A federal judge has denied a motion of a preliminary injunction from a corporate partner of the United States Fencing Association, concluding that the plaintiff failed to show that it would suffer irreparable harm in the absence of an injunction or that there was a likelihood of success on the merits of the litigation.
Philip Daly, d/b/a/ Tar Tar Printing, and the USFA, the National Governing Body for the sport of fencing, entered into a written Trademark and License Merchandise Agreement in July 2001, whereby the plaintiff was granted the exclusive right to manufacture, distribute and sell products carrying the USFA logo.
The License Agreement, which provided the plaintiff with access to vendor space at events sponsored by the USFA, was a one-year contract that renewed annually automatically unless either party provided the other with written notification of termination. The parties’ dispute centers around whether the defendant provided such notification of termination.
According to the defendant, its Executive Director, Michael Massik, sent the plaintiff a letter dated May 1, 2006, advising that the USFA would not be renewing the License Agreement with the plaintiff. Although the License Agreement was terminable at will, the letter describes that the contract was terminated for a number of reasons including that plaintiff had failed to submit required royalty payments and because there were many customer complaints concerning his failure to fulfill orders.
Beginning in May 2006 and continuing until January 2007, the plaintiff met with and spoke multiple times with the defendant in an effort to negotiate new licensing terms. The court noted that in the middle of the negotiations on October 3, 2006, “sensing that he may not have a valid license agreement,” the plaintiff applied for a USFA corporate membership. Under the terms of a corporate membership, “the plaintiff understood that he would not be guaranteed vendor space, as he would under an exclusive license, but rather would have to apply for such access.” The plaintiff claimed that he applied for this membership simply as “a precautionary measure.” While negotiations were ongoing, the plaintiff was permitted to sell logo merchandise at USFA-sponsored events.
“As stated above, these negotiations ended in January 2007 when the defendant notified the plaintiff by an e-mail dated January 23 that despite their many meetings and discussions, no agreement could not be reached on a new license,” wrote the court. “The plaintiff was also informed that his services would no longer be required at future tournaments.”
Recognizing that he could no longer attend events as an exclusive licensee, the plaintiff then pursued his options as a corporate member. By letter dated March 2, 2007, the plaintiff was advised that vendor spots for the season had already been filled, spawning the breach of contract suit.
In reviewing the standard for weighing injunction relief, the court noted that the moving “party … must show: (a) that it will suffer irreparable harm in the absence of an injunction, and (b) either (i) a likelihood of success on the merits, or (ii) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in favor of the movant’s favor.” Tom Doherty Assocs., Inc. v. Saban Ent. Inc., 60 F.3d 27, 33 (2d Cir. 1995).
The court continued that “perhaps the single most important prerequisite for the issuance of a preliminary injunction” is a demonstration of irreparable harm. Bell & Howell: Mamiya Co. v. Masel Supply Co. Corp., 719 F.2d 42, 45 (2d Cir. 1983) (quoting 11 C. Wright & A. Miller, Federal Practice and Procedure § 2948 at 431 (1973).
“The essential difficulty with plaintiff’s argument is that it disregards the nature of the relationship between the parties,” wrote the court. “It is undisputed that the defendant has the right to terminate the agreement on written notice 30 days prior to the termination of the Agreement, here, July 9, 2007. At the oral argument, counsel for the defendant made clear that they believed they had already terminated their relationship with the plaintiff and were prepared, if necessary, to send yet another written notice of non-renewal of the contract. Accordingly, even if the plaintiff prevails on the merits at trial and can show that the Agreement was not properly terminated in May 2006, his relationship with the defendant will not continue beyond July 2007. The absence of any prospects for continuing this business militates against a finding that in the absence of injunctive relief plaintiff will suffer irreparable harm based on the loss of his business.
“Even assuming that the plaintiff had established irreparable harm, the plaintiff has not established a likelihood of success on the merits,” it added.
Specifically, the court focused on the USFA’s flexibility after the relationship was terminated in the summer of 2006, allowing, for example, the plaintiff to continue to sell logo merchandise, while negotiations were ongoing.
However, the defendant’s January 23 email indicates that negotiations for a written license agreement had reached an impasse and it instructed plaintiff to discontinue selling logo merchandise.
“This court cannot, despite plaintiff’s invitation that it do so, ignore plaintiff’s own admission that his position as the official merchandiser of the defendant had in fact been terminated. There can simply be no doubt, given the available evidence, that the licensing agreement between the parties was revoked in May 2006.
“Plaintiff’s breach of contract claim with regard to his alleged rights pursuant to his corporate membership is similarly unavailing. Plaintiff’s claim is based on the corporate membership application’s language that one of the benefits of membership is ‘access to vendor space at US Fencing National Tournaments.’ Thus, plaintiff claims that his exclusion from USFA tournaments violates the terms of his corporate membership. Given plaintiff’s acknowledgment that corporate membership only entitled him to apply for vendor space his breach of contract claim on this basis is completely without merit. Given the above, this court finds that plaintiff has failed to demonstrate a likelihood of success on the merits. For these same reasons, the court also finds that there are no serious questions going to the merits.”
Philip Daly d/b/a Tar Tar Printing and/or Proprintwear v. United States Fencing Association; E.D.N.Y.; CV 07-1167 (LDW)(ARL), 2007 U.S. Dist. LEXIS 28092; 4/16/07
Attorneys of Record: (for plaintiff) Rick Ostrove, LEAD ATTORNEY, Leeds Morelli & Brown, P.C., Carle Place, NY. (for defendant) Thomas J. McNamara, LEAD ATTORNEY, Certilman, Balin, Adler & Hyman, LLP, East Meadow, NY.
