Monaco Indus., LLC v. Fomento Econ. Mexicano S.A.B. de C.V.

685 F.Supp.3d 654

MONACO INDUSTRIES, LLC, Plaintiff, v. FOMENTO ECONOMIC MEXICANO S.A.B. DE C.V., d/b/a FEMSA, et al., Defendants.

No. 3:22-CV-459-JRG-DCP

United States District Court, E.D. Tennessee, Northern Division, at Knoxville

Filed August 1, 2023

Emily Stulce, Jerrold L. Becker, Bunstine, Watson & McElroy & Becker, Knoxville, TN, for Plaintiff.

Caitlin A. Kovacs, Benesch, Friedlander Coplan Aronoff LLP, Chicago, IL, Suyash Agrawal, Christopher Matthew Walling, Pro Hac Vice, Massey & Gail LLP, Chicago, IL, Shayne R. Clinton, Bass, Berry & Sims, PLC, Knoxville, TN, Jonathan E. Nelson, Bass, Berry & Sims, PLC, Memphis, TN, for Defendants Envoy Solutions, LLC, Southeastern Paper Group, LLC, Penn Jersey Paper Company, LLC.

MEMORANDUM OPINION AND ORDER

Debra C. Poplin, United States Magistrate Judge

This case is before the undersigned pursuant to 28 U.S.C. § 636, the Rules of this Court, and the Order [Doc. 20] of referral by United States District Judge J. Ronnie Greer.¹

Now before the Court is Defendants' Consolidated Motions to Dismiss [Doc. 12]. Plaintiff has responded in opposition [Doc. 22], and Defendants filed a reply [Doc. 23]. The motion is ripe for adjudication. See E.D. Tenn. L.R. 7.1(a). For the reasons explained below, the Court GRANTS IN PART AND DENIES IN PART Defendants' motion [Doc. 12].

I. BACKGROUND

Plaintiff originally filed this case in the Chancery Court for Knox County, Tennessee, and Defendants removed this action on December 22, 2022 [Doc. 1]. Plaintiff names the following entities as Defendants: Fomento Economico Mexicano S.A.B. de C.V. d/b/a FEMSA ("FEMSA"), Envoy Solutions, LLC ("Envoy"), Southeastern Paper Group, LLC ("Southeastern"), and Penn Jersey Paper Company, LLC ("Penn Jersey") [Doc. 1-1]. FEMSA is the parent company for Envoy, and Envoy is the parent company of Southeastern and Penn Jersey [Id. ¶¶ 2-3].² Plaintiff manufacturers, purchases, and sells paper, paper products, and supplies throughout Tennessee and the United States, and Defendants are in the business of distributing supplies [Id. ¶¶ 10, 12, and 13].³

According to the Complaint, Plaintiff and "Defendant Southeastern enjoyed a long-standing business relationship that spanned nearly fifteen (15) years, beginning in 2008 and continuing through 2022" [Id. ¶ 14]. In their course of dealing, Southeastern sent purchase orders to Plaintiff, and Plaintiff fulfilled those orders [Id. ¶ 17]. Envoy acquired Southeastern in late 2020 or early 2021, and despite the acquisition, there was no disruption in the parties' business relationship [Id. ¶ 18].

On March 15, 2022, Douglas Bobar ("Bobar"), previously the Director of Purchasing for Southeastern and now for Envoy, emailed Richard Jansen ("Jansen"), Plaintiff's president, explaining that FEMSA had acquired Envoy, Southeastern, and others in order to create a "national distribution platform" [Id. ¶ 21 (citing Doc. 1-1 p. 46)].⁴ Bobar stated, "I have been tasked to engage suppliers and come up with an Envoy program for all members and drive sales to fewer partnered suppliers. This is my category so I will be asking Monaco for a new program" [Id. (citing Doc. 1-1 p. 46)]. He also asked if Plaintiff extended the program from 4/30/2021 to go through 4/30/2022, and if so, to provide a copy of it [Id. ¶ 22 (citing Doc. 1-1 p. 46)]. He concluded, "I have a really nice value proposition to share with you" [Id. (Doc. 1-1 p. 46)]. Jansen sent Bobar a copy of the requested program the same day and noted his availability to discuss the other matters [Id. ¶ 23 (citing Doc. 1-1 p. 46)].

On March 28, 2022, Jansen and Bobar confirmed a meeting [Id. ¶ 24 (citing Doc. 1-1 p. 49)]. Bobar stated that he would review FEMSA's strategy to establish a national distributors platform and noted the "need to create one Envoy program and create true value for our partnered vendors" [Id. (citing Doc. 1-1 p. 49)]. According to the Complaint, during the meeting, via Microsoft Teams, Jansen and Bobar "discussed the acquisition of Defendants Southeastern and Penn Jersey by Defendant FEMSA" [Id. ¶ 25]. In addition, during the meeting, "Bobar stated that he wanted Plaintiff Monaco to become the vendor for Defendant Envoy and extolled the possibilities of a growing opportunity for Plaintiff" [Id.].

On April 19, 2022, Bobar sent an email to Janson "explaining Defendants' intent with respect to the creation of one pricing program for all of Defendants' members, including Defendant Penn Jersey and Defendant Southeastern" [Id.]. Bobar wrote:

Our objective is to put together a 2022 program for all of Envoy Solutions members. Please keep the inclusion open as we acquire and add new members. Currently the volume is only from Penn Jersey Paper and Southeastern Paper Group. We are looking for two things: One program for all members and one price list for all members. Please be aggressive as you can as the are several suppliers involved in this opportunity. The volume attached is annual for 2021. We can move this business and we will move this business to the supplier that wants to partner with Envoy and growth their business together. We will not support any other non partnered suppliers unless it is contracted business that we cannot move. I did include one ribbon on the summary. If you can provide that please match it up with your offering and add it to the price list and program.

* * *

I will be your contact for all of Envoy. No getting redirected to other purchasing folks. We will make the decision and support that partnered vendor. We are inpowered to make these decisions and implement the change. I am excited about the relationship and the opportunity to really focus on this category and grow together. Please right the program to Tom Furia III.

[Doc. 1-1 p. 50].

Plaintiff alleges that "beginning in March 2022 and continuing through July 2022, in addition to its usual purchase orders received from representatives of Defendant Southeastern, [it] also received purchase orders from representatives of Defendant Envoy" [Doc. 1-1 ¶ 26]. While the parties' continued their business relationships, Plaintiff alleges that "Jansen and . . . Bobar worked together to create a program for Defendants that would expand the business from Defendant Southeastern to Defendants Envoy and Penn Jersey, ultimately benefitting Defendant FEMSA" [Id. ¶ 27].

On April 27, 2022, Jansen emailed Bobar, "telling him that Plaintiff was working on Defendant Penn Jersey's portion of the new program solicited by Defendants and asking for additional information and specifications regarding Defendant Penn Jersey's needs as to its register roll/thermal roll program" [Id. ¶ 28 (citing Doc. 1-1 p. 55)]. Bobar forwarded this email to Thomas Furia, III ("Furia"), the Director of Supply Chain Management at Penn Jersey [Id. (citing Doc. 1-1 p. 54)]. Furia responded by answering Jansen's questions [Id. ¶ 29 (citing Doc. 1-1 p. 55)]. On May 2, 2022, Bobar sent Jansen an email, stating that he was "[r]eally looking for one program for all of Envoy and one price list for all of Envoy. You can quote us LTL pricing as well as TL and the location will decide their purchasing minimum and pay the price accordingly. So one LTL and TL price for all, one Envoy price list. You have several brackets if needed." [Id. ¶ 30 (citing Doc. 1-1 p. 53)].

On May 4, 2022, Jansen sent Bobar an email "with an attachment containing a proposed program for Defendants" [Id. ¶ 31 (citing Doc. 1-1 p. 58)]. Jansen wrote, "The program consists of the monthly 5% merchandise credit and 2% 10-day prompt payment terms" [Id. (citing Doc. 1-1 p. 58)]. He also noted that while Bobar requested a single price, "the freight to Defendant Penn Jersey would have affected this component for location maintained by Defendant Southeastern" [Id. ¶ 32 (citing Doc. 1-1 p. 58)]. Following this email, Jansen and Bobar continued to exchange emails wherein Jansen checked the progress of Bobar's review, Bobar asked pricing questions, and Plaintiff updated the spreadsheets for Defendants' pricing as requested [Id. ¶¶ 32-33].

Throughout May 2022 to July 2022, the parties continued to engage in discussions regarding price adjustments [Id. ¶¶ 34-39]. On July 19, 2022, Bobar emailed Jansen and Stacey Anderson ("Anderson"), Plaintiff's Chief Financial Officer [see Doc. 1-1 p. 75], as follows:

We are prepared to award the register roll business to Monaco for all of Envoy Solutions. I just need a few things in order to get that done.

***

We are prepared to move forward with Monaco. My suggestion to my boss Tom Furia III. He is ready to move if you could address the issues in the prior paragraph. Please let me know this week if you can. We can then speak about next steps and the timing of the conversion. We will need to move Iconex business in both the North and the South. His only other concern was your support of the PJP business to provide uninterrupted service to the best of your ability.

[Id. ¶ 40 (citing Doc. 1-1 p. 108)]. A few days later, Jansen sent a letter to Bobar, dated July 21, 2022, as follows:

Monaco is pleased to offer this program to Envoy Solutions members from August 1, 2022 to July 31, 2023.

Monaco's program for Envoy Solution includes a 6% rebate in the form of a merchandise credit issued at the end of each month. In addition, payment terms are 2% 10; net 30 days. The program will be in effect from August 1, 2022 to July 31, 2023.

[Id. ¶ 41 (citing Doc. 1-1 p. 112)]. On July 25, 2022, Bobar emailed Jansen that he was "checking on the critical item pricing adjustment[,]" explaining that certain prices "will close the deal and [they] can move forward" [Id. ¶ 42 (citing Doc. 1-1 p. 116)]. Bobar concluded by requesting one price revision and noted, "Please let me know if you can make this adjustment and I will commit to giving you all the business today" [Id. (citing Doc. 1-1 p. 116)]. Jansen responded the same day, "[L]ets move forward with your proposal" [Id. ¶ 43 (citing Doc. 1-1 p. 116)]. And a few minutes later,...