TUMI, INC. v. LEVEL 8 APPAREL, LLC
OPINION fld. Signed by Judge Kevin McNulty on 11/25/15. (sr, )
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
Civ. No. 14-294 1 (KM) (JBC)
LEVEL 8 APPAREL, INC.,
KEVIN MCNULTY, U.S.D.J.:
The plaintiff, Tumi, Inc. (“Tumi”), brought this action against Level 8
Apparel, Inc. (“Level 8”) for breach of a license agreement. The complaint
alleges that Level 8 failed to pay royalty fees and violated federal statutes
relating to the unauthorized importation and sale of Tumi-branded products
after the expiration of a license agreement. Now before the Court is Tumi’s
unopposed motion for partial summary judgment. Specifically, Tumi seeks
summary judgment on Count 1 for breach of contract. For the reasons
expressed below, the motion will be granted.
Tumi is a manufacturer and retailer of premium luggage and business
accessories. (Plaintiff’s Statement of Undisputed Material Facts (“SOF”), Dkt.
No. 3 1-2, ¶1) Tumi owns two trademarks which it uses to brand its products.
2) Level 8 is an importer and distributor of apparel, including jackets and
3) Tumi enters into licensing agreements with companies that
Background facts are taken from Tumi’s Statement of Undisputed, Material
Facts submitted in accordance with L. Civ. R. 56.1. (Dkt. No. 3 1-2) Since Level 8 failed
to oppose the motion for summary judgment, the Court “will accept as true all
material facts set forth by the moving party with appropriate record support.”
Anchorage Assocs. v. Virgin Islands BcL of Tax Review, 922 F.2d 168, 175 (3d Cir.
1990). The facts set forth here relate solely to the motion for partial summary
judgment as to count 1 for breach of contract.
agree to manufacture goods, brand them with Tumi’s trademarks, and then
market and sell those products. (Id.
2) Tumi and Level 8 entered into such a
license agreement on May 1, 2010, which was amended and restated in April of
2012 (the “License Agreement”). (Id.
4; Compl. (Dkt. No. 1)
11) Pursuant to
that agreement, Level 8 was granted the right to use Thmi’s trademarks on
outerwear through December 31, 2013. (SOF
5) In exchange, Level 8
undertook to pay Tumi royalty fees based on Level 8’s gross sales of Tumi
branded products. (Id.)
Section 17 of the License Agreement permitted Tumi, on notice to Level
8, to perform an audit of Level 8’s books and records. (License Agreement
In December of 2013, after informing Tumi that it would not extend the
Agreement beyond the December 31, 2013 termination date, Tumi performed
an audit of Level 8’s books and records to verify royalty payments. (SOF ¶j 7—8)
The audit showed Level 8 had used an improper rate in determining the royalty
payments resulting in an underpayment of $263,412. (Id.
9) This amount,
plus the fees Level 8 had self-reported as owed (amounting to $320,252.30) and
$2,571 to cover the cost of the audit, resulting in an outstanding balance of
Tumi and Level 8 engaged in discussions in February 2014 to create a
payment plan for the outstanding royalty fees. (Id.
10) Level 8 confirmed the
monthly payment plan in an email on February 13, 2014, whereby Level 8
would pay $50,000 starting in March for four months, and then $100,000
monthly until paid in full. (Id.
11) A representative of Level 8 also
acknowledged the debt, stating “we owe this money to you” and represented
that Level 8 would “do all that we can to pay this.” (Id.) On April 11, 2014,
Level 8 emailed a royalty report for January through March 2014, reflecting an
outstanding debt of $48,896.72 in royalties. (Compl.
any payments to Tumi. (SOF
22) Level 8 never made
Tumi filed its complaint and an application for a preliminary injunction
on May 8, 2014. (Dkt. No. 1) The complaint alleges eight counts, including
breach of contract (Count 1), violations of the Lanham Act, 15 U.S.C.
(Counts 2—6), and violations of New Jersey’s trademark and unfair competition
statutes, N.J. Stat. 56:3-13: 16 and 56:4-1 (Counts 8—9). A hearing on the
application for temporary restraints was held on May 21, 2014, at which Level
8 did not appear. (Dkt. No. 11) On June 3, 2014, Level 8 answered the
complaint. (Verified Answer and Affirmative Defenses (Dkt. No. 18))
A preliminary injunction hearing was scheduled for June 19, 2014 (Dkt.
No. 20), but on June 17, 2014, Level 8 wrote to the Court requesting an
adjournment of the hearing. (Dkt. No. 23) In that letter, counsel for Level 8
stated that “our clients are working on a resolution to settle this case since my
client does not dispute that money in the form of royalty is due and owing to
plaintiff” but that Level 8 disputed the calculation of the amount owed. (Id.)
The preliminary injunction hearing was adjourned until July 17, 2014. (Dkt.
No. 24) On July 17, 2014, a stipulated order for preliminary injunction was
entered which enjoined Level 8 from selling, importing, or manufacturing any
Tumi-branded products. (Dkt. No. 27)
On September 18, 2014, Tumi filed this motion for partial summary
judgment on Count 1 of the complaint. (Dkt. No. 31) Although Level 8
requested (and was granted) an extension until November 3, 2014, to file an
opposition (Dkt. No. 35), Level 8 has never submitted any opposition to the
motion for summary judgment.
This Court has subject matter jurisdiction over this case pursuant to 28
§ 1331 as this case presents federal questions because the claims arise
under federal statutes.
a. Summary Judgment Standard
Federal Rule of Civil Procedure 56(a) provides that summary judgment
should be granted “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); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986); Kreschollek v. S. Stevedoring Co., 223 F.3d 202, 204 (3d Cir. 2000).
In deciding a motion for summary judgment, a court must construe all facts
and inferences in the light most favorable to the nonmoving party. See Boyle v.
Cnty. of Allegheny Pa., 139 F.3d 386, 393 (3d Cir. 1998). The moving party
bears the burden of establishing that no genuine issue of material fact
remains. See Celotex Corp. v. Catrett, 477 U.S. 317, 322—23 (1986). “[W]ith
respect to an issue on which the nonmoving party bears the burden of proof
the burden on the moving party may be discharged by ‘showing’—that is,
pointing out to the district court—that there is an absence of evidence to
support the nonmoving party’s case.” Celotex, 477 U.S. at 325.
Once the moving party has met that threshold burden, the non-moving
party “must do more than simply show that there is some metaphysical doubt
as to material facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475
U.S. 574, 586 (1986). The opposing party must present actual evidence that
creates a genuine issue as to a material fact for trial. Anderson, 477 U.S. at
248; see also Fed. R. Civ. p. 56(c) (setting forth types of evidence on which
nonmoving party must rely to support its assertion that genuine issues of
material fact exist). “[U]nsupported allegations
and pleadings are insufficient
to repel summary judgment.” Schoch v. First Fid. Bancorporation, 912 F.2d 654,
657 (3d Cir. 1990); see also Gleason v. Norwest Mortg., Inc., 243 F.3d 130, 138
(3d Cir. 2001) (“A nonmoving party has created a genuine issue of material fact
if it has provided sufficient evidence to allow a jury to find in its favor at trial.”).
If the nonmoving party has failed “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,
there can be ‘no genuine issue of
material fact,’ since a complete failure of proof concerning an essential element
of the nonmoving party’s case necessarily renders all other facts immaterial.”
Katz v. Aetna Cas. & Sur. Co., 972 F.2d 53, 55 (3d Cir. 1992) (quoting Celotex,
477 U.S. at 322—23).
If a party fails to address the other party’s properly supported assertion
of fact, the court may consider “grant[ing] summary judgment if the motion and
supporting materials—including the facts considered undisputed—show that
the movant is entitled to it
Fed. R. Civ. P. 56(e). Local Civil Rule 56.1(a)
deems a movant’s statement of material facts undisputed where a party does
not respond or file a counterstatement. L. Civ. R. 56(a). A failure to dispute a
party’s statement of material facts, however, “is not alone a sufficient basis for
the entry of a summary judgment.” See Anchorage Assocs. v. V.1. Bd. of Tax
Review, 922 F.2d 168, 175 (3d Cir. 1990) (holding that even where a local rule
deeming unopposed motions to be conceded, the court was still required to
prescribed by Fed. R. Civ. P. 56(e)); see also Muskett v. Certegy Check Servs.,
Inc., Civ. No. 08-3975, 2010 WL 2710555 (D.N.J. July 6, 2010) (“In order to
grant Defendant’s unopposed motion for summary judgment, where, as here,
‘the moving party does not have the burden of proof on the relevant issues,
the [Court] must determine that the deficiencies in [Plaintiffs] evidence
designated in or in connection with the motion entitle the [Defendants] to
judgment as a matter of law.’” (quoting Anchorage Assocs., 922 F.2d at 175)).
b. Breach of Contract
Under New Jersey law, a breach of contract claim requires proof of three
elements: (1) the existence of a valid and enforceable contract, (2) a breach of
that contract, and (3) damages. See Murphy v. Implicito, 920 A.2d 678, 689
(N.J. Super. Ct. App. Div. 2007). Where the terms of a contract are clear and
unambiguous, the Court can properly determine the contract’s meaning as a
matter of law. See Bethlehem Steel Corp. v. United States, 270 F.3d 135, 139
(3d Cir. 2001); see also City of Orange Twp. v. Empire Mortg. Servs., Inc., 775
A.2d 174, 179 (N.J. Super Ct. App. Div. 2001) (noting that under New Jersey
law, where the “terms of a contract are clear and unambiguous there is no
room for interpretation or construction and the courts must enforce t.hose
The parties do not dispute that the License Agreement is governed by New
Jersey law. (Compi. ¶ 16; Answer ¶ 16; License Agreement § 33).
terms as written.”). Whether a contract’s provisions are clear and ambiguous is
a question of law appropriate for summary judgment. See J.I. Hass Co., Inc. v.
Gilbane Bldg. Co., 881 F.2d 89, 92 (3d Cir. 1989), cert denied 493 U.S. 1080
(1990) (noting that where contract is unambiguous, determination of parties’
intent is a question of law); see also Driscoll Constr. Co., Inc. v. State Dep’t of
Transp., 853 A.2d 270, 276 (N.J. Super. Ct. App. Div. 2004) (“The
interpretation or construction of a contract is usually a legal question for the
court, suitable for a decision on a motion for summary judgment.”).
a. License Agreement
There is no dispute as to the existence of the License Agreement. (Answer
Nor is there a dispute as to the meaning of the terms of the License
32) Under Section 16, Level 8 agreed to pay royalties to Tumi
in consideration for the use of the trademarks. (License Agreement
royalty payments were to be calculated on monthly gross sales at a rate of 10%
for product sold at full price and 7% for product sold off-price, except that
where off-price sales accounted for more than 30% of gross sales, the royalty
rate would be 10% of those off-price sales over 30% of gross sales. (Id.
Payments of royalty fees were due monthly, by the 25th of the next month. (Id.)
Level 8, in its Answer, admitted that the License Agreement provided for
Level 8 to use the Tumi marks through December 31, 2013 in exchange for,
inter alia, royalty payments. (Answer
12) Level 8 further admitted that it had
“acknowledged miscalculations” of the royalty payments and that this
miscalculation was later “corrected between the parties.” (Id.
20) On February
13, 2014, Level 8 sent Tumi a payment plan, acknowledging the debt owed and
promising payment. (Ex. D) Level 8 also admitted that it provided Tumi a
royalty report for the months of January through March 2014 reflecting
$48,896.72 in royalties. (Answer
22) Despite their admissions that royalty
payments were owed, Level 8 stopped paying royalty fees in August 2013. (Id.
23; Dkt. No. 31-4, Attachment 1)
Level 8 does not deny that it breached its contractual obligation to pay
royalty fees. (Answer
34 (“Deny except that there are certain amount of
royalties that are due to TUMI by Defendant but has not yet been paid.”))
The only issue even potentially in dispute is the precise amount of
royalty fees due and owing. (Answer
35; Affirmative Defenses ¶j 1—2; Dkt. No.
23) In its summary judgment motion, Tumi claims $586,235 in unpaid royalty
fees. In support of that claim, Tumi has submitted documentary evidence,
consisting of a January 27, 2014 letter to Level 8 detailing the results of the
audit. (Aff. of Wendee Lunt in Support of Motion for Summary Judgment, Ex. B
(Dkt. No. 31-4)) That letter sets forth three categories of amounts owed,
(1) $320,252.30 in outstanding and unpaid royalty fees as calculated by
Level 8 for sales occurring between August 2013 and December 2013,
plus interest through the date of the letter;
(2) $263,412.00 in additional royalty fees owed using the correct royalty
rate calculation, plus interest through the date of the letter;
(3) $2,571.00 in costs and expenses for performing the audit.
(Id.) The letter attaches a number of documents reflecting that Level 8 had
stopped paying royalty fees in August 2013, and setting forth the royalty
amounts owed and the interest calculations. (Id.) Additionally, Tumi has
submitted an email from Michael Hong of Level 8, responding to a request for
the payment plan for the $586,235 due. (Id., Ex. C) In the email, Mr. Hong sets
forth a payment plan where Level 8 will pay $50,000 monthly from March
through June, and then $100,000 monthly thereafter until paid in full. (Id.) Mr.
Hong also states “Please note that we will attach more monies per month when
we have extra to add. We owe this money to you and will do all that we can to
pay this and additionally.” (Id.) Nowhere in the email does Mr. Hong dispute the
The Complaint originally sought “at least
635,131 in payments owed
under a now-terminated license agreement.” (Compl.
1) Level 8’s Answer and
Affirmative Defenses contested Tumi’s calculation of the amounts owed. The
Answer stated that the “amounts demanded in the Complaint are improper and
incorrect” and that the “amount demanded in the Complaint has been
partially/fully paid and/or credits have not been applies and/or adjusted for.”
1—2) Level 8 has submitted no further evidence, or
even any further allegations, as to how Tumi’s calculation might be incorrect or
as to the credits to which Level 8 believes it is entitled. A mere denial in Level
8’s Answer cannot overcome the documentary evidence submitted by Tumi.
See Saldana v. Kmart Corp., 260 F.3d 228, 232 (3d Cir. 2001) (party opposing
summary judgment “may not rest upon the mere allegations or denials of the
pleading” but “must set forth specific facts showing that there is a genuine
issue for trial”) (citing Fed. R. Civ. P. 56(e); Matsushita, 475 U.S. at 586).
In short, I am satisfied that Level 8’s Answer and Affirmative Defenses do
not create a genuine issue of material fact sufficient to defeat the motion for
summary judgment. See Celotex, 477 U.S. at 324.
For the reasons set forth above, Tumi’s unopposed motion for summary
judgment is GRANTED. Judgment will be entered in the amount of $586,235.
KEVIN MCNULTY, U.S.D.JO
Date: November 25, 2015
Strictly speaking, Level 8’s denial of the accuracy of the original $625,131 figure
is not even consistent with the proofs submitted by Tumi in its motion. The summary
judgment motion demands not $625,131 but $586,325.
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