Bodum Holding AG v. Starbucks Corporation

Background

Bodum Holding AG, Bodum USA, Inc., Bodum AG, and Pi-Design AG sued Starbucks Corporation over Starbucks’s alleged dealings with Bodum suppliers and its voluntary recall of a French press supplied by Bodum. Bodum’s claims included declaratory relief, product disparagement, and breach of contract. Starbucks asserted counterclaims for declaratory relief and breach of contract.

The parties had two relevant agreements. A 2002 Master Purchase Agreement, governed by Washington law, restricted Starbucks from purchasing goods similar to certain approved products directly from listed Bodum suppliers. A 2013 amendment replaced the supplier list and stated that the parties could update it only through a written agreement. A 2008 settlement agreement, governed by Illinois law, restricted Starbucks from intentionally copying Bodum designs or selling non-Bodum products that intentionally embodied those designs. The agreement released Starbucks’s affiliates from its obligations.

Bodum moved for leave to file a Third Amended Complaint under Federal Rule of Civil Procedure 15(a)(2). It proposed new allegations that Starbucks breached the Master Purchase Agreement by using ML Glass and Ningbo Worldcrown, and that Starbucks breached the 2008 Settlement Agreement by selling products that copied Bodum designs, including products obtained through affiliates. Bodum also moved under Rule 12(f) to dismiss Starbucks’s counterclaim seeking a declaration about responsibility for the French press recall costs.

Proposed Master Purchase Agreement claim

The court concluded that the proposed claim concerning ML Glass and Ningbo Worldcrown was futile. Neither supplier appeared on the list in the 2013 amendment, which replaced the earlier list. The amendment required a written mutual agreement to add suppliers, and Bodum did not allege that such an agreement existed.

The court also rejected Bodum’s arguments that Starbucks waived the written-agreement requirement or anticipatorily breached it. Bodum alleged that Starbucks did not track its supply chain in a way that would allow it to verify suppliers at the time of purchase. The court held that these allegations did not show an unequivocal intent to waive the written requirement or a clear refusal or inability to perform the contract. The proposed Master Purchase Agreement claim therefore failed to state a claim and could not be added.

Proposed 2008 Settlement Agreement claim

The court held that the proposed claim was not futile to the extent it alleged that Starbucks itself sold products that intentionally embodied Bodum’s designs. Bodum identified specific designs proposed to Starbucks and alleged that Starbucks sold products embodying those designs in Starbucks stores and online.

The court also held that Bodum could proceed with allegations that Starbucks obtained prohibited products through affiliates and then sold those products in Starbucks’s own stores. The agreement prohibited Starbucks from intentionally selling non-Bodum products embodying Bodum’s designs and did not distinguish between products Starbucks obtained directly and products it obtained indirectly through affiliates.

However, Bodum could not pursue allegations based on products sold in the affiliates’ own stores. The affiliates were not parties to the 2008 Settlement Agreement and were released from its obligations. The court also rejected Bodum’s theory that Starbucks breached the implied duty of good faith and fair dealing. The court explained that this theory requires a contractual duty involving discretion, and the allegations did not establish the required combination of an obligation and broad discretion.

Delay and prejudice

The court rejected Starbucks’s arguments that Bodum’s proposed amendment was unduly delayed or prejudicial. Bodum explained that it sought amendment after receiving information from Starbucks about the relevant products and suppliers. The court found no showing of bad faith. It also found that discovery was still ongoing, that Starbucks had notice of the substance of the proposed claim, and that any additional discovery would not significantly prolong the case.

Starbucks’s declaratory counterclaim

The court granted Bodum’s motion to dismiss Starbucks’s counterclaim for declaratory relief. Both Bodum’s claim and Starbucks’s counterclaim sought a judicial determination of who was responsible for the French press recall costs. Because deciding Bodum’s claim would necessarily resolve Starbucks’s counterclaim, the counterclaim was a redundant “mirror image” and served no independent purpose.

The court rejected Starbucks’s argument that its request for a ruling on the amount owed made the counterclaim independent. Any damages amount would be resolved after deciding the same underlying responsibility question and therefore did not create a separate controversy.

Disposition

The court granted in part and denied in part Bodum’s motion for leave to amend. Bodum was permitted to amend only if it removed the proposed Master Purchase Agreement claim and the portion of the 2008 Settlement Agreement claim concerning products sold in Starbucks affiliates’ stores. The court granted Bodum’s motion to dismiss Starbucks’s declaratory counterclaim. The parties were directed to submit a joint letter about discovery and a schedule for completing it by October 30, 2020.