afternoon gentlemen welcome to the th circuit we would prefer to see you in person but this is good as we can do under the circumstances so we thank you for joining us by video and will be hearing the case of food  minute mike dean are you a listening in i'm haven't you mr woods transmission visual is fine but the audio is sort of garbled food distributors and whether we yes that regardless of whether the price was any particular number and we would say yes indeed your honor we believe the main i argue that the interpretation that the food by gives now was not in the course of conduct that the parties engaged in prior to the litigation and what's your response to that that's incorrect your honor and i was going there after i talked about provisions but i'll go there strike very interesting at the beginning of the negotiation for the original contract finding about how the contract should be interpreted if we assume that the contract is ambiguous do we review his  gregory said made a reckless with a costumer what's the point of this and that's not the way this contract operates employees but here's the meaning once they get our position is we were entitled to an allowance for that case and the out on this if it proved to be unmarketable run reasonable was the sixty day hear from you thank you your honor i may please the court i'm russ ferguson representing appellee and counter public gregory packaging incorporated you know there are really two issues here that the court reviews de novo that's the interpretation of the contract and whether the factual findings in this case rise to the level of an unfair deceptive trade practice which is a matter of law i want to pick up on the contract issue just because that's what we've been discussing and but securely to answer your question judge agee is did the court consider the conduct of the parties and the answer that question is unequivocal yes and if you look at page one thousand five hundred and sixteen of the joint appendix there's a nice list of there were the court went through the conduct of the parties and said here is the conduct you are the actions that informed the interpretation of the contracts  an order for the court to district to consider the conduct of the parties first would have had to conclude that there were ambiguous parts of the contract that required extremes again it's no no your honor that the district court i believe did take that stance but i don't believe that's correct under the law at least as north carolina would see it and if you look at the north kind of court of appeals decision a bigot st mclane securities they looked at it in an unambiguous contract and this court has twice looked and unambiguous concert contract said we must look at the conduct of the parties during the course of the contract and this court said that america klein in two thousand and eight and earlier in that management systems associates in two thousand and five this court said the conduct of the parties as they interpreted it during the contract is subject to great if not controlling influence so i do believe the court can get there before finding this contract is ambiguous and of course both parties here have to find this contract is unambiguous  that might lead a court to conclude that there was some ambiguity there it could your honor it absolutely could and if the court finds ambiguity here that would certainly be harmless error because the district court went to that next step and said well even if it were ambiguous here's all the factors i look to and i interpreted this contract to find that it was interpreted the same exact way as the district court did and that is the food by does not get a volume allowance for cases that had nothing to do with i think the key fact that's perhaps missing there at least in the briefs is that gregory packaging didn't know the food by even would have knowledge of those cases gregory packaging didn't know and this is in the findings of fact of the district court victory back on you didn't know the food i had gone to the food distributors cut a separate deal and said give me all your data for every case gregory packages that this is selling to are committed customers so in a normal commercial relationship food i would have knowledge about the cases the food by sold here food buy had knowledge of cases of food by didn't sell  and charge the volume allowance for those cases let me take another couple minutes on the contract since we were talking about a couple other points and one is the exclusions on the contract well when you exclude someone from the contract like say navigator was good  food was good and that means a volume allowance is not earned on those cases even when their purchase of the food by program that means that the rest of the contract applies but it doesn't because you've specifically excluded it now the case the navigator the court found in this is it a paragraph twenty and seventy six dollars the joint appendix that food by charge gregory packaging for navigator anyway even though they were excluded and on the gordon's exclusion that my friend the other side discuss the district court found the gregory packaging was charged for cases of juice through gordon's they were never purchased at all just wholesale made up cases but what the exclusions don't address are cases that are already outside of the country and if you look at paragraph two and i know this is in the brief so i won't belabor the point but paragraph two sets out of the very beginning  contract to what this contract implies the paragraph one is the term and you get to paragraph two and the language is very clear it says this agreement contains the terms and conditions for right so what follows is what the terms and conditions of this contract apply for and therefore approx one a product that's listed in the contract the product specified attachment to at the prices specified three sold by seller to a food by distributor which is also defined and listed purchasing on behalf of a committed customer which is also defined and list now the key problem here is the nd problem the price problem because if you're not buying the food program you're not buying it the food by price and that's a factual finding the district court found and so the rest of this contract is very doesn't this rest of country doesn't apply to a purchase that doesn't satisfy those four prongs now wife on the other side wants to sections i'd like to briefly touch on the both the st is the non solicitation section in paragraph eighteen and in the question is right why would you have a non solicitation provision grigory package and go get a separate deal and to buy the get a volume allowance anyway why would they care less work for them but even more telling is i think the language of the non solicitation provision because if you look at it says during the term of this agreement customer on the list is going outside of food by to buy gregory packaging products obviously food by doesn't want that happening and that's why that provision is there now gregory back to you doesn't solicit the business and cuts from a buys outside of the food buy program and obviously volume allowance is not owed or that provision would not be there now section one thousand nine hundred your order is obviously at the end of the agreement where this kind of the non operative terms and it's limited by section two the whole agreement only applies to to those transactions that come in section two but even if you look at section one thousand dollars which is the integration clause what you're really looking at is language this defining an order and orders invoices purchase orders other documents purchases which food by will and it goes on and it talks about items purchased from seller on behalf of committee customers or member the committee customers as defined in section three and if you look at section three the definition of a committed customer is a client a food buy that is agreed in writing to authorize food but in a good cheat the commercial terms of purchasing contracts on its behalf and i don't think anyone can say price is not a commercial term in a contract so distributors not purchasing on behalf of a capital c committed customer unless they're buying it through bias price now its reputation the contract is before you de novo so is whether the clear factual findings of the district court rise to the level of an unfair deceptive trade practice under north carolina law now the facts themselves are very clearly under clear clear error or standard of review the facts themselves but it is a question of law as misrepresentations which are fairly clear but that the starkest is the systematic overcharge right there can't be a question that the district court found systematic overcharging here as a factual matter the may be a question about the interpretation the contract but given its interpretation there was systematic n incorrect innocent interpretation of the contract then north carolina north carolina law d all classified as that is unfair and deceptive trade practices honor and north carolina is that case you just said say that a man no it tells about systematic over charges but does it say over chargers pursuant to incorrect but  contract in good faith and we can quibble with that but we interpret it in good faith they misinterpret it but they're not come in supreme court has said over and over again and marshall versus miller they said it in the one thousand nine hundred and eighty s in two thousand they said it in gray versus north on underwriting the good faith is not a defense and bit they'd be back to what you the beginning of this discussion the district court order you know spends a lot of time only economic loss role and i understand your position with respect to that but then it has a fairly brief section if you will an alternative section about aggravating circumstances where there is still you know arguably you  know dealing with the tortious interference client maybe not as hard hard for me to tell quite frankly and so if you are right on the economic  rule why do you say when we have a fairly un clear provision of the order on that that we should make a ruling as a matter of law to circumstance because they found a cases with contracts that that's an unfair and deceptive trade practice they've done the same thing in cases where misrepresentations and i think the district courts fact that fact factual findings made a pretty clear finding of a misrepresentation they said the employee in charge of the relationship was saying internally that benjamin foods which is a distributor was not following their pricing and should be entitled to a valuable outs and at the same time turning around st gregory packaging well they are using your pricing which is not only misrepresentation in itself but it's also can see the food buys breach which is another aggravating circumstance because instead of saying you're right they're not using your pricing but you have us a volume allowance anyway they're trying to keep the scheme going by saying well they are using your pricing and that's why you not because we interpret the contract to say we get one anyway so all of those things as a matter of law your honor are an aggravating circumstance and i think the district court just got that wrong now if he hears if there's evidence in the record that would support a conclusion that there is no aggravating circumstances is it your position that we can't consider that evidence on to determine that there was some evidence substantial evidence from which the district court could have found the absence of aggravating circumstances i understand your argument that there was evidence that supported it but if there's evidence in the record that would lead to the opposite conclusion walk can't we consider that in determining whether we should affirm the district court or not well you absolutely can your honor you consider you can consider whatever evidence you like in making a dent in nova determination of whether there are aggravating circumstances or not what i'm saying is there are factual findings of the district court that are a per se unfair deceptive trade practice under north carolina law and in that case i be it would be error not not to find it so and if you look at the top shelf manager case of middle district north carolina case they say and i'll quote intentional misrepresentations or per se violations of section seventy five dollars death one dollar which the north carolina unfair deceptive trade practices act and i think it's clear that the court found a misrepresentation there's also factual findings outside of the contract for example i know is a small part of the damages but the court found that there were cases simply made up as  court put it there were never purchased at all for which a volume allowed as that's a page one thousand five hundred and three of the joint appendix now i don't think either interpretation the contract says that a volume allowance is owed for cases of jews that were never made and so that that is action outside the contract i think that's another reason you could find unfair deceptive trade practice here as a matter of law and keep in mind it only takes one right you don't have to find systematic unfair deceptive trade practices you only have to find either an unfair trade practices which is broader and the four circus noted that the guild bank case and more recently in the south atlantic limited case that it's implied limited and that even a truthful statement can be an unfair and deceptive trade practice if it has the capacity to mislead and i think the district court did find that and  them and the gregory packaging did not even know they knew about i see my time's running out and since that seems like a fair stopping point i'll stop there your honor unless you have any other questions it's just chloral mom just cleon me more questions at this point  view on the economic loss roll it is i ask this to your colleague i want to ask this to you to you given the limited in maybe even a little confusing discussion of aggravating circumstances was evidence to the contrary as well is it is it is the proper thing for us to do that or to remain and it for the district court to be able to you know address that specific question without any influence of the tortious interference going believe your honor that you all could address it look at the evidence that is the meaning of the no vote rule i don't think it has to feel that you could stand and i don't believe it ha practices act or not but that is not the same as saying and then that's true the north going to courts have not said that canonical school does not apply to unfair deceptive trade practices but at the same time they have not applied it and they have been given the opportunity time and again that claim they have never applied the economic loss rule to it in the go up case they said that the breach of contract and the unfairness of trade practices that claim can be based on the same conduct and the same damages that's going about as far as you can from the economic loss rule which applies to towards now that makes sense to me because if you think about the economic loss rule and the purpose for it in north carolina law courts that look on a wall the economic loss rule applies when there's a breach of contract and a tort because what the courts say is two parties to a contract can allocate that risk you don't need the tort system which is just pile on damages because the parties have already allocated the risks between them for an unfair act or a deceptive act you can't really allocate that risk between the parties by its very nature you don't know about a deceptive act so it makes sense that the economic loss rule which applies to torts doesn't apply to the unfair deceptive trade practices act i'm glad my friend brought up the case i think it's interesting case obviously a seminal case in this era yes i don't think it was cited in either our briefs and i think that's because the case is so different but as is often the case when you have a very different case sometimes a brings out a similarity to so in  the breach of contract there and it was a complex case but the thrust of the breach of contract there was that the franchisees pay ten percent of their revenues into an advertising fund controlled by the franchise or in the franchise or use that advertising fund to sue their advertising agency instead of using it for advertising and the question was is that a breach of contract and there was an unfair intercept of trade practices act claim and this court found there was no aggravating circumstance and that's true right all you have is a breach of contract now the difference in that case and this is this if in in the brossard case meineke had used one million one hundred thousand dollars and sued an advertising firm and not told the franchisees that then that would be the concealment of a breach and you would have an unfair deceptive trade practices that you didn't have that there had mine and he said you know you have temper sent of your revenues for this advertising fund and sent them invoices for twenty percent of the revenues every month you have systematic overcharging you have an aggravating circumstance as a matter of law and pushed hard you didn't have those facts you had a breach there was a question about whether was a breach or not that question was resolved and there was no aggravating circumstance at all unlike here where you have a number of aggravating circumstances as a matter of law and those are not limited to the overcharging and misrepresentations of the district court found a number of factual findings that flew by and sealed its breach that it refused to disclose its breach to grant repackaging atlantic is a unfair and separate free practice there are a number of factual findings that food by withheld data from gregory packaging and that's more important it seems because gregory packaging could not even tell why who was overcharging it or how because it didn't have the added to do it and what happened and this is in the trial transcript as it saw its sales mate remaining somewhat flat and the invoices from food by going up but at st i didn't know it was food but it didn't know what was happening and i went to every other g p o whatever distributor to give us the data and let us see what's going on and by the process of elimination food was the only one that would give it the data and that's how it figured out it was being overcharged buy food buy here but still at that point it didn't understand how an interpretation of the contract or how food buy would even know about those about those unfair and supped about those cases that were sold and that is unfair and deceptive and through all of this it wasn't just deception but food by knew the effect it had  gregory packaging business and the district were found a couple times and it's at four thousand nine hundred and four in the in the order and there's a couple paragraphs there where food by admitted that if in on a school bit given the margins if  they were paying a volume loss to food by in those cases gregory packaging was losing money and emitted would be detrimental to their business but they did it anyway thank you ron thank you very much we appreciate council joining us via video today  your experience if you've been to the four circuit before is that you would know that at this point we'd be coming down to shaking hands which obviously we can't do under the current circumstances so we'll thank you again for your excellent arguments and hope that we'll all be able to meet enrichment at some future date and with that now i asked the clerk of court to adjourn court for the day and then the judges will remain on the 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