Town & Country Linen Corp. v. Ingenious Designs LLC
| Decision Date | 23 August 2021 |
| Docket Number | 18-cv-5075 (LJL) |
| Citation | 556 F.Supp.3d 222 |
| Parties | TOWN & COUNTRY LINEN CORP. and Town & Country Holdings, Inc., Plaintiffs, v. INGENIOUS DESIGNS LLC, Joy Mangano, and HSN, Inc., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Lauren Brette Sabol, Robert M. Isackson, Yuval Hod Marcus, Leason Ellis LLP, White Plains, NY, Hoda Rifai-Bashjawish, Cole Schotz P.C., Hackensack, NJ, for Plaintiffs.
Andrew Samuels, Bakerhostetler, Columbus, OH, Carrie Ann Longstaff, Baker & Hostetler, New York, NY, Jared Brandyberry, Baker Hostetler, Denver, CO, Kevin W. Kirsch, Baker Hostetler LLP, Cincinnati, OH, for Defendants.
Plaintiffs Town & Country Linen Corp. and Town & Country Holdings, Inc. (collectively, "TNC" or "Plaintiffs") and Defendants Ingenious Designs LLC ("IDL"), Joy Mangano ("Mangano"), and HSN, Inc. ("HSN," and collectively with IDL and Mangano, "Defendants")1 cross-move for summary judgment pursuant to Federal Rule of Civil Procedure 56. Plaintiffs also move to strike certain exhibits offered by Defendants in opposition to summary judgment.
For the following reasons, Defendants’ motion for summary judgment is granted in part and denied in part, and Plaintiffs’ motion for summary judgment is granted in part and denied in part.
Familiarity with the Court's prior opinions granting in part and denying in part Defendants’ motion to dismiss the complaint, Dkt. No. 126, granting Plaintiffs’ motion for reconsideration, Dkt. No. 142, and granting in part and denying in part Plaintiffs’ motion to dismiss certain Counterclaims and affirmative defenses, Dkt. No. 171, is assumed.
The following facts are undisputed for the purposes of summary judgment except as otherwise indicated.
Plaintiffs are companies that "design, source, manufacture, market, and sell a variety of consumer products." Dkt. No. 47 ("Second Amended Complaint" or "SAC") ¶ 9. They provide products with distinctive and innovative structure and functionality, and they source the manufacturers of those products from a network of factories that they have developed and curated during their over sixty years in operation. Id. ¶ 16. Plaintiffs then take orders for these products, which are manufactured and delivered to their retail customers, who in turn sell the products, typically under the retail customers’ brands, to end-consumers. Id. Plaintiffs began working with Defendants in approximately 2012 to develop and manufacture products to be sold by Defendants. Id. ¶ 35. Beyda was TNC's President. Dkt. No. 256 ¶ 1. The Vice President of Design at TNC is Gina Barnaba ("Barnaba"). Dkt. No. 257 ¶ 1.
Defendant Mangano is an inventor and designer who founded IDL through its predecessor Ingenious Designs, Inc. SAC ¶ 22. IDL develops, markets, and sells products that Mangano creates, either alone or with others, or that others create for her. Id. Among the products for which it is renowned are mops, pillows, and luggage. IDL is a subsidiary of HSN, which operates a home shopping channel on cable television and has an online store. Id. ¶¶ 24, 26. Mangano is also a television personality and salesperson associated with a JOY brand of consumer goods sold on television, online, and in retail stores. Id. ¶ 22. As one of HSN's television personalities, Mangano appears regularly on HSN's cable network promoting, among other items, JOY branded goods that are sold by HSN. Id. ¶ 26. IDL's business model involves the development, sourcing, and packaging of products that would be sold on HSN. Dkt. No. 253, Ex. A ("Miranne Dep.") at 13. Christine Miranne was head of brand development for IDL. Id. at 12.
IDL, Mangano, and TNC began their relationship in approximately 2012. TNC was one of several vendors who supplied a wide range of products to IDL for sale on HSN as well as for HSN's retail customers. Dkt. No. 211 ¶ 3. The parties shared ideas. IDL and Mangano presented specifications for certain products that they wanted developed, and TNC engaged in development work, provided renderings, and arranged for the sourcing and the manufacture of the products.
The relationship between the parties was governed by two separate sets of contracts:
1. The MTC
IDL's obligations to purchase products from TNC was governed by an agreement of Master Terms and Conditions for Direct Source Purchase Orders with IDL ("MTC") signed by the parties in July 2012. Dkt. No. 201, Ex. F. The MTC set forth the terms and conditions under which IDL would purchase goods from TNC. It provided: "All goods purchased from You [TNC] ("Goods") pursuant to a purchase order ("PO") will conform to the samples and other descriptions provided to IDL or a third party designated by IDL" and that "all Goods will comply with all of IDL's quality assurance and fulfillment policies, standards, and procedures, including those contained in [HSN's] Supply Chain Requirements Manual." Id. ¶ 1. Any costs or expenses incurred by TNC to satisfy IDL's procedures, standards, or requirements would be TNC's sole responsibility. The MTC also contained TNC's acknowledgement that "a duly issued PO by an authorized agent of IDL is the only evidence of a commitment to purchase Goods as between You and IDL." Id. ¶ 11. Under the MTC, "[a]ny costs incurred by either party ... prior to the receipt and acceptance of a PO will be at the incurring party's risk, and IDL shall have no obligation to pay for any unavoidable, out-of-pocket costs incurred by [TNC]." Id. ¶ 11. The MTC was governed by Florida law. Id. ¶ 10.
2. The MNDAs
The disclosure of information between TNC and IDL for the purpose of developing products was governed by a Mutual Non-Disclosure Agreement ("MNDA"). Over time, the parties signed two MNDAs. The first was effective as of April 6, 2012 and had a one-year term. Dkt. No. 252, Ex. 165. The second was effective as of February 25, 2015 and had a three-year term. Dkt. No. 47, Ex. A. Aside from their dates and durations, the two MNDAs appear to be identical. For convenience, and because it was the agreement that addressed the provision of information at issue in this case, the Court describes the February 2015 MNDA, which it refers to as the MNDA. The MNDA recognizes that, "[i]n order [for the parties] to pursue the mutual business purpose of a possible transaction involving IDL and [TNC] and/or their respective affiliates ..., both IDL and [TNC] recognize that there is a need to disclose to one another certain information in respect of itself and/or its affiliates." Id. It further defines as Evaluation Material:
[a]ll such information, delivered by or on behalf of one party (the "Disclosing Party") and/or its Representatives (as defined below) to the other party (the "receiving Party") and/or its Representatives, whether furnished before or after the date of this Agreement and regardless of the manner in which it is furnished, together with all analyses, compilations, studies or other documents or records prepared by the Receiving party and/or its Representatives, to the extent such analyses, compilations, studies, documents or records contain, otherwise reflect, or are generated from such information.
Id. The MNDA provides that "Evaluation Material will be used by the Receiving Party solely for the purpose of evaluating the Transaction." Id. It also requires the Receiving Party to keep Evaluation Material "strictly confidential ..., except that Evaluation Material or any portion thereof may be disclosed to [Representatives] of the Receiving Party who need to know such Evaluation Material for the purpose of evaluating the Transaction and who agree to treat such Evaluation Material in accordance with the terms of this Agreement." Id.
At the same time, however, the MNDA reflects and embodies the understanding and acknowledgement by each party that the other "may currently or in the future be developing information, knowledge or technology internally, or obtaining information, knowledge or technology from other persons, that may be similar to information, knowledge or technology contained or reflected in the Disclosing Party's Evaluation Material," and that either party may "pursu[e] any of its present or future business activities or interests [and may] enter[ ] into any agreement or transaction with any person, regardless of whether such business activities or interests are competitive with the business activities or interests of the other party and regardless of whether the subject matter of any such agreement or transaction is in any way similar to the Transaction and/or any Evaluation Material." Id. It permits the parties to do so "[p]rovided that each party complies with its obligations [under the MNDA]." Id.
The MNDA contains a number of provisions that envision that each party may pursue business objectives that are similar to the Transaction or Evaluation Material and permits them to do so. It provides that:
The term "Evaluation Material" does not include information which (i) is or becomes generally available to the public other than as a result of the breach of the terms of this Agreement by the Receiving Party and/or any of its Representatives, (ii) is or has been independently acquired or developed by the Receiving Party and/or any of its Representatives without violating any of the terms of this Agreement.
Id. The MNDA also contains a clause which provides that:
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