Gregory Packaging, Inc., a 100-year-old family-owned juice manufacturer, was awarded $21.2 million after a federal court found Foodbuy, LLC engaged in unfair and deceptive trade practices.
On August 4, 2022, U.S. District Court Judge Frank D. Whitney ordered Foodbuy to pay $21.2 million for overbilling Gregory Packaging, of which more than $14 million is a penalty for unfair and deceptive trade practices. Foodbuy is a wholly-owned subsidiary of worldwide foodservice giant Compass Group (London Stock Exchange: CPG.L), whose revenue topped $30 billion in 2019.
The dispute began when Gregory Packaging discovered that Foodbuy charged them millions of dollars for volume allowance rebates on juice Foodbuy did not sell. “Foodbuy simply bills for every case they receive information from the distributor, and then waits for manufacturers to bring issues to them,” the Judge noted.
When Gregory Packaging attempted to rectify those overcharges, Foodbuy sued to collect the total amount, forcing Gregory Packaging to countersue. Initially, the court ordered Foodbuy to pay $9.3 million for breaching the contract.
Foodbuy appealed that decision. Not only did Foodbuy lose its appeal, but the company was then ordered to pay more for engaging in unfair and deceptive trade practices. Judge Whitney found that Foodbuy’s actions amounted to “more than a mere breach of contract” and “instead demonstrate[d] aggravating and egregious circumstances” amounting to unfair and deceptive trade practices. The Judge thus increased the award to $21.2 million.
The court found that Foodbuy “continued overbilling despite representations to the contrary” and refused to provide the data necessary to discover the overcharges. That behavior, Judge Whitney found, “extends beyond a mere breach of contract and constitutes an unfair and deceptive trade practice.”
The court further found that Foodbuy’s practices were “not unique” to Gregory Packaging, and Foodbuy engaged in a pattern of the same conduct with other manufacturers.
Gregory Packaging was represented by Russ Ferguson and Sam Hartzell of Womble Bond Dickinson.
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Alexandra Orr
Womble Bond Dickinson
Alex.Orr@wbd-us.com
