Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Classic Harvest LLC v. Freshworks LLC

United States District Court, N.D. Georgia, Atlanta Division

April 28, 2017

CLASSIC HARVEST LLC, Plaintiff,
v.
FRESHWORKS LLC, et al., Defendants. CRISP HOLDINGS, LLC d/b/a FRESH ROOTS, Third Party Plaintiff,
v.
US FOODS, INC., Third Party Defendant.

          OPINION AND ORDER

          WILLIAM S. DUPFEY, JR. UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on Third-Party Defendant U.S. Foods, Inc.'s (“US Foods”) Motion to Dismiss [383] Crisp Holdings, LLC d/b/a Fresh Roots' (“Crisp”) Third Party Complaint [336].

         I. BACKGROUND

         This is an action under the Perishable Agricultural Commodities Act (“PACA”), 7 U.S.C. §§ 499a, et seq. When perishable agricultural commodities (“Produce”) are sold, PACA imposes a nonsegregated, “floating” trust, in favor of Produce sellers, on the Produce sold, products derived from the Produce, “and any receivables or proceeds from the sale of such” Produce or product derived from it. 7 U.S.C. § 499e(c)(2). PACA requires the buyer to hold the trust assets “in trust for the benefit of all unpaid suppliers or sellers of such [Produce], ” “until full payment of the sums owing in connection with such transactions has been received by such unpaid suppliers . . . .” Id. A trust beneficiary may bring an action in federal court “to enforce payment from the trust.” 7 U.S.C. § 499e(c)(5).

         Crisp bought Produce on credit from wholesale Produce suppliers, including Classic Harvest, LLC (“Classic Harvest”). Crisp then resold the Produce to its customers, including U.S. Foods, on credit, generating accounts receivable (“Receivables”). Under PACA, Crisp was required to hold, in trust (the “PACA Trust”), the Produce, products derived from the Produce, and the Receivables or proceeds from the sale of the Produce (the “Trust Assets”), for the benefit of Crisp's unpaid Produce suppliers, including Classic Harvest.

         On August 25, 2015, Classic Harvest filed suit against Crisp to recover payment for Produce that Classic Harvest sold to Crisp. Classic Harvest asserts, among others, claims under PACA against Crisp, its principals and parent company, for breach of their duties under PACA and to enforce the PACA Trust.

         On September 4, 2015, the Court entered the “Consent Injunction and Agreed Order Establishing PACA Claims Procedure” [24] (the “September 4th Order”). The September 4th Order provides for the Court to exercise exclusive in rem jurisdiction over Crisp's PACA Trust Assets and directs counsel for Crisp to preserve and collect Crisp's PACA Trust Assets, including any unpaid Receivables. The September 4th Order further establishes a framework for Crisp's other unpaid PACA creditors to submit their claims against Crisp in this action and share, on a pro rata basis, in the recovery of Crisp's PACA Trust Assets.

         On August 16, 2016, Crisp filed its Third Party Complaint [336] (“Complaint”) against U.S. Foods asserting, inter alia, claims for Declaratory Judgment (Count IV), Breach of the PACA Trust (Count V), Breach of Duty as PACA Trustee (Count VI), and Conversion and Unlawful Retention of PACA Trust Assets (Count VII).[1] Crisp claims U.S. Foods wrongfully, and in violation of PACA, deducted $1, 077, 516.95 in product promotional allowances from amounts it owed to Crisp.

         Under the terms of the parties' Vendor Program Agreement (“VPA”) [336.2], U.S. Foods agreed to purchase Produce from Crisp, and Crisp agreed to pay to U.S. Foods a promotional allowance based on the amount of Produce U.S. Foods purchased from Crisp. The promotional allowance includes a Corporate Marketing Allowance (“CMA”) which was “intended to be used for Support Office and Regional Marketing Activities.” (VPA at 3, 7).[2] The VPA provides:

On or about the 25th day following the end of each calendar month, USF will (i) calculate the NPA, CMA, and LMA and/or LPA. . . due; (ii) post the billing amount to the supplier web portal that [Crisp] will have access to . . ., and (iii) process a deduction in that amount against any outstanding or future trade payable.

(Id. at 7). This allowed U.S. Foods to reduce the amount it owed Crisp on invoices by the amount of the promotional allowance owed to U.S. Foods by Crisp under the VPA.

         On October 14, 2016, U.S. Foods moved to dismiss Counts IV through VII of Crisp's Complaint for failure to state a claim for relief. (Mot. Dismiss [383]). U.S. Foods argues is that it cannot be liable for the claimed PACA violations because it was permitted to deduct the promotional allowance from amounts it owed Crisp, and thus the promotional allowance was not subject to the PACA Trust.

         II. DISCUSSION

         A. Le ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.