ST. LOUIS – The U.S. Court of Appeals for the 8th Circuit on April 11 reversed a ruling for summary judgment by an Arkansas court against a frozen food manufacturer in a case where it alleged an email from a marketing company cost it business with a warehouse chain.
The case came to the court from the U.S. District Court for the Western District of Arkansas, Fayetteville Division.
The facts, as laid out in the opinion, are that Leonetti’s Frozen Foods hired Rew Marketing, also known as Crew Inc., to market a stromboli product to the Sam's Club chain in 2014.
The court noted a Crew official sent an email to a cafe buyer for Sam's Club to report how well an initial test of the Leonetti’s product went at a Bentonville, Arkansas Sam's Club location.
The email records show that Crew President Jeff Campigli replied to all in an email response that "expressed his pleasure that the testing had gone so well," the opinion states. The email reply was sent to the Sam's Club buyer.
"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 opinion states. "The following month, Sam’s Club terminated discussions with Leonetti’s."
At issue is whether the Sam's Club chain ultimately decided to not buy the product in any part because of Campigli's email.
A subsequent note from the buyer puts forth an alternative reasoning for the decline – showing that after initial tests, the company found some unacceptable results with the product involving a change in cheese, cold pockets in heating, and some burns in the kitchen.
A deposition shows the buyer testified that the products were ultimately not accepted because of performance issues – and that the email reply by Campigli did not change the company's decision.
Despite this, Leonetti’s sought legal action against Crew for negligence, breach of contract, fiduciary duty and trade libel. As mentioned earlier, a lower court granted summary judgment for Crew on all counts except for breach of contract, which was dismissed. The lower court cited the evidence from the buyer testifying that Campigli’s email was not a factor.
Leonetti's appealed the grant of summary judgment and the appeal court reversed the ruling, saying that the district court failed to look at all of the evidence.
"Although Leonetti’s presented no direct evidence that the Costco email caused the project termination, there is sufficient circumstantial evidence to show causation," the court's opinion stated.