AETREX WORLDWIDE, INC. v. SOURCING FOR YOU LIMITED et al

Filing 12

OPINION. Signed by Judge Dennis M. Cavanaugh on 4/16/13. (jd, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

Hon. Dennis M. Cavanaugh
AETREX WORLDWIDE, INC.,
OPINION
Plaintiff,
Civil Action No. 13-cv-1943 (DMC)(MF)
V.

SOURCfNG FOR YOU, LIMITED and
SOURCING FOR YOU CONSULTING,
LTD.,
Defendant.

DENNIS M. CAVANAUGH, U.S.D.J.:

This matter comes before the Court upon Plaintiff Aetrex Worldwide’s (“Aertrex”) Order to
Show Cause with Temporary Restraints (ECF No. I) against Defendant Sourcing for You. Limited
and Sourcing for you Consulting, Ltd. (collectively “Sourcing”). Also before the Court is
Sourcing’s Motion to Stay (ECF No. 7). Pursuant to FED. R, Civ. P 78, no oral argument was heard.
Based on the following and for the reasons expressed herein, Plaintiffs Motion for Temporary
Restraints is denied and Defendant’s Motion to Stay is denied.
L

BACKGROUND’
Aetrex sells orthotics and comfort footwear, including the high end orthotic line Lynco.

which uses Aertex’s exclusive foot measuring and orthotic selecting device iStep. Aertrex is
seeking temporary restraints against Sourcing for You, Limited and Sourcing for You Consulting
Limited (collectively “Sourcing”) for their alleged breach of a non-compete provision contained in a

This section is taken from the parties pleadings.

Supply Agreement pursuant to which Sourcing would manufacture certain orthotics for Aertex,
Aertex and Sourcing also entered into a confidentiality agreement.
On March 14, 2009 the parties entered into a Supply Agreement whereby Sourcing would
manufacture and supply orthotics, and Aetrex would guarantee certain minimum purchases to
Sourcing (See Compl., Exh. A, hereinafter the “Agreement” or “Supply Agreement”). The
Agreement contained a non-compete clause, in which Sourcing agreed not to permit any use of
Aetrex’s intellectual property or confidential information that might adversely affect Aetrex’s good
will and not to duplicate or otherwise make, sell or promote any products that are confusingly or
deceptively similar to Aetrex’s products. Pursuant to the Supply Agreement, Sourcing had access to
Aetrex’s intellectual property, confidential and proprietary information and trade secrets. On June 1,
2010, the parties extended the agreement through May 31, 2013.
Sourcing is involved in the manufacture of Beats orthotics, which Aetrex alleges arc direct
knock-offs of its Lynco line. The Beats product is being offered as an alternative to Lynco orthotics
in retail establishments after customers are using the iStep machine, a machine manufactured by
Aertrex to measure customer’s feet and recommend personalized orthotics.
Aetrex filed the Complaint and Order to Show Cause on March 28, 2013 (ECF No.1).
Sourcing filed a Response (ECF No. 6) and a Motion to Stay (ECF No. 7) on April 4, 2013.
IL

STANDARD OF REVIEW
Injunctive relief is an “extraordinary remedy, which should be granted only in limited

circumstances.” Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck Consumer Pharms,
Co., 290 F.3d 578, 586 (3d Cir. 2002) (quotation and citation omitted); Kos Pharm. Inc. v. Andrx
Corp., 369 F.3d 700, 708 (3d Cir. 2004); see also Am. Tel. & Tel. Co. v. Winback & Conserve
Program, Inc., 42 F.3d 1421, 1427 (3d Cir. 1994). “A decision to grant or deny a preliminary

2

injunction is within the sound discretion of the district court.” Sanofi-Aventis Deutschland GrnbI-1
v. Glenmark Pharms. Inc., 2010 WL 2428561 (D.N.J. June 9, 2010) (citing Oakley. Inc. v, Sunglass
Hut Int’l, 316 F.3d 1331, 1339 (Fed. Cir. 2003)); see also Spartacus, Inc. v. Borough of McKees
Rocks, 694 F,2d 947, 949 (3d Cir. 1982). In determining whether a preliminary injunction should
be granted, a district court must consider four factors:
(1) whether the movant has shown a reasonable probability of success on the merits;
(2) whether the movant will be irreparably injured by denial of the relief; (3) whether
granting preliminary relief will result in even greater harm to the nonmoving party;
and (4) whether granting preliminary relief will be in the public interest.
Gerardi v. Pelullo, 16 F.3d 1363, 1373 (3d Cir. 1994); see also ACLU of N.J. v. Black 1-lorse Pike
Reg’l Bd. of Educ., 84 F.3d

1471, 1477 n. 2 (3d Cir. 1996); Opticians Ass’n of Am. v. Indep.

Opticians of Am., 920 F.2d 187, 191-92 (3d Cir. 1990); CIBA-GEIGY Corp. v. Bolar Pharm, Co.,
Inc., 747 F,2d 844, 850 (3d Cir. 1984) cert. denied 471 U.S. 1137 (1985). Plaintiff bears the burden
of showing that these factors weigh in favor of granting the injunction. Kos Pharm. Inc., 369 F,3d
at 708. “Only if the movant produces evidence sufficient to convince the [court] that all four factors
favor preliminary relief should the injunction issue.” Opticians Ass’n of Am.. 920 F.2d at 192; see
also Nutrasweet Co. v. Vit-Mar Enter. Inc., 176 F.3d 151, 153 (3d Cir. 1999); AT&T Co. v.
Winback & Conserve Program, Inc., 42 F.3d 1421, 1427 (3d Cir. 1994) (citation omitted).
The Third Circuit has accorded particular weight to the first two of the Injunction Factors:
irreparable harm and likelihood of success on the merits. Hoxworth v. Blinder, Robinson & Co.,
903 F.2d 186, 197 (3d. Cir. 1990) (quoting In re Arthur Treacher’s Franchisee Litig., 689 F.2d
1137, 1143 (3d Cir. 1982) (“[W]e cannot sustain a preliminary injunction ordered by the district
court where either or both of these prerequisites are absent.”)); see also Scholastic Funding Grp..
LLC v. Kimble, 2007 U.S. Dist. LEXIS 30333, at *28 (D.N.J. Apr. 24, 2007). Nonetheless. the
district court should only award preliminary injunctive relief upon weighing all four factors.
3

Tel. & Tel. Co., 42 F.3d at 1427, (citing Duraco Prod, Inc. v. Joy Plastic Enter. Ltd., 40 F.3d 1431,
1438 (3d Cir. 1994).)
HE

DISCUSSION
A. Likelihood of Success on the Merits

1. Breach of Contract
To state a claim of breach of contract, a plaintiff must allege: (1) the existence of a contract;
(2) a breach of that contract; (3) damages flowing from that breach; and (4) that the plaintiff
performed their own contractual duties.

Video Pipeline, Inc. v. Buena Vista Home Entmt, Inc.,

210 F, Supp. 2d 552, 561 (D.N.J. 2002); Pub. Serv. Enter. Group, Inc. v. Phila. Elec. Co., 722 F.
Supp. 184, 219 (D.N.J. 1989) (citing 5 Wright & Miller, Federal Practice & Procedure,

§

1235 at

189—90)).
The Court finds that a valid contract exists, as the parties executed and agreed to extend the
written Agreement. (See Compl., Exh. A). The Court also agrees with Aetrex that the non-compete
provision in the Supply Agreement is valid and reasonable.

($ Davidson Bros. v. D. Katz & Sons,

Inc., 121 N.J. 196, 211-12 (1990). The parties disagree whether the contract was breached,
specifically whether Sourcing’s actions were within the scope of the prohibited conduct in the noncompete provision.
The Agreement provides:
6. Non-Compete/Sole Dealings. Sourcing agrees that it shall exclusively manufacture
for, supply and sell the Products only to Aetrex for the Term of this Agreement and
for the next twelve (12) month period following any expiration or termination of this
Agreement. Sourcing agrees that during this time period it, as well as any of its
subcontractors, shall not directly or indirectly market, sell, promote, supply or
manufacture Lyncos, any other Aetrex products, and any other brands or items
which are competitive with Aetrex Products, or items which are the same or
confusingly similar to Aetrex Products, nor shall it seek or enter into any

agreement to do same with or to any other individual or entity in the world including
without limitation: Foot Solutions. Notwithstanding, Sourcing retains the right to
4

manufacture insoles that are presented to it by other companies so long as such
insoles are not competitive with any product of Aetrex. As used here in, competitive
means: (1) any orthotic or insole that meets either Medicare diabetic insert Code
A5512 or A5513 as defined in the year 2007 or in future definitions of these Codes;
(ii) any orthotic or insole that has metatarsal support, a metatarsal pad(s) and/or rear
foot posting(s); (iii) any orthotic or insole which is offered in enough styles/models
to be recommended for different foot types (e.g., 1 style for low arch; 1 style for
medium arch; 1 style for high arch, etc.); or (iv) any orthotic or insole which is the
same or confusingly similar.
(Supply Agreement

¶ 6)

(emphasis added). Aetrex argues that “in utter disregard of its very narrow

non-compete obligations as set forth in the Supply Agreement, Sourcing is involved in the
manufacture, promotion, sale, and/or distribution of a knockoff of Aetrex Lynco orthotics,” known
as the Beats orthotics. (Pl.’s Br. 1, ECF No. 1, March 28, 2013). Additionally. Aetrex alleges that
Sourcing, through its owner Gerald Vineberg, has refused to cease Sourcing’s involvement with the
Beats orthotics. (Id. 8).
Sourcing has three arguments as to why Aetrex is unlikely to succeed on the merits. First,
Sourcing argues that it was not in breach of the Agreement because the non-compete language of
the Agreement does not apply to Sourcing’s manufacture of the Beats orthotics. (Def. ‘S Opp’n Br.
9. ECF No. 6, April 4, 2013). As noted above, the Agreement provided Sourcing ‘shall not directly
or indirectly market, sell, promote, supply or manufacture Lyncos, any other Aetrex products, and
any other brands or items which are competitive with Aetrex Products, or items which are the same
or confusingly similar to Aetrex Products.” (Supply Agreement

¶

6). The Agreement defines

“Products” in Section 1, providing “Products’ means those orthotic insole footwear products which
Aetrex, in its sole discretion, desires Sourcing to manufacture and supply to it.” (Supply Agreement

¶

1). Sourcing argues that these “Products” are limited to the four products Sourcing was currently

manufacturing for Sourcing, related to “a niche diabetes insert line known as Thermothotics which
have nothing to do with Lyncos or Beats.” (Def.’s Opp’n Br. 9). Sourcing argues further:

5

The use and non-use of capitalization of the term “Products” is essential to
understanding the non-compete provision. By its terms, the non-compete clause only
prevents Sourcing from selling or manufacturing Lyncos, other Aetrex products, or
products that are competitive with or confusingly similar to the defined Products
(with a capital P); those Products are the Thermotics Products and Sourcing For You
manufactures for Aetrex.

(j4 10) (emphasis in original). As the Beats orthotics line competes with Aetrex’ s Lyncos line, and
not any of the four products that Sourcing was currently manufacturing for Aetrex, Sourcing argues
that its manufacture of Beats is not in violation of the non-compete provision. However, the
language of the Agreement defines Products more broadly then just those products Sourcing was
currently manufacturing. By stating that Products are those products which “Aetrex, in its sole
discretion, desires Sourcing to manufacture and supply to it,” the Agreement leaves open the
possibility that Aetrex could vary its requests to Sourcing. The Agreement specifically refers to
“Current Products,” and provides that “it is understood and agreed that Aetrex may, in its sole
discretion, from time to time, change the Products and/or specifications, upon reasonable notice to
Sourcing.”
The Court is not convinced by Sourcing’s argument. To limit the non-compete provision
only to the products that Sourcing was currently manufacturing for Aetrex would be a tortured
reading of the language of the Agreement. While the distinction between lower case “products” and
upper case “Products” is obviously intended, the Agreement does not limit the types of products
that Sourcing may produce for Aetrex, and thus the Court is not persuaded that Aetrex and Sourcing
intended for the non-compete provision to only apply when Sourcing competed with the certain
Aetrex products Sourcing at the time.
Sourcing also argues that Aetrex’s material breach of the Agreement precludes it from
enforcing the non-compete provision in the Agreement. Sourcing states that Aetrex has not
complied with the minimum volume requirements in Section 3 of the Supply Agreement. Pursuant
6

to the Agreement, Aetrex agreed to minimum purchase requirements

—

intitally amounting to

300,000 pair per year, and later 220,000 of orthotics per year in exchange and adjusted for a longer
term

—

from Sourcing. Sourcing argues that under either the original number or the reduced
2

number, Aetrex’s failure to meet the minimum volume requirements constitutes a material breach,
and thus Aetrex is precluded from enforcing the contract against Sourcing.
3
“It is well established in New Jersey that ‘when there is a breach of a material term of an
agreement, the non-breaching party is relieved of its obligations under the agreement.” Nolan v.
Lee Ho, 577 A. 2d 143, 146 (N.J. 1990). However, alternatively, the non-breaching party may elect
to continue performing under the contract and merely

sue for

the damages caused by the breach, As

the New Jersey Supreme Court has explained:
The fact that the defendant has been guilty of substantial breaches of essential
obligations under the contract would ordinarily give the plaintiff the right to deem
itself discharged from further performance and to sue the defendant for damages
under the contract. I3ut this is not always the injured partys only course of action, In
a case of ‘a material breach of contract which does not, however, indicate any
intention to renounce or repudiate the remainder of the contract the injured party has
a genuine election offered him of continuing performance or of ceasing to perform,
and any action indicating an intention to perform will operate as a conclusive choice,
not indeed depriving him of a right of action for the breach which has already taken
place, but depriving him of any excuse for ceasing performance on his own part.’

2

In Sourcing’s Opposition Brief, Sourcing claimed “while the parties discussed a lower volume of 220,000 pairs of
Products, Sourcing did not sign amendment agreeing to that lower volume.” (Def.’s Opp’n Br. 6). Sourcing cited to the
Declaration of Sourcing’s owner, Gerald Vineberg (ECF No. 6-2). In his Declaration, Mr. Vineberg states that Sourcing
did not sign the Amendment to the Agreement. Aetrex sent this Court a letter on April 5, 2013 (ECF NO. 9), alerting the
Court to a series of emails between Michael Y. Shimshak, Aetrex’s Vice President and General Counsel and Mr.
Vineberg; in one of these emails, dated June 9, 2012, Mr. Vineberg stated that he would fax a copy of the executed
Amendment to Mr. Shimshak on the next day. (Shimshak. Dccl. ¶ 3, Ex. A). Aetrex also attached a signed Amendment,
signed by both parties, to its letter as Exhibit B. (ECF No. 9, Ex. B). Sourcing then sent the Court a letter on April 5,
2012 (ECF No. 10) in response, where Sourcing alleges that “while, as set forth in his declaration, Mr. Vineberg
recalled discussing an accommodation to the minimum supply obligations called for in the Supply Agreement, he has
no recollection of signing the addendum and does not have a signed copy on his files.” (ECF No. 10). As Aetrex has
submitted a signed copy of the Amendment that is part of the record, the Court acknowledges its existence and finds
that the Amendment, changing the minimum volume requirements from 300,000 to 220,000 products, was duly
executed,
From May-June of 2011-2012, Aetrex ordered 202, 512 Products, 17,488 fewer than the 220,000 required. In the same
time period for the 2012-2013 year, Aetrex has only ordered 99,216 products, 120, 784 fewer than the 220,000 required,
though that period has not yet ended. (Def.’s Opp’n Br, 6, $çç Vineberg Dccl., ¶ 13).

7

Frank Stamato & Co. v. Borough of Lodi, 71 A. 2d 336, 339 (N.J. 1950) (citing 5 Williston on
Contracts (Rev. Ed. 1937)

§ 1334, pp 3749-3750).

Though Aetrex breached the Agreement, Aetrex did not indicate any intention to repudiate
or renounce the remainder of the Agreement, as it continued to do business with Souring. Thus
Sourcing had a choice

—

either continue to perform or cease to perform. If Sourcing manifested any

intention to continue performance, which it clearly did here by continuing to manufacture the
products for Aetrex in the year 2012-2013 even though Aetrex under bought in 2011-2012, this
“operated as a conclusive choice, not indeed depriving him or a right of action for the breach which
has already taken place, but depriving him of any excuse for ceasing performance on his own part.”
Id. “Insofar as defendants’ legal position is concerned, their failure to declare a breach of the
contract and their continuance under its terms for more than a year after having learned of the
breach constitute a waiver of their right to declare a forfeiture of the agreement for previous
violations by plaintiff.” Ross Sys. v. Linden Dari-Delite, Inc., 163 A.2d 184, 189 (N.J. App. Div.
1960) affd in part, rev’d in part, 173 A.2d 258 (1961). Sourcing continued performance, and did not
invoke any termination rights. Thus Aetrex is not precluded from enforcing the terms of the noncompete provision because they committed a material breach of the Agreement’s terms,
Finally, Sourcing argues that Aetrex is not entitled to preliminary injunctions because this
matter falls within the scope of the Agreement’s arbitration clause, and thus this matter should be
stayed pending arbitration. Sourcing filed a Motion to Stay in this Court in addition to its
Opposition Brief on April 4, 2013 (See ECF No. 7).
The Agreement between Sourcing and Aetrex provided:
14. Miscellaneous
F. Dispute Resolution and Governing Law. This Agreement shall be
governed and construed exclusively under the laws of the State of New Jersey
without references to the principles of conflicts of laws. Except for an action
8

seeking a temporary restraining order or injunction related to the purposes of
this Agreement, a suit to compel complicate with this dispute resolution process, on
the entry and enforcement of any judgment on any arbitration award, any dispute,
claim or controversy arising out of or relating to this Agreement or the breach,
termination, enforcement, interpretation or validity thereof including the
determination of the scope or applicability of this Agreement to arbitrate, shall be
determined exclusively by final, binding arbitration to be held in mutually
convenient locations within the USA.
(Supply Agreement ¶ 14) (emphasis added). While the Arbitration Clause provides an exception for
injunctions, the injunction sought must relate to the purpose of the Agreement, and Sourcing argues
that the current action does not satisfy this requirement. Sourcing argues “the purpose of the
agreement is the manufacture and sale of four discrete Products used in the niche diabetes insert
market.” (Def.’s Opp’n Br. 11). The Court disagrees. While the Arbitration Clause does say the
temporary restraining order or injunction must relate to “the purposes of this Agreement,”
Sourcing’s narrow reading of the “purpose” of the Agreement is unpersuasive. This action falls
squarely within the arbitration exclusion and thus this matter does not need to be stayed pending
arbitration.
For the reasons listed above, at this stage of litigation, Aetrex has shown it is likely to
succeed on the merits of the breach of contract claim.
2. Unfair competition
New Jersey’s common law of unfair competition “is an amorphous area ofjurisprudence. It
knows of no clear boundaries.

.

.

The concept is as flexible and elastic as the evolving standards of

commercial morality demand.” Duffy v. Charles Schwab & Co., Inc., 123 F. Supp. 2d 802, 815
(D.N.J. 2000) (quoting N.J. Optometric Ass’n v. Hillman-Kohan Eyeglasses, Inc., 365 A.2d 956,
965 (N.J. Super. Ct. Ch. Div. 1976)). However, the common law of unfair competition is “not
completely boundless,” Reckitt Benckiser Inc. v. Tris Pharma, Inc., 2011 U.S. Dist. LEXIS 19713,
25-26 (D.N.J. Feb. 28, 2011). “The law of unfair competition has its roots in the common-law tort
9

of deceit: its general concern is with protecting consumers from confusion as to source.” Bonito
Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 157, (1989). Indeed, it has been stated that
“[t]he essence of unfair competition is the practice of palming off one’s product as that of another.”
Sgueezit Corp. v. Plastic Dispensers, 106 A.2d 322, 325 (N.J. App. Div.1954). Most cases of unfair
competition encompass one of two business torts: the passing off of one’s goods or services as those
of another and unprivileged imitation, SK & F, Co. v. Permo Pharm. Lab., Inc., 625 F.2d 1055,
1062 (3d Cir. 1980). Thus, “[ajithough it is impossible to categorize all acts which constitute unfair
competition, there are a few fundamental elements that are definite. In essence... it consists of the
misappropriation of one’s property by another-property which has some sort of commercial or
pecuniary value.” N.J. Optometric Ass’n 365 A.2d at 965 (citations omitted). “The judicial goal
should be to discourage, or prohibit the use of misleading or deceptive practices which renders
competition unfair.” Ryan v. Carmona Bolen Home for Funerals, 341 N.J.Super. 87, 92
(App.Div.200 1).
Aetrex argues:
Sourcing’s use of Aetrex’s confidential, proprietary and trade secret information for
its own benefit and that of its partners in the beats business constitutes unfair
competition.,. Aetrex would not have entered into the Supply Agreement without the
inclusion of the non-compete. (Compl. ¶ 34). Sourcing was aware of Aetrex’s
position and agreed to it, but nevertheless is using the information it obtained from
Aetrex for its own benefit and that of its cohorts. That unfair competition has
damaged Aetrex’ s customer relationships, goodwill and reputation.
(Pl.’s Br. 9). At this stage in litigation, without the benefit of discovery, it seems to the Court that
this action is one of breach of contract and not unfair competition. The Court is not convinced that
Aetrex could succeed on the merits of an unfair competition claim, but as Aetrex has shown it is
likely to succeed on the merits of the breach of contract claim, the first prong of the temporary
restraint analysis weighs in favor of Aetrex.

10

B. Irreparable Harm

This Court next addresses whether Aertrex can demonstrate irreparable harm, because “[in)
the absence of irreparable injury, no preliminary injunction would lie, even if the other three
elements.

.

.

were found.” Nutrasweet Co., 176 F.3d at 153. “Establishing a risk of irreparable

harm is not enough. A plaintiff has the burden of proving a ‘clear showing of immediate irreparable
harm’ “absent injunctive relief. Hoxworth, 903 F.2d at 205 (citing ECRI v. McGraw—Hill, Inc.,
809 F.2d 223, 225 (3d Cir.1987)). Irreparable harm cannot be presumed, and “must be established
as a separate element, independent of any showing of likelihood of success.” King Pharm. Inc. v.
Sandoz, Inc., Civ. No. 08-5974, 2010 WL 1957640, at *5 (D.N.J. May 17, 2010) (citing Winter v.
Natural Resources Defense Counsel, Inc., 555 U.S. 7, 2 1-22 (2008)). “In order to demonstrate
irreparable harm the plaintiff must demonstrate potential harm which cannot be redressed by a legal
or an equitable remedy following a trial.” Instant Airfreight Co. v. C.F. Airfreight, Inc., 882 F.2d
797, 801 (3d Cir. 1989). Thus, the “preliminary injunction must be the only way of protecting the
plaintiff from harm.”

(emphasis added); see

Acierno v. New Castle County, 40 F.3d 645,

653 (3d Cir. 1994). Irreparable injury occurs when money damages are difficult to ascertain or
would be inadequate. In re Arthur Treacher’s Franchise Litig., 689 F.2d 1137, 1146 (3d Cir.1982).
Failure to establish irreparable injury automatically results in denial of a preliminary injunction.
Instant Airfreight Co., 882 F.2d at 800; see also Nutrasweet Co., 176 F.3d at 153.
Aetrex argues it is losing “current and future customers and goodwill” and that “it is
imperative that the Supply Agreement be enforced to protect Aetrex’s Lynco orthotics and iStep
program, as well as Aetrex’s customer relationships and goodwill.” (Pl.’s Br. 11), Aetrex argues
that the harm caused cannot be adequately redressed by money damages as it includes the loss of
“hard won goodwill and market reputation.” (4).

11

Aetrex also argues it only entered into the Supply Agreement with Sourcing because of the
non-competition clause, as Sourcing’s position as a manufacturer could result in damage if the
confidential information and trade secrets it acquired of Aetrex’s was misused. (Id.). Finally. Aetrex
argues that Sourcing’s wrongful use and disclosure of Aetrex’s confidential, proprietary and trade
secret information constitutes irreparable harm. (Id. at 13). (See Trico Equiptment, Inc. v. Manor,
2009 WL 1687391 at *8 (D.N.J. June 15, 2009) (“[Djisclosure of trade secrets causes irreparable
harm.”)
The Court does not find that Aetrex has met its burden of proving that it will suffer
irreparable harm if a preliminary injunction is not entered. While it is true that loss of good will and
customer relationships can cause irreparable harm, Aetrex has not proven that the damages it is
suffering from are of the nature that cannot be remedied with monetary damages. This case appears
to be a true breach of contract case, and for every customer that buys a Beats product instead of a
Lynco product, a monetary amount can be assessed in favor of Aetrex if it is determined that
Sourcing did in fact breach the Agreement. While the loss of good will and customer relationships
may also occur, Aetrex has not made a convincing argument to the Court that this harm is
irreparable.
As a failure to demonstrate irreparable injury must necessarily result in the denial of a
preliminary injunction, Aetrex’s motion for temporary restraints must be denied. Instant Air Freight
Co., 882 F.2d at 800.
C. Balance of Hardships and Public Interest
The Third Circuit has “held that these latter two factors should be taken into account only
when they are relevant.” Am. Tel. and Tel. Co. v. Winback and Conserve Program, Inc., 42 F.3d
1421, 1427 n. 8 (3d Cir.1994); see also Hoxworth, 903 F.2d at 196. These factors are only relevant

12

if the plaintiff has first established “both a likelihood of success on the merits and the probability of
irreparable harm if relief is not granted” because a preliminary injunction cannot be sustained
‘where either or both of these prerequisites are absent.” jçj (internal citations omitted). Since at
least one of these prerequisites is absent, this Court need not address the potential harm to Sourcing
or the public interest in granting a preliminary injunction.
I

CONCLUSION

For the foregoing reasons, Aetrex’s Motion for Temporary Restraints is denied and
Sourcing’s Motion to Stay is denied. An appropriate Order accompanies this Opinion.

S/ Dennis M. Cavanaugh
Dennis M. Cavanaugh, U.S.D.J.
Date:
cc:

April 16 2013
Clerk’s Office
All Counsel of Record
Hon. Mark Falk, U.S.M.J.
,

13