Mon Cheri Bridals, LLC v. Bowls
| Decision Date | 25 March 2015 |
| Docket Number | Civil Action No. 14-8107 (MAS) (LHG) |
| Parties | MON CHERI BRIDALS, LLC, Plaintiff, v. TONY BOWLS, Defendant. |
| Court | U.S. District Court — District of New Jersey |
NOT FOR PUBLICATION
This suit involves a dispute between a dress manufacturer and one of its designers. Plaintiff Mon Cheri Bridals, LLC ("Plaintiff"or "MCB") is a manufacturer and wholesaler of dresses for weddings and other special occasions. MCB brings suit against Tony Bowls ("Defendant" or "Bowls"), a former employee of the company and designer of its prom and pageant dresses. In the course of the parties' relationship, Bowls granted MCB an exclusive license to use his trademark, "Tony Bowls." MCB claims that Bowls wrongfully attempted to terminate that arrangement.
The matter comes before the Court on Plaintiff's application for a preliminary injunction. (ECF Nos. 1, 17.) Defendant has opposed the application (ECF Nos. 11, 20) and filed a cross-motion for an accounting (ECF No. 21), and Plaintiff replied (ECF No. 28). The Court has carefully considered the parties' submissions and decided the matter without oral argument pursuant to Local Civil Rule 78.1. For the reasons set forth below, MCB's application for a preliminary injunction is denied, the existing temporary restraining order is dissolved, and Bowls' cross-motion for an accounting is denied.
As noted, the parties' relationship is one of a manufacturer and designer. MCB engaged Bowls as a designer in February 2005. (Notice of Removal, Ex. B., Verified Compl. ¶ 9, ECF No. 2. ) In or around October 2011, MCB and Bowls negotiated two agreements relevant to the dispute at issue—an agreement governing Bowls' employment ("Employment Agreement") and an agreement governing Bowls' grant of an exclusive license to use his trademark, "Tony Bowls," ("Licensed Mark") and MCB's concomitant duty to pay royalties to Bowls ("License Agreement"). (Id. ¶¶ 10-11.) Specifically, Bowls, in the License Agreement, "grants to MCB an exclusive, world-wide, license to use the Licensed Mark[]" for a ten-year term, expiring in 2021. (Certification of Stephen Lang ("Lang Cert."), Ex. B ("License Agreement") ¶¶ 2.1, 7.1, ECF No. 17-3.) MCB is required to pay royalties to Bowls "monthly within twenty-five (25) days of the end of the applicable month." (Id. ¶ 3.)
The terms of the License Agreement impose certain duties on MCB's use of the Licensed Mark. For example, "MCB may not use the Licensed Mark[] in a form and manner or for a subject matter that would or could reduce [its] value." (Id. ¶ 5.1.) The License Agreement also requires that MCB use the Licensed Mark whenever a related product line appears in any form of media. (Id.)1 The License Agreement also requires that MCB "include on all website pages on which any of the Dresses2 are mentioned or offered for sale the appropriate trademark notice." (Id. ¶ 5.3.)
The License Agreement also spells out when Bowls may terminate the arrangement.3 For instance, if certain benchmarks are not satisfied (e.g., marketing budget expenses), Bowls is entitled to terminate. (Id. ¶ 7.3(a).) Bowls is also allowed to terminate on thirty-days' notice if the Employment Agreement is terminated and one of several conditions, which are expressly deemed material breaches, is satisfied. Of particular relevance here, Bowls may terminate, in that context, if either: "[1] MCB ceases to use its best efforts to market commercially reasonably [sic] Dresses using the Licensed Mark[] and to preserve and promote the good reputation of the Licensed Mark[] within the marketplace; . . . [or] [2] MCB markets prom or pageant dresses in any manner not using the Licensed Mark[]." (Id. ¶ 7.3(b)(ii), (v).)
The parties' relationship appears to have remained amicable until the fall of 2014. On September 16, 2014, Bowls wrote MCB notifying it that he was resigning from his employment.4 (Verified Compl. ¶ 21.) Then, on October 10, 2014, Bowls sent correspondence to MCB claiming that it breached the License Agreement and, as a result, Bowls was terminating the License Agreement effective November 10, 2014 ("Termination Notice"). (Id. ¶ 20.) On November 7, 2014, MCB filed a verified complaint and order to show cause in the Superior Court of New Jersey, Chancery Division, Mercer County, docket number C-98-14, requesting a temporary restraining order and preliminary injunction. (See generally Notice of Removal, Ex. B.) On December 3, 2014, the Honorable Paul Innes, P.J. Ch., granted MCB's request for a temporary restraining orderand enjoined Bowls from terminating, or taking action to terminate, the License Agreement ("TRO"). (See id.)
Prior to resolution of the request for preliminary injunction, Defendant removed the case to this Court. On January 16, 2015, the Court determined that, under Rule 65(b), the TRO had expired but, on application from Plaintiff, the Court found good cause to extend the TRO pending the resolution of the instant application. (ECF No. 16.)
Rule 65 of the Federal Rules of Civil Procedure governs the imposition of injunctive relief in federal court. Rule 65 "empowers district courts to grant preliminary injunctions." Doe v. Banos, 713 F. Supp. 2d 404, 410 (D.N.J.), aff'd, 416 F. App'x 185 (3d Cir. 2010). "Preliminary injunctive relief is an 'extraordinary remedy, which should be granted only in limited circumstances.'" Ferring Pharm., Inc. v. Watson Pharm., Inc., 765 F.3d 205, 210 (3d Cir. 2014) (quoting Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck Consumer Pharm. Co., 290 F.3d 578, 586 (3d Cir. 2002)). Injunctive relief is inappropriate "when the moving party has an adequate remedy at law." Morales v. Trans World Airlines, Inc., 504 U.S. 374, 381 (1992) (internal quotation marks omitted). In determining whether to grant preliminary injunctive relief, courts look to several factors:
[a] plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.
Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). These equitable factors are just that—factors to be balanced against one another. All of these factors need not be considered by the Court, if the factors considered are dispositive; however, an injunction shall not issue absent a showing of both a likelihood of success on the merits and a likelihood of irreparable harm. Id. at22; Campbell Soup Co. v. ConAgra, Inc., 977 F.2d 86, 90-91 (3d Cir. 1992). The moving party, MCB, bears the burden of showing entitlement to injunctive relief. Ferring Pharm., 765 F.3d at 210. The Court may properly consider both the allegations of Plaintiff's Verified Complaint and supporting affidavits in determining the suitability of a preliminary injunction. See Bascom Food Prods. Corp. v. Reese Finer Foods, Inc., 715 F. Supp. 616, 624 n.14 (D.N.J. 1989); Flynt Distrib. Co. v. Harvey, 734 F.2d 1389, 1394 (9th Cir. 1984).
Plaintiff asserts essentially one cause of action—breach of contract, namely the License Agreement—and requests both injunctive and declaratory relief. (Verified Compl. ¶¶ 29-46.) Plaintiff claims that it never breached the License Agreement and, therefore, Bowls' efforts to terminate it constitute a wrongful repudiation and breach. As a result, the Court must determine whether Plaintiff has established that it is likely to succeed on its claim that Bowls breached the License Agreement—or to put it another way, MCB must establish that it is likely that it did not first breach the License Agreement, rendering Bowls' repudiation wrongful.
In making this determination, certain principles of contract law apply. "If the language of a contract is plain and capable of legal construction, the language alone must determine the agreement's force and effect." Manahawkin Convalescent v. O'Neill, 217 N.J. 99, 118 (2014).5 "New Jersey law recognizes that a material breach of contract on the part of one party entitles the other party to terminate it." In re Rappaport, 517 B.R. 518, 533 (Bankr. D.N.J. 2014) (citing Ross Sys. v. Linden Dari-Delite, 35 N.J. 329 (1961)); accord Gen. Motors Corp. v. New A.C. Chevrolet,Inc., 263 F.3d 296, 315 n.5 (3d Cir. 2001) (). New Jersey courts have deferred to a contract's definition of what constitutes a material breach. See Luma Enters., L.L.C. v. Hunter Homes & Remodeling, L.L.C., No. L-5620-10, 2013 WL 3284130, at *4 (N.J. Super. Ct App. Div. July 1, 2013); see also In re Gen. DataComm Indus., Inc., 407 F.3d 616, 624 (3d Cir. 2005) (). Regardless of contractual definition, "[a] breach is material if it goes to the essence of the contract." See In re Rappaport, 517 B.R. at 533 (citing Ross Sys., 35 N.J. at 341).
Bowls asserts several grounds in support of his contention that Plaintiff breached the License Agreement. Without providing a review of every asserted basis, the Court will address those asserted bases that have the most support in the materials submitted to the Court. For one, Bowls states that MCB marketed prom and pageant dresses, designed by Bowls, without the use of the Licensed Mark. As discussed, the License Agreement states that MCB commits a material breach, and Bowls may then terminate the agreement, if "MCB markets prom or pageant dresses in any manner not using the Licensed Mark[]." (License Agreement ¶ 7.3(b)(v).) Bowls contends that MCB has marketed dresses designed by Bowls on various forms of social media without the Licensed Mark and that these marketing efforts...
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