It is easy for a company to claim to have the exclusive right to distribute products in certain territories; however, it is much more difficult to plead and prove such claims. Often, companies claim exclusive sales territories without a legal basis to do so in an attempt to scare off lawful competition.
That is what happened to one of our clients recently, a nation-wide distributor of specialized snack products. A competing distributor filed a lawsuit in the United States District Court for the Northern District of Illinois alleging intentional interference with prospective economic advantage and violations of the Illinois Deceptive Trade Practices Act. The plaintiff claimed exclusive territory rights in locations where our client did business. Those claims were quickly dismissed after attorneys Michael Shapiro and Michael Tomlinson persuaded the court that no exclusive territory contract existed. The court granted the motion to dismiss before it was necessary to engage in costly discovery or further litigation. The court’s ruling can be found at Midland Distribution, Inc. v. Zest US Wholesale, Inc., No. 21 C 1403, 2021 WL 4745265 (N.D. Ill. Oct. 12, 2021).