On September 14, 1999, Veryfine sent a letter to Phlo's General Counsel, Anne Hovis, notifying her of the alleged breaches of contract and threatening to terminate the agreement if ongoing nonpayment of invoices was not cured within 30 days. Phlo also allegedly failed or refused to pay Veryfine's invoices. Furthermore, there was allegedly a complete failure to schedule any production runs in September or October within the time specifications of the Agreement. The Complaint sets out a pattern of late production orders or situations in which Phlo tried to reschedule (delay) delivery of portions of the product in each monthly period.
In particular, production in June had to be rescheduled several times, causing disruption to other scheduled production runs for Veryfine's other customers. These failures allegedly caused Veryfine to produce only a limited number of cases of product by the monthly deadlines. a May production order of only 39,000 cases), and repeated manufacturing disruption due to problems in delivery of Phlo's supplies to Veryfine's facility. Among the alleged repeated problems encountered were failure or refusal to provide production scheduling orders by the deadline, late provision of such scheduling orders, production orders that were well below the minimum (e.g. Veryfine's Complaint alleges that Phlo breached the Agreement almost from its inception.
The Agreement provided that it was to be construed and enforced in accordance with the laws of the Commonwealth of Massachusetts applicable to agreements made and to be performed entirely within Massachusetts. The term of the Agreement was one year beginning April 27, 1999. Payments were due within 14 days of Veryfine's invoice date and Veryfine had no obligation to manufacture products for Phlo during any period of time in which payments were overdue. If Phlo did not order the minimum number in a given month, it remained liable for the manufacturing fee for the unordered cases unless Veryfine was able to replace all or part of the production (in which case the fee would be waived or reduced). The Agreement mandated a minimum production order of 200,000 cases per month. Once such a schedule was furnished to Veryfine, it could only be altered by mutual written agreement. Pursuant to the Agreement, Phlo was required to provide a firm schedule of orders for the following month's production of its products (i.e. On April 27, 1999, Veryfine and Phlo entered into a written Contract Manufacturing & Packaging Agreement (the "Agreement") under which Veryfine agreed to manufacture and bottle beverages for Phlo using materials, ingredients, and supplies provided by Phlo and manufactured in accordance with Phlo's specifications. The following facts are taken from the Complaint, unless otherwise indicated. This memorandum sets out the reasons for that ruling. On February 3, 2000, after oral argument, this Court DENIED the Motion to Dismiss, Transfer or Stay. Phlo has brought this Motion to Dismiss, Transfer or Stay the action before this Court primarily on the grounds that venue is more appropriate in the Southern District of New York. Subject matter jurisdiction in both suits is premised on the diversity of the parties. The *18 New York State action was subsequently removed by Veryfine to the United States District Court for the Southern District of New York (the "Southern District"). The issue that was before this Court on oral hearing on February 3, 2000, concerned the existence of a duplicative lawsuit filed by the Defendant Phlo against Veryfine on October 26, 1999, in the New York State Supreme Court, exactly one day after this action was filed by Veryfine here in the United States District Court for the District of Massachusetts. ("Veryfine"), a Massachusetts corporation engaged in manufacturing fruit juices and other beverages under its own label and for sale under the labels of other companies, and Phlo Corporation ("Phlo"), a Delaware corporation with a principal place of business in New York City engaged in the business of selling iced teas, lemonades and fruit flavored beverages under the label "McCoy's." This case involves a contract dispute between Veryfine Products, Inc. Robert Ciociola, Somerville, MA, for Donald E.
Church, Salsberg & Schneider, Boston, MA for Phlo Corp. *17 Robert Ciociola, Somerville, MA, for Veryfine Products, Inc.
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