987 F.3d 102
4th Cir.2021Background
- Foodbuy (a group purchasing organization) and Gregory Packaging, Inc. (GPI, a juice-cup manufacturer) entered a non‑exclusive supplier Agreement (2011, amended to 2015) under which GPI would pay Foodbuy a per‑case "volume allowance" tied to sales “through the Foodbuy program at the Foodbuy price.”
- The Agreement included detailed attachments (price lists, allowance per case), an audit right, a non‑solicitation clause, and a broad merger/"applies to all orders" clause that arguably reached purchases by Committed Customers or Foodbuy Distributors.
- GPI later discovered Foodbuy invoiced allowances on many "off‑contract" sales (including school‑bid/direct deals) that were not bought at the Foodbuy price; GPI claims it overpaid approximately $6,042,431 and stopped some payments in 2015.
- Foodbuy sued for overcharging; GPI counterclaimed for breach and UDTPA (treble) damages. At bench trial the district court found (alternatively) the Agreement unambiguous in GPI’s favor or, if ambiguous, that industry custom, contra proferentem, parties’ conduct, and other rules required construing the Agreement to limit allowances to purchases made through the Foodbuy program at the negotiated price; the court dismissed GPI’s UDTPA cross‑claim (applying the economic‑loss rule and finding no aggravating conduct).
- On appeal the Fourth Circuit: affirmed dismissal of Foodbuy’s overcharging claim for lack of Article III standing; affirmed the district court’s damages‑evidence ruling and denial of Foodbuy’s late statute‑of‑limitations defense; held the Agreement was ambiguous but affirmed the district court’s alternative contractual interpretation (Foodbuy waived challenge to that alternative); vacated and remanded the UDTPA dismissal for reconsideration (ELR misapplied and court conflated UDTPA with fraud requirements).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1) Standing for Foodbuy’s overcharge claim | Foodbuy: as contracting party it can enforce the Agreement and recover overcharges (including nominal relief) | GPI: any monetary injury flowed to Committed Customers, not Foodbuy; Foodbuy alleged harms to third parties only | Held: Foodbuy lacks Article III standing; dismissal affirmed |
| 2) Exclusion of GPI’s late damages computation | Foodbuy: GPI failed to timely disclose a damages computation and witness, so evidence should be excluded | GPI: produced evidence at trial; court’s remedy can cure any surprise | Held: district court did not abuse discretion; allowing rebuttal and a week recess cured any surprise |
| 3) Leave to amend to assert statute‑of‑limitations defense | Foodbuy: should be allowed to amend Answer at trial to add limitations defense | GPI: defense was forfeited by not pleading it earlier; amendment would prejudice GPI | Held: denial affirmed as within district court’s discretion; defense forfeited |
| 4) Interpretation of Agreement (scope of allowance) | Foodbuy: Agreement covers all purchases by Committed Customers or Foodbuy Distributors (allowance on every case bought by Committed Customers) | GPI: allowance applies only to cases bought through Foodbuy program at the Foodbuy price | Held: Agreement is ambiguous; district court’s alternative interpretive analysis (allowance only on purchases through Foodbuy program at negotiated price) stands and Foodbuy waived challenge to that alternative; judgment for GPI affirmed |
| 5) GPI’s UDTPA cross‑claim | GPI: Foodbuy engaged in deceptive practices (mischaracterizing sales data, concealing off‑contract billing) amounting to unfair/deceptive trade practices | Foodbuy: claim barred by economic‑loss rule and lacking aggravating conduct | Held: district court erred applying ELR and conflating UDTPA with fraud; UDTPA dismissal vacated and remanded for further proceedings |
Key Cases Cited
- Friends of the Earth, Inc. v. Laidlaw Env’t Servs. (TOC), 528 U.S. 167 (2000) (Article III standing requirements for injury traceability and redressability)
- Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (1998) (appellate courts’ obligation to ensure subject‑matter jurisdiction)
- S. Walk Broadlands Homeowner’s Ass’n v. OpenBand at Broadlands, 713 F.3d 175 (4th Cir. 2013) (mere contractual privity does not automatically confer Article III standing)
- Wilkins v. Montgomery, 751 F.3d 214 (4th Cir. 2014) (factors for assessing harmlessness of discovery nondisclosure and Rule 37 sanctions)
- Legacy Data Access, Inc. v. Cadrillion, LLC, 889 F.3d 158 (4th Cir. 2018) (distinguishing tort claims subject to the economic‑loss rule from statutory UDTPA claims)