Breach of Contract; Tortious Interference with Business Relations; Jurisdiction
By Toshia Smith | Senior Staff Writer
Madden International, Ltd. (“Plaintiff”) is a designer and seller of footwear, handbags, and accessories. Lew Footwear Holdings Pty Ltd. (“Defendant”) is a footwear distributor in Australia. Plaintiff and Defendant entered into a licensing and distribution agreement, where Defendant would be the exclusive licensee of Plaintiff’s products in Australia and New Zealand. Unless otherwise stated in the agreement, the agreement was to expire in five years. Notably, the agreement included a forum selection clause in which any dispute arising out of the agreement would be resolved in New York under New York law. Later, Defendant informed Plaintiff of its intentions to wind down business operations with Plaintiff. Defendant then initiated proceedings in an Australian court in an effort to void the agreement.
The Australian court did not find any New York equivalent for the relief Defendant sought under Australian law. Thus, Defendant’s claims for damages in New York were at risk of being dismissed without a determination on the merits. Therefore, the Australian court allowed the proceeding to continue as Defendant’s only forum for seeking relief would have to arise under Australian jurisdiction. After receiving this determination, Plaintiff sought a preliminary injunction against Defendant in New York Supreme Court to enjoin Defendant from prosecuting claims against Plaintiff in the Australian court, and, with regards to a certain agreement between Plaintiff and Defendant, keep Defendant from initiating any proceeding in any forum other than a state or federal court in Queens or Nassau Counties, New York.
Plaintiff argued its motion for a preliminary injunction should be granted because: (1) Defendant agreed to the forum selection clause, (2) Plaintiff bargained with Defendant for the jurisdiction stated in the forum selection clause, and (3) Defendant is trying to avoid application of New York law altogether even though that’s what the parties agreed to. In opposition, Defendant argued: (1) Defendant could seek damages under Australian law due to international comity, (2) Plaintiff waited two years to seek relief in the New York court, and (3) Defendant already spent considerable resources in the Australian litigation.
Ultimately, the Court granted Plaintiff’s preliminary injunction because Plaintiff set forth sufficient evidence to satisfy the requisite evidence. In order for a court to grant injunctive relief, the party seeking relief must satisfy three elements: (1) a probability of success on the merits, (2) irreparable harm the party, and (3) the balance of the equities tips in the party’s favor. Here, the Court granted Plaintiff’s motion because Plaintiff satisfied the three elements. First, the Court reasoned Plaintiff would be irreparably harmed if not granted relief. To demonstrate irreparable harm, a movant must show that the harm is imminent, not remove or speculative, and the alleged injury must be one incapable of being fully remedied by monetary damages. Here, Plaintiff, a New York company that negotiated a New York forum selection clause, would be forced to litigate in Australia. To subject Plaintiff to damages that are unavailable under New York law would place Plaintiff liable under a foreign statute it did not agree to be bound by. Thus, the Court found that Plaintiff met the first element. Second, the Court concluded that the balance of the equities tipped in Plaintiff’s favor for the same reason. The Court found that Defendant was trying to get away from its contractual commitment by seeking relief outside of New York court. Moreover, the Court declined to extend comity to the case as New York has a strong public policy to ensure that two sophisticated business entities that freely execute a forum selection clause abide by the agreement. Thus, the Court found that Plaintiff met the second element. Third, the Court held Plaintiff would likely succeed on the merits. The Court found that neither party made a clear showing on this issue, but since Plaintiff had a showing of irreparable harm and balance of the equities, Plaintiff made a prima facie showing of entitlement to a preliminary injunction. Thus, the Court found that Plaintiff met the third element.
Accordingly, the Court granted Plaintiff’s request for a preliminary injunction.
Madden Intl., Ltd. v. Lew Footwear Holdings Pty Ltd., Index No. 650209/2015, 1/15/16 (Scarpulla, J.).