The effect is to limit competitors to selling grocery items in 500 square feet or less of their retail space.
In 2011 WD filed lawsuits against Big Lots, Dollar General and Dollar Tree claiming they had violated WD’s exclusive rights in 97 stores in five States. The District Court denied WD’s claim in 43 stores, but allowed the litigation to proceed in the remaining 54 sites.
The Court reviewed the non-compete covenants and focused on the prohibition that precluded other stores from selling groceries. Lacking a definition of the term groceries in the leases, the District Court determined that groceries means “food items” and “beverages, including but not limited to bottled water, soda, and energy and coffee drinks, but excluding alcoholic beverages.”
Based on those definitions, the Court granted WD injunctive relief in 37 of the 54 stores. WD appealed.
The Circuit Court took a broader definition of the term groceries, and concluded that it includes not only food items but also “many household supplies” as well as fixtures and proportionate aisle space.
It took this federal court 35 pages to chastise the lower court and one lawyer – unnamed here – who represented Big Lots and Dollar General. Ultimately the Circuit Court determined that an expanded definition of groceries should apply. That definition would include “food (excluding prepared foods) and beverages (excluding alcoholic beverages) and many household supplies (as soap, matches, [and] paper napkins).”
And that “household supplies” means items “associated with the preparation and service of food, as well as the maintenance of a clean kitchen.”
See Winn-Dixie Stores, Inc. v. Dolgencorp, LLC, Big Lots Stores, Inc. and Dollar Tree Stores, Inc.; No 15-12990; United States Court of Appeals for the 11th Circuit, January 31, 2018: http://media.ca11.uscourts.gov/opinions/pub/files/201512990.pdf.
Stuart A. Lautin, Esq.*
* Board Certified, Commercial (1989) and Residential (1988) Real Estate Law,
Texas Board of Legal Specialization
Licensed in the States of Texas and New York