Lewis Bros. Bakeries Inc. v. Interstate Brands Corp. (In Re Interstate Bakeries Corp.)
690 F.3d 1069
8th Cir.2012Background
- IBC licensed its marks to LBB in Illinois in 1996 under a license and related asset sale; IBC later filed for Chapter 11 in 2004 and sought to assume/reject the License Agreement under §365; the district court and bankruptcy court held the License Agreement was an executory contract due to continuing obligations; the district court relied on the Agreement's materiality provisions (5.2, 6.1) to find ongoing duties; LBB argued the arrangement was part of an integrated asset sale and that post-sale obligations were minor; the court ultimately held both parties had remaining material obligations, including quality control and infringement-related duties; the majority affirmed, rejecting promissory estoppel claims; the decision discusses Countryman’s test and compares to Exide Technologies.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the License Agreement is an executory contract under §365 | LBB: integrated agreement; no remaining material duties | IBC: substantial unperformed obligations remain | Yes, remain material obligations exist |
| Whether state or federal law governs the executory-contract determination | State law governs materiality considerations | Federal Countryman framework applies | Federal Countryman test governs; state law relevant but not controlling |
| Whether the quality-standards provision makes the contract executory | Quality clause is material and enforceable | Quality clause vague/minor | Quality obligation constitutes material remaining duty |
| Whether promissory estoppel bars IBC from arguing executory status | LBB relied on IBC’s conduct implying sale of trademarks | License preserves ownership by IBC; no sale promise | Promissory estoppel rejected |
| Whether the remaining obligations burden LBB or IBC more | Remaining duties are material | Most duties are minor under integrated sale | Contract remains executory due to IBC’s and LBB’s remaining material obligations |
Key Cases Cited
- In re Exide Technologies, 607 F.3d 957 (3d Cir. 2010) (substantial performance analysis in integrated licenses; quality and infringement duties not weighing against remaining performance)
- Cameron v. Pfaff Plumbing & Heating, Inc., 966 F.2d 414 (8th Cir. 1992) ( Countryman test; federal standard for executory contracts under §365; state-law relevance acknowledged)
- In re Craig, 144 F.3d 593 (8th Cir. 1998) (Countryman definition used in §365 cases; federal framework)
- In re Qintex Entm’t, Inc., 950 F.2d 1492 (9th Cir. 1991) (notice/forbearance obligations can render contract executory; materials discuss licensing contexts)
- Lubrizol Enters., Inc. v. Richmond Metal Finishers, Inc., 756 F.2d 1043 (4th Cir. 1985) (defending infringement and indemnification obligations as ongoing material duties)