The lawsuit accuses the snack company of unlawfully terminating several franchisees, including New Jersey-based Jonathan Scheurer LLC. shortly after the merger of the two snack companies, Snyder’s and Lance, in 2010.
Scheurer entered into a distributor agreement with Snyder’s in October 3, 2008. The agreement granted Scheurer “the exclusive right to sell and distribute authorized products to authorized outlets within the defined territory,” according to the court document.
However, not long after the merger, Snyder’s-Lance notified the franchisee, along with others in New Jersey, that its services were terminated due to a “system-wide restructuring” of its business, said Scheurer.
In November 2012, Scheurer received a letter, notifying it that Snyder’s-Lance was also terminating the distributor agreement “as a result of this same system-wide restructuring and not for any good cause,” the court document showed.
Scheurer initiated the lawsuit in November 2016, suing the snack giant for violations of the New Jersey Franchise Practices Act (NJFPA).
Snyder’s-Lance attemped to block the suit, claiming Scheurer did not maintain “a place of business”.
However, the US district judge ruled that Scheurer’s allegations were sufficient to let the suit proceed as the NJPA defines "a place of business shall not mean an office, a warehouse, a place of shortage, a residence or a vehicle, except that with respect to persons who do not make a majority of their sales directly to consumer.”
“Scheurer has pled that it ‘operated out of a warehouse in Rockaway, New Jersey, from which it received shipments of Snyder’s-Lance products for sale to retail outlets’,” said district judge Madeline Cox Arleo.
“The complaint alleges that Scheurer and members of the class 'do not make a majority of their sales directly to consumers,’ but instead ‘operate out of various warehouses in the State of New Jersey at which they receive shipments of Snyder’s-Lance from Snyder’s-Lance for sale to retail outlets,” said Arleo. “Such allegations are sufficient to establish a ‘place of business’.”
The judge added: “The cases that Snyder’s-Lance cites to support its proposition are misplaced. As an initial matter, several of these cases were decided before the NJFPA was amended in 2010 to include the above wholesale distributor exception.”
Judge Arleo ordered that Snyder’s-Lance’s arguments for dismissal may be renewed at a later time.
The case is Scheurer LLC. vs Snyder’s-Lance Distribution, 2:16-cv-08783, US District Court, District of New Jersey.