Suit targets ConAgra in dispute over snack - Omaha.com
Published Friday, January 24, 2014 at 1:00 am / Updated at 5:18 pm
Suit targets ConAgra in dispute over snack

Omaha food manufacturing giant ConAgra Foods has been sued by a California snack company that says it has been frozen out of its share of the market for peanut butter-stuffed pretzel treats.

Maxim Marketing Corp. filed the suit this week in Los Angeles County Superior Court, seeking $60 million in damages for breach of contract, plus additional amounts not specified.

The suit says ConAgra and California-based grocer Trader Joe's conspired to cut Maxim out of the picture when it came to peanut butter-stuffed pretzel sales, to divvy up the extra profits for themselves.

The suit alleges breach of contract and other commercial behavior Maxim alleges to be improper after ConAgra bypassed Maxim's distribution, selling directly to Trader Joe's. The suit says that violated earlier agreements.

ConAgra, employer of about 3,300 in the metro area, said it plans to fight the suit, which it said is without merit.

“Our long-standing commitment to operating our business in a responsible way means that our customers and consumers can feel good about the high-quality food we make,” spokeswoman Becky Niiya said in an emailed response to an inquiry.

Trader Joe’s said it would not comment on pending litigation.

The tussle is over bite-size pretzel snacks that enrobe a dollop of peanut butter. Maxim's suit says the company developed the peanut butter-filled pretzel snack in 1988. That's when the company said it began paying a food manufacturer to make the snack, reserving the right of sale to retailers for itself.

Things began to change in 2011. That's when ConAgra, the suit says, bought the company that Maxim hired to make the snacks. Last year, the suit says, ConAgra said it would stop making the pretzels for Maxim, and Trader Joe's said it would stop buying them.

Shortly thereafter, according to the suit, identical pretzels in identical packages began showing up on Trader Joe's shelves — made by ConAgra.

“Pursuant to the parties' implied-in-fact contract, Maxim and ConAgra agreed and understood that ConAgra, as the contract manufacturer, would not attempt to undercut Maxim's business relationship with its customers by selling peanut butter-filled pocket pretzels or other related pretzel products directly to Maxim's customers, such as Trader Joe's,” the suit says.

Maxim said in the suit it sold about $10 million of the snacks to the chain in the last year the two did business together. If eliminating Maxim reduced costs by cutting out a middleman, the suit says, consumers have not been the ones seeing the benefits.

“Both Trader Joe's and ConAgra increased their profits on peanut butter-filled pocket pretzels, but without reducing the price of peanut butter-filled pocket pretzels to the consumers at Trader Joe's,” the suit says. “The consumer still pays $3.79 for peanut butter-filled pocket pretzels. Now that Maxim has been eliminated, defendants have increased their profits from the sale of peanut butter-filled pocket pretzels.”

Contact the writer: Russell Hubbard

russell.hubbard@owh.com    |   402-444-3133

Russell Hubbard covers banking, financial services, corporate finance, TD Ameritrade, business lawsuits, bankruptcies and other economic and financial topics.

Developer wants to transform old Millard Lumber site with housing, commercial buildings
Dip in Nebraska economic index doesn’t reflect outlook
Post Holdings buys Michael Foods
Business digest: Target expands subscription service, adds discount
Rural Mainstreet Index finds slow growth
Earnings roundup: Chipotle says it won’t scare off customers with higher prices
BNSF to add trains to handle fertilizer
Walmart touts lower money transfer fees
In brief: Judge doesn’t make GM take cars off road
Airbnb event seeks Omaha-area hosts for Berkshire weekend, CWS
USDA offers aid for disasters that have driven up beef prices
Union Pacific's profits withstand challenging weather
Program gets students with disabilities on the job, ready for future
Nebrasks health officials to advertise jobs via drive-thru
New tenant moves in at old Omar Baking
Applications for U.S. jobless aid edge up to 304,000
Nebraska Crossing Outlets stores, layout
Garbo’s Salon at Midtown Crossing to expand, add loft
New First Data Corp. board member is latest JPMorgan alum
$600 million job-training effort to focus on skill sets
Original Recipe or Extra Crispy? Don't be chicken! Wear your dinner to prom with a KFC corsage
In brief: Bitcoin exchange faces liquidation
Summer concerts to start May 30 at Shadow Lake Towne Center in Papillion
Fed survey sees growth across U.S.
Janet Yellen signals that interest rates will remain low
Deadline Deal thumbnail
The Jaipur in Rockbrook Village
Half Off Fine Indian Cuisine & Drinks! $15 for Dinner, or $7 for Lunch
Buy Now
< >
SPOTLIGHT »
Inside Business
To submit an announcement for "Inside Business", click here. For questions call (402) 444-1371 or e-mail announcements@owh.com.
WORLD-HERALD ALERTS »
Want to get World-Herald stories sent directly to your home or work computer? Sign up for Omaha.com's News Alerts and you will receive e-mails with the day's top stories.
Can't find what you need? Click here for site map »