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U.S. Licensing Associates, Inc v. the Rob Nelson Company

November 28, 2011

U.S. LICENSING ASSOCIATES, INC., PLAINTIFF,
v.
THE ROB NELSON COMPANY,
DEFENDANT.



The opinion of the court was delivered by: Hon. Harold Baer, Jr., District Judge:

OPINION & ORDER

Before the Court is a motion to dismiss brought by defendant The Rob Nelson Company ("RNC"). The Notice of Motion also seeks leave to change the Defendant's name in the case caption to "The Rob Nelson Company" rather than the "The Rob Nelson Corporation." In the amended complaint, plaintiff U.S. Licensing Associates, Inc. ("USLA") alleges two counts of breach of contract and one count of breach of the implied covenant of good faith and fair dealing in connection with a contract between RNC and USLA entered into in 1992 ("1992 Contract"). For the reasons set forth below, the motion is GRANTED in part and DENIED in part.

I. BACKGROUND

On January 1, 1992, The Jim Bouton Corporation ("JBC"), Defendant RNC's predecessor in interest, entered into a written license agreement ("1992 License Agreement") with Amurol Products Company ("Amurol") through which JBC licensed the use of trademarks for a shredded gum called Big League Chew. Complaint ¶ 12. In return, Amurol agreed to manufacture and sell Big League Chew products and agreed to pay JBC 6 percent of net sales of Big League Chew products, with a Guaranteed Minimum Royalty of $500,000.00 each year. Id. at ¶ 21.

On January 1, 1992, USLA also entered into the 1992 Contract with JBC, through which JBC agreed to pay USLA a percentage of royalties received from Big League Chew products in consideration for USLA's "labor and services in connection with" prior license agreements between JBC and Amurol. Id. at ¶ 14. USLA was entitled to receive 1.5 percent of Amurol's net sales of Big League Chew products, or if Amurol did not achieve the Guaranteed Minimum Royalty, USLA was entitled to 23 percent of the difference between the Guaranteed Minimum Royalty and the actual royalties earned. Id. at ¶ 23.

JBC subsequently assigned all of its rights, obligations and liabilities under the 1992 Contract and 1992 License Agreement to RNC, id. at ¶¶ 15, 16, and Wrigley subsequently purchased Amurol, assuming all of Amurol's rights and obligations under the 1992 License Agreement. Id. at ¶ 17.

The 1992 Contract was scheduled to expire on December 31, 2011. Id. at ¶ 26. In January 2010, Wrigley notified RNC that it did not intend to renew the 1992 License Agreement and wanted to terminate the 1992 License Agreement at the end of 2010 in exchange for payment of the 2011 Guaranteed Minimum Royalty. Id. at ¶ 28. Instead, RNC waived its right to the 2011 Minimum Guaranteed Royalty and Wrigley agreed to sell the equipment it had used to manufacture Big League Chew Products to RNC pursuant to a termination agreement ("Termination Agreement") entered into on July 28, 2010. Id. at ¶¶ 30-32.

The 1992 Contract, 1992 License Agreement and the Termination Agreement explicitly state that the agreements should be construed under the laws of the state of New York. Feureisen Decl., Ex. B 1992 Contract ¶ 7; Feureisen Decl., Ex. A 1992 License Agreement ¶ 31; Feureisen Decl., Ex. G Termination Agreement ¶ 10(c).

II. LEGAL STANDARD

According to the Supreme Court's most recent pronouncements, "[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' " Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly, 550 U.S. at 556). The requirement that the court accept all factual allegations as true does not apply to "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements." Id. The court's determination of whether a complaint states a "plausible claim for relief" is a "context-specific task" that requires application of "judicial experience and common sense." Id. at 1950.

At the motion to dismiss stage, "the complaint is deemed to include any written instrument attached to it as an exhibit or any statements or documents incorporated in it by reference." Chambers v. Time Warner, Inc. 282 F.3d 147, 152 (2d Cir. 2002) (internal quotation marks and citation omitted) (affirming district court's consideration of contracts referenced in the complaint on a motion to dismiss).

New York rules govern choice-of-law questions in diversity actions in this Court. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 498 (1941). Under New York law, "a contractual choice-of-law provision is generally binding on a party claiming rights under a contract." CIH Intern. Holdings, LLC v. BT United States, LLC, No. 10 Civ. 7790, 2011 WL 4483983, at *4 (S.D.N.Y. Sept. 28, 2011) (citing Hartford Fire Ins. Co. v. Orient Overseas Containers Lines (UK) Ltd., 230 F.3d 549, 556 (2d Cir. 2000) (relying on New York Contract law to resolve the issues raised in the case).

While the court must "draw all reasonable inferences" in the non-movant's favor Roth v. Jennings, 489 F.3d 499, 503 (2d Cir. 2007), it need not accord "[l]egal conclusions, deductions or opinions couched as factual allegations . . . a presumption of truthfulness." In re NYSE ...


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