The opinion of the court was delivered by: Leisure, District Judge.
Plaintiffs AIM International Trading, LLC ("AIM"), Moshe Aviv,
AIM Dania, Inc. ("AIM Dania"), and AIM International Trading,
Inc. ("AIM, Inc.") apply pursuant to Rule 65 of the Federal
Rules of Civil Procedure for a temporary restraining order
("TRO") against defendants Valcucine SpA ("Valcucine"), IBI LLC
("IBI"), Kitchens of Veneto, Inc. ("Veneto"), Brian Jevremov,
Ruben Braha, and Jeffrey McDuffee, enjoining Valcucine, its
agents, attorneys, and all those acting on their behalf from (1)
selling products offered for sale by Valcucine under the
trademarks "Valcucine" and "New Art" dealerships which were
established by AIM pursuant to a March 31, 1999 Exclusive
Distributorship Agreement ("Distributorship Agreement"); (2)
selling Products to any person within the United States other
than AIM; and (3) directing Valcucine to continue to fulfill and
ship on a C.O.D. basis orders for Products forwarded to it by
AIM in accordance with the Distributorship Agreement. For the
following reasons, plaintiffs' application is granted.
Plaintiffs bring this action for inter alia: (1) breach of
contract; (2) breach of implied covenant of good faith; (3)
fraud; (4) tortious interference with contractual and business
relationships; (5) disparagement and injurious falsehood; and
(6) unjust enrichment.*fn1 The case was removed by defendants
on February 21, 2002, one day before the state court was to have
a hearing regarding the TRO.
Valcucine is an Italian company engaged in the manufacture of
high-end kitchen cabinetry and furniture components sold in
Europe and elsewhere. See Complaint at ¶ 5. The plaintiffs
allege that AIM and Valcucine entered into the Distributorship
Agreement on March 31, 1999, whereby AIM was appointed by
Valcucine as the exclusive distributor of Valcucine Products in
the United States. See Complaint at ¶ 6. AIM's business is
based solely on its role as exclusive distributor of Valcucine
products. See Affirmation of May Orenstein, Esq., February 21,
2002 ("Orenstein Aff."), at ¶ 15.*fn2 Further, plaintiffs
claim that they have spent hundreds of thousands of dollars in
start-up costs in connection with creating a distribution
network in the United States for Valcucine's products. See
Complaint at ¶ 24. Plaintiffs claim that their efforts in
marketing Valcucine have proven fruitiful, having secured
agreements with five dealers to sell, through AIM, Valcucine's
products in the United States.*fn3
However, by a letter dated October 24, 2001, Valcucine
purported to terminate its Distributorship with plaintiffs, as
of February 28, 2002, expressing dissatisfaction with the
plaintiffs efforts. Plaintiffs allege, however, that the
Distributorship agreement was terminable only for cause, and
that defendants had no cause in order to terminate the
agreement. See Orenstein Aff. at ¶ 6.
On January 10, 2002, plaintiffs filed the instant case,
alleging a scheme by which the defendants seek to misappropriate
the good will, and the network of five dealerships built by
plaintiffs pursuant to the Distributorship. See Orenstein Aff.
at ¶ 7. Following commencement of the action, by letter dated
January 17, 2002, Valcucine purported to terminate the
Distributorship immediately. See Orenstein Aff. at ¶ 8. On
February 7, 2002, pursuant to an arbitration clause in the
Distributorship, Valcucine filed a request for arbitration to
the Secretariat of the International Court of Arbitration,
seeking, among other things, declaration that Valcucine validly
terminated the Distributorship. See Orenstein Aff. at ¶ 10.
Plaintiffs now seek the above described temporary restraining
order during the pendency of the arbitration proceedings.
The standard for granting a temporary restraining order and a
preliminary injunction pursuant to Rule 65 of the Federal Rules
of Procedure are identical.*fn4 It
is well established that in order to obtain such relief, the
movant must show: "(a) irreparable harm and (b) either (1)
likelihood of success on the merits or (2) sufficiently serious
questions going to the merits to make them a fair ground for
litigation and a balance of hardships tipping decidedly toward
the party requesting the preliminary relief." See Jackson
Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir.
1979). Whether injunctive relief should issue or not "rests in
the sound discretion of the district court which, absent abuse
of discretion, will not be disturbed on appeal." Reuters Ltd.
v. United Press Int'l, Inc., 903 F.2d 904, 907 (2d Cir. 1990)
(quoting Thornburgh v. American College of Obstetricians and
Gynecologists, 476 U.S. 747, 755, 106 S.Ct. 2169, 90 L.Ed.2d
A temporary restraining order pursuant to Fed.R.Civ.P.
Rule 65(b) is designed to preserve the status quo. "The purpose of a
temporary restraining order is to preserve an existing situation
in statu quo until the court has an opportunity to pass upon
the merits of the demand for a preliminary injunction." Warner
Bros. Inc. v. Dae Rim Trading, Inc., 877 F.2d 1120, 1125 (2d
Cir. 1989) (quoting Pan American World Airways, Inc. v. Flight
Engineers' Int'l Ass'n, 306 F.2d 840, 842-43 (2d Cir. 1962)).
Thus, a temporary restraining order should issue for just so
long as is necessary to hold a hearing. See Granny Goose Foods,
Inc. v. Brotherhood of Teamsters, 415 U.S. 423, 439, 94 S.Ct.
1113, 39 L.Ed.2d 435 (1974).
The Second Circuit has deemed the threshold showing of
"irreparable harm" to be of particular significance under
Rule 65, regardless of the strength of the movant's case on the
merits. See, e.g., Reuters Ltd. v. United Press Int'l, Inc.,
903 F.2d 904, 907 (2d Cir. 1990) ("a showing of probable
irreparable harm is the `single most important prerequisite for
the issuance of a preliminary injunction'") (quoting Bell &
Howell: Mamiya Co. v. Masel Supply Co. Corp., 719 F.2d 42, 45
(2d Cir. 1983)). Accordingly, "[i]rreparable harm must be shown
by the moving party to be imminent, not remote or speculative,
and the alleged injury must be one incapable of being fully
remedied by monetary damages." Reuters, 903 F.2d at 907
(citing Tucker Anthony Realty Corp. v. Schlesinger,
888 F.2d 969, 972 (2d Cir. 1989)). The movant is required to establish
not a mere possibility of irreparable harm, but that it is
"likely to suffer irreparable harm if equitable relief is
denied." JSG Trading Corp. v. Tray-Wrap, Inc., 917 F.2d 75, 79
(2d Cir. 1990) (emphasis in original). "Likelihood sets, of
course, a higher standard than `possibility.'" Id.
In Roso-Lino Beverage Distributors, Inc. v. Coca-Cola
Bottling Co., 749 F.2d 124 (2d Cir. 1984), the Second Circuit
preliminarily enjoined Coca-Cola from terminating plaintiff as a
distributor pending arbitration. See id. at 127. The Court
explained the basis of its decision as follows: