DocketNumber: 15–CV–6360 (MKB) (RLM)
Judges: Brodie
Filed Date: 12/11/2017
Status: Precedential
Modified Date: 10/18/2024
Plaintiff LPD New York, LLC ("LPD") commenced the above-captioned action against Defendants Adidas America, Inc. ("Adidas America") and Adidas AG on November 5, 2015, bringing claims for breach of contract, defamation and unjust enrichment. (Compl. ¶¶ 1, 104-16, 126-31, Docket Entry No. 1.) LPD also sought relief under the Declaratory Judgment Act,
By order dated April 6, 2016, the Court referred both motions to Chief Magistrate Judge Roanne L. Mann. (Order dated Apr. 6, 2016.) By report and recommendation dated August 25, 2016 (the "R & R"), Judge Mann recommended that the Court grant Adidas America's motion to dismiss LPD's breach of contract and declaratory judgment claims, deny the motion as to LPD's defamation and unjust enrichment claims, and deny LPD's motion for partial summary judgment. (R & R, Docket Entry No. 39.) LPD objected to the R & R in part. (Pl. Obj. to the R & R ("Pl. Obj."), Docket Entry No. 49.) Adidas America did not file objections.
By Memorandum and Order dated March 27, 2017 (the "March 2017 Decision"), the Court adopted Judge Mann's recommendations in their entirety. See LPD New York, LLC v. Adidas Am., Inc. , No. 15-CV-6360,
LPD now moves the Court to reconsider the portion of the March 2017 Decision dismissing LPD's breach of contract and declaratory judgment claims, and alternatively moves the Court to certify the contract formation issue for appeal in the event the Court denies the reconsideration motion. (Pl. Mot. for Recons. ("Pl. Recons. Mot."), Docket Entry No. 59; Pl. Mem. in Supp. of Pl. Recons. Mot. ("Pl. Recons. Mem."), Docket Entry No. 60.) For the reasons discussed below, the Court denies LPD's reconsideration motion in its entirety.
I. Background
The Court assumes familiarity with the facts as detailed in the R & R and the March 27, 2017 Decision and provides only a summary of the pertinent facts and procedural background. See LPD ,
a. Factual background
LPD is a fashion company that creates "streetwear" products. (Compl. ¶¶ 15-16.) In October of 2013, Defendants contacted LPD to discuss a possible "collaboration" in which LPD would create unique streetwear-style designs for Defendants' brand and five National Collegiate Athletic Association ("NCAA") basketball teams sponsored by Defendants.
On November 17, 2013, LPD asked Defendants how the pieces from the Classics Capsule "should/will be branded (with both LPD and Adidas logos) and how/where they will be distributed (in Adidas' stores/distributors or otherwise)." (Id. ¶ 24.) Defendants responded that "the rules are really what [the parties] want them to be" because the project was the first time Adidas' basketball division was "coordinating with a fashion brand." (Id. ¶ 25.) Defendants subsequently proposed that:
*280Branding
Due to NCAA rules the uniforms can only be branded adidas. So our actual on court product we will be badged as adidas.
There is an opportunity for co-branding on your retail pieces and our Satin Jacket. Our designers could collab for a cool jocktag or woven label that would be badged with both logos.
If you want to just badge your product LPD only we understand the option but we would want to at least show a true collaboration to demonstrate "court to street."
Retail
This part is also new. But after having [internal] discussion[s] ... we have a few options of where we would retail.
Adidas.com-Our own retail would love to feature this [as] an exclusive collection. Your retail pieces are at a price point where we could feature our retail shorts with your retail pieces and make it an exclusive release online.
Your retailers-because these pieces are at a higher price point than our sales reps deal with your access to boutique and footprint accounts.
NYC stop-in-shop. We would do an in-store collab where we split the store in half with your retail and some of our higher price point retail and highlight this collection but gain momentum for both brands.
Or the option of all [three]. Let me know your thought as I think we will have to write our rules because this has not happened with an actual on-court kit before.
(Id. (alterations in original).) LPD replied that it liked the idea of the collaboration and wanted to get to work on the tags and labels for the pieces, was interested in exploring all of the proposed retail options, and could get to work on "visuals" as soon as it had "samples of the first approved products." (Id. ¶ 26.) In addition, LPD asked if "it would be possible to get a letter of intent for the collaboration." (Id. ) Defendants thought "a letter of intent [would be] perfect" and agreed to "work on putting some of this into a document with the purpose of this along with details." (Id. ¶ 27 (alterations omitted).)
On January 13, 2014, LPD informed Defendants that it was going to begin creating samples from the Classics Capsule design proposal. (Id. ¶ 29.) On February 25, 2014, LPD sent Defendants "a concept proposal for the Collaboration Capsule." (Id. ¶ 33.) By March of 2014, Defendants had not responded, and LPD followed up to get Defendants' feedback regarding the Collaboration Capsule and a letter of intent. (Id. ¶ 34.) A week later, Defendants replied, stating that they approved of the designs for the Collaboration Capsule and that "[t]he letter of intent is a work in progress" due to some "development[al] boundaries." (Id. ¶ 35.) Defendants also provided "some key next steps," which included finalization of the "[l]etter of intent." (Id. ) LPD then asked how the parties would divide or allocate the "sales and profits," to which Defendants responded that the products from the Classics Capsule would be provided to the NCAA teams at no cost. (Id. ¶¶ 36-37.) Defendants further stated that their licensed apparel division would purchase the Collaboration Capsule materials related to the NCAA teams, the "royalties [from those sales] would go to the schools," and the "capsule collection profits would likely be primarily profits to LPD" because Defendants' products were mainly "on court school products." (Id. ¶ 37.) Defendants also stated that the details of the collaboration would be finalized and confirmed "once the mission statement is complete."
*281(Id. ) In response, LPD asked that Defendants "just let [LPD] know the specifics and that everything is confirmed once [Defendants] know[ ] for sure." (Id. ¶ 38.)
After beginning to make arrangements to prepare samples of products for both capsules, LPD contacted Defendants to determine who would cover the costs of producing the samples and to specify the location of the manufacturing for the final products. (Id. ¶¶ 39, 41.) Defendants gave LPD a "budget code" to pay for the production of the samples and stated that the final products would be manufactured in Defendants' facilities. (Id. ¶¶ 40, 42.) Because LPD's "pattern-and-sample maker" refused to accept Defendants budget code to cover the sample production costs, LPD paid the costs and sought reimbursement from Defendants. (Id. ¶ 47.)
On June 12, 2014, Defendants notified LPD that there was a "large re-alignment within [its] group," [placing] many of [Defendants'] projects ... on hold." (Id. ¶ 50.) Nevertheless, Defendants told LPD that it wanted to finalize and launch the collaboration and instructed LPD to do the following: (1) send the "art" from the capsules for Defendants to review, (2) send information regarding the Classics Capsule for Defendants' "teams" to "agree and sign off," and (3) keep any information regarding the teams involved in the collaboration confidential. (Id. ) Defendants also agreed to reimburse the sample production costs and told LPD that further details regarding the collaboration should be handled in "the next few weeks." (Id. ) As to the prices for the collaboration products, LPD informed Defendants that they could not "pin down exact[ ] [pricing] since it depends on production (specifically whether LPD is producing the pieces here or at [Defendants'] facilities abroad and how many units ... are ordered."). (Id. ¶ 51 (alterations omitted).) LPD also requested "some sort of confirmation that the collaboration ... will be happening." (Id. ) Defendants responded that "the collaboration would only be confirmed once [Defendants] were '100% on board' " and could "dedicate more funding for the collaboration." (Id. ¶ 52.)
The following week, LPD followed up, again asking about the location of the manufacturing and also sending Defendants its final design proposal for the collaboration. (Id. ¶ 53.) Defendants responded that "upper management approved the designs" and gave LPD " 'permission to move forward' with the collaboration." (Id. ¶ 54.) Defendants subsequently sent LPD sample products that it produced based on the Classics Capsule and allowed LPD to pitch products from both capsules to potential buyers. (Id. ¶¶ 56-57.) Thereafter, LPD notified Defendants that its buyers were interested in the products and inquired as to the status of the reimbursement for the sample production costs it had incurred. (Id. ¶¶ 58-59.) Defendants expressed their intent to reimburse the sample production costs, noted that they were having a meeting soon to discuss "a marketing budget and promotional plan," and stated that they had "enough signoff to continue to push through and continue on with the collab[oration]." (Id. ¶ 60 (alterations omitted).) During a subsequent telephone call, LPD informed Defendants it would soon begin producing "marketing materials" to promote the collaboration. (Id. ¶ 63.)
On September 8, 2014, LPD began selling women's clothing items from the collaboration.
After getting in touch with the representative who had contacted V Magazine, LPD provided him with information about Defendants' personnel through whom the collaboration had been taking place. (Id. ¶¶ 83-84.) LPD also reached out to their contacts at Defendants' company, seeking clarification of the basis for the statement made by Defendants' representative to V Magazine. (Id. ¶ 85.) Defendants responded that the promotional material regarding the collaboration "took another route" than what the parties had discussed and "raised some flags" with its public relations team. (Id. ¶ 86.) Defendants also told LPD that the executive who approved the collaboration was no longer with the company and while they "did provide initial green lights to proceed, ... all content needed to be approved by [Defendants'] higher ups." (Id. ) LPD expressed its confusion and sent Defendants copies of all the materials it had regarding the collaboration. (Id. ¶ 87.) Defendants then told LPD that the "products are good to go" but the promotional video could not be shown anymore and any sales from the Classics Capsule had to be placed on hold because it could cause legal issues with the NCAA teams. (Id. ¶ 88.)
LPD continued to promote and sell items from the Collaboration Capsule but, in January of 2015, a buyer refused to accept delivery and pay for the items because he doubted the legitimacy of the collaboration. (Id. ¶¶ 90, 94-95.) To resolve the issue, LPD requested that Defendants send the buyer a letter confirming the collaboration's legitimacy. (Id. ¶ 96.) Defendants sent the letter but the buyer requested additional assurance, and LPD requested further confirmation of the collaboration. (Id. ¶¶ 97-99.)
In May of 2015, Defendants sent LPD a "back-dated licensing agreement" dated June 1, 2014, which provided that LPD had the right to "use the [A]didas name and the Three-Stripes trademark" for both capsules "provided LPD paid 10% royalties" to Defendants. (Id. ¶ 100.) The proposed licensing agreement also sought to "terminate LPD's right to manufacture and sell pieces from the Classics and Collaboration Capsules" as of May 1, 2015. (Id. ) LPD refused to sign the agreement and again requested reimbursement for the sample production costs. (Id. ¶¶ 101-02.) Defendants threatened to sue LPD for trademark infringement. (Id. ¶ 102.)
b. Procedural background
Based on the foregoing, LPD filed the Complaint in this action, bringing claims for, inter alia , breach of contract and seeking declaratory relief pertaining to disputes regarding its use of Defendants' trademarks. (Id. ¶¶ 1, 104-26.) After Defendants moved to dismiss and LPD moved for partial summary judgment, the Court referred both motions to Judge Mann. (Order dated Apr. 6, 2016.)
As relevant here, Judge Mann recommended that the Court dismiss the breach of contract claim, finding that LPD's allegations failed to show the formation of a contract. (R & R 21-25.) Judge Mann also recommended that the Court dismiss *283LPD's trademark abandonment claims because, even assuming that Defendants gave LPD a license to use their trademarks, Defendants exercised sufficient control over LPD's use of their trademarks. (Id. at 28-30.)
LPD objected to the R & R, arguing that Judge Mann erred in recommending dismissal of the breach of contract claim because: (1) neither party expressed an intention not to be bound absent a formalized agreement; (2) the parties abandoned any intention to formalize an agreement; (3) the absence of a formal agreement does not preclude finding that the parties formed a contract; (4) the parties agreed on the "material terms" of the contract and New York law gap-fills any terms that were not agreed upon; and (5) Defendants' conduct "expressly recognized" the existence of a contract. (Pl. Obj. 22-34, 37-42.) LPD also argued that Judge Mann erred because Defendants "expressly authorized" LPD to use Defendants' trademarks and Defendants granted LPD a "naked license" because they never inspected the quality of the collaboration merchandise. (Pl. Obj. 42-44.) Because LPD objected to Judge Mann's recommendations as to LPD's breach of contract and trademark abandonment claims, the Court reviewed Defendants' motion as to those claims de novo . See LPD ,
In the March 2017 Decision, the Court dismissed LPD's breach of contract claim because LPD's allegations failed to establish the existence of a binding contract between LPD and Defendants. See
to determine if an agreement is a Type I preliminary agreement [courts must consider] (1) whether there is an expressed reservation of right not to be bound in the absence of a writing; (2) whether there has been partial performance of the contract; (3) whether all the terms of the alleged contract have been agreed upon; and (4) whether the agreement at issue is the type of agreement that is usually committed to writing, ... [and] to determine if an agreement is a Type II preliminary agreement [courts must consider] (1) whether the intent to be bound is revealed by the language of the agreement; (2) the context of the negotiations; (3) the existence of open terms; (4) partial performance; and (5) the necessity of putting the agreement in final form, as indicated by the customary form of such transactions.
Id. at *7-8 (quoting Vacold LLC v. Cerami ,
The two most important factors-intent of the parties and open material terms-weigh heavily in Defendants' favor, the context of the negotiations also weighs in Defendants' favor, partial performance weighs slightly in [LPD's] favor, and whether the agreement is customarily reduced to writing does not weigh in favor of either party.
Id. at *13. The Court also dismissed LPD's trademark abandonment claim because:
[LPD's] primary argument is that Defendants failed to physically inspect the final merchandise produced. The law, however, does not require physical inspection of products; it requires [LPD] to show that Defendants exercised no control over the nature or quality of the goods or services provided in connection with the mark.
*284Id. at *14 (citation and internal quotation marks omitted).
II. Discussion
a. Standard of review
The standard for granting a motion for reconsideration is strict, and "[r]econsideration will generally be denied unless the moving party can point to controlling decisions or data that the court overlooked-matters, in other words, that might reasonably be expected to alter the conclusion reached by the court." Cedar Petrochem., Inc. v. Dongbu Hannong Chem. Co., Ltd. ,
It is thus well settled that a motion for reconsideration is "not a vehicle for relitigating old issues, presenting the case under new theories, securing a rehearing on the merits, or otherwise taking a 'second bite at the apple.' " Salveson v. JP Morgan Chase & Co. ,
b. Reconsideration
LPD argues that the Court should reconsider the March 2017 Decision as to LPD's breach of contract and trademark abandonment claims. (Pl. Recons. Mem. 1-26.) The Court separately addresses LPD's arguments as to each claim.
i. Breach of contract claim
LPD argues that the Court erred in finding that the parties lacked a binding contract and, therefore, in dismissing its breach of contract claims because the Court: (1) resolved disputed issues of fact, (2) required LPD to establish that Defendants intended to be bound absent a binding agreement, when such a burden was Defendants', and (3) failed to assess all the allegations and draw all reasonable inferences in LPD's favor. (Pl. Recons. Mem. 1-25.) These arguments are meritless.
1. The Court only addressed undisputed facts and decided issues of law
LPD argues that the Court resolved disputed issues of fact because "the *285question of whether a contract has been formed is a question of fact." (Pl. Recons. Mem. 3-5 (alterations and internal quotation marks omitted) (citing Vacold ,
In Vacold LLC v. Cerami , the Second Circuit addressed whether the parties entered a binding contract, where the parties failed to execute a formal written contract.
Here, the Court looked only to the Complaint, which alleges that the parties completed a binding contract and supports the allegations by reciting email exchanges between the two parties. See LPD ,
2. The Court applied the controlling law correctly in determining that LPD failed to establish Defendants' intent to be bound absent a formal written contract
LPD argues that the Court applied controlling law incorrectly by placing the burden on LPD to establish that the parties intended to be bound absent a formal written contract because Defendants' "bear[ ] the burden of proving an 'express' reservation of the right not to be bound absent the execution of [a] formal agreement." (Pl. Recons. Mot. 5.)
To defeat a motion to dismiss, a plaintiff's complaint must set forth plausible allegations that state a claim for relief, which entails setting forth allegations to *286support each element of the alleged legal violation and applies to "all civil actions and proceedings in the United States district courts." See Ashcroft v. Iqbal ,
As discussed in the March 2017 Decision, the allegations in the Complaint fail to establish that the parties intended to be bound because during the parties' communications, Defendants repeatedly expressed their intention to complete a formal written agreement, which the parties never completed. LPD ,
3. The Court assessed all relevant allegations and drew all reasonable inferences in LPD's favor
LPD argues that the Court overlooked relevant allegations and failed to *287construe them in its favor in determining that Defendants failed to express an intent to be bound absent a formal written contract. (Pl. Recons. Mot. 8-14.) The Court has reviewed LPD's arguments, the allegations in the Complaint and the Court's analysis finding that the Defendants lacked the intent to be bound absent a formal agreement, and LPD points to no relevant allegations the Court overlooked. While LPD may disagree with the Court's determination of the legal significance of its allegations, reconsideration is unwarranted based on LPD's disagreement with the Court's determination. See Salveson ,
Accordingly, the Court declines to reconsider the March 2017 Decision as to LPD's breach of contract claim.
ii. Trademark abandonment claim
LPD's argues that the Court should reconsider its dismissal of its trademark abandonment claim simply because LPD believes the Court misinterpreted the *288district court's findings in Hawaii Pacific Apparel Group Incorporated v. Cleveland Browns Football Company LLC ,
c. Certification to appeal
LPD argues that if the Court declines to grant its motion for reconsideration, the Court should "enter a final judgment dismissing LPD's breach-of-contract and declaratory-judgment causes of action," allowing for appeal of the issue of contract formation. (Pl. Recons. Mem. 2 n.1.) Defendants oppose the request, arguing that certification is inappropriate because the remaining quasi-contract, i.e. promissory estoppel, and unjust enrichments claims are " 'inherently inseparable' from and 'inextricably interrelated' " with the dismissed claims. (Defs. Mem. in Opp'n to Pl. Recons. Mot. ("Defs. Opp'n.") 7-9, Docket Entry No. 63.)
Certification pursuant to Rule 54(b) of the Federal Rules of Civil Procedure is a "permissive, not mandatory, mechanism to be 'exercised in the interests of sound judicial administration.' " B.V. v. Allergan, Inc. , No. 12-CV-2650,
Here, the dismissed and pending claims are "closely related and stem from essentially the same factual allegations." Cullen ,
III. Conclusion
For the foregoing reasons, the Court denies LPD's motion for reconsideration and declines to certify the contract formation issue for appeal to the Second Circuit.
SO ORDERED:
In its motion to dismiss, Defendant Adidas America explained that Adidas AG, while named in the Complaint, had not been served. (Def. Adidas America Mot. to Dismiss ("Adidas Am. Mot.") 1 n.1, Docket Entry No. 20.) Thus, for purposes of that motion to dismiss, the undersigned counsel only appeared on behalf of Defendant Adidas America. (Id. )
On June 27, 2016, after Adidas America moved to dismiss and LPD moved for summary judgment, LPD served Adidas AG with the summons and Complaint. (Adidas AG Letter dated July 18, 2016, Docket Entry No. 37.) On September 6, 2016, Adidas AG moved to dismiss the Complaint for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure and for failure to state a claim upon which relief may be granted pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. (Def. Adidas AG Mot. to Dismiss ("Adidas AG Mot."), Docket Entry No. 40.) The Court denied Adidas AG's separate motion to dismiss for lack of personal jurisdiction, which was filed after the R & R. LPD N.Y., LLC v. Adidas Am., Inc. , No. 15-CV-6360,
Throughout the Complaint, LPD refers to Adidas America and Adidas AG as one entity, Adidas. (See Compl., Docket Entry No. 1.) Thus, the Court is unable to determine what allegations relate to Adidas America, Adidas AG, or both.
It is unclear from the Complaint whether the sales were from the Classics Capsule, the Collaboration Capsule, or both.
LPD makes an additional argument regarding the Court's analysis of the parties' intent to be bound, asserting that "LPD has not alleged that the ... emails constituted preliminary manifestations of assent to contract formation that created binding obligations, [but] [Defendants] claim[ ] that those [e]mails prove that it did not intend to be contractually bound." (Pl. Recons. Mem. 7.) This argument directly contradicts LPD's prior assertions. (See Compl. ¶ 105 (alleging that the "written exchanges [between] LPD and adidas formed a contract"); Pl. Obj. 24-25 (arguing that the parties email "exchanges confirmed the [p]arties' agreement" and "proceed[ed] to formalize their contract via email"); Pl. Recons. Mem. 11 (arguing that "the[ ] [email] exchanges illustrate that the parties intended to finalize their contract, if at all, via email").) Because other than the emails, there is no basis to find that the parties entered a binding preliminary agreement, the Court rejects LPD's argument.
LPD makes three additional arguments for reconsideration. First, LPD argues that the Court erred in finding that the partial-performance factor did not weigh heavily in LPD's favor. (Pl. Recons. Mem. 15-18.) In the March 2017 Decision, the Court found that the partial-performance factor weighed slightly in LPD's favor. LPD ,
Second, LPD argues that the Court misapplied the law in assessing the significance of the material open terms, (Pl. Recons. Mem. 19-23), but because LPD's arguments on the issue merely repeat the arguments the Court previously rejected, (see Pl. Obj. 30-31; LPD ,
Finally, LPD argues that the Court erred in finding that the customarily-reduced-to-writing factor weighed in neither parties' favor because the alleged agreement "was a first-of-its-kind arrangement, it cannot be said that the agreement was one that is customarily reduced to writing." (Pl. Recons. Mem. 23; see also Pl. Obj. 28 (arguing same).) As the Court noted in the March 2017 Decision:
In determining whether an agreement is of the type that parties customarily reduce to writing, courts in this Circuit consider: (1) the size and complexity of the transaction; (2) the duration of the contract; (3) the subject matter of the contract; and (4) the amount of money to be exchanged.
LPD ,
Plaintiff also fails to allege "unusual hardship" justifying certification. See Adrian v. Town of Yorktown ,