A Newton, Mass., shrimp supplier has filed a fraud and breach-of-contract lawsuit against BJ’s Wholesale Club, seafood broker Paul Dembling and Dembling’s company, Sinco of Belmont, Mass.
International Marketing Specialists (IMS) alleges that the three parties conspired to break up a deal IMS signed with BJ’s to sell the 184-store chain its shrimp products marketed under the Legal Sea Foods brand. Legal Sea Foods is not listed as a defendant in the suit.
The suit, filed on 9 September in Middlesex County Superior Court in Woburn, Mass., seeks unspecified damages. IMS said it suffered more than USD 1 million (EUR 684,000) in damages and remains in possession of about 256,000 pounds of unsold shrimp that BJ’s had agreed to buy. The unsold product includes 70,000 pounds of coconut shrimp at USD 3.90 a pound, 86,000 pounds of popcorn shrimp at USD 3.90 a pound and 100,000 pounds of panko shrimp at USD 4.50 a pound.
IMS is represented by Adam Rowe of the Boston law firm Crowe & Dunn.
The case dates back to February 2008, when Dembling said he wanted to try to broker a deal between IMS and BJ’s, and Dembling and IMS agreed that Dembling would represent IMS in dealing with BJ’s, according to the suit. In March 2008, Dembling; Morton Nussbaum and Todd Rushing of IMS; Maureen Hines, BJ’s VP of frozen perishables; and Bruce Graham, BJ’s executive VP of perishables, met at BJ’s Natick, Mass., headquarters. At the meeting, BJ’s said it wanted to purchase Legal Sea Foods brand shrimp from IMS; financial terms and logistics were also discussed.
From March to May 2008, IMS worked on developing a way to pack its shrimp to BJ’s specifications, according to the suit. Then BJ’s expressed an interest in converting its entire Berkley & Jensen line of shrimp products to IMS-produced shrimp. A BJ’s representative, Bonnie Volpe, asked IMS to maintain a sufficient supply “so as never to be unable to fulfill purchase orders,” and Dembling confirmed the request. According to the suit, Volpe assured Nussbaum that even if BJ’s stopped purchasing the line, BJ’s would not leave IMS with unsold shrimp earmarked for BJ’s.
In summer 2008, IMS began supplying BJ’s with Legal Sea Foods brand shrimp. However, Nussbaum, CEO of IMS, became concerned about Dembling’s business activities; Dembling had been convicted of tax evasion, according to the suit. Then, unbeknownst to IMS, Dembling and Sinco took steps to exclude IMS from its deal with BJ’s as well as Legal Sea Foods, including looking for other shrimp suppliers, alleges IMS.
In summer 2009, Dembling and Sinco negotiated secretly with Legal Sea Foods to become its exclusive marketing agent for the brand, excluding products from Blount Fine Foods.
IMS also alleges that the defendants took steps to interfere with the smoked fish program it was developing under the Legal Sea Foods brand; IMS invested more than USD 20,000 (EUR 13,680) in packaging and material for the program and would have earned more than USD 300,000 (EUR 205,200) annually by supplying BJ’s with smoked fish.
