Court Opinion

ID: 146543
Source: CourtListenerOpinion
Date Created: 2010-05-15 00:01:37+00
Date Added: 2024-06-11T17:24:02.053971
License: Public Domain

FILED
                            NOT FOR PUBLICATION                            MAY 14 2010

                                                                       MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                      U .S. C O U R T OF APPE ALS

                            FOR THE NINTH CIRCUIT

JOHN R. ATCHLEY and MICHAEL                      No. 09-35275
GILROY,
                                                 D.C. No. 2:04-cv-00452-FVS
              Plaintiffs - Appellants,

       v.                                        MEMORANDUM *

PEPPERIDGE FARM INC., a Connecticut
corporation,

              Defendant - Appellee.

                    Appeal from the United States District Court
                       for the Eastern District of Washington
                    Fred L. Van Sickle, District Judge, Presiding

                       Argued and Submitted March 8, 2010
                               Seattle, Washington

Before: TASHIMA, FISHER and BERZON, Circuit Judges.

      John R. Atchley and Michael Gilroy (“Appellants”) appeal from a judgment

entered in a case arising from the purchase and operation of Pepperidge Farm

distributorships. We affirm in part and reverse in part and remand.

        *
        This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
      The district court erred in granting summary judgment to Pepperidge Farm

on Appellants’ Washington Franchise Investment Protection Act (“FIPA”) claim

by finding that they had not paid a franchise fee. Payments for “the mandatory

purchase of goods or services” are fees under FIPA. Wash. Rev. Code §

19.100.010(12); see also Blanton v. Mobil Oil Corp., 721 F.2d 1207, 1220 (9th

Cir. 1983) (holding under FIPA that the required purchase of unwanted goods

could be a franchise fee). Appellants argue that Pepperidge Farm effectively

required them to purchase goods by mandating inventory levels and controlling

pallet shipments and then requiring Appellants to pay for some product that went

stale prior to sale. The district court found that “Plaintiffs were never required to

purchase a set quantity of [Pepperidge Farm] product.” However, Appellants

submitted evidence to support their claim to the contrary. There is therefore a

genuine dispute of material fact precluding summary judgment.

      On the other hand, we affirm the grant of summary judgment to Pepperidge

Farm on Appellants’ Washington Business Opportunity Fraud Act (“BOFA”)

claim. We are skeptical that Washington state courts would adopt the district

court’s narrow construction of “seller” under BOFA. See Haberman v. Wash. Pub.

Power Supply Sys., 744 P.2d 1032, 1051-52 (Wash. 1987) (interpreting a similar

term of the Washington State Securities Act broadly in order to fulfill the

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“legislative purpose”). However, we need not reach this question because, as

Pepperidge Farm argues, it is not apparent that a distributorship is a business

opportunity under the Act, and Appellants have offered no counter-argument. See

Wash. Rev. Code § 19.110.020(1) (defining a business opportunity as “the sale or

lease of any product, equipment, supply, or service which is sold or leased to

enable the purchaser to start a business”).

      We also affirm the dismissal of Appellants’ negligent misrepresentation

claim as barred by the consignment agreement’s non-reliance clause. The

agreement is a fully integrated contract, subject to the parol evidence rule. See

Berg v. Hudesman, 801 P.2d 222, 230 (Wash. 1990). The agreement specifically

required distributors to remove stale product from store shelves and provided that

Pepperidge Farm had no obligation to accept stale goods. The balance of factors

the Washington courts have established bars reliance on other representations

concerning the stale product policy. See Stewart v. Estate of Steiner, 93 P.3d 919,

927 (Wash. Ct. App. 2004).

      Finally, the district court did not clearly err in finding that Pepperidge

Farm’s sale of Gilroy’s route was commercially reasonable. Pepperidge Farm

undertook efforts in excess of ordinary procedures for marketing a distributorship,

easily satisfying the standard for a commercially reasonable sale. See Wash. Rev.

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Code § 62A.9A-627(b)(1). “The fact that a greater amount could have been

obtained . . . at a different time or in a different method from that selected by the

secured party is not of itself sufficient to preclude the secured party from

establishing that . . . disposition . . . was made in a commercially reasonable

manner.” Id. § 515A.9A-627(a).

      AFFIRMED IN PART AND REVERSED IN PART AND

REMANDED.

      Parties shall bear their own costs.

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