Legal Brief: Doubting Thomas, English muffin distributor sues over route ownership

Contents
Tacit ownership agreement
Reading the fine print
Can I get that in writing?
1999 Bestfoods re-org prompts suit

Walter Arasimowicz was an independent distributor of Thomas' English Muffins in Eastern Pennsylvania for more than 30 years. He lost his routes when S.B. Thomas' ("Thomas") corporate parent, Bestfoods, Inc. and Bestfoods Baking Company, changed its business practices to require its distributors to purchase their routes from Bestfoods. Arasimowicz refused to buy his route from Bestfoods, on the ground that he had already bought the route from his predecessor distributor more than 30 years earlier. Apparently, Arasimowicz had paid Peter Coleman and Mike Todara $ 13,500 to acquire their right to distribute Thomas and Pepperidge Farm products.

Tacit ownership agreement
Prior to Arasimowicz's purchase of whatever rights Todara and Coleman had, he was required to obtain approval from Thomas to become a distributor. To obtain the necessary permission, Arasimowicz spoke to Steven Kalinger, a representative of Thomas (as Bestfoods was then known). According to Arasimowicz, Kalinger assured him that he could be terminated as a distributor only for a few specific reasons such as not abiding by the stale policy; not paying his bill or indulging in some kind of illegal behavior that could put the company in a bad light. Otherwise, Kalinger promised him that he would not be terminated for any other reason "in perpetuity", said Arasimowicz.

Reading the fine print
Subsequently, Arasimowicz received a Letter Agreement from Kalinger confirming that he was an acceptable distributor to Thomas. However, the letter contained a statement that varied from Kalinger's earlier oral assurances. The key language read as follows:

"It is understood that we do not assign territory on a permanent basis, and our decision to continue to ship products for your distribution is contingent upon our satisfaction with this arrangement in the future. It must be completely understood that you do not have a franchise to deliver our products."

Despite receiving this letter, Arasimowicz went through with his purchase from Coleman and Todara and started distributing Thomas' products.

Shortly thereafter, Arasimowicz also became an independent distributor of Pepperidge Farm baked goods. Pepperidge Farm provided Arasimowicz with a written contract which stipulated that he could be terminated only for cause.

Can I get that in writing?
Arasimowicz soon returned to Kalinger and asked that Thomas put his prior verbal assurances in writing. According to Arasimowicz:

". . . I was wondering what--I would like to have something in writing, and I was assured [by Kalinger] that nothing was needed. I was dealing with S.B. Thomas and our agreement, our oral agreement would prevail, that would be an agreement that we had prior to my buying the route would prevail, and that no written agreement was needed. It was just a matter of fact that they would abide by the agreement that he verbally told me. . . . The grounds for termination were as he originally stated, if I chose not to service the route or if I did not, you know, pay my bills in a timely fashion, or if I simply chose to leave. These are the ways we could be separated. Nonperformance was probably the major issue." (Verbatim.)

Kalinger confirmed that he told Arasimowicz that no writing was necessary because "the oral commitment that was given by S.B. Thomas was far stronger than anything that was put in writing, and [Arasimowicz] was dealing with a company whose integrity and morality was beyond reproach."

Following this conversation, Arasimowicz continued to distribute Thomas' products, in addition to Pepperidge Farm products, for some 33 years. Over the years, Arasimowicz even sold some portions of his route to Tony Quinnan, James J. Harrington and Eugene Meyung. It appeared that Arasimowicz never entertained or sought offers to buy his Thomas' business at any point in his 33 years as a distributor.

1999 Bestfoods re-org prompts suit
On or about July 7, 1999, Arasimowicz was told that Bestfoods had decided to change its distribution scheme in his area. Bestfoods, which historically had never sold distributorships, were now going to require its distributors to purchase their routes from the company. Arasimowicz protested on the ground that he had already paid Coleman and Todara to acquire his route. Because he refused to pay Bestfoods for his route, Arasimowicz was terminated as a distributor by Bestfoods.

Arasimowicz sued Bestfoods in the U.S. District Court For The Southern District Of New York alleging that Kalinger's oral assurances entitled him to continue as a distributor so long as he paid his bills, abided by the stale policy and otherwise performed adequately.

Bestfoods argued that the literal terms of the Letter Agreement signed more than 30 years earlier made clear that Arasimowicz did not have the rights he claimed.

The trial judge agreed with Bestfoods that the Letter Agreement distinctly lacked any assurances to Arasinowicz and accordingly dismissed his case.

Source: ARASIMOWICZ v. BESTFOODS, INC., 2000 U.S. Dist. LEXIS 17818
(United States District Court For The Southern District Of New York) (November 27, 2000)

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