United States District Court, D. Connecticut
ELEMENT SNACKS, INC. Plaintiff,
GARDEN OF LIGHT, INC., d/b/a BAKERY ON MAIN Defendant.
MEMORANDUM OF DECISION GRANTING IN PART
PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION [DKT.
Vanessa L. Bryant United States District Judge
the Court is a Motion for Preliminary Injunction on which the
Court conducted an evidentiary hearing on August 1, 2018 (the
“Hearing”). Plaintiff seeks to maintain the
status quo prior to its contractual dispute with
Defendant until the parties' arbitral proceedings
conclude. [Plaintiff's Mot. for Preliminary Injunction,
Dkt. No. 2-1, at 2]. Plaintiff, Element Snacks, Inc.
(“Element”), is a New York corporation which
sells organic rice cake snack food products. [Affidavit of
Nadia Leonelli, Dkt. No. 24, ¶ 2]. Defendant, Garden of
Light, Inc., doing business as Bakery on Main
(“Bakery”), is a “co-packer” - a
company that works with businesses like Element to
co-manufacture and co-pack food products. [Dkt. No. 24,
¶ 6]. The dispute concerns Bakery's threatened
termination of the parties' contract for Bakery to
manufacture Element's products. Element contends that it
will suffer irreparable harm if Bakery is allowed to
terminate the contract. [Dkt. No. 2-1, at 9].
following facts are taken from the record and from the
evidence introduced at the Hearing. Element and Bakery
executed a written Manufacturing Agreement on October 25,
2016 under which Bakery agreed to manufacture specialty rice
cakes to Element's specifications (the
“Agreement.”). [Complaint, Dkt. No. 1, ¶ 9].
The Products as delivered to Company will conform to the
Specifications, be free of all material defects arising from
improper manufacture and handling, including contamination,
and be unadulterated and fit for consumption by humans. As
shipped to Company, the Products will be packaged and
appropriately marked for lot code identification and date of
manufacture in accordance with applicable Law and
[Manufacturing Agreement, Dkt. No. 1-1, § 1(a)(iii)].
Element made no representations or warranties concerning the
equipment or ingredients the contract required Bakery to use.
Agreement specifies the price Element is obligated to pay
Bakery and the method for adjusting the price. [Dkt. No. 24,
¶ 11; See Dkt. No. 1-1, §§ 2(a),
Agreement further describes the composition of the price:
Except for chocolate, which will remain fixed during each
calendar quarter, the Production Materials cost component of
the Price will remain fixed during each six (6) month period
of the Term (as hereinafter defined), with Manufacturer
assuming whatever gains or losses may result from price
fluctuations in the cost of Production Materials during such
period. Manufacturer shall, at least fifteen (15) days before
the start of any such six month period, provide Company with
updated Production Material costs by providing a detailed
cost sheet for each Product and any other documentation
reasonably requested by company.
Company will, prior to the commencement of each six month
period, agree upon the actual cost of the Production
Materials that will be incorporated into the Price of the
Products for the next six month period.
[Dkt. No. 1-1, §§ 2(a)].
The Parties acknowledge and agree that, except as set forth
below, the “Price” payable for the Products shall
include all of Manufacturer's costs and expenses related
to the production and packaging of the Products, including
without limitation, labor, overhead, purchase of Production
Materials, receipt, unloading and warehousing of Production
Materials, performance of the manufacturing and packaging
activities (in bulk (i.e., in corrugated shippers), in retail
carton and/or for retail sale), application of labeling,
warehousing of the Products, loading the Products onto a
trailer for transport, disposal of related waste, insurance
and profit. The Price payable for the Products shall not
include any costs or expenses relating to the tooling,
packaging, set-up, plant trials (which shall be conducted
prior to production), or third party laboratory testing
relating to the Products or Production Materials (which
manufacturer shall perform upon Company's written
directive). Any costs and expenses relating to the foregoing
shall be pre-approved by Company.
[Dkt. No. 1-1, § 2(b)].
parties agreed that this price would be fixed for six-month
Labor costs will be reviewed annually and an adjustment
thereto will be implemented, based on demonstrable increases
or decreases in labor costs, ninety (90) days after notice of
adjustment is delivered to Company. Price Component pricing
will be reviewed every six (6) months, adjusted when
necessary, and implemented in accordance with Section 2(a).
[Dkt. No. 1-1, § 2(c)].
Agreement has a three-year term commencing on October 25,
2016. [Dkt. No. 1-1, Preamble]. The Agreement establishes a
process for renewal:
Except as otherwise set forth in this Agreement, the
obligation of Manufacturer to provide Products to Company
pursuant to this Agreement, and Company's obligation to
purchase the Products ordered from Manufacturer pursuant to
Purchase Orders, shall commence on the Effective Date and
continue until the third anniversary of the Effective Date
(together with any renewal terms, the “Term”).
Thereafter the term shall renew for successive terms of one
(1) year unless either Party provides a non-renewal notice at
least one hundred eighty (120) [sic] days prior to
the expiration of the initial term or any renewal term. Such
notice shall be ...