past-due balance within 10 days. Since receiving the letter, Andrea has not made any payments on its past-due balance, although Dean Foods has been able to reduce the balance by applying various billing credits and product rebates.

         On June 8, 2015, Dean Foods transferred Andrea’s hauling routes to a new company, as indicated in its March 20 letter. Dean Foods continued to supply Andrea with products under the distribution agreement. But to avoid adding to the past-due balance, Dean Foods required Andrea to pay cash on delivery for any products that it purchased during that time.

         Dean Foods answered Andrea’s complaint and added a counterclaim for nonpayment of amounts due under the distribution agreement on June 19. Dkt. 3. In September 2015, after Andrea lost its hauling routes but a few days before the distribution agreement was set to expire, the court denied Andrea’s motion for preliminary injunction. Dkt. 29. Consistent with the June 4 letter, the parties’ distribution agreement ended on September 3, 2015, because Andrea had failed to pay off its past-due balance. The case proceeded to discovery, and Dean Foods has now moved for summary judgment. Dkt. 31.

         The court has subject matter jurisdiction over this case pursuant to 28 U.S.C. § 1332, because the parties are diverse and ...


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