Cookie and bakery companies work together on health bar, until it all crumbles. $10 million, LA County

Facts and Background

• Facts and Background:

  Plaintiffs (and brothers) Joe and Rich Semder owned Fantasy Cookie, which made and sold cookies and nutritional bars to various retailers. Defendants Harold Rothman and William Ross had owned Bloomfield Bakery, which had made and sold similar items, including Clif Bar. Rothman and Ross had sold their company, Bloomfield Bakery, and could not compete for six years.

  In 2013, once the non-compete agreement from the sale of Bloomfield Bakery ended, Rothman and Ross became co-owners of Defendant Bar Bakers, LLC (“Bar Bakers”) whose purpose was to build and operate a state-of-the-art commercial baking facility. Rothman brought in Gary Jacobs, who had worked with Mr. Rothman on prior ventures and who was hired as president of Bar Bakers, to help launch the operation.

  When the non-compete ended, Mr. Rothman had an empty building but no customers as yet, while Joe Semder had a successful cookie company with current customer contacts.

   

• Plaintiff's Contentions:

  Plaintiffs had an agreement and were joint venture partners and were to receive half the profits, which terms were confirmed in substantial part by putting together a number of emails and texts (the texts were only discovered on a backup drive after the initial round of depositions were taken).

  Plaintiffs and defendants did explore the possibility of merging over the years, but no merger was ever reached. 

  Plaintiffs ultimately met with Kind Bar, negotiated and signed a non-disclosure agreement with Kind, introduced Kind’s people to defendants, and helped negotiate a manufacturing agreement between Kind and Bar Bakers. Bar Bakers received hundreds of millions of dollars from Kind from then until trial, reaping profits approximating $10 million. When plaintiffs asked to be paid, even offering alternative compensation arrangements to resolve matters, defendants paid plaintiffs zero. Defendants also failed to pay $276,546.27 due for goods sold to them by plaintiffs.

  Defendants called Daniel Lubetsky, the founder of Kind, who testified that he knew Harold Rothman from Clif Bar days; but during cross-examination, Lubetsky admitted that his pre-trial declaration was inaccurate in stating that other than introductory emails, Kind did not engage with Fantasy Cookie. Defendants also called Patrick Ozimek, the broker Kind hired to find a West Coast manufacturer to tout defendants’ experience in making nutritional bars, but during cross-examination, Ozimek admitted that despite exhaustive research regarding potential manufacturers, while plaintiffs were on his list of potentials, the Bar Bakers defendants were not, and that it was only through plaintiffs’ efforts that Kind was brought to Bar Bakers.

• Defendant's Contentions:

  There was no oral joint venture agreement. Plaintiffs and defendants were never partners. No money was owed to plaintiffs.

  Plaintiffs did not introduce anyone to defendants and defendants would have gotten the Kind business without plaintiffs’ help because of defendants’ experience.

  Defendants contended that the only agreement ever contemplated between the parties was a potential merger and it was in service of that merger that the parties worked together to fill the Bar Bakers’ facility with what the parties hoped would ultimately be joint customers. After months of negotiations, Joseph Semder ultimately walked away from the merger in order to sell Fantasy Cookie to a private equity firm for over $12 million and the merger was never consummated.  Defendants characterized plaintiffs’ suit as an effort to reap the monetary benefits of the merger without having to go through with the merger.

  During trial, plaintiff Richard Semder voluntarily dismissed his claims. Plaintiffs also voluntarily dismissed Jacobs on the tenth day of trial. Defendants paid the full amount due for goods of $276,546.27, plus interest at 10 percent, on the eve of trial. Plaintiffs’ claims against Bar Bakers, Rothman and Ross were submitted to the jury after a 17-day trial.