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Montana Merchandising, Inc. v. Dave'S Killer Bread, Inc.

United States District Court, D. Montana, Great Falls Division

June 9, 2017

MONTANA MERCHANDISING, INC., d/b/a MONTANA MILLING, INC., HINEBAUCH GRAIN, INC., and OCC-O'CONNOR CROPS AND CATTLE, LLC, Plaintiffs,
v.
DAVE'S KILLER BREAD, INC., GLENN DAHL, Individually and as Trustee of Glenn Dahl Family Trust, DAVID J. DAHL, Individually and as Trustee of the David Dahl Family Trust, SHOBI L. DAHL, Individually and as Trustee of the Shobi L. Dahl Family Trust, FLOWERS FOODS, INC., and GOODE PARTNERS, LLC, Defendants.

          OPINION AND ORDER ON DEFENDANTS' MOTION TO TRANSFER VENUE

          Brian Morris United States District Court Judge

         Defendants Dave's Killer Bread, Inc. (“DKB”) and Flowers Foods, Inc. (“Flowers”) move this Court to transfer this case to the District of Oregon. (Doc. 13 at 2.) DKB and Flowers filed an action against MMI in the District of Oregon (“the Oregon Case”) ten days before Plaintiffs Montana Merchandising, Inc. (“MMI”), Hinebauch Grain, Inc. (“Hinebauch”), and OCC-O'Connor Crops and Cattle, Inc. (“OCC”) filed this lawsuit. (Doc. 14 at 8.) In the Oregon Case, DKB and Flowers allege breach of contract and seek a declaratory judgment based on the same business dispute that underlies this action. Id. at 10. DKB and Flowers argue that the Court should apply the first-to-file rule. DKB and Flowers move in the alternative to stay this case pending resolution of the Oregon Case. (Doc. 13 at 2.)

         Defendants Glenn Dahl, individually and as Trustee of the Glenn Dahl Family Trust, David J. Dahl, individually and as Trustee of the David Dahl Family Trust, Shobi L. Dahl, individually and as Trustee of the Shobi Dahl Family Trust, and Goode Partners, LLC (collectively, “Dahl/Goode Defendants”), join DKB and Flowers's motion. (See Doc. 15.)

         I. BACKGROUND

         DKB, an Oregon corporation, produces organic bread products at its main bakery facility in Milwaukie, Oregon. (Doc. 14 at 9.) DKB and MMI began negotiations for the contracts at issue in this case in September 2013. (Affidavit of Greg Thayer, Doc. 27 at 2.) DKB asked MMI to procure millions of pounds of organic wheat and to provide milling services. Id. Representatives of DKB, including Director of Organic Procurement, Ron Milio, and then-President, John Tucker, traveled to Great Falls, Montana on October 25, 2013, to meet with around 30 wheat growers and solicit them to provide wheat to DKB. Id.; see also Declaration of Ronald Milio, Doc. 14-3 at 3. Plaintiffs Hinebauch and OCC attended that meeting. (Affidavit of Greg Thayer, Doc. 27 at 2.) Milio attended the Montana Organic Association conference in Kalispell, Montana in December 2013, where he spoke at the event. Id. Milio discussed DKB's growing need for Montana wheat. Id. Around the same time, MMI began working with milling equipment suppliers to build a new mill to serve DKB. Id.

         DKB and MMI entered into two written contracts based on negotiations that took place in October and December 2013. Id. at 3. First, on January 5, 2014, DKB and MMI executed a contract whereby MMI agreed to procure, and DKB agreed to purchase, millions of pounds of organic wheat. Id. MMI separately entered into 94 agreements with Montana-based wheat growers on DKB's behalf. Id. Second, on January 17, 2014, DKB and MMI entered into a contract whereby MMI agreed to mill the majority of the procured wheat in Montana. Id.

         Milio traveled to Montana twice in August and December 2014 where MMI asserts that Milio reaffirmed his promises to purchase millions of pounds of organic wheat. (Affidavit of Greg Thayer, Doc. 27 at 3.) MMI asserts that Milio represented that DKB would need increasing amounts of wheat and would need all of MMI's milling capacity. Id. Milio and other DKB representatives flew to Great Falls in June 2015 to film four farming operations and a Montana Organic Association farm tour to promote DKB's use of Montana organic wheat in its bread products. Id. at 4. MMI asserts that Milio again represented that DKB would need Montana wheat well beyond the three-year term of the contracts. Id. Both contracts applied to the years 2014/2015, 2015/2016, and 2016/2017.

         In September 2015, Flowers, a publicly traded Georgia corporation, acquired DKB. (Oregon Complaint, Doc. 14-2 at 3). DKB emerged from the purchase as a wholly-owned subsidiary of Flowers. Id. MMI asserts that shortly thereafter, DKB/Flowers refused to honor its commitments to MMI and the Montana growers. (Affidavit of Greg Thayer, Doc. 27 at 3.) DKB/Flowers claims that disagreements arose between the parties regarding information about, and the volume of, organic wheat DKB was bound to accept, the length of time for which DKB was bound to accept the wheat, and the shipping conditions regarding the wheat. (Doc. 14 at 10.)

         Milio and Flowers's representative, Miles Dennis, flew to Great Falls to meet with MMI in November 2015. (Affidavit of Greg Thayer, Doc. 27 at 3.) In December 2015, Milio and Dennis attended the Montana Organic Association conference in Bozeman, where Dennis was the dinner speaker. Id. Greg Thayer, president and CEO of MMI, and MMI employee, Sam Schmidt, traveled to Oregon in February 2016 to meet with Milio. (Doc. 14 at 10; Affidavit of Greg Thayer, Doc. 27 at 4-5.) Milio, Dennis, and another Flowers employee, Craig Parr, met with MMI in Great Falls in May 2016. (Affidavit of Greg Thayer, Doc. 27 at 5.)

         Thayer sent an email to Dennis and Parr on October 25, 2016, informing them that MMI would seek legal assistance in recovering damages for DKB/Flowers' failure to perform under the contract if the parties could not reach an agreeable solution. (Affidavit of Alexander Blewett III, Doc. 26 at 2.) DKB/Flowers and MMI participated in a mediation in Great Falls on January 24, 2017. Id. The parties failed to reach a settlement. (Affidavit of Alexander Blewett III, Doc. 26 at 2; Affidavit of Greg Thayer, Doc. 27 at 5; Declaration of Annamarie A. Daley, Doc. 40-1 at 3.)

         On February 10, 2017, counsel for DKB/Flowers traveled to Great Falls to review MMI's agreements with the Montana growers and to discuss a possible resolution to the dispute. (Affidavit of Alexander Blewett III, Doc. 26 at 2; Affidavit of Greg Thayer, Doc. 27 at 5; Declaration of Annamarie A. Daley, Doc. 40-1 at 3.) Counsel for MMI informed DKB/Flowers's counsel that MMI immediately would file suit against DKB/Flowers if it did not agree to pay for the organic wheat that it was refusing to take. (Affidavit of Alexander Blewett III, Doc. 26 at 2; Affidavit of Greg Thayer, Doc. 27 at 5.)

         MMI asserts that DKB/Flowers's counsel never contended, before or during that meeting, that MMI had breached the agreements, and counsel for DKB/Flowers never threatened litigation. (Affidavit of Alexander Blewett III, Doc. 26 at 2-3; Affidavit of Greg Thayer, Doc. 27 at 5.) MMI alleges that DKB/Flowers's counsel advised that she would check again with her clients and would inform MMI if the matter could be resolved. (Affidavit of Alexander Blewett III, Doc. 26 at 3; Affidavit of Greg Thayer, Doc. 27 at 5-6.) The next day, on Saturday, February 11, 2017, counsel for DKB/Flowers filed the Oregon Case. (See Oregon Complaint, Doc. 14-2.)

         DKB/Flowers's counsel contends that she “never deceived” Plaintiffs. (Declaration of Annamarie A. Daley, Doc. 40-1 at 3.) She further asserts that she did not file the Oregon Case “surreptitiously.” Id. She declares that she never stated that her clients would wait to file a law suit. Id.

         II. LE ...


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