Town & Country Linen Corp. v. Ingenious Designs LLC, 18-cv-5075 (LJL)

• Court: United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
• Decision Date: 13 May 2022
• Docket Number: 18-cv-5075 (LJL)
• Parties: TOWN & COUNTRY LINEN CORP. and TOWN & COUNTRY HOLDINGS, INC., Plaintiffs, v. INGENIOUS DESIGNS LLC, JOY MANGANO, and HSN, INC., Defendants.

TOWN & COUNTRY LINEN CORP. and TOWN & COUNTRY HOLDINGS, INC., Plaintiffs,
v.
INGENIOUS DESIGNS LLC, JOY MANGANO, and HSN, INC., Defendants.

No. 18-cv-5075 (LJL)

United States District Court, S.D. New York

May 13, 2022

OPINION AND ORDER

LEWIS J. LIMAN, UNITED STATES DISTRICT JUDGE

As the Court has recounted in many prior opinions, see Dkt. Nos. 126, 142, 171, 331, 396, this case involves a variety of disputes between plaintiffs Town & Country Linen Corp. (“TCL”) and Town & Country Holdings, Inc. (“TCH, ” and collectively with TCL, “TNC” or “Plaintiffs”) and defendants Ingenious Designs LLC (“IDL”), Joy Mangano, and HSN, Inc. (“HSN, ” and collectively with IDL and Mangano, “Defendants”)^[1] arising out of the many years of interactions and collaborations between the parties. Defendants now move to strike Plaintiffs' jury demand. Dkt. No. 409.

For the following reasons, the motion to strike the jury demand is granted.

BACKGROUND

The relevant facts of this case are set forth in 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; granting in part and denying in part

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Plaintiffs' motion to dismiss certain counterclaims and affirmative defenses, Dkt. No. 171; granting in part and denying in part the parties' cross-motions for summary judgment, Dkt. No. 331; and denying the parties' cross-motions for reconsideration, Dkt. No. 396. Familiarity with those opinions is assumed. In short, Plaintiffs and Defendants had a relationship beginning in 2012 in which they collaborated to design and develop products. Defendants would propose ideas and present specifications for certain products they wanted developed, and Plaintiffs would engage in development work, provide renderings, and arrange for the sourcing and manufacture of those products. Much of the mutual exchange of ideas between the parties was governed by Mutual Non-Disclosure Agreements (“MNDAs”); the MNDA relevant to this dispute was signed in 2015 and had a three-year term. At some point, the relationship between the parties broke down. Plaintiffs allege that, after that breakdown, Defendants misappropriated ideas, trade secrets, and intellectual property developed by TNC and belonging to TNC.

PROCEDURAL HISTORY

The lengthy procedural history of this case is recounted in full in the Court's summary judgment opinion, Dkt. No. 331. As relevant here, the Court issued its opinion granting in part and denying in part the parties' cross-motions for summary judgment-thus preserving several claims for trial-on August 5, 2021, Dkt. No. 331, and issued its opinion denying the parties' cross-motions for reconsideration on October 19, 2021, Dkt. No. 396.

Defendants filed this motion on March 4, 2022. Dkt. No. 409. Plaintiffs filed their opposition to the motion on March 25, 2022. Dkt. No. 413. Defendants filed their reply in further support of the motion on April 8, 2022. Dkt. No. 414.

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DISCUSSION

Defendants base their motion to strike on the jury waiver provision of the MNDA, effective as of February 25, 2015, by and between IDL and TCH. Dkt. No. 47-2. The MNDA recites in its Paragraph 14 as follows:

EACH PARTY HERETO AND EACH OF ITS REPRESENTATIVES BOUND TO THE TERMS HEREOF HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL IN RESPECT OF ANY CLAIM R CAUSE OF ACTION IN ANY COURT IN ANY JURISDICTION BASED UPON OR ARISING OUT OF OR RELATING TO THIS AGREEMENT THE FOREGOING WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT

Id. ¶ 14.

The “parties” to the MNDA are IDL and TCH, and the Representatives are defined to be “affiliates, directors, officers, employees, advisors, attorneys, agents, controlling persons, financing sources [and] other representatives” of the parties. Id. ¶ 1. The MNDA contains an integration clause that provides, in relevant part: “No alteration, waiver, amendment, change or supplement hereto shall be binding or effective unless the same is set forth in writing signed by a duly authorized representative of each party.” Id. ¶ 16.

Defendants' motion to strike the jury demand-and Plaintiffs' opposition to that motion-raises two broad questions: (1) whether the contractual waiver is-and remains- enforceable; and (2) whether the scope of the contractual waiver encompasses the parties, times, and claims that remain in this case. The Court addresses each of these questions in turn.

I. Enforceability of the Waiver

Under Federal Rule of Civil Procedure 39(a)(1), a jury demand may be stricken if “the court, on motion or on its own, finds that on some or all of th[e] issues there is no federal right to a jury trial.” Fed.R.Civ.P. 39(a)(1). The federal right to a jury trial is provided by the Seventh

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Amendment; under Federal Rule of Civil Procedure 38, “[t]he right of trial by jury as declared by the Seventh Amendment to the Constitution . . . is preserved to the parties inviolate.” Fed.R.Civ.P. 38. “It is elementary that the Seventh Amendment right to a jury is fundamental and that its protection can only be relinquished knowingly and intentionally.” National Equipment Rental, Ltd. v. Hendrix, 565 F.2d 255, 258 (2d Cir. 1977) (citing Johnson v. Zerbst, 304 U.S. 458 (1938)). However, “[t]he parties to a contract may, by prior written agreement entered into knowingly and voluntarily, waive the right to a jury trial.” Morgan Guaranty Trust Co. v. Crane, 36 F.Supp.2d 602, 603 (S.D.N.Y. 1999) (citing Herman Miller v. Thom Rock Realty Co., 46 F.3d 183, 189 (2d Cir. 1977)). Waiver is not to be lightly inferred. “Contract provisions waiting the right are narrowly construed, and the requirement of knowing, voluntary, intentional waiver is strictly applied.” Id.

A. The Waiver Was Knowing, Voluntary, and Intentional

“The factors a court must consider in determining whether a contractual waiver of a right to a jury trial was entered into knowingly and voluntarily include: 1) the negotiability of the contract terms and negotiations between the parties concerning the waiver provision; 2) the conspicuousness of the waiver provision in the contract; 3) the relative bargaining power of the parties; and 4) the business acumen of the party opposing the waiver.” Id. (citing Sullivan v. Ajax Navigation Corp., 881 F.Supp. 906, 911 (S.D.N.Y. 1995)). “When the criteria outlined above have been met, the waiver has been deemed enforceable.” Id. (collecting cases).

Plaintiffs do not contest that TCH and IDL knowingly, voluntarily, and intentionally waived their constitutional jury trial right.^[2] Dkt. No. 413 at 7. The Court nonetheless considers

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the relevant factors briefly here. First, the MNDA, including the jury trial waiver, was-as Plaintiffs describe it in their complaint-the product and codification of a mutual understanding between the parties, Dkt. No. 47 ¶¶ 38-41; there is “no indication that the terms of the [MNDA] were not negotiable, ” Morgan, 36 F.Supp.2d at 604. Second, the jury trial waiver was conspicuous-it is one of eighteen numbered paragraphs and is the only contract provision written in all capital letters. See, e.g., Id. (finding a jury waiver provision “quite conspicuous” because, inter alia, “[i]t was written in all capital letters”); American Equities Group, Inc. v. Ahava Dairy Products Corp., 2007 WL 4563487, at *3 (S.D.N.Y. Dec. 18, 2007) (noting that to determine whether a waiver is conspicuous, “courts have looked at the placement of the waiver within the contract, as well as the font size and style of the waiver, ” and finding that the waiver in that contract was “sufficiently conspicuous” where it was “in the same font and size as all other provisions”). Third, with regard to equality of bargaining power, both parties are corporations and “neither should be a stranger to contract negotiations.” American Equities Group, 2007 WL 4563487, at *3 (internal quotation marks omitted) (quoting Orix Credit Alliance, Inc. v. Better Built Corp., 1990 WL 96992, at *2 (S.D.N.Y. July 2, 1990)). Fourth, and finally, with regard to the business acumen of TNC as the party opposing the waiver, TNC has extensive business experience in the relevant industry; as the complaint alleges, TNC was founded in 1954 and has developed a thriving business, including a “network of factors that Plaintiffs have developed and curated . . . during their over 60 years of operation.” Dkt. No. 47 ¶¶ 9-16. For these reasons, the jury trial waiver in the MNDA was knowing, voluntary, and intentional, and is therefore enforceable at least as against the parties to the contract.

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B. Defendants Have Not Waived the Ability to Enforce the MNDA Waiver Provision

In opposing this motion, Plaintiffs argue that, even if they did waive their jury trial right in the MNDA, Defendants have, so to speak, waived the waiver-they have waived the ability to enforce that provision of the MNDA by agreeing to a jury trial throughout the pendency of this litigation and submitting signed case management plans indicating an agreement to have the case tried to a jury, as well as by waiting until now to bring this motion, which Plaintiffs assert is “both untimely and prejudicial.” Dkt. No. 413 at 8. Plaintiffs frame the argument in two different respects. They suggest that Defendants' conduct and representations effect a waiver pursuant to Paragraph 16 of the MNDA. Dkt. No. 413 at 8 (citing Dkt No. 47-2 ¶ 16). They also argue that a waiver should be found from the “manner in which Defendants conducted this litigation.” Id.

Paragraph 16 of the MNDA provides:

The Agreement embodies the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersedes any and all prior agreements, arrangements and understandings relating to the matters provided for

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