United States District Court, W.D. Texas, Austin Division
SPARKS, SENIOR UNITED STATES DISTRICT JUDGE.
REMEMBERED on this day the Court reviewed the file in the
above-styled cause, and specifically Cross-Claimant WFM
Private Label, L.P. (Whole Foods)' Motion for Summary
Judgment [#70], Cross-Defendant 1048547 Ontario, Inc. d/b/a
Skotidakis Goat Farm (SGF)'s Response [#77] in
opposition, and Whole Foods' Reply [#79]
thereto. Having considered the case file and the
applicable law, the Court enters the following opinion and
a contract dispute case. Whole Foods contracted with SGF to
supply Greek yogurt for sale under the Whole Foods Market 365
Everyday Value private label. Some yogurt contained higher
sugar content than disclosed on the product labels, resulting
in a product withdrawal, numerous consumer lawsuits, and
other expenses. Whole Foods and SGF dispute liability under
2012, Whole Foods and SGF executed a vendor agreement in
which SGF agreed to supply Whole Foods various plain and
flavored Greek yogurt products. Mot. Summ. J. [#70-3] Ex. 3
(Vendor Agreement). SGF provided nutritional information for
the yogurt. Resp. [#77] at 3. In doing so, SGF relied on 2010
and 2011 nutritional tests performed by Maxxam Analytics
International Corporation (Maxxam), a third-party laboratory
company based in Canada. See id; Mot. Summ. J.
[#70-7] Ex. 7 (SGF Specifications E-mail). SGF reviewed and
approved nutritional information before the products were
sold. See Mot. Summ. J. [#70-6] Ex. 6 (Technical
September 2013, SGF received updated test results from Maxxam
for several of its yogurt products. Resp. [#77] at 4-5. One
of the products tested-the 0% plain yogurt-was also a product
SGF supplied to Whole Foods. See Id. The new Maxxam
test results reflected higher sugar content than the previous
test results relied upon for product labeling.
Compare Mot. Summ. J. [#70-12] Ex. 12 (SGF Consumer
Reports E-mail) at 7 (indicating 1.8 grams of total sugars
per 100 grams of 0% plain yogurt), with SGF
Specifications E-mail at 7 (indicating 1.0 grams of total
sugars per 100 grams of 0% plain yogurt). SGF did not notify
Whole Foods of the new test results at the time. Resp. [#77]
thereafter, in early November 2013, Whole Foods contacted SGF
with a customer inquiry regarding nutritional information of
its plain yogurt products. See Mot. Summ. J.
[#70-13] Ex. 13 (Customer Inquiry E-mail). The customer asked
how the sugar content of the Whole Foods Market 365 Everyday
Value private label plain yogurt was "significantly
lower" than other Greek yogurt brands. Id. SGF
assisted Whole Foods in responding to this and other customer
inquiries, but again did not notify Whole Foods of the new
Maxxam test results. See id.; Mot. Summ. J. [#70-14]
Ex. 14 (another customer inquiry).
14, 2014, Consumer Reports contacted Whole Foods for an
upcoming article on the sugar content of the Whole Foods
Market 365 Everyday Value private label plain yogurt.
See SGF Consumer Reports E-mail at 3-4. Consumer
Reports notified its nutritional testing showed Whole
Foods' plain yogurt contained five times the sugar
content listed on the product labeling. Id; see also
Mot. Summ. J. [#70-17] Ex. 17 (Consumer Reports Article).
Whole Foods requested input and any additional nutritional
testing from SGF. See SGF Consumer Reports E-mail
atl. SGF sent Whole Foods the 2013 Maxxam test results on the
same day. See Id. Consumer Reports published its
article on July 17, 2014. See Consumer Reports
August 2014, Whole Foods voluntarily withdrew the Whole Foods
Market 365 Everyday Value private label plain yogurt after
confirming the sugar content of the yogurt exceeded the sugar
content listed on the product label. See Mot. Summ.
J. [#70] at 5-7; see also Mot. Summ. J. [#70-20] Ex.
20 (Test Results).
putative class action lawsuits were filed against Whole Foods
and its affiliates for the mislabeling of sugar content on
the company's plain yogurt. See Mot. Summ. J.
[#70-18] Ex. 18 (Underlying Lawsuits). The lawsuits were
centralized before this Court by the Judicial Panel on
Multidistrict Litigation. See In Re: Whole Foods Market,
Inc., Greek Yogurt Marketing and Sales Practices
Litigation, No. 1:14-mc-02588-SS (W.D. Tex. Dec,
September 5, 2014, SGF confirmed its intent to indemnify
Whole Foods in the Underlying Lawsuits. See Mot.
Summ. J. [#70-26] Ex. 26 (Indemnity Letter). Five days later,
Whole Foods effectively terminated the Vendor Agreement by
permanently discontinuing all plain and flavored private
label yogurt products from SGF, citing "allegations made
relating to products produced by [SGF]." Mot. Summ. J.
[#70-33] Ex. 23 (Termination Letter). SGF made two payments
to Whole Foods totaling $75, 000 for litigation expenses
incurred in the Underlying Lawsuits. Resp. [#77] at 15. Whole
Foods settled the Underlying Lawsuits in November 2016.
See Mot. Summ. J. [#70] at 8.
2015, SGF initiated a lawsuit against Maxxam in the Ontario
Superior Court of Justice for inaccuracies in the 2010 and
2011 Maxxam nutritional tests SGF relied upon in its contract
with Whole Foods. See Mot. Summ. J. [#70-9] Ex. 9
(Maxxam Lawsuit). SGF asserted Maxxam's testing was
"wholly inaccurate and the amount of the total sugars in
the yogurt were under-reported." Id. at 5.
case, Whole Foods filed a crossclaim against SGF, asserting
six claims for breach of contract and fraud. See Am.
Cross-Compl. [#37] at ¶¶ 57-100. SGF filed one
counterclaim for breach of contract. See Am.
Counterclaim. [#49] at ¶¶ 13-21. Whole Foods moves
for summary judgment on its affirmative claims and SGF's
counterclaim. See Mot. Summ. J. [#70]. The motion is
fully briefed and ripe for consideration.
Legal Standard-Summary Judgment
judgment shall be rendered when the pleadings, the discovery
and disclosure materials on file, and any affidavits show
that there is no genuine dispute as to any material fact and
that the moving party is entitled to judgment as a matter of
law. Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett,
477 U.S. 317, 323-25 (1986); Washburn v. Harvey, 504
F.3d 505, 508 (5th Cir. 2007). A dispute regarding a material
fact is "genuine" if the evidence is such that a
reasonable jury could return a verdict in favor of the
nonmoving party. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986). When ruling on a motion for summary
judgment, the court is required to view all inferences drawn
from the factual record in the light most favorable to the
nonmoving party. Matsushita Elec. Indus. Co. v. Zenith
Radio, 475 U.S. 574, 587 (1986); Washburn, 504
F.3d at 508. Further, a court "may not make credibility
determinations or weigh the evidence" in ruling on a
motion for summary judgment. Reeves v. Sanderson Plumbing
Prods., Inc., 530 U.S. 133, 150 (2000);
Anderson, 477 U.S. at 254-55.
the moving party has made an initial showing that there is no
evidence to support the nonmoving party's case, the party
opposing the motion must come forward with competent summary
judgment evidence of the existence of a genuine fact issue.
Matsushita, 475 U.S. at 586. Mere conclusory
allegations are not competent summary judgment evidence, and
thus are insufficient to defeat a motion for summary
judgment. Turner v. Baylor Richardson Med. Ctr., 476
F.3d 337, 343 (5th Cir. 2007). Unsubstantiated assertions,
improbable inferences, and unsupported speculation are not
competent summary judgment evidence. Id. The party
opposing summary judgment is required to identify specific
evidence in the record and to articulate the precise manner
in which that evidence supports his claim. Adams v.
Travelers Indem. Co. of Conn., 465 F.3d 156, 164 (5th
Cir. 2006). Rule 56 does not impose a duty on the court to
"sift through the record in search of evidence" to
support the nonmovant's opposition to the motion for
summary judgment. Id.
disputes over facts that might affect the outcome of the suit
under the governing laws will properly preclude the entry of
summary judgment." Anderson, 477 U.S. at 248.
Disputed fact issues that are "irrelevant and
unnecessary" will not be considered by a court in ruling
on a summary judgment motion. Id. If the nonmoving
party fails to make a showing sufficient to establish the
existence of an element essential to its case and on which it
will bear the burden of proof at trial, summary judgment must
be granted. Celotex, 477 U.S. at 322-23.