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Daly v. United States Fencing Association

April 16, 2007

PHILIP DALY D/B/A TAR TAR PRINTING AND/OR PROPRINTWEAR, PLAINTIFF,
v.
UNITED STATES FENCING ASSOCIATION, DEFENDANT.



The opinion of the court was delivered by: Lindsay, Magistrate Judge

MEMORANDUM AND ORDER

Before the court is the plaintiff's motion for a preliminary injunction referred to the undersigned by District Judge Leonard D. Wexler on April 11, 2007. The parties consented to a binding determination of the motion by the undersigned. During a teleconference on April 10, 2007, the parties also advised the court that, in lieu of an evidentiary hearing, they would rest on their papers and oral argument thereon. Accordingly, the court scheduled oral argument on the plaintiff's motion and counsel for the parties appeared on April 12, 2007 for that purpose.

Based on the plaintiff's memorandum of law in support of the motion, the amended complaint, the affidavit of Philip Daly in support of the motion, the reply declaration of Philip Daly, with the exhibits annexed thereto, the defendant's memorandum of law in opposition, the affidavit of Michael Massik, together with exhibits annexed thereto, the affidavit of defense counsel Thomas J. McNamara with exhibits annexed thereto, the oral arguments and the applicable law, the motion for injunctive relief is denied.

FACTS

The plaintiff, Philip Daly, d/b/a/ Tar Tar Printing and/or Proprintwear ("Proprintwear"), a resident of Suffolk County, New York, commenced this breach of contract action against the defendant, United States Fencing Association ("USFA") a nonprofit corporation organized under the laws of the state of Colorado with its principal place of business also in Colorado. (Am. Compl. at ¶¶ 1-3). The USFA is the National Governing Body for the sport of fencing. (Id. at ¶ 6). This court's subject matter jurisdiction is invoked pursuant to 28 U.S.C. § 1332 given the parties' diversity of citizenship and the plaintiff's allegation that the amount in controversy exceeds $75,000. (Id. at ¶ 4).

The parties agree that the plaintiff and defendant entered into a written Trademark and License Merchandise Agreement ("License Agreement") in July 2001, whereby the plaintiff was granted the exclusive right to manufacture, distribute and sell products carrying the USFA logo. (Id. at ¶ 10; see also License Agreement annexed to the Daly Reply Decl. as Exhibit 1). 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. (License Agreement at ¶¶ 4, 10). 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. (Massik Aff. at ¶ 2, see also May 1, 2006 letter annexed to the Daly Reply Decl. as Exhibit 2). 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. (Id.). The termination letter set forth the possibility that an entirely new agreement could be negotiated and invited plaintiff to discuss the matter further. (Id.). Although plaintiff contends that he never received this letter and that his licensing agreement with the USFA continued beyond May 2006, he acknowledges that between May 2006 and January 2007 he met with and spoke multiple times with the defendant in an effort to negotiate new licensing terms. (Daly Repl. Decl. at ¶¶ 6-9 ). In the middle of these negotiations on October 3, 2006, sensing that he may not have a valid license agreement, the plaintiff applied for a USFA corporate membership. (Id. at ¶¶ 16-17). Under the terms of a corporate membership, 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. (Id.). Plaintiff asserts that he applied for this membership simply as a precautionary measure. (Id.). While negotiations were ongoing, 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 e-mail dated January 23rd that despite their many meetings and discussions, no agreement could not be reached on a new license. (See Ex. 7, annexed to the Daly Reply Decl.). Plaintiff was also informed that his services would no longer be required at future tournaments. (Id.). Plaintiff replied by e-mail stating:

[O]ur [b]usiness relationship has changed from that of Official Merchandiser to Corporate Vendor. We forged a secondary agreement to sell tournament t-shirts and provide the USFA with a percentage of that revenue in exchange for vendor space at National Tournaments. On January 26, 2007 the USFA notified us that our agreement had been terminated. This notification was provided twenty-one (21) days after the 2007 Junior Olympic filing deadline of January 5, 2007 effectively eliminating us from filing a timely application. On February 2, 2007 we made application to attend the 2007 Junior Olympics as a Vendor and the USFA denied our application based upon a late filing and/or limited space considerations. . . . It is clear that the USFA has established a unique application process for our business resulting from your numerous contractual violations under our previous relationship. . . . We appeal to your better judgment and respectfully request that you approve our application for the 2007 Junior Olympics and the 2007 Summer Nationals . . . . (Ex. 5 annexed to the Daly Reply Decl.) (emphasis added).

Recognizing that he could no longer attend events as an exclusive licensee, plaintiff then pursued his options as a corporate member. By letter dated March 2, 2007, plaintiff was advised that vendor spots for the season had already been filled and this lawsuit followed. The next USFA sponsored events are scheduled for April 20-April 23rd in Arizona and June 29-July 8th in Florida. The plaintiff seeks a preliminary injunction restraining and enjoining, during pendency and determination of this action, the defendant from breaching the contract between the parties and restricting plaintiff's attendance at USFA events or USFA sponsored events. See Order to Show Cause.*fn1

DISCUSSION

1. Preliminary Injunction Standards

"A party seeking injunction relief ordinarily 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). Where the requested preliminary injunction will provide a movant with substantially all the relief sought and that relief cannot be undone even if defendant prevails at trial on merits, a heightened standard has been applied. Id. at 33-34. Under this higher standard, the party seeking relief must "meet the higher standard of substantial, or clear showing of, likelihood of success to obtain the preliminary injunction,"as opposed to a mere likelihood, together with the requisite irreparable injury. Forest City Daly Hous., Inc. v. Town of N. Hempstead, 175 F.3d 144, 149 (2d Cir. 1999); see also Eng v. Smith, 849 F.2d 80, 82 (2d Cir. 1988).

It has been said that the use of the heightened standard is "justified when the issuance of an injunction will render a trial on the merits largely or partially meaningless, . . . [such as, in] a case involving the live televising of an event scheduled for the day on which preliminary relief is granted." Doherty, 60 F.3d at 35. While the relief being sought warrants the application of a higher standard, the court need not determine whether the heightened standard should apply ...


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