RBG Management Corp. v. Village Super Market, Inc.

Background

RBG Management Corp., doing business as Morton Williams Supermarkets, sued Village Super Market, Inc. Morton Williams alleged that Village interfered with Morton Williams’s 2019 supply agreement with Wakefern Food Corporation. Under that agreement, Morton Williams purchased Wakefern’s private-label grocery products. Morton Williams alleged that Village, a significant Wakefern member and competitor, used its influence over Wakefern to cause Wakefern to stop supplying those products to Morton Williams.

Morton Williams asserted four claims under New York law: tortious interference with a contract; tortious interference with economic relations and prospective economic relations; unfair competition; and unjust enrichment. It sought compensatory and punitive damages, restitution, and disgorgement. Village moved to dismiss the complaint in its entirety for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).

Tortious Interference with Contract

The court declined to dismiss the first claim. To state a claim for tortious interference with a contract, Morton Williams had to allege a valid contract with a third party, Village’s knowledge of that contract, intentional and improper procurement of a breach, and damages.

Village argued that it was protected by New York’s economic-interest defense because it had a financial stake in Wakefern. The court held that the defense was not established from the complaint alone. Although Morton Williams alleged that Village owned 12.2% of Wakefern’s outstanding stock, Morton Williams also alleged that Village acted to advance its own competitive interests rather than Wakefern’s financial interests. The court therefore found that the defense could not be resolved at the pleading stage.

Village also argued that Wakefern’s refusal to supply private-label products was allowed by the 2019 Supply Agreement, which permitted Wakefern to reject orders and amend the products listed in an appendix. The court found that the agreement did not unambiguously permit Wakefern to reject all future orders for private-label products for the remainder of the contract term. Morton Williams had adequately alleged that Wakefern breached the agreement and that Morton Williams suffered damages. The court therefore denied dismissal of the contract-interference claim.

Tortious Interference with Economic Relations and Prospective Economic Relations

The court dismissed the second claim. Claims involving nonbinding or future business relationships require allegations that the defendant acted for a wrongful purpose or used improper means. The alleged conduct must generally amount to a crime, an independent tort, extreme and unfair economic pressure, or conduct undertaken solely to inflict intentional harm.

The court concluded that Morton Williams’s allegations showed Village was motivated at least in part by its own economic interests in competing for private-label grocery sales. Morton Williams did not adequately allege that Village acted solely to harm Morton Williams, used criminal or independently tortious means, or applied extreme and unfair economic pressure. The court therefore dismissed this claim.

Unfair Competition

The court dismissed the third claim. Morton Williams proceeded under a misappropriation theory, alleging that Village took advantage of Morton Williams’s investments, labor, skills, expenditures, and goodwill in promoting Wakefern’s private-label products.

The court held that Morton Williams had not identified property or a commercial advantage belonging to Morton Williams that Village misappropriated. The alleged goodwill was connected to Wakefern’s products and the ShopRite trademark, which belonged to Wakefern. Morton Williams’s license to use Wakefern’s intellectual property did not give Morton Williams ownership of the associated trademark goodwill. The court also found that Morton Williams did not have an exclusive distribution right comparable to the commercial advantage recognized in another case. The court therefore dismissed the unfair-competition claim.

Unjust Enrichment

The court dismissed the fourth claim. An unjust-enrichment claim requires a specific and direct benefit that the defendant received at the plaintiff’s expense, along with circumstances making it unfair for the defendant to keep the benefit.

Morton Williams alleged that Village could attract Morton Williams’s customers and charge higher prices after Morton Williams stopped selling Wakefern’s products. But Morton Williams did not allege that customers had actually switched to Village’s stores or that Village had actually charged higher prices. The court found those allegations speculative. It also concluded that the alleged right to sell Wakefern products without competition was tied to the contract-interference claim, making the unjust-enrichment claim duplicative. Finally, Morton Williams’s allegation that it would be unfair for Village to retain the benefit was conclusory. The court dismissed the unjust-enrichment claim.

Punitive Damages and Disposition

The court declined to dismiss Morton Williams’s request for punitive damages. It found that Morton Williams had alleged that Village knew about the supply agreement, knew that Morton Williams’s private-label business was thriving, and nevertheless caused Wakefern to terminate the relationship. The court stated that whether those allegations support punitive damages was a factual issue that could not be decided on a motion to dismiss.

Judge Jennifer L. Rochon’s order granted in part and denied in part Village’s motion. Morton Williams’s second, third, and fourth claims were dismissed. The first claim, for tortious interference with a contract, remained, along with the request for punitive damages. Village was ordered to file its answer to the remaining claim within 21 days.