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R.C. Beeson, Inc. v. Coca-Cola Co.

September 26, 2008

R.C. BEESON, INC., PLAINTIFF,
v.
THE COCA-COLA CO., JOSEPH E. SEAGRAM & SONS, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Sheridan, U.S.D.J.

OPINION

This matter comes before the Court on Defendants' motion to dismiss and Plaintiff's cross motion for summary judgment. The plaintiff is R.C. Beeson, Inc., a New Jersey corporation. Defendants are four out-of-state corporations: (1) the Coca-Cola Company ("Coca-Cola"), (2) Pernod Ricard USA, LLC ("Pernod"), (3) Diageo North America, Inc. ("Diageo"), and (4) Seagram & Sons, Inc. ("Seagram"), which no longer exists and is a predecessor in interest of the first three defendants. Plaintiff brings two claims: breach of contract and unjust enrichment.

Beeson was a consultant for Seagram, and in or around 1982, Beeson invented and developed Seagram Mixers (that is Seagram's ginger ale, tonic water, etc.) for Seagram, which then granted non-party Coca-Cola Bottling Company of New York, Inc. ("Coke NY")*fn1 a license to sell Seagram Mixers in exchange for an agreed-upon royalty. Seagram then negotiated Beeson's interest payments from sales of Seagram Mixers, and the two parties agreed that if there was a material change in the license fees, upon which Beeson's interest was based, Seagram would negotiate in good faith with Beeson the amount of interest to be paid. In 1993 Seagram made a change to its licensing fees, which in turn changed the amount of interest it paid to Beeson. Plaintiff noticed a change in its interest payments and began inquiring about and disputing these payments starting at least as far back as the mid 1990s. Beeson continued to dispute the payments, but Beeson also continued to receive interest payments for sales of Seagram Mixers. On October 4, 2007, Beeson filed the complaint at issue.

This begs the question of why Beeson waited so long to bring suit. This Court must decide whether the statute of limitations has expired, which will determine whether it has jurisdiction over this matter or whether it must dismiss under Federal Rule of Civil Procedure 12(b)(6). The governing statute of limitations for both claims is six years, pursuant to New Jersey law for recovery under contractual claims. Plaintiff argues that after the alleged material change in royalties, every time Defendants made an interest payment to Beeson, a new cause of action accrued, triggering six more years during which Plaintiff could bring suit. Plaintiff seeks six years worth of damages dating back from when it filed suit. Defendants counter that if Beeson had a cause of action, it only happened once--in or around 1993; thus, Plaintiff is time barred from bringing this suit. This Court finds that the statute of limitations on Plaintiff's claims lapsed long ago and will dismiss this action under Federal Rule 12(b)(6).

I.

The facts are largely undisputed. On January 1, 1982, Beeson entered into a consulting agreement (the "1982 Consulting Agreement") with Seagram to assist it with its beverage business as a consultant. The contract offered Plaintiff monthly compensation, and additionally, the parties agreed that they would "negotiate in good faith" the interest Seagram would pay to Beeson for each project Beeson developed or brought to Seagram. ¶ 3.

Later in 1982, Beeson created, invented, and developed Seagram Mixers for Seagram, which then entered into an agreement dated October 8, 1982 (the "1982 License Agreement") with Coke NY, by which Seagram granted Coke NY licenses to use Seagram's trademarks to sell Seagram Mixers.*fn2 Article IX of the agreement provided that Coke NY would pay to Seagram a royalty of $.05 for each case of Seagram Mixers sold. Additionally, Article IX provided that this royalty "shall increase at a compound rate of ten percent per year...."

By a second agreement dated October 8, 1982 (the "1982 Interest Agreement"), Seagram honored its earlier promise from the 1982 Consulting Agreement to negotiate Beeson's interest payments. The 1982 Interest Agreement provided that the interest to be paid to Beeson in accordance with Paragraph 3 of the 1982 Consulting Agreement for Seagram Mixers would be twenty percent of the royalties received by Seagram from Coke NY under Article IX of the 1982 License Agreement. So pursuant to these terms, Beeson would receive twenty percent of the $.05 per case royalty payment, which would increase at ten percent per year, that Seagram received from Coke NY.

The 1982 Interest Agreement further provided that if Seagram made a material change to the Seagram Mixers royalties, Seagram would "negotiate in good faith" with Beeson its interest payments. The 1982 Interest Agreement states:

[I]n the event that Seagram and Coke NY amend or supplement the License Agreement in a manner which materially changes the amount of the royalties payable to Seagram pursuant to Article IX, Seagram shall negotiate in good faith with [Beeson] the amount of interest to be received by [Beeson] under the amended or supplemented License Agreement, which shall be in lieu of the interest granted hereby. (emphasis added).

Coke NY subsequently assigned its rights under the 1982 License Agreement for the Seagram Mixers to non-party Premium Beverages, Inc. ("Premium"). Seagram and Premium entered into a license agreement, which amended the 1982 License Agreement as of January 1, 1986 (the "1986 License Agreement"). This agreement similarly provided in its Article IX that the royalties Premium paid to Seagram would increase at a compound rate of ten percent per year commencing on November 1, 1985.

Beeson and Seagram then signed a new agreement dated February 18, 1987 (the "1987 Interest Agreement"), which extended the terms of the 1982 Interest Agreement to sales in Canada and confirmed the terms of the agreement for sales in the United States. That is, Seagram agreed to pay to Beeson twenty percent of moneys received by Seagram for sales of Seagram Mixers in the United States and Canada.

Plaintiff's alleged cause of action arises out of an agreement dated February 1, 1993 (the "1993 License Agreement") between Seagram and Premium. Where under the 1982 and 1986 License Agreements there was a ten percent increase in royalty payments per year, the 1993 License Agreement stipulated for a yearly increase equal to the percentage increase in the Consumer Price Index ("CPI") for nonalcoholic beverages. Paragraph 6(a) of the 1993 License Agreement states in relevant part:

Such royalty shall increase on November 1, 1993, and thereafter on November 1 each year, by an amount equal to the percentage increase in the Consumer Price Index for all Urban Consumers: U.S. City average, Nonalcoholic ...


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