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Court Watch

By Susan H. Morton and David W. Oppenheim
November 08, 2004

Carvel's Supermarket Sales Program Was Not Tortious Interference

Several Carvel franchisees sued Carvel Corporation in federal court, complaining of the distribution of Carvel's products through supermarkets that competed with the franchisees. Juries awarded damages to three franchisees on tort and contract claims, and Carvel appealed to the U.S. Court of Appeals for the Second Circuit. That court certified the question of whether the franchisees had a valid tort claim for “interference with prospective economic relations” to the New York Court of Appeals, which has held that they do not have such a claim. Carvel Corporation v. Elizabeth A. Noonan, et al., __ N.E.2d __, 2004 WL 2320368 (N.Y. Ct. App. 2004).

Until the early 1990s, when Carvel adopted a “supermarket program,” Carvel ice cream was distributed only through franchised stores. The program called for sales to supermarkets by Carvel itself and by those franchisees that chose to participate in the program. Most franchisees chose not to participate.

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