The Franchise Memorandum

The U.S. District Court for the Western District of Louisiana has held that a wholesale distributor’s claims against R.J. Reynolds (“RJR”) under the Louisiana Unfair Trade Practices Act (“LUPTA”) were perempted and time-barred. Caldwell Wholesale Co., L.L.C. v. R.J. Reynolds Tobacco Co., WL 2209165 (W.D. La. May 11, 2018). The wholesaler, Caldwell, alleged that RJR violated the LUPTA by terminating in 2004 Caldwell’s status as a direct purchaser of RJR’s tobacco products (thereby depriving Caldwell of favorable pricing incentives) and denying Caldwell’s subsequent requests in 2011 and 2014 to reinstate the pricing incentives. Caldwell also alleged that this conduct constituted tortious interference with business relations because it forced Caldwell’s customers to go to other distributors to get better pricing facilitated by the incentives now denied to Caldwell.

RJR filed a motion to dismiss the claims, arguing that both the LUPTA claim and the tortious interference claim were perempted or time-barred because the LUPTA contains a one-year limitations period. Caldwell alleged that its claims were not perempted because RJR’s conduct constituted a continuous and ongoing tort. The court disagreed, concluding that each of RJR’s decisions in 2004, 2011, and 2014, to deny Caldwell the favorable pricing incentives, was a distinct and separate act that triggered the running of the statutory period. Since this 2017 action was commenced more than one year after the 2014 denial, the court found that the one-year limitations period had run and therefore granted RJR’s motion to dismiss.