Opinion ID: 76624
Heading Depth: 2
Heading Rank: 1

Heading: facts

Text: 2 From 1974 to 1997, Defendant Bracciale was employed by Kraft Foods (Kraft). Bracciale held sales positions, ultimately advancing to the position of Regional Sales Manager at Kraft. 3 In the course of its normal business, Kraft offers discounted prices to certain customers in exchange for various promotional and advertising activities (promotional activities). From 1994 to 1997, Kraft offered three kinds of deals to customers: (1) Merchandise discounts, whereby the customer received a discounted price in exchange for negotiated promotional activity; (2) Purchase Only discounts, whereby the customer received a discounted price in exchange for merely purchasing the food product; and (3) Purchase and Merchandise discounts, whereby the customer received a discounted price in exchange for purchasing the food product and agreeing to certain promotional activity. Kraft permitted only certain authorized customers to participate in its discount programs. 4 Under these discount programs, authorized customers would purchase Kraft food products at full price. The customer, however, would receive money back from Kraft by submitting Deal Payment Authorization (DPA) forms to Kraft. The DPA forms required Kraft to reimburse the customer for the difference between the full purchase price and the previously negotiated discount price. This process was known as bill-backs. 5 A Kraft senior executive, such as Bracciale, would then approve the bill-back and pay the customer the required amount. Where the sale included a Merchandise or Purchase and Merchandise discount, the customer was obligated to use some of the bill-back money to market Kraft's products. For example, bill-back money could be used to erect Kraft displays or to provide new product sampling in grocery stores. 6 During his employment with Kraft, Defendant Bracciale met David Weinbaum, who operated D&K, a company which supplied food products to smaller food stores and other retail establishments. D&K was not authorized to receive discounted food prices under any of Kraft's three discount programs. However, due to his acquaintance with Weinbaum, Bracciale arranged for D&K to obtain Kraft goods at the discounted prices offered to an authorized customer, McLane Company, Inc. (McLane). Bracciale encouraged McLane to divert to D&K some of the food products that it had bought from Kraft at a discounted price. This allowed D&K to purchase those products at McLane's discounted price, a price much lower than that which D&K would have paid for the products on the open market. 7 Bracciale and Weinbaum shared the profits that D&K enjoyed as a result of this diversion scheme. Kraft's internal policy, however, barred Bracciale from (1) self-dealing or making arrangements with its customers to profit personally from Kraft sales, and (2) participating in the diversion of Kraft products.