Monday, December 16, 2013
To judge by the numerous cases that remind one of Wood v. Lucy, Lady Duff-Gordon, one might have the impression that parties never abide by their exclusive distribution agreements. This month, the District Court for the Southern District of New York issued its memorandum and order on defendant's partial motion to dismiss in Ciamara Corp. v. Widealab, Inc., in which Ciamara sued Widealab for breach of an exclusive distribution agreement relating to high-end audio equipment.
According to the complaint, the parties agreed in September 2011 that Ciamara would be the exclusive North American distributor of Widealab's products for two years. Ciamara alleges that it had significant expenses as a result of this agreement. In November 2011, Widealab removed all references to Ciamara from its website and instead listed a Ciamara competitor as its North American distributor. Ciamara sued on a number of theories, and Widealab moved to dismiss claims for fraudulent inducement, tortious interference, quantum meruit, and unjust enrichment. Widealab also moved to dismiss plaintiff's request for loss-of-future-profits, harm-to-business-reputation, and loss-of-goodwill damages related to its breach-of-contract claims.
After a nifty review of New York law relating to fraud, quantum meruit/unjust enrichment and damages (Ciamara abandoned its tortious interference claim), the District Court granted Widealab's motion in all respects, leaving Ciamara with a simple claim for breach of contract, which restores to the case its original dignity. No more slumming in torts and equity!