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Affiliated Foods Midwest Cooperative, Inc. v. Supervalu Inc.

United States District Court, D. Nebraska

August 3, 2017

AFFILIATED FOODS MIDWEST COOPERATIVE, INC., a Nebraska corporation, and ASSOCIATED WHOLESALE GROCERS, INC., Plaintiffs,
v.
SUPERVALU INC., a Delaware corporation; Defendant. BOROWIAK IGA FOODLINER, INC., Plaintiff/Counter Defendant,
v.
AFFILIATED FOODS MIDWEST COOPERATIVE, INC., and ASSOCIATED WHOLESALE GROCERS, INC., Defendants/Third-Party Plaintiffs/Counter Plaintiffs.
v.
TREVOR BOROWIAK, Third Party Defendant.

          MEMORANDUM AND ORDER

          Joseph F. Bataillon, Senior United States District Judge

         This matter is before the court on the parties' (Counter Claimant Affiliated Foods Midwest Cooperative, Inc., Defendants Affiliated Foods Midwest Cooperative, Inc., Associated Wholesale Grocers, Inc., Third Party Plaintiff Affiliated Foods Midwest Cooperative, Inc.) motion to strike jury trial request, Filing No. 37, in 16-cv-00466.[1]Borowiak objects, Filing No. 54 in the Lead case, and Filing No. 61 in the Member Case, to the Order dated May 30, 2017, Filing No. 48, granting the Motion to Strike Plaintiff's Jury Demand in the Lead Case filed by Affiliated Foods Midwest Cooperative (“AFM”) and Associated Wholesale Grocers (“AWG” and collectively with AFM, “AFM/AWG”) (Filing No. 37). These objections are filed pursuant to Fed.R.Civ.P. 72(a) and NECivR 72.2(a). Defendant Supervalu filed a request for a jury trial in the Member Case, 16cv465. Filing No. 1, ¶ 11 at 2, and in its answer, Filing No. 33 at 7 and its answer to amended complaint, Filing No. 58 at 10. In the Lead case, Borowiak filed a request for a jury trial in its complaint, Filing No. 1.

         The Supreme Court has construed the statutory grant of authority conferred on magistrate judges under 28 U.S.C. § 636 to mean that nondispositive pretrial matters are governed by § 636(b)(1)(A) and dispositive matters are covered by § 636(b)(1)(B). Gomez v. United States, 490 U.S. 858, 873-74 (1989); see alsoFed. R. Civ. P. 72(a). On review of a decision of the magistrate judge on a nondispositive matter, the district court may set aside any part of the magistrate judge's order that it finds is clearly erroneous or contrary to law. 28 U.S.C. § 636 (b)(1)(A); Fed.R.Civ.P. 72(a). With respect to dispositive motions, a magistrate judge lacks authority to do anything but make recommendations, which are subject to de novo review. See e.g., United States v. Lothridge, 324 F.3d 599, 600 (8th Cir. 2003); 28 U.S.C. § 636(b)(1).

         BACKGROUND

         Plaintiff AFM is in the business of selling grocery products and other items to retail grocery stores. AFM regularly entered into long-term supply agreements with many of its customers. As part of AFM's agreement to loan money to its customers, the parties agree that for a certain period of time AFM will supply all the groceries to the customer. SuperValu Inc. is similarly in the business of selling grocery products to retail grocery stores. They are direct competitors of AFM. Borowiak owns seven retail grocery stores. At all material times herein, Borowiak entered in to a Supply Agreement with AFM, which made AFM the primary grocery supplier to Borowiak. The Agreement was to last for 5 years. Borowiak agreed to buy at least $85, 000, 000 in goods from AFM. AFM decided to sell its business in late 2016. Once the announcement of a possible sale occurred, SuperValu began working with Borowiak to become its supplier.[2]

         On October 12, 2016, a complaint filed by AFM filed against SuperValu in the District Court of Madison County, Nebraska (Member Case) was removed to federal court. The complaint alleged SuperValu, by supplying fresh meat and other groceries, tortiously interfered with certain agreements between AFM and Borowiak. See Filing No. 1 at 1. Borowiak alleged that there had been a “failure or refusal” by AFM “to provide fresh meat and timely deliver produce” and AFM has been “unable or failed to consistently serve Borowiak's needs for other foodstuffs and items sold by retail grocers such as the $1.00 product offering and cross-dock products.” See Filing No. 11, at 3. As a result Borowiak purchased all fresh meat for its seven stores from SuperValu. Id. In addition, Borowiak also learned AFM was selling substantially all of its assets to Associated Wholesale Grocers, Inc. (“AWG”) and Borowiak would, thereafter, be required to become an AWG member to receive the grocery items previously provided by AFM. Id. at 2. Borowiak would be “required to accept terms and conditions different than those in the Agreement relating to the valuable patronage rebate Borowiak was then receiving from AFM”. See Filing No. 12-2 at 4-5.

         On October 12, 2016, Borowiak filed suit (Lead Case) against AFM for breach of contract, breach of the covenant of good faith and fair dealing, and for violations of the Nebraska Consumer Protection Act (“NCPA”), and Borowiak requested a jury trial. Filing No. 1. AFM filed a Counterclaim against Borowiak, alleging Borowiak defaulted under the Supply Agreement and Promissory Note, and filed a Third Party Complaint against Trevor Borowiak for breach of the guaranties, among other causes of action. Filing No. 44. AFM/AWG filed the instant motion to strike Borowiak's demand for jury trial, arguing that Borowiak waived its right to a jury trial in each of the above agreements executed between the parties. Borowiak filed a complaint and demand for jury trial. Filing No. 1. AFM/AWG moved to strike the demand for jury trial. Filing No. 37. Thereafter, in their amended answer, AFM/AWG requested a jury trial on all matters that are triable to a jury. Filing No. 44, at 28. The Amended Answer with AFM/AWG's jury demand asserts claims for breach of contract relating to the three (3) agreements relied upon in AFM/AWG's motion to strike, as well as claims for violation of the Nebraska Consumer Protection Act, unjust enrichment and related business torts. Filing No. 44. The magistrate judge granted the motion to strike. Filing No. 48. SuperValu, a defendant in the Member case, demanded a jury trial, Filing No. 33, and no motion to strike was ever filed.

         DISCUSSION

         Borowiak objects to the findings of the magistrate judge, in particular, the magistrate judge's determinations that:

a. “[T]he Eighth Circuit Court of Appeals has repeatedly stated that ‘the right to a jury trial in the federal courts is to be determined as a matter of federal law in diversity as well as other actions'” (Filing No. 48 at 4).
b. “Courts in the Eighth Circuit apply the federal ‘knowing and voluntary' test to determine whether a jury trial has been waived” (Filing No. 48 at 5).
c. “Borowiak argues enforcement of the clauses are procedurally unenforceable” (Filing No. 45 at 5).
d. “Borowiak knowingly and voluntarily executed waivers of a jury trial on its claims in this case” (Filing No. 48 at 5).
e. “[AFM/AWG] did not clearly, unequivocally, and decisively waive its right to enforce the valid contractual waivers of a jury trial in this matter. It is clear that [AFM/AWG] intended at the outset of this litigation to enforce the jury waiver clauses. . . . The Court finds [AFM/AWG's] conduct does not amount to a clear, unequivocal, decisive waiver of the valid contractual jury waivers” (Filing No. 48 at 6).
f. “The Motion to Strike the Plaintiff's Jury Demand in the Lead Case (Filing No. 37) is ...

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