Benihana of Tokyo Inc. v. Benihana Inc. et al
Filing
95
MEMORANDUM OPINION. Signed by Judge Sue L. Robinson on 7/22/2014. (nmfn)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
BENIHANA OF TOKYO, INC.
Plaintiff,
v.
BENIHANA, INC., and
NOODLE TIME, INC.,
Defendants.
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) Civ. No. 10-1051-SLR
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David M. Powlen, Esquire and Kevin G. Collins of Barnes & Thornburg LLP,
Wilmington, Delaware. Counsel for Plaintiff. Of Counsel: James R. Burdett, Esquire,
Joseph D. Lewis, Esquire and Mark R. Owens, Esquire of Barnes & Thornburg LLP.
Robert W. Whetzel, Esquire and Todd A. Coomes, Esquire of Richards, Layton &
Finger, PA, Wilmington, Delaware. Counsel for Defendants. Of Counsel: Alan H. Fein,
Esquire and Joshua Munn, Esquire of Stearns Weaver Miller Weisler Alhadeff &
Sitterson, P.A.
MEMORANDUM OPINION
JJ-
2014
Dated: July
Wilmington, Delaware
R~,
istrict Judge
I. INTRODUCTION
On December 3, 2010, Benihana of Tokyo, Inc. ("plaintiff' or "BOT") filed this
complaint comprising six causes of action: (1) breach of contract; (2) specific
performance; (3) conversion; (4) false designation of origin; (5) trademark infringement;
and (6) declaratory judgment. (D. I. 1 at 6-12) Plaintiff amended its complaint on
December 7, 2010. (D.I. 6) On February 4, 2011, defendants Benihana, Inc. ("BI") and
Noodle Time, Inc. ("Noodle Time," collectively "defendants") filed a motion to dismiss
plaintiff's amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).
(D .I. 11) In lieu of a responsive brief, plaintiff filed a motion to strike/exclude (D .I. 15},
which the court granted in part and denied in part.
On December 13, 2011, the court granted in part and denied in part defendants'
motion to dismiss. (D. I. 32) The court granted BOT leave to amend its complaint. On
January 9, 2012, plaintiff filed its second amended complaint, alleging causes of action
for: (1) breach of contract; (2) specific performance; (3) conversion; (4) false
designation of origin (or false advertising); and (5) declaratory judgment. (D.I. 35)
Defendants denied the allegations and asserted counterclaims against BOT for breach
of contract. (D. I. 61)
Following a teleconference with the court, a scheduling order was entered,
setting a discovery deadline of January 24, 2014. 1 (D. I. 63) On February 14, 2014,
1
According to defendants, "BOT did not seek discovery of Bl and failed to
produce any documents or witnesses supporting its claims or to designate any expert
witnesses to support its case." (D.I. 78 at 1) Plaintiffs aver that "[t]hroughout this
matter, the parties have engaged in settlement discussions [and] [a]t one point, BOT
believed the parties had an agreement in principal. These discussions were the parties'
focus during the discovery period." (D.I. 82 at 1)
defendants filed a motion for summary judgment. (D.I. 77) The matter is fully briefed.
(D. I. 78, 79, 82, 83, 84, 86, 87) The court has jurisdiction pursuant to 28 U.S.C. §§
1331, 1332 and 1338.
II. BACKGROUND 2
Plaintiff is a New York corporation with a principal place of business in New York,
New York. Defendant Bl is a Delaware corporation and defendant Noodle Time is a
Florida corporation. Both defendants have a principal place of business at the same
address in Miami, Florida. Noodle Time is a subsidiary of Bl.
BOT was founded by Rocky Aoki ("Aoki") in 1963 and opened its first Japanese
teppanyaki steakhouse called "Benihana" in New York. The concept proved popular;
by 1972 BOT owned, operated or licensed approximately 18 restaurants grossing $12
million. Several years later, Aoki formed Benihana National Corporation ("BNC"), taking
the company public to raise capital. Aoki served as chairman of both BNC and
privately-held BOT, retaining 51% of BNC's common stock and keeping about 30
restaurants in BOT. Later, BNC announced that it would acquire BOT's operations in
the United States and rights to BOT's trademarks. Defendant Bl was formed, then
acquired BNC in a 1995 merger transaction ("1995 transaction"). Aoki continued to
serve as chairman of 81. The 1995 transaction was governed by the "Amended and
Restated Agreement and Plan of Reorganization" ("ARA").
The ARA provided for the sale, transfer and assignment of certain restaurants
listed on Schedule A of the ARA, and all related assets, from BOT to Bl (or to a wholly-
2
Unless otherwise noted, the background is taken from the court's memorandum
opinion of December 13, 2011. (D.I. 32)
2
owned subsidiary of Bl). This included the trademarks and servicemarks listed on
Schedule 1.01 (d) ("Trademarks") "to the extent applicable to the United States
(including its territories and possessions), Central America, South America and the
islands of the Caribbean sea" ("Territory"). Among the Trademarks listed on schedule
1.01 (d) were the text "BENIHANA" ("the BENIHANA trademark") and a "flower design." 3
Section 7.10 of the ARA further provided that
[BI] will own the Trademarks in the Territory and BOT will continue to own
the Trademarks outside of the Territory. Accordingly, each of BOT and
Benihana agree that, without the prior written consent of the other, neither
will make any use of the Trademarks which could reasonably be expected
to reduce the value or usefulness of the Trademarks to the other party.
In addition, each of BOT and [BI] shall be responsible for the proper
registration and maintenance of the Trademarks and the prosecution of
infringements or potential infringements of the Trademarks in the territories
where such party has an interest in the Trademarks .... The obligations
of this Section shall survive the Closing for an indefinite period.
(0.1. 83, ex. A at 24)
Section 10.10 of the ARA addresses specific performance:
The parties hereto agree that irreparable damage would occur in the
event any of the provisions of this Agreement were not to be performed
in accordance with the terms hereto and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any
remedy at law or equity.
(/d. at 32)
On or about April 23, 2010, Bl, through its subsidiary defendant Noodle Time,
filed a first application with the World Intellectual Property Organization ("WI PO")
seeking to register the BENIHANA trademark in Iceland, Iran, Monaco, Singapore,
3
"The word 'Benihana' is translated as 'red flower."' (0.1. 32 at 2, n.1)
3
Ukraine, Vietnam and Zambia. (0.1. 83
at~
14; 0.1. 27 at ex. 7; 0.1. 79 at ex. 1) This
application was assigned registration no. 1048205.
On July 5, 2010, Bl, through its subsidiary defendant Noodle Time, initiated a
second WI PO application for registration of the Benihana flower design. (0.1. 83
at~
15; 0.1. 27 at ex. 9; 0.1. 79 at ex. 1) The application was assigned registration no.
1056172 and sought to register the flower design in several countries, including Iceland,
Iran, Monaco, Ukraine and Zambia. (/d.)
On January 28, 2011, Bl, through its subsidiary defendant Noodle Time,
submitted a "Request for the Recording of a Renunciation" with WI PO, renouncing
registration of the Benihana flower design trademark in the disputed countries. 4 (0.1. 25
at 3; 0.1. 79 at ex.1) In February 2011, Bl, through its subsidiary defendant Noodle
Time, filed a "Request for the Recording of a Renunciation" with WI PO, renouncing
registration of the BENIHANA trademark in the disputed countries. (/d.)
According to general counsel for Bl ("Mendoza affidavit"), the registrations have
been renounced and Bl "will not pursue international registration of trademarks rights in
the countries located in BOT's Territory as defined in the ARA." (0.1. 79, ex.1
at~
5) In
a March 13-14, 2014 email exchange between counsel, the issue was further
discussed, as follows:
BOT: This will confirm BOT's intention to file a motion for leave to amend
the complaint in order to add the remedy of seeking rescission of the ARA.
As we discussed, this is based on Bl's continuing position that it has the
right to file in countries outside of its defined Territory. Indeed, Ms.
Mendoza's affidavit merely states that Bl "will not pursue international
4
Approximately three months prior to the second renunciation, plaintiff filed the
complaint at bar against defendants. (0 .I. 1)
4
registration of trademark rights in the countries located in BOT's
Territory as defined in the ARA." This would not foreclose Bl from filing
national applications in those countries ....
Bl: ... The parsing you came up with is half-again too clever. Ms.
Mendoza referred to an "international registration" because
that was what was filed, and that was what the case was
purportedly about. But, let me make this more clear, if indeed it
could be more clear: As you well know, Bl will not file international
applications, and it will not file national applications. It will not file
applications in BOT's Territory. It has not and will not register in
BOT's Territory. It has not and will not use in BOT's Territory ....
(D. I. 87 at ex. 2)
Ill. STANDARD OF REVIEW
"The court shall grant summary judgment if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law." Fed. R. Civ. P. 56(a). The moving party bears the burden of
demonstrating the absence of a genuine issue of material fact. Matsushita Elec. Indus.
Co. v. Zenith Radio Corp., 475 U.S. 574, 586 n.10 (1986). A party asserting that a fact
cannot be- or, alternatively, is- genuinely disputed must demonstrate such, either by
citing to "particular parts of materials in the record, including depositions, documents,
electronically stored information, affidavits or declarations, stipulations (including those
made for the purposes of the motions only), admissions, interrogatory answers, or other
materials," or by "showing that the materials cited do not establish the absence or
presence of a genuine dispute, or that an adverse party cannot produce admissible
evidence to support the fact." Fed. R. Civ. P. 56(c)(1 )(A) & (B). If the moving party has
carried its burden, the nonmovant must then "come forward with specific facts showing
that there is a genuine issue for trial." Matsushita, 475 U.S. at 587 (internal quotation
5
marks omitted). The court will "draw all reasonable inferences in favor of the
nonmoving party, and it may not make credibility determinations or weigh the evidence."
Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000).
To defeat a motion for summary judgment, the non-moving party must "do more
than simply show that there is some metaphysical doubt as to the material facts."
Matsushita, 475 U.S. at 586-87; see also Podobnik v. U.S. Postal Serv., 409 F.3d 584,
594 (3d Cir. 2005) (stating party opposing summary judgment "must present more than
just bare assertions, conclusory allegations or suspicions to show the existence of a
genuine issue") (internal quotation marks omitted). Although the "mere existence of
some alleged factual dispute between the parties will not defeat an otherwise properly
supported motion for summary judgment," a factual dispute is genuine where "the
evidence is such that a reasonable jury could return a verdict for the nonmoving party."
Anderson v. Liberty Lobby, Inc., 477 U.S. 242,247-48 (1986). "If the evidence is
merely colorable, or is not significantly probative, summary judgment may be granted."
/d. at 249-50 (internal citations omitted); see also Ce/otex Corp. v. Catrett, 477 U.S.
317, 322 ( 1986) (stating entry of summary judgment is mandated "against a party who
fails to make a showing sufficient to establish the existence of an element essential to
that party's case, and on which that party will bear the burden of proof at trial").
IV. DISCUSSION
Defendants have moved for summary judgment on all claims that survived the
motion to dismiss: (1) breach of contract; (2) specific performance; (3) conversion; (4)
6
false designation of origin (or false advertising); and (5) declaratory judgment. 5 (D.I. 78)
In its opposition to the motion, however, plaintiff seeks to "simplify this dispute and
conserve judicial and party resources" by focusing "on the heart of the parties' dispute:
BOT's breach of contract claim, request for a declaration of its rights, and request for
equitable relief, including injunctive relief." (D. I. 82 at 2) Plaintiffs failure to address and
defend the specific performance, conversion and false designation of origin (or false
advertising) claims constitutes abandonment. See Convoy v. Leone, 316 Fed. Appx.
140, 144 n. 5 (3d Cir. Mar. 9, 2009) ("We find this undeveloped argument has been
waived."); Blakeman v. Freedom Rides, Inc., Civ. Action No. 12-416-LPS-CJB, 2013 WL
3503165, at *13 (D. Del. July 10, 2013); Glover v. City of Wilmington, 966 F. Supp.2d
417,428 (D. Del. 2013). Accordingly, the court turns to plaintiff's remaining causes of
action.
A. Breach of Contract
Defendants contend that summary judgment is warranted because plaintiff cannot
demonstrate a breach of the ARA. (D.I. 78) There is no language in the ARA that
prohibits Bl from registering trademarks for the protection of both parties, nor any
proscription against applying for such registration. Rather, the ARA specifically prohibits
the "use" of the trademarks: "neither [party] will make any 'use' of the Trademarks which
could reasonably be expected to reduce the value or usefulness of the Trademarks to
the other party." (D.I. 83, ex. A at§ 7.1 0) (emphasis added) Further, defendants argue
5
ln light of neither party moving for summary judgment on defendants'
counterclaims, the court will consider the claims moot.
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that plaintiff cannot demonstrate any proof of damages sustained as a result of the
purported breach.
In response, plaintiff asserts that defendants' acts of applying for registration of
the trademarks constitutes "use" and, consequently, a breach of the ARA. The ARA
employs "use" in a general and broad fashion whereby any disputes over interpretation
create an issue of material fact that would preclude summary judgment. Moreover,
plaintiff avers that, under the ARA, proof of breach constitutes proof of damages
whereby a showing of actual damages is unnecessary. (D. I. 82 at 14)
Under New York law, 6 an action for breach of contract requires proof of: (1) a
contract; (2) performance of the contract by one party; (3) breach by the other party;
and (4) damages. Rexnord Holdings, Inc. v. Bidermann, 21 F.3d 522, 525 (2d Cir.
1994). It is well-settled that "[t]he fundamental objective of contract interpretation is to
give effect to the expressed intentions of the parties." Lockheed Martin Corp. v. Retail
Holdings, N. V., 639 F.3d 63, 69 (2d Cir. 2011) (quoting Klos v. Lotnicze, 133 F.3d 164,
168 (2d Cir.1997)). "The best evidence of what parties to a written agreement intend is
what they say in their writing." Greenfield v. Philles Records, Inc., 98 N.Y.2d 562, 569
(2002).
Where there is a dispute over the meaning of a contract, "the threshold question
is whether the contract is ambiguous." Lockheed Martin, 639 F.3d at 69. "Ambiguity is
determined by looking within the four corners of the document, not to outside sources."
JA Apparel Corp. v. Abboud, 568 F.3d 390, 396 (2d Cir.2009). Whether a contract is
6
The court has previously determined that New York law governs the breach of
contract claim. (D.I. 32 at 5; D.l. 83, ex. A at§ 10.06)
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ambiguous is a question of law for the court. Law Debenture Trust Co. of N.Y. v.
Maverick Tube Corp., 595 F.3d 458, 465 (2d Cir.2010).
It is well-settled that a contract is unambiguous "if the language it uses has a
definite and precise meaning, as to which there is no reasonable basis for a difference
of opinion." Lockheed Martin, 639 F.3d at 69. "[A] written agreement that is complete,
clear and unambiguous on its face must be [interpreted] according to the plain meaning
of its terms, without the aid of extrinsic evidence." Law Debenture Trust Co. of N.Y. v.
Maverick Tube Corp., 595 F.3d at 467 (internal quotations and citations omitted). In
such circumstances, courts should "read the integrated contract as a whole to ensure
that undue emphasis is not placed upon particular words and phrases, and to safeguard
against adopting an interpretation that would render any individual provision
superfluous." /d. at 468. "In interpreting a contract under New York law, words and
phrases ... should be given their plain meaning, and the contract should be construed
so as to give full meaning and effect to all of its provisions." LaSalle Bank Nat'/ Ass'n v.
Nomura Asset Capital Corp., 424 F.3d 195, 206 (2d Cir.2005). "[C]ourts may not by
construction add or excise terms, nor distort the meaning of those used and thereby
make a new contract for the parties under the guise of interpreting the writing." Law
Debenture Trust Co. of N.Y. v. Maverick Tube Corp., 595 F.3d at 468 (internal citations
omitted). "[l]f the agreement on its face is reasonably susceptible of only one meaning,
a court is not free to alter the contract to reflect its personal notions of fairness and
equity." /d. (internal quotations omitted).
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A contract is ambiguous, however, "if it is capable of more than one meaning
when viewed objectively by a reasonably intelligent person who has examined the
context" of the entire agreement as a whole. Lockheed Marlin, 639 F.3d at 69.
"Language whose meaning is otherwise plain does not become ambiguous merely
because the parties urge different interpretations in the litigation" unless each is a
reasonable interpretation. Hunt Ltd. v. Lifschultz Fast Freight, Inc., 889 F.2d 1274, 1277
(2d Cir.1989). Moreover, courts should not find the contract language to be ambiguous
where such an interpretation urged by one party would "strain the contract language
beyond its reasonable and ordinary meaning." Bethlehem Steel Co. v. Turner
Construction Co., 2 N.Y.2d 456, 459 (1957). Where the contract language creates
ambiguity, "extrinsic evidence as to the parties' intent may properly be considered." JA
Apparel, 568 F.3d at 397 (citation omitted). "Where there is such extrinsic evidence, the
meaning of the ambiguous contract is a question of fact for the factfinder." /d. (citations
omitted).
Considering this authority, in light of the record evidence and parties'
submissions, the court finds that defendants' registration of the BENIHANA Trademark
and flower design does not constitute a breach of the ARA. It is undisputed that
defendants filed applications with WI PO for international registration of the shared
BENIHANA Trademark and flower design in certain countries. And it is clear that
defendants renounced the applications and never obtained any trademark rights in the
subject countries. 7 There is nothing, however, in the ARA that prohibits defendants from
7
By affidavit and correspondence, defendants have foresworn any intention of
pursuing future registrations in the subject countries. (0.1. 79 at ex. 1; 0.1. 87 at ex. 2)
10
registering Trademarks or for applying for such registrations. Rather, the ARA
specifically precludes "use" of the Trademarks: "neither [party] will make use of the
Trademarks which could reasonably be expected to reduce the value or usefulness of
the Trademarks of the other party." (D.I. 83 at 24, § 7.1 0) While plaintiff argues that the
term "use" should be broadly construed to include "registration," the court concludes
that, in the context of the entire contact, the plain meaning of "use" is unambiguous and
does not encompass "registration" or "attempts to register" Trademarks. Plaintiff has not
presented any evidence (extrinsic or otherwise) to support its supposition that "use" is
ambiguous and applies to registration or attempted registration of the Trademarks.
Similarly, plaintiff has failed to demonstrate another element required for a breach
of contract claim, damages. See Vann v. Home Ins. Co., 733 N.Y.S. 2d 13, 14 (N.Y.
App. Div. 2001) (summary judgment is appropriate where plaintiff has suffered no
damages). Rather than producing evidence of specific damages to refute the motion for
summary judgement, plaintiff relies on its conclusory contentions and suggests that,
under the ARA, proof of breach also demonstrates proof of damages. (D. I. 83 at 10-14)
There is nothing, however, in the language of the ARA to suggest that a breach of
contract does not require proof of damages.
Moreover, plaintiff's attempt to demonstrate reduction in value of the Trademarks
by referencing a letter by defendants' counsel is unpersuasive. The conduct described
in counsel's letter involved a third party's "use" of the Trademarks in a restaurant that
was operating in Montreal, Canada and impermissibly using the Benihana name. (D.I.
67, ex. B) Conversely, the conduct at bar alleges "use" by "registration" by co-owners of
the Trademarks. It stands to reason that such registration by either plaintiff or
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defendants (both co-owners of the Trademark) would preserve, not diminish, the value
of the Trademarks as it would preclude any use by a third-party.
B. Declaratory Judgment
In its second amended complaint, plaintiff requests that the court issue a
declaratory judgment as to the parties' "respective rights to register trademarks in
countries throughout the world." (D.I. 351J1f60-63) Plaintiff asserts that such a
declaration of rights will prevent defendants from seeking registrations outside their
Territory. (D. I. 82) Defendants contend that summary judgment is warranted on this
claim because there is no current conflict between the parties since the trademark
registration applications were withdrawn, and defendants have expressly stated that they
will not pursue registrations outside the Territory.
The Declaratory Judgment Act, 28 U.S.C. § 2201, "creates a remedy by which
federal courts may declare the rights and other legal relations of any interested party
seeking such a declaration when there is a case of actual controversy." Brockstedt v.
Sussex County Council, 794 F. Supp.2d 489, 499 (D. Del. 2011). "The question in each
case is whether the facts alleged, under all the circumstances, show that there is a
substantial controversy, between parties having adverse legal interests, of sufficient
immediacy and reality to warrant the issuance of a declaratory judgment." Maryland
Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941). A plaintiff bringing an action
for declaratory judgment must prove, by a preponderance of the evidence, that an actual
controversy exists. Edmunds Holding Co. v. Autobytellnc., 598 F. Supp.2d 606, 609 (D.
Del. 2009).
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Given the foregoing, the court finds that plaintiff has failed to carry its burden
regarding the existence of an actual controversy. It is undisputed that the trademark
registration applications have been withdrawn and counsel for defendants has
unequivocally renounced any intention to seek registration of the trademarks in other
Territories. Likewise, there has been no showing of any conduct by defendants that is
detrimental to plaintiff nor any proof of damages resulting from the registrations
submitted in 2010.
C. Injunctive Relief
In the second amended complaint, plaintiff sought injunctive relief to stop
defendants from using the BENIHANA Trademark and flower design in certain areas
and to enjoin defendants from operating in certain locations. (0.1. 35 at 12-13) In its
opposition to the motion for summary judgment, plaintiff adds that, under § 10.10 of the
ARA, "irreparable damage would occur in the event of any of the provisions of the ARA"
that were not performed. (0.1. 82 at 14)
Defendants counter that plaintiff has not presented any proof of irreparable harm
resulting from the purported breach of the ARA. Relying on the bare provisions of§
10.10 to prove irreparable harm is insufficient under New York law. Life Techs Corp. v.
AB Sciex Pte. Ltd., No. 11-cv-325 (RJH), 2011 WL 1419612, at *5 (S.D.N.Y. Apr. 11,
2011).
"The decision to grant or deny ... injunctive relief is an act of equitable discretion
by the district court." eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006);
Jayaraj v. Scappini, 66 F.3d 36, 38 (2d Cir. 1995). The moving party for injunctive relief
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has the burden of showing: "(1) irreparable harm and (2) either (a) likelihood of success
on the merits or (b) sufficiently serious questions going to the merits to make them fair
grounds for litigation and a balance of the hardships tilting decidedly towards the
plaintiff." Loveridge v. Pendleton Woolen Mills, Inc., 788 F.2d 914, 916 (2d Cir. 1986);
Markovits v. Venture Info Capital, Inc., 129 F. Supp.2d 647, 661 (S.D.N.Y. 2001) ..
Applying this authority to the record at bar, the court finds that plaintiff has not
presented any evidence to warrant the extraordinary relief requested. Simply, there has
been no affirmative demonstration of irreparable harm.
V. CONCLUSION
For all the above reasons, defendants' motion for summary judgment is granted.
An order will issue.
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