US court limits time period Aryzta could be liable for damages in contract dispute

CUISINE de France owner Aryzta has secured an important victory in its legal battle in the US with a former customer.

The court overseeing the case has limited the time period for which the Swiss-Irish firm might be liable for damages in a major contract dispute.

Aryzta was sued by Tennessee-based McKee Foods in 2017 for an alleged breach of contract.

Family-owned McKee has claimed that it has lost “millions of dollars” in revenue because Aryzta was allegedly unable to fulfil its manufacturing orders at a US facility.

McKee sells well-known cake snack brands in the US such as Little Debbie. It has annual sales of about $1.5bn (£1.2bn).

Last year, Aryzta moved to have the amount of damages it would be potentially liable for if it loses the legal fight, limited to those potentially incurred before and during a 90-day notice period for the termination of a contract between the two firms.

McKee had argued with the court that the time period for its damages claim should not be limited, insisting that it has continued to lose profits because of Aryzta’s alleged failures under the contract.

But the court has sided with Aryzta, whose chief executive is Kevin Toland.

“If McKee Foods prevails on its breach of contract claim against Aryzta, McKee Foods’ damages, if any, must be limited to damages accrued before and during the 90-day notice period following McKee Foods’ termination of the outside manufacturer’s agreement,” the court ordered.

It also dismissed McKee Foods’ motion to have a counterclaim lodged by Aryzta dismissed.

In its counterclaim, Aryzta has alleged that none of the alleged breaches committed by it under its contract with McKee Foods qualify as a breach that was immediately terminable and that the US firm should have given 90 days’ notice.

Aryzta claims that the alleged breach of the manufacturing agreement by McKee has resulted in Aryzta suffering “substantial damages”, which continue.