22-1113-cv

Keystone Foods Holding Limited, n/k/a Beef Holdings Limited v. Tyson Foods, Inc

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A 

SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY 

FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1. 

WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST 

CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION 

“SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON 

ANY PARTY NOT REPRESENTED BY COUNSEL. 

At a stated term of the United States Court of Appeals for the Second Circuit, held at the 

Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the

16th day of May, two thousand twenty-three.

Present:

DEBRA ANN LIVINGSTON,

Chief Judge,

REENA RAGGI,

MARIA ARAÚJO KAHN,

Circuit Judges.

_____________________________________

KEYSTONE FOODS HOLDINGS LIMITED, N/K/A BEEF 

HOLDINGS LIMITED,

Plaintiff-Appellant,

v. 22-1113-cv

TYSON FOODS, INC.,

Defendant-Appellee.

_____________________________________

For Plaintiff-Appellant: WILLIAM B. ADAMS (Michael B. Carlinsky and Blair A. 

Adams, on the brief), Quinn Emanuel Urquhart & 

Sullivan, LLP, New York, NY

For Defendant-Appellee: JUSTIN N. KATTAN (Sandra D. Hauser, on the brief), 

Denton US LLP, New York, NY
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Appeal from a judgment of the United States District Court for the Southern District of 

New York (Carter, J.).

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND 

DECREED that the order of the district court is AFFIRMED.

Plaintiff-Appellant Keystone Foods Holdings Limited n/k/a Beef Holdings Limited (“Beef 

Holdings”), a subsidiary of Marfrig Global Foods S.A. (“Marfrig”), appeals from the April 21, 

2022 judgment of the United States District Court for the Southern District of New York (Carter, 

J.), which, in relevant part, dismissed Beef Holdings’s claims of promissory fraud and fraudulent 

inducement (counts VIII and IX, respectively) against Defendant-Appellee Tyson Foods, Inc. 

(“Tyson”). As relevant to this appeal, in July 2018, the parties entered into a preliminary 

agreement (the “Revised Proposal”) pursuant to which Tyson agreed to negotiate in good faith a 

final agreement to acquire Beef Holdings’s global poultry business, which operated as Keystone 

Foods Holdings Limited (“Keystone”), for $2.7 billion, less $200 million in “agreed allowances,

with no further deductions.” App’x 167. In return, Beef Holdings agreed to cease negotiations

with other potential acquirers for a limited period, including a competing bidder (the “Other 

Bidder”) who allegedly “expressed a desire to buy Keystone’s U.S. operations,” but not its 

overseas operations, “at a price between $1.6 billion and $1.75 billion.” Id. at 21. But a final 

agreement consistent with the Revised Proposal’s terms never materialized, allegedly because 

Tyson demanded a significant price cut at the last minute. Instead, on August 17, 2018, the 

parties executed a stock purchase agreement for Tyson to acquire Keystone for $2.37 million, 

minus certain allowances—$330 million less than the amount reflected in the Revised Proposal. 

After the deal closed, Beef Holdings filed suit in the Supreme Court of the State of New 

York, asserting, as relevant here, that Tyson fraudulently entered the Revised Proposal with the 
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intention of ultimately demanding a lower price. Tyson removed Beef Holdings’s action to 

federal district court and moved to compel arbitration of certain claims and to dismiss others, 

including the fraud claims. The district court granted the motion, holding, in relevant part, that 

Beef Holdings failed to plead adequate allegations of special damages to maintain its fraud claims 

under New York law. Beef Holdings appeals only the dismissal of the fraud claims. For the 

following reasons, we affirm the order and judgment below. We assume the parties’ familiarity 

with the underlying facts, the procedural history of the case, and the issues on appeal, which we 

reference here only as necessary to explain our decision.

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* * *

Generally, under New York law, “allegations that [a] defendant entered into a contract 

while lacking the intent to perform it are insufficient to support [a fraud claim].” N.Y. Univ. v. 

Cont’l Ins. Co., 87 N.Y.2d 308, 318 (1995). This flows from the notion that “a fraud claim may 

not be used as a means of restating what is, in substance, a claim for breach of contract.” Wall v. 

CSX Transp., Inc., 471 F.3d 410, 416 (2d Cir. 2006) (internal quotation marks omitted). But “not 

every fraud claim is foreclosed in an action also involving a contract.” Id. As this Court has 

recognized, one circumstance in which a plaintiff may pursue a fraud claim premised on a breach 

of contract is where the plaintiff “seek[s] special damages that are caused by the misrepresentation 

and unrecoverable as contract damages.” Bridgestone/Firestone, Inc. v. Recovery Credit Servs., 

Inc., 98 F.3d 13, 20 (2d Cir. 1996). “Special”—or, alternatively, “consequential”—damages seek 

to compensate a plaintiff for losses other than the value of the promised performance that are 

1 We review de novo a district court’s dismissal under Rule 12(b)(6). Cornelio v. Connecticut, 

32 F.4th 160, 168 (2d Cir. 2022). “We consider the legal sufficiency of the complaint, taking 

its factual allegations to be true and drawing all reasonable inferences in the plaintiff’s favor.” 

Harris v. Mills, 572 F.3d 66, 71 (2d Cir. 2009).
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incurred as a result of the defendant’s breach. Schonfeld v. Hilliard, 218 F.3d 164, 175 (2d Cir. 

2000). Thus, a “fraud claim [is] actionable” where “the injury alleged [is] the detriment actually 

suffered by plaintiff rather than the value of what [the] defendant promised.” Fort Howard Paper 

Co. v. William D. Witter, Inc., 787 F.2d 784, 793 (2d Cir. 1986) (internal quotation marks omitted).

“In an action to recover damages for fraud,” damages are measured using the “out-ofpocket” rule, which captures “the actual pecuniary loss sustained as the direct result of the wrong.” 

Lama Holding Co. v. Smith Barney Inc., 88 N.Y.2d 413, 421 (1996) (internal quotation marks and 

citations omitted). “Under this rule, the loss is computed by ascertaining the difference between 

the value of the bargain which a plaintiff was induced by fraud to make and the amount or value 

of the consideration exacted as the price of the bargain.” Id. (internal quotation marks omitted). 

This measure reflects the intention “to restore [] plaintiffs to the position they occupied before the 

commission of the fraud.” Kroshnyi v. U.S. Pack Courier Servs., Inc., 771 F.3d 93, 106 (2d Cir. 

2014). As such, in measuring the loss, the plaintiff may account for “the costs incurred in 

preparation or in performance or in passing up other business opportunities.” Fort Howard Paper 

Co., 787 F.2d at 793 n.6 (alternations and internal citations omitted).

But in seeking to recover for a “pass[ed] up . . . business opportunit[y],” id., “the loss of an 

alternative contractual bargain” that was “undeterminable and speculative” will not suffice. 

Lama Holding Co., 88 N.Y.2d at 422 (quoting Dress Shirt Sales, Inc. v. Hotel Martinique Assocs., 

12 N.Y.2d 339, 344 (1963)). This is because special damages—unlike general damages—are 

only recoverable when “the extent of the loss is capable of proof with a reasonable certainty.” 

Tractebel Energy Mktg., Inc. v. AEP Power Mktg., Inc., 487 F.3d 89, 109 (2d Cir. 2007). Thus, 

while the damages associated with a lost opportunity “need not be proven with mathematical 
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precision, they must be capable of measurement based upon known reliable factors without undue 

speculation.” Schonfeld, 218 F.3d at 172 (internal quotation marks omitted). 

Consistent with this rule, courts applying New York law have allowed plaintiffs to sustain 

fraud allegations based on lost opportunities in some circumstances but not in others. For 

example, in Schonfeld, this Court held that a plaintiff could pursue a fraud claim to recover the 

value of a supply agreement that the plaintiff was allegedly induced to abandon on the theory that 

its “market value” was sufficiently determinable so as not to be speculative. See 218 F.3d at 183. 

In contrast, in Connaughton v. Chipotle Mexican Grill, Inc., the Court of Appeals of New York 

affirmed the dismissal of a plaintiff’s fraud claim, holding that the mere allegation that the plaintiff 

had “stopped soliciting potential buyers” due to the defendants’ alleged fraud was too speculative 

to demonstrate any out-of-pocket loss where the plaintiff had not alleged that he actually “rejected 

another prospective buyer’s offer.” 29 N.Y.3d 137, 143 (2017); see also Rather v. CBS Corp., 

886 N.Y.S.2d 121, 128 (1st Dep’t 2009) (holding that a plaintiff could not seek lost opportunity 

damages for allegedly being fraudulently induced to stay with his employer when he “never 

identified a single opportunity with specified terms that was actually available to him and which 

he declined to accept because of [the defendant’s] actions”). 

Here, Beef Holdings’s alleged damages arise from its purported lost opportunity to pursue 

an alternative sale of Keystone’s U.S. operations to the Other Bidder. Specifically, Beef 

Holdings alleges that the Other Bidder “expressed a desire to buy Keystone’s U.S. operations . . . 

at a price between $1.6 billion and $1.75 billion.” App’x 21. Although the complaint refers to 

this communication as “the Other Bidder’s bid,” id., Beef Holdings does not allege that this was a 

concrete offer with “specified terms” that Keystone would have accepted absent Tyson’s alleged 

fraudulent misrepresentation. Rather, 886 N.Y.S.2d at 128; see App’x 21 (alleging only that 
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“Other Bidder appeared willing to pay up to $1.75 billion” (emphasis added)). In this manner, it 

appears more speculative than those alternative opportunities that have typically been accepted by 

courts applying New York law as a basis for special damages. Indeed, even in In re MarketXT 

Holdings Corp., a nonprecedential decision by a bankruptcy court cited favorably by Beef 

Holdings, the court held that the plaintiff had sufficiently pled “the loss of an opportunity to make 

a deal that would have resulted in another company’s acquisition” of certain entities based on 

allegations that a prior auction had led to “proposals from several potential acquirers,” 2006 WL 

2864963, at *2, *21 (Bankr. S.D.N.Y. Sept. 29, 2006), not—as we have here—a mere 

“express[ion]” of “desire” to purchase the business, App’x 21. 

In any case, even assuming that the Other Bidder’s potential offer was sufficiently concrete 

so as to support special damages, Beef Holdings’s claim suffers a different fatal weakness: Beef 

Holdings argues that Keystone’s U.S. operations effectively sold for a purchase price of $1.45 

billion—that is, two-thirds of the $2.37 billion demanded by Tyson less the $200 million in agreed 

upon price adjustments—which is below the $1.6 billion to $1.75 billion that the Other Bidder was 

allegedly anticipated to offer. See Opening Br. at 10. But concluding based on these arguments 

that Beef Holdings suffered out-of-pocket damages of between $150 million and $300 million, as 

Beef Holdings urges us to do, see id. at 23, requires us to assume that the overseas operations, 

based in Asia, would have been sold for one-third Tyson’s purchase price in the counterfactual 

circumstance in which Beef Holding pursued the Other Bidder’s offer for the U.S. operations. 

This is pure speculation. Beef Holdings can point to no allegations to suggest that it had some 

alternative offer for the overseas operations. Instead, Beef Holdings merely asserts that “[t]he 

value of Keystone’s Asia business existed regardless of whether it was monetized.” Reply Br. at 

5. Maybe so—but in order to support special damages that value must be supported by concrete 
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allegations of “pass[ed] up . . . business opportunities,” generally in the form of lost profits from 

operating the business or from an alternative sale. Schonfeld, 218 F.3d at 183. Beef Holdings 

offers neither in connection to the overseas operations. 

To sustain a fraud action premised on special damages, a plaintiff must sufficiently allege 

a “difference between the value of the bargain which [the] plaintiff was induced by fraud to make 

and the amount or value of the consideration exacted as the price of the bargain.” Cont’l Cas. 

Co. v. PricewaterhouseCoopers, LLP, 15 N.Y.3d 264, 271 (2010). Here, Beef Holdings’s 

argument that the “value of the bargain” it received was less than the “value of the consideration” 

offered in exchange rests on a wholly speculative theory of the consideration it could have received 

for Keystone’s overseas operations had they been sold or operated on their own. Id. 

Accordingly, the district court did not err in dismissing Beef Holdings’s fraud claims.

* * *

We have considered all of Beef Holdings’s remaining arguments and find them to be

without merit. Accordingly, we AFFIRM the judgment of the district court.

FOR THE COURT:

Catherine O’Hagan Wolfe, Clerk of Court