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Inc. v. Rew Marketing, Inc.

United States Court of Appeals, Eighth Circuit

April 11, 2018

Leonetti's Frozen Foods, Inc. Plaintiff- Appellant
Rew Marketing, Inc. Defendant Crew, Inc., doing business as Rew Marketing, Inc. Defendant-Appellee

          Submitted: February 14, 2018

          Appeal from United States District Court for the Western District of Arkansas - Fayetteville

          Before LOKEN, BENTON, and ERICKSON, Circuit Judges.


         In 2014, Leonetti's Frozen Foods, Inc. hired Crew, Inc. to market and sell stromboli products to Sam's Club. One of these products was intended for sale in Sam's Club's in-store cafes. The in-store café product needed to be reformulated so that it could be heated in Sam's Club's impinger pizza ovens. Leonetti's worked for months to ensure that the café stromboli met Sam's Club's stringent requirements, which demanded that the stromboli pass two crucial tests. Leonetti's eventually succeeded in passing the two tests. Shortly after receiving news that the stromboli passed the tests and reviewing photographs of the testing, Crew President Jeff Campigli inadvertently sent a reply-all email that expressed his pleasure that the testing had gone so well. In the email, Campigli suggested that some of the photographs were so good they could be used to market the product to Costco, Sam's Club's primary competitor. The following month, Sam's Club terminated discussions with Leonetti's.

         Leonetti's filed an action against Crew, asserting that the email caused Sam's Club to decline to purchase Leonetti's stromboli products. The district court, having jurisdiction under 28 U.S.C. § 1332(a)(1), granted summary judgment against Leonetti's on all counts but one. On appeal, jurisdiction is proper in this court under 28 U.S.C. § 1291. For the reasons stated below, we reverse.


         Leonetti's is in the business of developing and manufacturing a variety of frozen food products. In August 2014, Leonetti's and Sam's Club began discussing the possible purchase of two stromboli products: "Leonetti's Frozen Stromboli" and "Café Stromboli." Leonetti's hired Crew as a broker for the testing and approval process. Crew was already Leonetti's broker for Costco.

         Leonetti's needed to reformulate its pepperoni and provolone cheese Café Stromboli to meet Sam's Club's requirements-which were being driven by the impinger ovens that Sam's Club uses to heat its pizza products. In essence Sam's Club required the stromboli product to pass both a temperature test and a hold test before it would be willing to purchase the stromboli for resale. The testing process began in late September 2014. It is undisputed that during October and November 2014 Leonetti's struggled to achieve the requisite internal temperature (at least 135 degrees) without burning the stromboli or having cold pockets inside the stromboli.

         Leonetti's successfully reformulated the stromboli by changing the dough and surface area. By early December 2014, Sam's Club Senior Vice President Shawn Baldwin told Leonetti's co-owner Robert Ippaso that Leonetti's had made substantial progress, writing, "John [Hawthorne, the café buyer for Sam's Club, ] told me that you are getting close on the Stromboli heating evenly [t]o a point we can test and sell some soon." The stromboli met Sam's Club's internal-temperature benchmark in tests conducted during the week of December 7, 2014, and on December 16, 2014.

         That same day, Hawthorne requested that Leonetti's develop a ham and pepperoni stromboli to sell in addition to the pepperoni and provolone stromboli. Crew Chief Executive Officer Cindy Romines-Towler told Leonetti's that after the holidays, the ham and pepperoni product would undergo temperature tests, the pepperoni and provolone product would undergo a hold test, and if the latter passed the hold test, the parties would "move forward." On January 13, 2015, the ham and pepperoni stromboli failed a temperature test, and Hawthorne concluded that the original pepperoni and provolone stromboli was better.

         On January 14, 2015, the pepperoni and provolone stromboli passed temperature and hold tests. That day, Romines-Towler emailed Hawthorne to report the favorable results:

John and Jeremy good day! I completed the in-club testing this morning at the Bentonville Sam's Club. Test went extremely well. I used 8 Stromboli's in the test. The additional samples were used to determine where to start the pans as the temperature and times were not set at 485* - 6 minutes. The ovens were set at 500* - 6:30, club associate said they started the pizzas at the entrance of the oven and recommended we do the same. I found that the top oven cooked hotter ...

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