Kong Co. v. Piccard Meds for Pets Corp
| Decision Date | 29 April 2022 |
| Docket Number | Civil Action 21-cv-02040-NRN |
| Parties | THE KONG COMPANY, LLC, a Colorado limited liability company, Plaintiff, v. PICCARD MEDS FOR PETS CORP, a Florida corporation, MARLON MARTINEZ, a natural person, and JOHN DOES 1-10, individually or as corporate/business entities, Defendants. |
| Court | U.S. District Court — District of Colorado |
ORDER ON PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT (DKT. #23)
This case is before the Court upon the consent of the parties (Dkt. #14) and pursuant to an Order (Dkt. #15) issued by Chief Judge Philip A. Brimmer referring the case. The matter pending before the Court is Plaintiff The Kong Company LLC's (“KONG”) Motion for Partial Summary Judgment. (Dkt. #23.) Defendant Marlon Martinez (“Mr Martinez”) responded (Dkt. #26), and KONG filed a reply. (Dkt. #27.) On February 2, 2022, the Court heard argument on the subject motion. (See Dkt. #48.) The Court has taken judicial notice of the Court's file and considered the applicable Federal Rules of Civil Procedure and case law. Now, being fully informed and for the reasons discussed below, it is hereby ORDERED that KONG's Motion for Partial Summary Judgment (Dkt. #23) are GRANTED in part and DENIED in part.
UNDISPUTED MATERIAL FACTS[1]
This lawsuit arises from an ongoing business dispute between KONG and Defendants Piccard Meds for Pets Corporation (“Piccard”) and Mr. Martinez (collectively, “Defendants”) that began in February 2019. Piccard is a Florida corporation that operates several online storefronts on Amazon, eBay, Walmart, and its own private website. (Dkt. #1 at 2, ¶ 2; Dkt. #13 at 1, ¶ 2.) Mr. Martinez is the CEO of Piccard and operates Piccard's various storefronts. (Dkt. #1 at 3, ¶ 3, Dkt. #13 at 2, ¶ 3.)
A majority of the following undisputed facts are taken from Plaintiff's Partial Motion for Summary Judgment (Dkt. #23) because most of Mr. Martinez's denials of KONG's undisputed facts were unsupported by additional evidence and, therefore, did not create an issue of material fact. See Otter Prods., LLC v. Triplenet Pricing Inc., No. 19-cv-00510-RMR-MEH, 2021 WL 5232639, at *5 n.4 (D. Colo. Nov. 10, 2021) ().
KONG manufactures and distributes high-quality pet products. (Dkt. #23 at 3, ¶ 1.) To ensure the quality of its products, KONG only allows its products to be sold in the United States via a network of authorized sellers who agree to abide by KONG's policies. (Id., ¶ 2.) One of those policies restricts authorized sellers from selling KONG products on third-party marketplace websites like Amazon or eBay unless the seller first receives written approval from KONG. (Id., ¶ 3.) Authorized sellers are, however, permitted to sell KONG products on websites they operate themselves or in physical retail stores. (Id.) KONG provided Mr. Martinez with the Authorized Reseller Policy on April 17, 2018.[2] (Id., at 4, ¶ 5.)
In February 2019, KONG discovered that Defendants, who were authorized sellers but had not been approved to sell KONG products on third-party marketplace websites, as required by the 2018 Authorized Reseller Policy, were selling KONG products on Amazon.[3] (Id., ¶ 4.)
On February 25, 2019, KONG informed Mr. Martinez that his authorized seller account was on hold due to his active Amazon listings, which violated KONG's 2018 Authorized Reseller Policy. (Id., ¶ 6) KONG explained that the hold on Mr. Martinez's authorized seller account would be lifted “[u]pon removal of KONG products from 3rd Party Marketplaces.” (Id.) That same day, Mr. Martinez responded to KONG that he understood the arrangement but asked if he could finish selling off his KONG products for cost purposes. (Id. at 4-5, ¶¶ 7-8.) KONG responded to Mr. Martinez, explaining that KONG would be willing to enter a third-party marketplace sell-through agreement, which would allow Mr. Martinez to temporarily sell KONG products on Amazon until an agreed upon sell-through date (the “Sell-Through Agreement”). (Id. at 5, ¶ 8.) KONG also explained that, once Mr. Martinez signed the Sell-Through Agreement, he would be permitted again to sell KONG products through Piccard's private website. (Id.)
On March 1, 2019, Mr. Martinez signed the Sell-Through Agreement and KONG countersigned on March 4, 2019. (Id., ¶ 9; see also Dkt. #23-6.) The signed agreement stated that “[a]fter March 31, 2019 (the ‘Sell-Through Date'), neither I nor any employee, agent, or anyone else acting at my direction or on my behalf, will advertise or sell any products bearing any KONG trademarks (‘KONG products') on any Third Party online marketplace ....” (Dkt. #23 at 5, ¶ 10; Dkt. #23-6.) The Sell-Through Agreement also states that “[a]fter the Sell-Through Date, I will only advertise or sell KONG Products in compliance with KONG's Authorized Reseller Policy (the ‘Policy'), as it may be amended from time to time.” (Dkt. #23 at 5, ¶ 12; Dkt. #23-6.)
On March 5, 2019, KONG sent an email to Mr. Martinez stating that he had again been approved to sell KONG products on the Piccard private website. (Dkt. #23 at 6, ¶ 15.) Thus, KONG argues, KONG complied with its obligations under the Sell-Through Agreement. (Id.) Mr. Martinez, however, did not comply with his obligations under the Sell-Through Agreement. He continued to sell KONG products on Amazon after March 31, 2019. (Id., ¶ 16) Mr. Martinez also began listing KONG products on Walmart's website, another third-party marketplace, after March 31, 2019. (Id.)
On July 1, 2019, KONG notified Mr. Martinez of his violation of the Sell-Through Agreement and requested that the products be removed from Amazon and Walmart within twenty-four hours. (Id. at 7, ¶ 17.) Mr. Martinez did not comply with KONG's request and continued selling KONG products on third-party marketplace websites. (Id., ¶ 18.)
On October 17, 2019, KONG informed Mr. Martinez that he and Piccard had been formally terminated as authorized sellers of KONG products because of their continued sale of KONG products on third-party marketplace websites. (Id., ¶ 19.) KONG also warned Martinez that it would pursue a breach of contract claim against him unless he permanently removed all of his listings of KONG products from third-party marketplace websites by the end of the day. (Id., ¶ 20.)
Mr. Martinez did not remove his listings and instead continued to periodically sell KONG products on third-party marketplace websites, even after KONG sent a cease-and-desist letter to Mr. Martinez and Piccard on February 8, 2021. (Id. at 8, ¶ 22.) Mr. Martinez continued to sell KONG products on third-party marketplace websites up until KONG filed this suit. (Id.)
KONG claims that, as a result of Mr. Martinez's breach of the Sell-Through Agreement, KONG has been damaged. (Id. at 9, ¶ 25.) KONG explains that has incurred substantial costs in monitoring Mr. Martinez's continued sales on third-party marketplace websites and in enforcing the Sell-Through Agreement. (Id., ¶ 26.) KONG does not provide information about actual damages suffered.
Additionally, KONG states that it has been unable to protect its brand goodwill due to Mr. Martinez's continued sales outside of KONG's quality controls. (Id.) KONG explains that it “cannot carry out this oversight [of products sold on third-party marketplace websites] or take any corrective action to protect its brand goodwill when sellers such as Martinez continue to sell on third-party marketplace websites, outside of KONG's quality controls, after expressly agreeing to stop.” (Id., ¶ 25.)
I. Motion for Summary Judgment under Rule 56
A motion for summary judgment serves the purpose of testing whether a trial is required. Heideman v. S. Salt Lake City, 348 F.3d 1182, 1185 (10th Cir. 2003). A court shall grant summary judgment if the pleadings, depositions answers to interrogatories, admissions, or affidavits show there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). A fact is material if it might affect the outcome of the suit under the governing substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). Furthermore, a judge's function at summary judgment is not to weigh the evidence and determine the truth of the matter, but to determine if there is a genuine issue for trial. Tolan v. Cotton, 572 U.S. 650, 656 (2014).
The moving party bears the initial responsibility of providing the court with the factual basis for its motion. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). “The moving party may carry its initial burden either by producing affirmative evidence negating an essential element of the nonmoving party's claim, or by showing that the nonmoving party does not have enough evidence to carry its burden of persuasion at trial.” Trainor v. Apollo Metal Specialties, Inc., 318 F.3d 976, 979 (10th Cir. 2002). Only admissible evidence may be considered when ruling on a motion for summary judgment. World of Sleep, Inc. v. La-Z-Boy Chair Co., 756 F.2d 1467, 1474 (10th Cir. 1985).
If the movant properly supports a motion for summary judgment, the non-moving party has the burden of showing there are issues of material fact to be determined. Celotex, 477 U.S at 322. That is, the opposing party may not rest on the allegations contained in his complaint but must respond with specific facts showing a genuine factual issue for trial. Fed.R.Civ.P. 56(e); see Scott v. Harris, 550 U.S. 372, 380 (2007) (...
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