As used in the Hobbs Act, robbery is “the unlawful taking or obtaining of personal property from
a person or in the presence of another, against his will, by means of actual or threatened force, or
violence, or fear of injury ....”_ 18 U.S.C. § 1951(b)(1). Extortion under the Hobbs Act means
“the obtaining of property from another, with his consent, induced by wrongful use of actual or
threatened force, violence, or fear, or under color of official right.” 18 U.S.C. § 1951(b)(2);
United States v. Granados, 142 F.3d 1016, 1019 (7" Cir. 1998).

The Plaintiffs do not allege a “robbery” in their Amended Complaint, and an inference of
such an allegation cannot be construed as there are no allegations of the taking of property by
actual or threatened force or violence or fear of injury as required by the Hobbs Act. See 18
U.S.C. § 1951(b)(1). The Plaintiffs do make a conclusory allegation of extortion. However, the
Plaintiffs repeatedly plead that the program and the subsequent commissions not received from
the termination of the program were taken without the consent of the Plaintiffs and against the
Plaintiffs’ opposition to the termination of the program. Accordingly, the property was not taken
with the Plaintiffs’ consent, as required by the Hobbs Act; and the Amended Complaint fails to
allege an extortion under the Hobbs Act. Because the Plaintiffs fail to adequately plead a
racketeering activity, the RICO claim is dismissed without prejudice.

For the foregoing reasons, the Defendants’ Motion to Dismiss is granted in part and
denied in part. Counts IH, V, X, XI, and XIV are dismissed without prejudice. Count XIII is

dismissed with prejudice. Defendants’ Motion to Strik

Dated: Bewads 2
JO.

13



Defendants argue that Count III fails to plead a cause of action. In response, Plaintiffs
quote part of a Seventh Circuit case, P.S. & E., Inc. v. Selastmer Detroit, Inc., 470 F.2d 125, 128
(7" Cir. 1972), discussing expenditures in an agency relationship, and assert that such quotation
constitutes the Seventh Circuit anticipating Illinois law. Plaintiffs do not indicate what Illinois
law was anticipated and do not identify any specific cause of action under either federal or
Illinois law under which Count III would fall. Nor can such a cause of action be inferred from
the allegations found in Count III. Accordingly, the allegations in Count II fail to adequately
place the Defendants on notice of the claim against them and is dismissed without prejudice.
4. Count IV - Interference with Prospective Economic Advantage

Plaintiffs claim that, as independent distributors of Voortman cookies, they built sales of
Voortman products to their customers. H. Voortman knew of the Plaintiffs’ work and
encouraged the distributors to spend their time, money, energy, resources, and skills in designing
and implementing marketing and sales programs for Voortman products. The Plaintiffs
undertook these activities and built sales of Voortman products with their customers to build
their own commissions. When Voortman terminated the program, the Plaintiffs could no longer
earn part of the commissions for sales they had built-up through their undertakings. The
termination of the program interfered with the business relationship that the Plaintiffs had with
their customers and greatly decreased the Plaintiffs’ incomes.

The tort of interference with prospective economic advantage occurs if: (1) a plaintiff has
a reasonable expectancy of a valid business relationship; (2) the defendant knows about the
expectancy; (3) the defendant intentionally interferes with the expectancy and so prevents it from

ripening into a valid business relationship; and (4) the intentional interference must injure the



distributor who wanted to sell the territory and prospective purchasers who were deterred from
purchasing a distributor’s territory. It also restricted the sale of Voortman products. Based on
these allegations and the factors cited above, the Plaintiffs have sufficiently pled antitrust
standing at this stage of the litigation.
9. Count IX - Restraint on Alienation

Plaintiffs allege that the restraints Voortman imposed on the Plaintiffs which prevented
them from selling their territories constituted an illegal restraint on alienation of the property
interest they held in such territories.

Defendants argue that Count IX should be dismissed because the Plaintiffs failed to
identify any statutory or common law basis for the assertion that the restrictions of the approval
and guidelines for the sale prices are illegal. However, Count VIII does allege a statutory basis
for the assertion that the approval and guidelines for the sale prices of the territories are illegal.
Accordingly, Count IX is sufficiently pled.

10. Count X - Interference with Prospective Economic Advantage

Plaintiffs allege that H. Voortman’s conduct interfered with the Plaintiffs’ economic
advantage. The alleged conduct set forth in Count X is duplicative of the alleged conduct set
forth in the general facts of the Amended Complaint and Count IV of the Amended Complaint,
which names both Defendants. Therefore, Count X appears to be duplicative and is dismissed
without prejudice.

11. Count XI - “Tort of Outrage”
In Count XI, Plaintiffs allege that Defendants’ conduct left the Plaintiffs “personally and

emotionally devastated” and, through such misconduct, inflicted the “tort of outrage”.


TM oTM

are attempting to allege in Count V. A reading of Count V shows that Plaintiffs seek lost profits;
however, the cause of action that is alleged to receive such damages is not ascertainable by the
pleadings. Accordingly, Count V fails to put the Defendants on notice of the claim against them
and is dismissed without prejudice.

VI. Count VI - Breach of Implied Contract

In the alternative, Plaintiffs allege that the Defendants breached an implied contract in
fact by terminating the program. Defendants argue that the claim should be dismissed because
the implied contract is for an indefinite term; therefore, the statute of frauds is applicable.

In Illinois, a contract that cannot be performed within one year must be in writing. 740
ILCS § 80/1. Nevertheless, a statute of frauds defense can be waived by an acknowledgment of
an agreement and the subject matter thereof. R.J.N. Corp. v. Connelly Food Prod., Inc., 175 Ill.
App. 3d 655, 663 (1988).

In the instant case, the Defendants have not yet filed an answer. Therefore, the statute of
frauds defense may still be waived; and dismissal at this early stage of litigation is improper. See
Equiguard, Inc. v. Islandaire, Inc., 1999 WL 259953 (N.D. Ill. April 6, 1999) (denying motion to
dismiss based on statute of frauds defense before answer was filed). Furthermore, an inference
can be drawn from the Plaintiffs’ Amended Complaint that the contract may have been able to be
performed within one year, making the statute of frauds inapplicable.

Defendants also argue that the claim should be dismissed because it fails to allege all of
the elements of an implied in fact contract. As set forth above, Plaintiffs need not plead all of the
elements of a claim. The allegations set forth in Count VI clearly set forth sufficient information

to place the Defendants on notice of the claim.



plaintiff. Schuler v. Abbott Laboratories, 265 Il. App. 3d 991, 994 (1993).

Defendants argue that Plaintiffs did not sufficiently plead the elements of the cause of
action. However, a review of the Amended Complaint demonstrates that the Plaintiffs
sufficiently pled a cause of action for interference with prospective economic advantage and put
the Defendants on notice of the claim against them. Plaintiffs allege that they reasonably
expected the program to continue and that they forwent other means of income to operate as
Voortman distributors in reliance on the program as well as the other aspects of the Policy.
Furthermore, Voortman knew about this expectancy and encouraged Plaintiffs to expend time,
energy, money, and resources to design and implement marketing and sales programs for the sale
of Voortman products. The intentional termination of the program interfered with the Plaintiffs’
present and future business relationships with their customers and caused the Plaintiffs to lose
money via the lost commissions. Under the liberal federal pleading standards, Plaintiffs have
sufficiently pled a cause of action for interference with prospective economic advantage.

5. Count V - “Future Lost Profits”

Plaintiffs claim that the illegal termination of the program prevented them from
continuing to operate their exclusive territories in a manner that permitted them to earn the
commissions they were entitled to earn under the program. The termination of the program
prevented the Plaintiffs from earning lost profits.

Defendants argue that Count V should be dismissed because it seeks damages but does
not state a cause of action for such damages. In response, Plaintiffs state that they had a valid
business relationship with their customers and that the termination of the program breached that

relationship, resulting in damages. Plaintiffs do not identify a specific cause of action that they



Policy Manual also stated that each distributor was an independent businessman that had the
right to sell his territory. The restriction and restraint had a severe effect on competition in the
relevant market.

Defendants argue that the Plaintiffs lack standing to bring this cause of action.

Section 4 of the Clayton Act, 15 U.S.C. § 15, provides individuals the right to bring suit
under the Sherman Act. See Sanner v. Board of Trade of the City of Chicago, 62 F.3d 918, 926
(7" Cir. 1995) (Sanner). The scope of this right is restricted by certain doctrines, including
antitrust standing. See Sanner, 62 F.3d at 926. Antitrust standing requires that a plaintiff
demonstrate “a direct link between the antitrust violation and the antitrust injury”. Greater
Rockford Enery & Tech. Corp. y. Shell Oil Co., 998 F.2d 391, 395 (7" Cir. 1993). Factors
considered in determining whether antitrust standing exists include: (1) whether the injury was
the type that Congress sought to redress with the antitrust laws, (2) the causal connection
between the alleged anti-trust violation and the harm to the plaintiff, (3) improper motive, (4) the
directness between the injury and the market restraint, (5) the speculative nature of the damages,
and (6) the risk of duplicative recoveries or complex damages apportionment. Sanner, 62 F.3d at
927, quoting Lovett v. General Motors Corp., 975 F.2d 518, 520 (8" Cir. 1992).

In the instant case, the Plaintiffs allege that the Defendants’ restrictions on the sale of
territories via the formula found in the Policy Manual and the requirement that any sale be
approved by Defendants greatly restricted the price that the distributors could sell their territories
even though such territories were “owned” by the distributors. Furthermore, the illegal
termination of the program materially depreciated the Plaintiffs’ abilities to sell their territories.

These restrictions adversely affected competition in the relevant market area, including the



¥ Minuto Ordée Form (06/97) TMTM fn

: * ‘United States District Court, Northern District of Dlinois

Ni of ned Jt Sitting Judge if Other
vor Magistrate Judge John W. Darrah than Assigned Judge
CASE NUMBER 02.C 681 DATE 8/8/2002
CASE CATHLEEN M. ROWELL vs. VOORTMAN COOKIES, LTD.
TITLE

[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
of the motion being presented.)

MOTION:

DOCKET ENTRY:

(1) oO Filed motion of [ use listing in “Motion” box above.]

(2) oO Brief in support of motiondue__.

(3) Oo Answer brief to motion due. . Reply to answer brief due.

(4) Oo Ruling/Hearingon set for at

(5) im Status hearing[held/continued to] [set for/re-set for]on__setfor__at

(6) oO Pretrial conference[held/continued to] [set for/re-set for]on__—ssetfor__——at__—.
(7) oO Trial{set for/re-set for] on___at

(8) Qo [Bench/Jury trial] [Hearing] held/continued tos aat__— =.

(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

1 OFRCP4(m) O General Rule21 CIFRCP41(a)(1) O FRCP41(a)(2).

do) «of [Other docket entry] Enter Amended Memorandum Opinion And Order. The defendants’ motion
to dismiss is granted in part and denied in part. Counts III, V, X, XI, and XIV are dismissed without
prejudice. Count XII is dismissed with prejudice. Defendants’ motion to strike is denied.

(il) [For further detail see order attached to the original minute order.]

No notices required, advised in open court,

No notices required.

umber of notices

AUR 12 2999

date dockeu

Notices mailed by judge’s staff.

Notified counsel by telephone.

Uv | Docketing to mail notices,
Mail AO 450 form.

Copy to judge/magistrate judge.

courtroom
LG deputy’s
initials

central Clerk’s Office mailing deputy initials



under the sales program for several years and purchased their territories and operated them in
reliance on the establishment and existence of the program. The Plaintiffs were entitled to rely
on the continued existence of the program.

Defendants argue that the Plaintiffs failed to adequately plead certain elements of the
claim of promissory estoppel, for example, that the promise was in unambiguous terms, that the
Plaintiffs’ reliance was expected or foreseeable by the Defendants, and that the Plaintiffs relied to
their detriment as a result of the reliance.

While the Plaintiffs may not have pled specific terms, the Amended Complaint
sufficiently sets forth a claim for promissory estoppel under the liberal pleading requirements of
the federal court.

13. Count XIII - Violation of Illinois Criminal Statutes and the Hobbs Act

Plaintiffs allege that the Defendant’ conduct constituted violations of Illinois Criminal
Statutes, including extortion and theft. The Defendants’ misconduct also violated the Federal
Hobbs Act, 18 U.SC. § 1952, et seg.

Defendants argue that the Plaintiffs cannot bring civil actions for violation of the Illinois
Criminal Code and the Hobbs Act.

Civil actions cannot be brought for violation of the Illinois Criminal Code, Jacobs v.
Paynter, 727 F. Supp. 1212, (N.D. Ill. 1989); and the Hobbs Act does not allow a private right
of action, Bajorat v. Columbia-Breckenridge Dev. Corp., 944 F. Supp. 1371, (N.D. Ill. 1996).
Accordingly, Count XIII is dismissed with prejudice.

14. Count XIV - Racketeer Influence and Corrupt Organization Act (“RICO”) Violation

Plaintiffs allege that the Defendants’ conduct constituted a RICO, 18 U.S.C. § 1962,

11



Defendants argue that Illinois does not recognize the tort of outrage. In response, Plaintiffs only
argue that “Defendant does not support a Count XI in its dismissal motion.”

In Illinois, the tort of outrage is otherwise commonly known as the tort of intentional
infliction of emotional distress. See Smith v. Metropolitan Life Ins. Co., 550 F. Supp. 896, 900
(N.D. Ill. 1982). In order to sustain a claim of intentional infliction of emotional distress, a
plaintiff must establish: (1) the defendant’s conduct was extreme and outrageous; (2) the
defendant either intended that his conduct would cause severe emotional distress or knew that
high probability existed that his conduct would cause severe emotional distress; and (3) the
defendant’s conduct actually caused severe emotional distress to the plaintiff. See Doe v.
Calumet City, 161 Ill.2d 374, 392, 641 N.E.2d 498, 506 (1994).

In Count XI, Plaintiffs allege that all of the afore-described misconduct caused great
upheavals in the Plaintiffs’ lives and left the Plaintiffs personally and emotionally devastated.
The Plaintiffs do not allege that the afore-mentioned misconduct, Counts I - X, was extreme and
outrageous nor can such an inference be drawn from allegations such as a breach of contract and
quantum meruit. Furthermore, Plaintiffs fail to allege that the Defendants either intended to
cause severe emotional distress or knew that a high probability existed that their conduct,
including breach of contract and quantum meruit, would cause severe emotional distress,
Accordingly, Count XI is dismissed without prejudice.

12. Count XII - Promissory Estoppel

Plaintiffs allege, in the alternative, that if it is found that there is not a formal agreement

between the parties permitting the Plaintiffs to operate under the program, the Plaintiffs are

entitled to operate under the program based on promissory estoppel. The Plaintiffs operated

10



TM tTM

7. Count VII - Quantum Meruit Claim

In the alternative, the Plaintiffs also allege that Voortman has received and accepted
money and services by virtue of service rendered by the Plaintiffs for several years while the
program operated. Since termination of the program, the Plaintiffs have received nothing from
Voortman for all of the services they rendered, and Voortman has received considerable income
because of the illegal termination of the program. Voortman has been unjustly enriched by virtue
of the Plaintiffs’ acts and services and retention of benefits received from such acts and services.

A cause of action of quantum meruit exists if : (1) the plaintiff performed a service to
benefit the defendant; (2) the plaintiff performed the service non-gratuitously; (3) the defendant
accepted the service; and (4) no contract existed to prescribe payment of the service. Owen
Wagener & Co. v. U.S. Bank, 297 Ill. App. 3d 1045, 1053 (1998).

Defendants argue that the claim should be dismissed because the Plaintiffs do not
describe the specific services, how the services benefitted the Defendants, acceptance of the
services, or the absence of a contract. Defendants’ argument is without merit. The Plaintiffs
need not allege specific facts or elements. Even if such a requirement did exist, the Plaintiffs’
allegations in Count VII do adequately set forth the elements of a claim of quantum meruit.

8. Count VIII - Antitrust Claim

Plaintiffs allege that Defendants violated Section 1 of the Sherman Antitrust Act, 15
U.S.C. § 1. Plaintiffs allege that Voortman’s termination of the program materially depreciated
the Plaintiffs’ ability to sell their particular territories at fair market value. Through the formula
within the Policy Manual regarding the determination of the value of a territory, Voortman

restricted and restrained the price for which a distributor could sell his territory even though the



cTM C

with section 2 “shall be liable in a civil action for exemplary damages....” 820 ILCS 120/3.

Defendants argue that the “termination” required under the statute is termination of
employment and does not include termination of part of a contract. However, this question is
more properly addressed in later proceedings, i.e., a motion for summary judgment, not at the
pleading stage. Plaintiffs allege that they have commissions due them, that Voortman terminated
at least a portion of the contract, and that Voortman has refused to pay the requested
commissions. These allegations sufficiently plead a cause of action under the ISRA as they place
the Defendants on notice of the claim against them.
2. Count II - Procuring Cause Claim

The procuring cause doctrine of Illinois common law entitles a party “to commission on
sales made after termination of a contract if that party procured the sales through its activities
prior to termination”. Hammond Group, Ltd. v. Spalding & Evenflo Co., 69 F.3d 845, 850 (7"
Cir. 1995), quoting Scheduling Corp. of Am. v. Massello, 151 Ill. App. 3d 565 (1987). Here,
Plaintiffs have alleged that their efforts prior to the termination of the contract were the procuring
cause of the sales of cookies for at least one year after termination of such contract and that they
have been denied the commissions for these sales. These allegations sufficiently plead a cause of
action under the procuring cause doctrine of IIlinois common law.
3. Count III - “Maintaining/Expanding Territories” Claim

Plaintiffs allege that they refrained from selling products competing with Voortman
products, maintained facilities to promote the sale of Voortman products, and incurred expenses
to maintain and expend their territories. As a result of the termination of the program, Plaintiffs

will lose the monies expended by them to engage in these actions.



Higgs v. Carver, 286 F.3d 437, 439 (7" Cir. 2002) (Higgs).

A reading of the First Amended Complaint supports the following summary of the
alleged conduct of the parties.

Plaintiffs are independent distributors of cookie products of Voortman, each of whom
have exclusive sales territories contracted for with Voortman to sell and distribute Voortman
products. H. Voortman is the President, Chief Executive Officer, Director, and sole or principal
shareholder of Voortman.

The Plaintiffs, as distributors, and Voortman operated under the provisions of a Policy
Manual and amendments and modifications made to such Policy Manual. The Policy Manual
constituted a contract between the parties. Effective April 5, 2001, H. Voortman terminated the
“deep discount, buy-in program” (“program”), which had existed in the Policy Manual for
several years. The termination of the program caused the distributors’ incomes to substantially
decrease. The termination of the program is the basis of Plaintiffs’ fourteen counts discussed
separately below.

1, Count I - Violation of the Illinois Sales Representative Act

Plaintiffs allege that Defendants violated the Illinois Sales Representative Act (“ISRA”),
820 ILCS 120/1, by illegally terminating the program and refusing to pay commissions due under
the program after Plaintiffs requested such commissions.

The ISRA provides that “[a]ll commissions due at the time of termination of a contract
between a sales representative and principal shall be paid within 13 days of termination, and
commissions that become due after termination shall be paid within 13 days of the date on which

such commissions become due.” 820 ILCS 120/2. Furthermore, a principal that fails to comply



UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
CATHLEEN M. ROWELL, et al., )
)
Plaintiffs, )
) No, 02 C 0681
Vv. )
) Judge John W. Darrah
VOORTMAN COOKIES, LIMITED, a Canadian ) dD
Corporation; and HARRY VOORTMAN, ) Ole
Individual ne TED
ndividually, ) A Ug a
) ig 200g
Defendants. ) :

AMENDED MEMORANDUM OPINION AND ORDER

Plaintiffs, on behalf of themselves and a class of similarly situated individuals, filed a
fourteen-count complaint against Defendants, Voortman Cookies, Limited (“Voortman”) and
Harry Voortman (“H. Voortman”), alleging that the Defendants breached an exclusive
distributorship agreement. Presently before the Court is the Defendants’ Motion to Strike and
Dismiss Plaintiffs’ Complaint for failure to state a claim.

In reviewing a motion to dismiss, the court reviews all facts alleged in the complaint and
any inferences reasonably drawn therefrom in the light most favorable to the plaintiff. See
Marshall-Mosby v. Corporate Receivables, Inc., 205 F.3d 323, 326 (7th Cir.2000). Dismissal is
warranted only if the plaintiff can prove no set of facts in support of its claims that would entitle
it to relief. See Conley v. Gibson, 355 U.S. 41, 45-46 (1957). A plaintiff need not plead facts or
the elements of a claim, with those exceptions specified in Rule 9. Instead, a plaintiff need only
plead the bare minimum facts necessary to put a defendant on notice of the claim so that the

defendant can file an answer. See Swierkiewicz v. Sorema, 534 U.S. 506, ___ (2002) (Sorema);



, oo oTM

violation. H. Voortman, in concert with Voortman, caused the program to be terminated,
depriving and defrauding the Plaintiffs of income. The Defendants terminated the program as
part of a conspiracy to deprive the Plaintiffs of commissions and to enhance the appearance of
Voortman’s financial statements for purposes of having a more favorable financial picture to
potential buyers of Voortman.

To state a cause of action under RICO, Plaintiffs must allege with particularity (1)
conduct (2) of an enterprise (3) through a pattern of racketeering activity. Richards v. Combined
Ins. Co. of America, 55 F.3d 247, 249 (7th Cir. 1995); R.E. Davis Chemical Corp. v. Nalco
Chemical Co., 757 F.Supp. 1499, 1516 (N.D.Ill. 1990) (Davis).

Defendants argue that the RICO claim should be dismissed because the Plaintiffs failed to
allege a racketeering offense as enumerated in 18 U.S.C. § 1961(1).

Section 1961(1) identifies criminal conduct that constitutes “racketeering activity”. The
criminal conduct includes violations of the Hobbs Act, 18 U.S.C. § 1981(1)(B). In the instant
case, the Plaintiffs have pled that Defendants’ conduct constituted a violation of the Hobbs Act.'
However, the alleged conduct of the Defendants fails to support the alleged violation of the
Hobbs Act. The court examines a complaint as a whole in analyzing a motion to dismiss and
need not ignore facts alleged in the complaint that undermine a plaintiff’s claim. See Slaney v.
International Amateur Athletic Fed., 244 F.3d 580, 597 (7" Cir. 2001).

The Hobbs Act prohibits the interference with commerce by robbery or extortion or

attempts or conspiracy to interfere with commerce by robbery or extortion. 18 U.S.C. § 1951(a).

'The Plaintiffs also allege a violation of the Illinois Crimina] Code. However, such
violations are not included as racketeering activity under Section 1961(1).

12