Cookie and health bar companies work together with only verbal agreement, then it all crumbles.

Summary

Wholesale bakery earns millions baking health bars, but cookie company claims they had agreed to be partners in the bakery and that they were partly responsible for its success.

The Case

  • Case Name: Fantasy Cookie Corporation, a California Corporation; Joseph Semder; et al vs. Harold Rothman; Bar Bakers, LLC, a California Limited Liability Company; William Ross; et al and related cross complaint by Bar Bakers, LLC, a California Limited Liability Company; Harold Rothman; William Ross; vs. Fantasy Cookie Corporation, a California Corporation; Joseph Semder; Richard Semder, et al
  • Court and Case Number: Los Angeles Superior Court / BC578882
  • Date of Verdict or Judgment: Monday, March 16, 2020
  • Date Action was Filed: Thursday, April 16, 2015
  • Type of Action: Breach of Fiduciary Duty
  • Judge or Arbitrator(s): Hon. J. Stephen Czuleger
  • Plaintiffs:
    Fantasy Cookie Corporation, a California Corporation
    Joseph Semder
  • Defendants:
    Harold Rothman
    Bar Bakers, LLC, a California Limited Liability Company
    William Ross
  • Type of Result: Jury Verdict

The Result

  • Gross Verdict or Award: $10,845,000
  • Award as to each Defendant:

    On the joint venture agreement, and breach of fiduciary duty, and quantum meruit claims against Bar Bakers: $9,535,000

    On the breach of fiduciary duty claim against Harold Rothman: $650,000

    On the quantum meruit claim against Harold Rothman: $660,000

    Plaintiff Richard Semder and defendant Gary Jacobs were dismissed during trial for cost waivers. Defendants’ cross-complaint against Joseph and Richard Semder and Fantasy Cookie was dismissed on the first day of trial.

    Defendant RSR Consulting, LLC was dismissed before trial.

    The jury found for Ross on every cause of action against him and awarded him $96,173.09 in costs.

    Defendant William Ross was awarded $96,173.09 in costs by the Court as a prevailing party against plaintiffs. 

    Plaintiffs were awarded costs of $228,816.05 against Bar Bakers and Rothman.

  • Trial or Arbitration Time: 16 1/2 days
  • Jury Deliberation Time: 3 1/2 days (The courthouse closed due to COVID-19 on the last day of deliberations.)
  • Post Trial Motions & Post-Verdict Settlements: Motions by defendants Harold Rothman and Bar Bakers for New Trial and JNOV all denied (7/10/2020). Motion by defendant Bar Bakers LLC for attorney’s fees as prevailing party on Plainitffs’ claim for violation of the Independent Whole Representative Act was denied (7/24/20).

The Attorneys

  • Attorney for the Plaintiff:

    Buchalter by George J. Stephan, C. Dana Hobart, Robert S. Addison, Jr., Mancy Pendergrass, Pooya Sohi, and David Mark, Los Angeles

  • Attorney for the Defendant:

    Rosen Saba, LLP by Ryan Saba, Beverly Hills. (For Bar Bakers, LLC.)

    Yoffe & Cooper by Alex Yoffe, Manhattan Beach. (For Bar Bakers, LLC.)

    O’Melveny & Meyers, LLP, by Michael Yoder and Ashton Massey (For Harold Rothman, William Ross, and Gary Jacobs.)

The Experts

  • Plaintiff's Technical Expert(s):

    Jeffrey H. Kinrich, economics, Los Angeles.

    Dr. John L. Stanton, Ph.D., wholesale sales and commissions, Philadelphia, PA.

  • Defendant's Technical Expert(s):

    Henry Kahrs, economics, Orange.

    Alan D. Rodrigues, wholesale sales and commissions, Minnetonka, MN.

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.

Demands and Offers

  • Plaintiff §998 Demand: $3,500,000

Additional Notes

Special Damages Claimed - Future Lost Profits: Over $10 million by end of the existing manufacturing agreement.

Special Damages Claimed – Money owed for goods sold: $276,546.27. (Defendants paid the full amount due for goods, plus interest at 10% on the eve of trial.)

 

Disclaimer

This is not an official court document. While the publisher believes the information to be accurate, the publisher does not guarantee it and the reader is advised not to rely upon it without consulting the official court documents or the attorneys of record in this matter who are listed above.

© Copyright 2020 by Neubauer & Associates, Inc. All rights reserved. www.juryverdictalert.com