JLM Couture, Inc. v. Gutman
| Decision Date | 02 June 2021 |
| Docket Number | No. 20 CV 10575-LTS-SLC,20 CV 10575-LTS-SLC |
| Parties | JLM COUTURE, INC., Plaintiff, v. HAYLEY PAIGE GUTMAN, Defendant. |
| Court | U.S. District Court — Southern District of New York |
Before the Court is Defendant Haley Paige Gutman's motion to dissolve the injunctive relief provisions of the Court's March 4, 2021, Memorandum Opinion and Order granting JLM Couture Inc.'s motion for a preliminary injunction (docket entry no. 109 (the "Preliminary Injunction Order")). (Docket entry nos. 141-145.) Defendant Gutman ("Ms. Gutman") argues that the Court should dissolve the Preliminary Injunction Order in light of facts that existed, but were not presented to the Court, prior to the issuance of the injunction. Specifically, Ms. Gutman contends that the injunction should be dissolved because Plaintiff JLM ("JLM") breached the parties' employment contract ("the Contract")1 by cancelling Ms. Gutman's health benefits as of December 31, 2020, and failing to pay her any "base" or "additional" compensation under the Contract in the year 2021. (Docket entry no. 145, at ¶¶ 14, 15, 16.) Separately, Ms. Gutman moves for reconsideration of the Preliminary Injunction Order,arguing that it is clearly erroneous insofar as it grants JLM what Ms. Gutman contends is an overbroad injunction against competition, finds that irreparable harm to JLM is likely absent an injunction granting JLM control of the social media accounts referenced in the Preliminary Injunction Order ("the Accounts"),2 and prohibits Ms. Gutman from using her name in commerce. (Docket entry nos. 115, 116.) The Court has jurisdiction of this case pursuant to 15 U.S.C. section 1121, and 28 U.S.C. sections 1138(a) and 1331, and 1367(a).3
The Court has reviewed carefully the parties' written submissions,4 and heard oral argument on June 1, 2021. For the reasons stated below, the Court denies in its entirety Ms. Gutman's motion to dissolve the Preliminary Injunction Order and denies in its entirety Ms. Gutman's motion for reconsideration. The Court does, however, modify two provisions of the Preliminary Injunction Order for the purpose of clarity.
This recitation of facts is limited to the parties' material proffers in connection with the motion to dissolve the Preliminary Injunction Order. The Court assumes the parties' familiarity with the facts and history of the case.
After lengthy contract negotiations5 and actions by both parties as detailed in the Preliminary Injunction Order, Ms. Gutman announced her resignation from JLM Couture Inc. on December 17, 2020. (Docket entry no. 58, Exh. 127.) Ms. Gutman's employment contract with JLM provides, inter alia, for the payment of base compensation, "additional" compensation computed based on the annual net sales of certain product lines during the fiscal year and payable "not later than 120 days after the end of each fiscal year of the company," and benefits. (Docket entry no. 14, Exh. 2, at §§ 4(b)-(e); docket entry no. 14, Exh. 62.) By letter dated December 29, 2020, JLM notified Ms. Gutman that "[s]ince you resigned from your employment . . . your Medical Plan was terminated as of December 31, 2020." (Docket entry no. 143, Exh. 6.) Ms. Gutman proffers that, throughout her employment with JLM, her base compensation was paid bi-weekly, and that she has not received any base compensation since December 24, 2020. (Id. at ¶ 15.) Ms. Gutman has not been paid any additional compensation for fiscal year 2020. (Id. at ¶ 14.) On March 18, 2021, Ms. Gutman sent JLM a letter enumerating these alleged material breaches of the Contract and declaring the Contract terminated. (Docket entry no. 143, Exh. 7.) JLM did not respond to the March 18, 2021, letter. (Docket entry no. 145, at ¶ 19.)
Ms. Gutman asserts that, by failing to pay compensation and benefits allegedly due to her, JLM has materially breached and repudiated the Contract, electing to treat the Contract as terminated, and is not entitled to injunctive enforcement of any of the Contract'srestrictive provisions or its provisions granting JLM rights with respect to the use of Ms. Gutman's name and derivatives thereof. (Docket entry no. 144, at 10-11.)
"District courts have continuing power to vacate or modify injunctions where there is a showing of a change in the operative facts so that the injunction is no longer justified." Helmer v. Briody, 721 F. Supp. 498, 505 (S.D.N.Y. 1989); see also International Equity Investments, Inc. v. Opportunity Equity Partners, Ltd., 427 F. Supp. 2d 491, 501 (S.D.N.Y. 2006) (); Railway Labor Executives' Ass'n v. Metro North Commuter R. Co., 759 F. Supp. 1019, 1021 (S.D.N.Y. 1990) () Upon a motion to dissolve a preliminary injunction order, a court should typically consider "only truly new evidence." Semmes Motors, Inc. v. Ford Motor Co., 429 F.2d 1197, 1207 (2d Cir. 1970); see also American Optical Co. v. Rayex Corp., 394 F.2d 155 (2d Cir. 1968) ().
The Second Circuit has expressly disapproved of the practice of "trying to relitigate on a fuller record preliminary injunction issues already decided." American Optical Co., 394 F.2d at 155; Semmes Motors, Inc., 429 F.2d at 1207; Broker Genius, Inc. v. Seat Scouts LLC, No. 17-CIV-8627 (SHS), 2018 WL 11222928, at *2 (S.D.N.Y. Aug. 3, 2018). Accordingly, upon a motion to modify or dissolve a preliminary injunction, the movant mustdemonstrate that the circumstances warranting a change are truly new, as the Court should not permit the movant to "withhold its objections to a preliminary injunction until such time as it can present the strongest possible case." Broker Genius, Inc., 2018 WL 11222928, at *2 (quoting Huk-A-Poo Sportswear, Inc. v. Little Lisa, Ltd., 74 F.R.D. 621, 624 (S.D.N.Y. 1977)).
Here, all of the facts proffered by Ms. Gutman were known or available to her prior to March 4, 2021, the date on which the Preliminary Injunction Order was issued.6 Ms. Gutman received a letter dated December 29, 2020, terminating her health benefits, and Ms. Gutman proffers that she purchased private health insurance as a result. (Docket entry no. 145, at ¶¶ 16, 17.) Ms. Gutman had historically been paid her base compensation on a bi-weekly basis, and the last payment she received from JLM was made on December 24, 2020. (Id. at ¶ 15.) Ms. Gutman asserts that additional compensation was due on March 1, 2021, but that she was not paid on that date. (Id. at ¶ 14.) Because these facts were known by or were available to Ms. Gutman prior to the issuance of the Preliminary Injunction Order, Ms. Gutman could have raised them prior to the issuance of that order, in further support of her argument that the Contract had been terminated. To permit Ms. Gutman to relitigate the issue of whether the Contract remains in effect, an issue that the Court has already addressed in the context of the preliminary injunction motion practice, would be "judicially unwise." Huk-A-Poo Sportswear, Inc., 74 F.R.D. at 624. Ms. Gutman's failure to raise her factual contentions regarding materialbreach by JLM and her arguments as to the legal significance of such breach while the preliminary injunction motion was pending is sufficient reason, in itself, for denial of the dissolution motion.
Ms. Gutman's legal arguments also fail on their merits.
Ms. Gutman argues that JLM failed to perform its duties under the Contract following Ms. Gutman's announcement of her resignation, and that JLM's decision to forgo performance terminated the Contract. Accordingly, Ms. Gutman argues that the election of remedies doctrine, which prohibits a party to a contract from ceasing its performance but continuing to accept the benefits of the contract, precludes JLM from pursuing injunctive relief to enforce the Contract. (Docket entry no. 144, at 9.)
When confronted with a repudiation, Lucente v. International Business Machines Corp., 310 F.3d 243, 258 (2d Cir. 2002). The non-repudiating party "cannot at the same time treat the contract as broken and subsisting." Id. (quotation omitted). Accordingly, a party may not "stop performance and continue to take advantage of the contract's benefits." Martha Graham School and Dance Foundation, Inc. v. Martha Graham Center of Contemporary Dance, Inc., 43 F. App'x 408, 415 (2d Cir. 2002) (quoting Ryan v. Volpone Stamp Co., 107 F. Supp. 2d 369, 386 (S.D.N.Y. 2000)). Once the "party has elected a remedy for a particular breach, [its] choice is binding with respect to that breach and cannot be changed." Lucente, 310 F.3d at 258-259. However, "an election need not be made until the time comes when the party making the electionmust render some performance under the terms of the contract." Id. at 259. At that point, "either performing or failing to perform will indicate an election." Id.
Here, Ms. Gutman argues that, because JLM did not pay her any base or additional compensation and terminated her health benefits after she communicated her resignation on December 17, 2020, the Court must conclude that JLM elected to treat her resignation as an anticipatory breach that terminated the Contract in all respects. (Docket entry no. 144, at 9.) However, JLM maintains that it has continued to perform and that it has...
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