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Halo Optical Products, Inc. v. Liberty Sport, Inc.

United States District Court, N.D. New York

March 22, 2017

HALO OPTICAL PRODUCTS, INC.; and HALO SPORTS AND SAFETY, INC., Plaintiffs/Counter Defendants,
v.
LIBERTY SPORT, INC., formerly known as LIBERTY OPTICAL MANUFACTURING COMPANY, INC., Defendant/Counter Claimant.

          MCNAMEE, LOCHNER, TITUS & G. KIMBALL WILLIAMS, ESQ. WILLIAMS, P.C. Attorneys for Plaintiffs/Counter Defendants

          WHEELER, TRIGG LAW FIRM CAROLYN J. FAIRLESS, ESQ. GWEN J. YOUNG, ESQ. Attorneys for Defendant/Counter Claimant

          O'CONNELL & ARONOWITZ, P.CJEFFREY J. SHERRIN, ESQ. Attorneys for Defendant/Counter Claimant

          MEMORANDUM-DECISION AND ORDER

          Mae A. D'Agostino, U.S. District Judge.

         I. INTRODUCTION

         Plaintiffs Halo Optical Products, Inc. and Halo Sports and Safety, Inc. (collectively "Halo") commenced this action on March 13, 2014, alleging trademark infringement and breach of contract by Defendant Liberty Sport, Inc. ("Liberty"). See Dkt. No. 1. In a Memorandum-Decision and Order dated June 24, 2014 (the "June 24 Order"), this Court granted Halo's motion for a preliminary injunction. See Dkt. No. 34. On March 5, 2015, this Court denied Liberty's motion for reconsideration of the preliminary injunction order. See Dkt. No. 71. On February 22, 2016, this Court denied Liberty's motion for partial summary judgment. See Dkt. No. 102.

         Currently before the Court is another motion for partial summary judgment filed by Liberty, see Dkt. No. 103, and Halo's motion for summary judgment, see Dkt. No. 112.

         II. BACKGROUND

         A. The June 24 Order

          The Court assumes the parties' familiarity with the background of this case, as detailed in the June 24 Order. See Dkt. No. 34. The Court is aware that some new information has come to light during discovery, but the Court's June 24 Order adequately sets forth the overall background of the case. The Court will discuss any new information to the extent that it is relevant in the Court's analysis of the parties' current motions.

         Although Liberty filed its motion for partial summary judgment before Halo filed its motion for summary judgment, the Court will discuss Halo's motion first.

         B. Halo's Motion for Summary Judgment

         Halo argues that it is entitled to summary judgment on all of its claims, and that the preliminary injunction granted in the June 24 Order should now be made permanent. With respect to Halo's breach of contract claims, Halo contends that, when Liberty began directly ordering REC SPECS and certain non-REC SPECS products from Hwa Meei Optical ("Hwa Meei") instead of ordering the products through Halo, Liberty breached "the parties' agreements and the parties' custom and practice of implementing their agreements." Dkt. No. 112-13 at 14. Halo also claims that any ambiguity in the 1993 Trademark License Agreement has been clarified by the parties' course of conduct over the past several decades. Id. at 15-16. As such, Halo believes that it is entitled to summary judgment on its breach of contract claims.

         In response, Liberty argues that questions of material fact preclude summary judgment on Halo's breach of contract claims. Liberty claims that once it terminated the 2002 Outline of Understanding and the 2006 Memorandum of Understanding, the only remaining contracts between the parties are the 1992 Distribution Agreement and the 1993 Trademark Licensing Agreement. See Dkt. No. 113 at 21. Since neither contract sets forth the price that Halo may charge Liberty for its inspection services or use of the REC SPECS mark, Liberty claims that material facts exist regarding the extent of Halo's damages. See Id. at 21-23.

         Halo also argues that it is entitled to summary judgment on its Lanham Act claims for trademark infringement (see section 32 of the Lanham Act, 15 U.S.C. § 1114(1)(a)), and unfair competition (see section 43 of the Lanham Act, 15 U.S.C. § 1125(a)(1)(A)). Halo claims that, when Halo gave Liberty permission to sell REC SPECS and sports protective eyewear that competes with REC SPECS, it did so on the condition that Halo would continue to receive the orders for such products and continue to inspect those products. See Dkt. No. 112-13 at 20. Halo asserts that it lost the ability to monitor and protect the quality of the products bearing its trademark when Liberty began to purchase such products directly from Hwa Meei. See Id. As such, Halo argues that it is entitled to summary judgment on its trademark infringement and unfair competition claims.

         Liberty counters that Halo has not demonstrated a likelihood of confusion, which is an essential element of Halo's claims under the Lanham Act. See Dkt. No. 113 at 23-25. Liberty notes that Halo failed to address the Polaroid factors, which are factors that courts consider when determining whether a likelihood of confusion exists. See Id. at 24-25. Liberty further argues that Halo has "merely dressed up its breach of contract claim as trademark infringement claims in order to seek damages beyond breach of contract damages, to which Halo is not entitled." Id. at 24.

         Halo also contends that it is entitled to summary judgment on its New York General Business Law ("N.Y. G.B.L.") claims. Halo does not address the elements of its claims, but refers the Court to its briefing on Liberty's motion for partial summary judgment with respect to Halo's N.Y. G.B.L. claims. See Dkt. No. 112-13 at 23. Halo also seeks dismissal of Liberty's remaining counterclaims. See Id. at 23-24.

         Liberty argues that Halo's failure to address its N.Y. G.B.L. claims precludes summary judgment on those claims. See Dkt. No. 113 at 27. Liberty also purportedly withdrew its remaining counterclaims in a footnote in Liberty's opposition papers, see Id. at 28 n.19, but Halo argues that any dismissal of Liberty's counterclaims should be on the merits, see Dkt. No. 120-16 at 8. Liberty also makes several general arguments with respect to Halo's request for a permanent injunction, including that there is no reasonable likelihood that the alleged wrong will be repeated, and that Halo has failed to establish irreparable harm. See Dkt. No. 113 at 9-13. Liberty further makes several claims with respect to damages that Halo seeks, including that Halo is not entitled to any monetary damages under the Lanham Act, that Halo is not entitled to attorney's fees, that Halo is not entitled to recover both its actual damages and Liberty's profits, and that Halo is not entitled to enhanced or punitive damages. See Id. at 13-19.

         C. Liberty's Motion for Partial Summary Judgment

         Liberty's motion for partial summary judgment seeks dismissal of Halo's claim for enhanced damages under the Lanham Act, and also seeks dismissal of Halo's claims under sections 349 and 350 of the N.Y. G.B.L. See Dkt. No. 103 at 1. Liberty also seeks dismissal of Halo's claim for punitive damages and for damages under N.Y. G.B.L. § 360-l. Id.

         With respect to Halo's Lanham Act claims, Liberty argues that treble or enhanced damages are inappropriate since Halo can readily calculate its damages. See Dkt. No. 103-1 at 4. Liberty contends that Halo can use the documentation of Liberty's direct purchases from Hwa Meei to calculate Halo's damages for the time period that Liberty directly ordered products from Hwa Meei instead of Liberty's regular practice of first placing an order through Halo. See Id. at 4-5. Liberty's Chief Financial Officer, Franco Tommasino, calculated Halo's purported damages based on the documentation of Liberty's direct purchases from Hwa Meei using two different damage calculations. Id.; Dkt. No. 108 at 2-3. As such, it is Liberty's position that since Halo's damages are readily calculable, any enhanced damages would be for punitive purposes only, which are not permitted under the Lanham Act.

         Halo argues that its damages are not readily calculable since Halo never had the opportunity to confirm the quantities of the products that Liberty directly purchased from Hwa Meei. See Dkt. No. 109-2 at 9. Although Halo was able to confirm the prices of the products that Liberty directly purchased, without the quantities of those products, Halo contends that it cannot accurately determine its damages. See Id. at 6-7. Halo further argues that even if its damages can be readily calculated, there is a split among courts in the Second Circuit as to whether that precludes an award of enhanced damages under the Lanham Act. See Id. at 9-10.

         Liberty also seeks dismissal of Halo's claims under sections 349 and 350 of the N.Y. G.B.L. Liberty argues that, along with the elements of such claims, Halo "also must show that the core harm at issue is 'to the public interest in New York at large, ' rather than to the plaintiff's business." Dkt. No. 103-5 at 7. Liberty further argues that, in the context of alleged trademark violations, a plaintiff must show that there is a specific and substantial injury to the public interest over and above an ordinary trademark infringement claim. Id. at 8. Liberty contends that Halo has not demonstrated any injury to the public over and above the injuries that Halo itself has allegedly suffered. Id. at 10. Liberty further argues that Halo has failed to demonstrate that the deceptive acts or false advertising occurred in New York, which is required by the statutes. See Id. at 11. Accordingly, Liberty argues that its motion for summary judgment seeking dismissal of Halo's N.Y. G.B.L. claims should be granted.

         Halo argues that it has sufficiently demonstrated that this case involves a potential harm to the public interest at large. See Dkt. No. 109-3 at 10. Halo claims that, once Liberty started directly purchasing products from Hwa Meei, Halo was no longer able to inspect the products that Liberty purchased directly. See Id. Since the products in this case consist of sports protective eyewear that consumers wear to protect their eyes, Halo argues that there is a potential danger to public health and safety when Halo is not given the opportunity to inspect the products. See Id. at 10-11. Halo also argues that Liberty's conduct in this case concerns harm to consumers in New York State, thus satisfying that requirement in the statute. See Id. at 9-10.

         Finally, Liberty argues that Halo's claim for punitive damages and Halo's claim for damages under N.Y. G.B.L. § 360-l should be dismissed. See Dkt. No. 103-5 at 12-14. Halo did not specifically respond to these arguments.

         III. DISCUSSION

         A. Standard of Review

         A court may grant a motion for summary judgment only if it determines that there is no genuine issue of material fact to be tried and that the facts as to which there is no such issue warrant judgment for the movant as a matter of law. See Chambers v. TRM Copy Ctrs. Corp., 43 F.3d 29, 36 (2d Cir. 1994) (citations omitted). When analyzing a summary judgment motion, the court "'cannot try issues of fact; it can only determine whether there are issues to be tried.'" Id. at 36-37 (quotation and other citation omitted). Moreover, it is well-settled that a party opposing a motion for summary judgment may not simply rely on the assertions in its pleading. See Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986) (quoting Fed.R.Civ.P. 56(c), (e)).

         In assessing the record to determine whether any such issues of material fact exist, the court is required to resolve all ambiguities and draw all reasonable inferences in favor of the nonmoving party. See Chambers, 43 F.3d at 36 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)) (other citations omitted). Where the non-movant either does not respond to the motion or fails to dispute the movant's statement of material facts, the court may not rely solely on the moving party's Rule 56.1 statement; rather, the court must be satisfied that the citations to evidence in the record support the movant's assertions. See Giannullo v. City of N.Y., 322 F.3d 139, 143 n.5 (2d Cir. 2003) (holding that not verifying in the record the assertions in the motion for summary judgment "would derogate the truth-finding functions of the judicial process by substituting convenience for facts").

         "[S]ummary judgment may be requested not only as to an entire case but also as to a claim, defense, or part of a claim or defense." Fed.R.Civ.P. 56(a) advisory committee's note to 2010 amendment. Summary judgment may also be granted against any part of the remedy sought by the opposing party's claims. See Hamblin v. British Airways PLC, 717 F.Supp.2d 303, 307 (E.D.N.Y. 2010).

         B. Halo's Motion for Summary Judgment

         1. Breach of Contract

          Halo has asserted three breach of contract claims: one for Liberty's failure to continue to order REC SPECS products and pay for Halo's inspection and testing of those products in accordance with the parties' agreements and their practice of implementing those agreements; one for Liberty selling sports protective eyewear which competes with REC SPECS eyewear in a manner not permitted by the 1993 Trademark License Agreement; and one for Liberty selling F803 products which compete with REC SPECS eyewear without having those products inspected by Halo, in breach of the 1993 Trademark License Agreement and the 2006 Memorandum of Understanding. See Dkt. No. 1 at 14-15.

         Under New York law, [1] a plaintiff must allege the following elements to state a claim for breach of contract: (i) the existence of a contract; (ii) adequate performance of the contract by the plaintiff; (iii) breach by the other party; and (iv) damages suffered as a result of the breach. See Harsco Corp. v. Segui, 91 F.3d 337, 348 (2d Cir. 1996) (citation omitted); see also Wolff v. Rare Medium, Inc., 171 F.Supp.2d 354, 357-58 (S.D.N.Y. 2001) (citation omitted). "In reviewing a written contract, a trial court's primary objective is to give effect to the intent of the parties as revealed by the language they chose to use." Seiden Associates, Inc. v. ANC Holdings, Inc., 959 F.2d 425, 428 (2d Cir. 1992) (citing Slatt v. Slatt, 64 N.Y.2d 966, 967 (1985)). "When the terms of a written contract are clear and unambiguous, the intent of the parties must be found within the four corners of the contract, giving practical interpretation to the language employed and the parties' reasonable expectations." 131 Heartland Blvd. Corp. v. C.J. Jon Corp., 82 A.D.3d 1188, 1189 (2d Dep't 2011) (citations omitted).

         Generally, "a motion for summary judgment may be granted in a contract dispute only when the contractual language on which the moving party's case rests is found to be wholly unambiguous and to convey a definite meaning." Topps Co., v. Cadbury Stani S.A.I.C., 526 F.3d 63, 68 (2d Cir. 2008) (citation omitted). "To the extent the moving party's case hinges on ambiguous contract language, summary judgment may be granted only if the ambiguities may be resolved through extrinsic evidence that is itself capable of only one interpretation, or where there is no extrinsic evidence that would support a resolution of these ambiguities in favor of the nonmoving party's case." Id. (citation omitted).

         The Second Circuit has "defined ambiguous language as that which is '"capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business."'" Seiden Associates, 959 F.2d at 428 (quotations omitted). "Conversely, language is not ambiguous when it has '"a definite and precise meaning, unattended by danger of misconception in the purport of the [contract] itself, and concerning which there is no reasonable basis for a difference in opinion."'" Id. (quotations omitted). "Ambiguity is determined within the four corners of the document; it cannot be created by extrinsic evidence that the parties' intended a meaning different than that expressed in the agreement and, therefore, extrinsic evidence 'may be considered only if the agreement is ambiguous.'" Brad H. v. City of New York, 17 N.Y.3d 180, 186 (2011) (quotation and other citations omitted).

         As outlined in the June 24 Order, the parties have entered into five agreements. The 1992 Distribution Agreement provides that, among other things, Halo agrees "to continue to manufacture high quality sports-safety eyewear products . . . for distribution by Liberty" and that "Liberty agrees to continue to be the exclusive distributor for those Halo safety-eyewear products currently carried by Liberty[.]" Dkt. No. 5-6 at 2. The 1992 Distribution Agreement further provides that either party could terminate the agreement "at anytime for any reason providing the terminating party give the other party twelve (12) months written notice of its desire to terminate." Id. Finally, the 1992 Distribution Agreement states that "Liberty shall acquire no rights to the name 'REC SPECS' by virtue of its distribution of products supplied by HALO." Id.

         The 1993 Trademark License Agreement provides, in relevant part, as follows:

Now, therefore in consideration of One dollar (1.00) to each in hand paid, receipt of which is hereby acknowledged and other good and valuable consideration and the mutual covenants and agreements herein contained, the ...

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