Chicago Business Litigation Lawyer Blog
After the manufacture of granola bars went awry, the company that hired the manufacturer sued the manufacturer alleging breach of contract among other claims. The granola company alleged that the manufacturer failed to supply the required number of granola bars and supplied bars that were defective. The suit was filed in Illinois, and the defendant manufacturer, headquarters in Illinois, attempted to transfer the case to Michigan where the production of the bars had occurred. The trial court denied this motion, finding that Illinois was an appropriate forum, and the appellate panel of the Illinois Appellate Court agreed and affirmed.
18 Rabbits, Inc. is a California corporation with headquarters in San Francisco, CA. Hearthside Food Solutions is a Delaware corporation with headquarters in Downers Grove, IL. 18 Rabbits hired Hearthside to toll manufacture its premium organic granola bars, in a process by which 18 Rabbits would supply the raw materials for the bars, Hearthside would manufacture them, and 18 Rabbits would own the completed product. In August 2016, the two companies executed a mutual confidentiality agreement.
The two companies met shortly thereafter to discuss the possibility of Hearthside manufacturing the bars. Beginning in September 2016, Hearthside’s Illinois-based managers participated in multiple, weekly telephone calls with 18 Rabbits. Hearthside represented that it could manufacture the bars to 18 Rabbits’ specifications and to satisfy all of 18 Rabbits’ customers’ orders for bars.
In November of that year, 18 Rabbits paid Hearthside to conduct a low-quantity trial run of two types of bars. The bars conformed to 18 Rabbits’ expectations, and 18 Rabbits decided to shift all of its production to Hearthside. 18 Rabbits paid Hearthside tolling costs to complete three production runs of bars beginning in April 2017 and supplied Hearthside with all of the raw materials for each run. The raw materials were worth $600,000, and the toll fees cost $437,782.68. Hearthside partially performed under the contract, delivering fewer bars than promised, delivering nonconforming bars, and delivering sealed cases of commingled conforming and nonconforming bars. Ultimately, Hearthside delivered about $551,864.42 worth of conforming bars. Hearthside later paid 18 Rabbits $110,213.28 in partial compensation.
In January 2019, 18 Rabbits sued Hearthside alleging breach of contract, intentional misrepresentation/common-law fraud, negligent misrepresentation, and promissory estoppel. In March 2019, Hearthside moved to dismiss the complaint alleging forum non conveniens. Hearthside argued that the bars were manufactured in Michigan; the courts in Kent County, Michigan were far less congested than those in Du Page County; and neither public nor private interest factors were served by litigating the claims in Du Page. The trial court denied the motion, and granted Hearthside leave to file an interlocutory appeal. Hearthside then appealed.
The Illinois appellate court panel began by citing 735 ILCS 5/2-101, stating that the Illinois venue statute provides that an action must be commenced in the county of residence of any defendant who is joined in good faith or in the county in which the cause of action arose. The panel noted that the forum non conveniens doctrine is founded in considerations of fundamental fairness, and can be invoked to determine the most appropriate forum if multiple forums qualify.
The panel then determined that the factors weighed somewhat in 18 Rabbits’ favor. The panel stated that a plaintiff’s chosen forum is presumed to be appropriate, and the trial court reasonably places some weight on 18 Rabbits’ choice to file suit in Illinois, the location of Hearthside’s headquarters. The panel noted that Illinois employees allegedly changed the contract terms during the production runs, and the allegedly defective bars were currently located in California. The panel stated that the fact that production occurred in Michigan was not insignificant, but it did not strongly favor that forum over Illinois. Finally, the panel stated that Illinois was the most convenient forum for the required witnesses, as only 3 of 12 possible witnesses resided in Michigan and travel for other witnesses to Chicago was less expensive and time-consuming than travel to Grand Rapids, Michigan. The panel, therefore, determined that the trial court did not abuse its discretion in denying the motion, and it affirmed the decision of the trial court.
You can read the Court’s entire ruling here.
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