Craig v. Pepperidge Farm Inc.

JENAY CRAIG, et al., Plaintiffs,

v.PEPPERIDGE FARM, INC. Defendant.

1:06-cv-954-SEB-DML

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF INDIANA

Dated: April 27 , 2011

Entry Denying Motion for Reconsideration

Before the Court is Defendant Pepperidge Farm, Incorporated's ("Pepperidge Farm") motion for reconsideration of the Court's August 30, 2010, Entry Discussing Cross-motions for Summary Judgment (the "August 30, 2010 Order"). See dkt. 315. Our August 30, 2010, Order found Pepperidge Farm liable for breaching its agreements with plaintiffs Jenay Craig, Dennis McGuire, and Randy Patterson (collectively the "Plaintiffs"). In addressing the current motion, the Court assumes the reader's familiarity with the August 30, 2010 Order. Thus, the underlying facts of this action are not reiterated herein.

A motion to reconsider is designed to correct manifest errors of law or fact or to present newly discovered evidence. Publishers Resource, Inc. v. Walker-Davis Publications, Inc., 762 F.2d 557, 561 (7th Cir. 1985). For example, a motion for reconsideration is appropriate when: (1) a court has patently misunderstood a party; (2) a court has made a decision outside the adversarial issues presented; (3) a court has made an error not of reasoning but of apprehension; or (4) a change in the law or facts has occurred since the submission of the issue. Bally Export Corp. v. Balicar, Ltd., 804 F.2d 398, 404 (7th Cir. 1986). A motion for reconsideration is an "improper vehicle to introduce evidence previously available or to tender new legal theories." Id."This Court's orders are not mere first drafts, subject to revision and reconsideration at a litigant's pleasure." Quaker Alloy Casting Co. v. Gulfco Indus., Inc., 123 F.R.D. 282, 288 (N.D. Ill. 1988).

Pepperidge Farm argues that the Court's interpretation of the agreement at issue (including the Consignment Agreement, Pallet Addendum and Indiana Disclosure Statement) (collectively the "agreement") is based on manifest errors of law. These errors purportedly include: (1) improperly construing ambiguities against Pepperidge Farm without resort to extrinsic evidence; (2) interpreting the relevant agreements in a manner inconsistent with Plaintiffs' own conduct; (3) interpreting the relevant agreements in a manner that conflicts with other provisions of the Consignment Agreement, thereby violating principles of contract interpretation; and (4) ignoring evidence of a disputed question of material fact concerning Pepperidge Farm's ability to comply with its customers' requests to deliver product to companies like Eby-Brown.

We begin by noting that each of Pepperidge Farm's arguments was or could have been argued in the prior motions for summary judgment. Further, no argument advanced here is based on any controlling legal precedent which was totally disregarded and/or misapplied by the Court. Instead, Pepperidge Farm's arguments once again challenge the reasoning employed by the Court as set forth in its August 30, 2010 Order. Such a "second bite at the apple" provides convincing proof of the adage that "the bane of lawyers is prolixity and duplication...." Ryan v. Commodity Futures Trading Com'n, 125 F.3d 1062, 1064 (7th Cir. 1997).

Pepperidge Farm's request for reconsideration [318] is hereby denied, for the reasons explicated in detail below and in our prior ruling on the cross-motions for summary judgment; no persuasive basis has been shown in the pending motion for reconsidering that decision. Therecord in this case is more than sufficient, thus a hearing and oral argument are unnecessary, and Pepperidge Farm's request for such [321] is denied.

I. Ambiguities Created by Paragraph 9 of Consignment Agreement

Pepperidge Farm contends, first, that the Court improperly construed ambiguities in the contract between the parties against Pepperidge Farm as the drafter of the contract without resort to extrinsic evidence. The principle that ambiguities are to be construed against the drafter without resort to extrinsic evidence (most commonly applied in insurance contracts) was properly applied here in the Court's interpretation of a single provision, specifically paragraph 9, of the Consignment Agreement vis-a-vis the Pallet Addendum and the Indiana Disclosure Statement. See BKCAP, LLC v. CAPTEC Franchise Trust 2000-1, 572 F.3d 353, 361 (7th Cir. 2009) ("Indiana arguably applies the rule of construing ambiguities against the drafter more liberally, and the Indiana Supreme Court has occasionally applied the rule without considering whether extrinsic evidence would clarify the parties' intent." Id. (citing cases)); Bradshaw v. Chandler, 916 N.E.2d 163, 166 (Ind. 2009) (stating that insurance contracts are governed by the same rules of construction as other contracts); Fresh Cut, Inc. v. Fazli, 650 N.E.2d 1126, 1132 (Ind.1995) (stating that the lease was drafted by owner, and an ambiguous contract will be construed against its drafter). We held that all of the other agreement's terms that were in controversy or otherwise relevant were not ambiguous.

The ambiguity is whether Pepperidge Farm agreed to pay the Plaintiff's commissions on shipments "in palletized form" to customer warehouses or cross-docking facilities. Pepperidge Farm argues that, pursuant to paragraph 9 of the Consignment Agreement, it is permitted to make warehouse deliveries for its "own account," while Plaintiff's argue that per the Pallet Addendum Pepperidge Farm promised to pay such commissions to them, or in the case of Jenay Craig per the Indiana Disclosure Statement.

We held that it was appropriate to construe any ambiguity created by paragraph 9 against the drafter, Pepperidge Farm. As illustrated below, paragraph 9 is one of several provisions which together comprise a form contract; the Pallet Addendum is a separate document which specifically addresses the Plaintiffs' rights to be paid commissions for the products delivered by Pepperidge Farm directly to customers through their warehouses or cross-docking facilities rather than through direct store delivery ("DSD") to their retail premises. The Pallet Addendum acknowledges that its terms supplement Pepperidge Farm's rights under paragraph 9. Each of these documents was drafted by Pepperidge Farm and were executed by each of the parties at the same time.

Paragraph 9 of the Consignment Agreement provides:

PROHIBITED SALES AND DELIVERIES. Consignee will not sell or deliver any Consigned Products, or any products listed in Schedule B, directly to consumers or to any other purchasers except retail stores (exclusive of the in-store bakeries, food-service counters and food-service sections located in such retail stores) within the Territory and such hotels, restaurants, clubs and similar organizations within the Territory as Bakery may authorize in writing. Also, Consignee will not, without like authorization, make deliveries of Consigned Product to any Chain¹ via a central or district warehouse or in any manner other than directly to its retail stores. If despite the best efforts of Consignee and Bakery to obtain permission from any Chain to make deliveries directly to its retail stores, such Chain refuses to handle Consigned Products except via warehouse deliveries, Bakery shall have the right in its discretion to sell and deliver the Consigned Products directly to such Chain for its own account via such warehouse deliveries, as long as such refusal remains in effect. In addition, Consignee shall, if requested to do so in writing by Bakery, on a non-exclusive basis and for the period of time set forth in such written request distribute products listed in Schedule B (as modified from time to time pursuant to Paragraph 10) to in-store bakeries and to food-service counters and food-service sections located in retail stores in the Territory.

See dkt. 303-1 at p. 4 (emphasis added).

The Pallet Addendum states:

I understand that from time to time Pepperidge Farm may be requested to deliver Consigned Products to customers in palletized form through their warehouses and/or cross-docking facilities. I hereby request that Pepperidge Farm effect such cross-dock/warehouse delivery to these customers for my account pursuant to the Pallet Delivery Program and to comply with its terms. I understand and agree that, under such Pallet Delivery program Pepperidge Farm (i) may, at its option, deliver Consigned Products to a customer's warehouse and/or cross-docking facility for delivery to retail stores in my territory and (ii) shall pay me an amount equal to the commissions for the Consigned Products so delivered to retail stores in my territory computed at the rate specified in Schedule B of my Consignment Agreement, less an amount to cover a portion of the costs incurred in connection with such Pallet Delivery Program and the delivery of products thereunder. Until further notice, the amount of that deduction shall not exceed $30 per pallet.

I agree that once such Consigned Products are so delivered to any retail store in my territory, I will, when requested, provide service to those stores for such products as though they had been delivered by me under the terms of the Consignment Agreement.

I acknowledge and agree that Pepperidge Farm may at any time modify, change or terminate the Pallet Delivery Program and/or the amounts paid thereunder, but I request 30 days' notice of any such change. I further acknowledge and agree that the rights set forth in this letter are in addition to, and not in lieu of, any other rights or obligations contained in the Consignment Agreement, including, without limitation, the rights of Pepperidge Farm under the terms of Section 9 of that Agreement.

Dkt. 303-1 at p. 21 (emphasis added).

Paragraph 9 of the Indiana Disclosure Statement states:

Where the Consigned Products are not delivered to a store by the distributor but instead are palletized and delivered, under Bakery's pallet delivery or surge volume programs, either directly by Bakery or indirectly

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