US Foods, Inc. v. Remcoda, LLC

Background

US Foods sued two entities named Remcoda, LLC—one identified as a New York limited liability company and the other as a Florida limited liability company—over the sale of nitrile gloves. The opinion states that the entities merged in 2022. US Foods alleged that the parties’ vendor agreement, vendor policy, and purchase orders required Remcoda to supply nitrile gloves and that Remcoda instead delivered vinyl gloves.

US Foods alleged that it submitted at least 27 purchase orders totaling about 79,000 cases and paid approximately $10 million. After testing samples in September 2021, US Foods received results in October 2021 indicating that the gloves were vinyl rather than nitrile. US Foods alleged that it notified Remcoda in November 2021 that it was revoking acceptance, wanted to return the gloves, and sought a full refund. Remcoda allegedly refused to retrieve the gloves or provide a refund.

US Foods asserted one claim covering breach of contract, breach of express warranty, and breach of implied warranties. Remcoda moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which asks whether a complaint states enough facts to present a plausible legal claim.

Breach of Contract

The court denied the motion to dismiss the breach-of-contract claim. Remcoda argued that US Foods had not adequately alleged written notice revoking acceptance and that the revocation came too late. Applying Delaware law, the court explained that revocation must occur within a reasonable time after the buyer discovers the problem and becomes effective when the buyer notifies the seller. The law does not specify a particular form of notice.

The court found that US Foods adequately alleged that it discovered the problem in October 2021, notified Remcoda in November 2021, and discussed the test results and the gloves’ nonconforming nature with Remcoda in writing and by telephone. The court also concluded that the vendor policy did not expressly require written notice for revocation and that the reasonableness of the timing was generally a factual question not suitable for resolution on a motion to dismiss.

Warranty Claims

The court granted the motion as to the express-warranty claim because it was duplicative of the contract claim. US Foods’s contract and express-warranty theories were based on the same alleged failure to deliver nitrile gloves and sought the same damages, according to the court.

The court denied the motion as to the implied warranty of merchantability. Under Delaware law, goods sold by a merchant carry an implied promise of merchantability, including that they conform to promises or factual statements on their containers or labels. The court held that US Foods adequately alleged that the gloves failed to conform to labels stating that the boxes contained nitrile gloves.

The court granted the motion as to the implied warranty of fitness for a particular purpose. That warranty requires allegations that the seller knew the buyer’s particular purpose and that the buyer relied on the seller’s skill or judgment to select suitable goods. The court found that US Foods alleged the opposite: it specifically ordered particular stock keeping units of nitrile gloves and did not leave the selection to Remcoda’s discretion.

Disposition

The court denied Remcoda’s motion to dismiss as to US Foods’s breach-of-contract and implied-warranty-of-merchantability claims. The court granted the motion as to US Foods’s breach-of-express-warranty and implied-warranty-of-fitness claims. The Clerk was directed to terminate the motion.