Walgreens Sues Fitbit in Sales Contract Dispute

On November 1, drug store chain Walgreen Co., represented by A&G Law, filed a complaint against Fitbit, Inc. for breach of contract (Walgreen Co. v. Fitbit, Inc. 1:19-cv-07215). The complaint state that Fitbit breached its promises and obligations in its sales contract with Walgreens.

The lawsuit comes as Fitbit is set to be acquired by Google parent Alphabet. 

The underlying sales contract, known as the GTA, was effective as of February 1, 2012. The complaint alleged that “Fitbit sold personal fitness and body tracking electronic products (the ‘Tracker Products’) to Walgreens on a guaranteed-sale basis.”

Fitbit agreed to:

  • “[R]efund Walgreens to the extent that the Tracker Products did not meet agreed-to benchmarks and unsold units of Tracker Products were ultimately returned to Fitbit;”
  • “[R]epay Walgreens for units of Tracker Products that, consistent with the applicable written policies and contracts, were deemed unsaleable;”
  • “[P]ay Walgreens to participate in various promotions.”

Walgreens claimed that Fitbit failed to meet the agreed upon terms and at no point were any modifications to the contract agreed upon and signed. As a result of this breach, Walgreens has suffered damages of at least $140,116.14. Fitbit violated its contract with Walgreens when Walgreens returned at least 3,616 units of Tracker Products to Fitbit between August 2018 and March 2019. The return was authorized in agreement with the underlying contract but Fitbit refused to pay Walgreens for the incurred costs. Fitbit accepted the returns, which Walgreens had paid approximately $160,561.64 for with additional charges. According to Walgreens, they are owed at least $169,458.75, including those additional charges. Fitbit breached the contract because it has refused to pay Walgreens this amount. Fitbit’s refusal to pay Walgreens also occurred for the 41 units of unsaleable Tracker Products, which cost Walgreens approximately $1,603.76 and $6,984.91 for participation in promotions, as agreed upon in the terms of the contract.  

In total, Fitbit owes Walgreens $178,047.42, however as stated in the GTA, Walgreens has taken credits against Fitbit’s account with Walgreens to alleviate the damages reducing the owed amount to $140,116.14.

Walgreens also argues that when Fitbit accepted the 3,616 returned units, but refused to reimburse Walgreens for the units, Fitbit was unjustly enriched by Walgreens. Fitbit was similarly unjustly enriched from Walgreens payments of the 41 unsaleable units and promotional participation.