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Seneca Foods Corp. v. Starbucks Corp.2/3/2005
Seneca Foods Corporation produced a beverage concentrate for a Starbucks Corporation blended fruit drink, 'Tiazzi.' Seneca ended the parties' relationship while holding a large inventory of certain flavor ingredients used in the beverage concentrate. Seneca demanded that Starbucks pay for those flavor ingredients, which had expired shelf lives. Starbucks refused and Seneca sued in Yakima County for breach of contract. Starbucks moved for summary judgment dismissal. The trial court granted that motion.
Seneca appeals, contending the court erred in granting Starbucks' summary judgment motion because there exist genuine issues of material fact that the parties had (1) an implied-in-fact contract, (2) an oral contract, (3) a written contract, (4) a requirements contract, (5) an implied-in-law contract, or (6) a situation governed by principles of estoppel--any one of which obligates Starbucks to pay Seneca for the flavor ingredient inventory. Seneca also contends the court erred in earlier denying, after in camera review, its discovery motion to compel Starbucks to produce documents withheld as work product or privileged attorney-client communications. We find no error and affirm the trial court.
FACTS
In 1997, Starbucks began developing a new fruit beverage product, 'Tiazzi,' for sale in its retail stores the following year. Tiazzi was to be prepared in store by mixing a bottled concentrate with ice. Starbucks engaged Seneca to co-pack the beverage concentrate exclusively for sale to Starbucks. The arrangement was turnkey, whereby Seneca directly ordered and purchased the Tiazzi raw ingredients for shipment to its Prosser, Washington plant. Seneca then blended the ingredients, including certain flavor concentrates manufactured by International Flavors & Fragrances, Inc. (IFF), into the bottled beverage concentrate. Starbucks sent purchase orders to Seneca and Seneca filled those orders by sending Starbucks the finished beverage concentrate in two flavors--Wild Berry and Mango Citrus. Starbucks had separately engaged IFF to develop the flavor ingredients. The Tiazzi and IFF flavorings and their formulas were proprietary to Starbucks.
Seneca's vice-president for industrial sales, David Watkins, oversaw the Tiazzi co-pack project for Seneca and was the communication contact with Starbucks. Mr. Watkins was also ultimately in charge of raw materials purchases. Eric Karlsen of Starbucks' purchasing department was Mr. Watkins' primary contact. Seneca early on signed a five-year agreement not to disclose any of Starbucks' confidential or proprietary information. Seneca began producing the Tiazzi beverage concentrate in April 1998. But the formulas had to be revised and finished product recalled prior to Starbucks' retail launch of Tiazzi. Starbucks paid Seneca for its entire finished inventory of recalled beverage concentrate. Seneca then worked overtime to produce front load quantities of reformulated beverage concentrate to stock Starbucks' warehouses in anticipation of a July 10 start of retail sales.
Aside from initial front loading for the July sales start-up, the parties' goal was for Seneca to have one month's finished beverage concentrate on hand at any given time, and be manufacturing the next month's anticipated supply in the current month. Thus, Starbucks expected Seneca to make reasonable purchases of flavor concentrates prior to receiving Starbucks' purchase orders. Mr. Karlsen said this benefited both parties. Starbucks issued a written purchase order to Seneca each time it purchased Tiazzi beverage concentrate. Both parties considered the terms and conditions of the purchase orders acceptable and binding. Since the purchase orders were o
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