Leggoons did not respond to the plaintiff's motion on this point at all; rather it acted as if the motion had not been brought. Accordingly, under Local Rule 3(b), the motion is granted by default.
II. Motion for Summary Judgment
The Estate and Bag One seek summary judgment finding that the Agreement terminated on April 2, 1995. Defendant argues that this motion is not yet ripe for determination and that further discovery is needed. Fed. R. Civ. P. 56(f) requires that a party opposing a motion for summary judgment on this basis submit an affidavit that details: "(1) the information sought and how it is to be obtained; (2) how a genuine issue of material fact will be raised by that information; (3) what efforts the affiant has made to obtain the information; and (4) why those efforts were unsuccessful." Sage Realty Corp. v. Insurance Co. of North America, 34 F.3d 124, 128 (2d Cir. 1994). Furthermore, the discovery sought must be material to the opposition of the summary judgment motion. Id.
Defendant's counsel, Joe Jacobson, Esq., submitted an affidavit in support of his application to adjourn this motion. While this affidavit does not exactly satisfy the Sage Realty requirements, I conclude that given the preliminary stage of these proceedings, it is preferable to permit further discovery before conclusively ruling on this issue. Accordingly, plaintiffs' motion for summary judgment is denied with leave to renew following further discovery.
III. Motion for Preliminary Injunction
The Estate and Bag One also seek a preliminary injunction to enjoin Leggoons from infringing the Estate's trademark and copyrights. A preliminary injunction is "an extraordinary and drastic remedy which should not be routinely granted." Medical Society v. Toia, 560 F.2d 535, 538 (2d Cir. 1977); see also Patton v. Dole, 806 F.2d 24, 28 (2d Cir. 1986). To obtain a preliminary injunction, the moving party must establish "(1) irreparable injury and (2) a likelihood of success on the merits or a sufficiently serious question going to the merits and a balance of hardships tipping decidedly in the moving party's favor." Laureyssens v. Idea Group, Inc., 964 F.2d 131, 135-36 (2d Cir. 1992); see also Fisher-Price Inc. v. Well-Made Toy Manufacturing Corp., 25 F.3d 119, 122 (2d Cir. 1994). Plaintiffs have presented compelling arguments that they have a likelihood of success on the merits and will be irreparably harmed without preliminary relief. Injunctions, however, are an equitable remedy and I find that plaintiffs are precluded from equitable relief under the doctrine of unclean hands.
A court may deny injunctive relief based on the defense of unclean hands "'where the party applying for such relief is guilty of conduct involving fraud, deceit, unconscionability, or bad faith related to the matter at issue to the detriment of the other party.'" Performance Unlimited, Ltd. v. Questar Publishers, Inc., 52 F.3d 1373, 1383 (6th Cir. 1995) (quoting Novus Franchising, Inc. v. Taylor, 795 F. Supp. 122, 126 (M.D. Pa. 1992)); see also Saxon v. Blann, 968 F.2d 676, 680 (8th Cir. 1992); Fuddruckers, Inc. v. Doc's B.R. Others, Inc., 826 F.2d 837, 847 (9th Cir. 1987).
Leggoons argues that Bag One committed several acts evidencing bad faith during the negotiations of the Agreement. First, it claims that James Powers acted as an agent for Leggoons in negotiating with Bag One when in fact he was an agent for Bag One. In addition, Leggoons claims that Bag One misrepresented the exclusivity of the Agreement. Finally, Leggoons cites several other alleged misrepresentations by Bag One. See Def. Mem. at 15-16.
The record established that there was a relationship between James Powers and Bag One. For example, in a July 25, 1994 letter to Lynne Clifford of Bag One, Powers noted that he was in a difficult position because he had been hired as a consultant to Leggoons but his "allegiance and alliance has always and will always be with you personally along with Yoko and Bag one Arts." Def. Ex. N., at 1. Similarly, in an August 11, 1994 letter to Clifford, Powers wrote that "although my gut says to dump these guys [Leggoons], I think it is a more prudent position to gain more control over them until we see that they can perform." Def. Ex. O, at 1. See also Deposition of James Clinton at 111; Deposition of Robert Tamsky at 116-17 (both attached to Affidavit of Robert J. Lack, Esq.) (stating that Leggoons was unaware of Powers' relationship with Bag One when he was consulting for them in the negotiations with Bag One). Bag One's acts of negotiating with its own agent posing as the agent of its bargaining adversary raise the specter of bad faith.
Leggoons also claims that the plaintiffs have unclean hands because they misrepresented the exclusivity of the Agreement. As noted above, Bag One agreed to provide Leggoons an exclusive license to use the John Lennon signature, John Lennon artwork and the MacMillan photograph of John Lennon. Leggoons, however, argues that Bag One made several misrepresentations regarding the exclusivity of the Agreement to induce it to enter into the Agreement. See Deposition of Robert S. Tamsky at 140-41. In addition, during the negotiations between Bag One and Leggoons, the Estate had granted a competing license to Winterland to use approved photographs of John Lennon on t-shirts.
I find that the record sufficiently supports Leggoons' unclean hands defense. Therefore, as a court of equity, I must deny plaintiffs' motion for a preliminary injunction. To minimize any risks of irreparable harm to the plaintiffs, however, the Court will place this action on an accelerated schedule.
As stated above, the Estate's motion to dismiss is granted. The motion by the Estate and Bag One for a preliminary injunction and summary judgment is denied. Plaintiffs may renew their motion for summary judgment following additional discovery. The parties are directed to contact Chambers within seventy-two hours to schedule a conference during the week of September 16, 1996.
Dated: New York, New York
September 9, 1996
Harold Baer, Jr.