LPD New York, LLC v. Adidas America, Inc. et al

Filing 55

ORDER adopting 39 Report and Recommendations; granting in part and denying in part 20 Adidas America's Motion to Dismiss for Failure to State a Claim; denying 24 Plaintiff's Motion for Partial Summary Judgment; granting in part and denying in part 40 Adidas AG's Motion to Dismiss for Failure to State a Claim and For Lack of Jurisdiction. For the reasons set forth in the attached Memorandum and Order, the Court adopts Chief Magistrate Judge Roanne L. Mann's report an d recommendation in its entirety and denies Adidas AG's separate motion to dismiss, which was filed after Judge Mann's R&R. The Court grants Plaintiff leave to amend and Plaintiff shall file an amended complaint, if any, asserting any quasi-contract claims it wishes to pursue within thirty (30) days of this Memorandum and Order. As to Adidas AG, Plaintiff is granted limited jurisdictional discovery. Ordered by Judge Margo K. Brodie on 3/27/2017. (Hawkins, Salah)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
--------------------------------------------------------------LPD NEW YORK, LLC,
Plaintiff,

MEMORANDUM & ORDER
15-CV-6360 (MKB) (RLM)

v.
ADIDAS AMERICA, INC. and ADIDAS AG,
Defendants.
--------------------------------------------------------------MARGO K. BRODIE, United States District Judge:
On November 5, 2015, Plaintiff LPD New York, LLC (“LPD”) commenced the abovecaptioned action against Defendants Adidas America, Inc. and Adidas AG, bringing claims for
breach of contract, defamation and unjust enrichment. (Compl. ¶¶ 1, 104–16, 126–31, Docket
Entry No. 1.) Plaintiff also seeks declaratory relief pertaining to disputes regarding its use of
Defendants’ trademarks under the Declaratory Judgment Act, 28 U.S.C. §§ 2201, 2202. (Id. ¶¶
117–25.) Defendant Adidas America moved to dismiss the Complaint for failure to state a claim
upon which relief may be granted pursuant to Rule 12(b)(6) of the Federal Rules of Civil
Procedure. (Def. Adidas America Mot. to Dismiss (“Adidas Am. Mot.”), Docket Entry No. 20.)
Plaintiff moved for partial summary judgment on its claims for breach of contract, defamation
and declaratory relief, pursuant to Rule 56 of the Federal Rules of Civil Procedure. (Pl. Mot. for
Summ. J. (“Pl. Mot.”), Docket Entry No. 24.)
By order dated April 6, 2016, the Court referred both motions to Chief Magistrate Judge
Roanne L. Mann. (Order dated Apr. 6, 2016.) By report and recommendation dated August 25,
2016, (the “R&R”), Judge Mann recommended that the Court grant Adidas America’s motion to
dismiss as to Plaintiff’s breach of contract and declaratory judgment claims, deny the motion as

to Plaintiff’s defamation and unjust enrichment claims, and deny Plaintiff’s motion for partial
summary judgment. (R&R, Docket Entry No. 39.) Plaintiff objects to the R&R in part. (Pl.
Obj. to the R&R (“Pl. Obj.”), Docket Entry No. 49.) Adidas America did not file objections.
On June 27, 2016, after Adidas America moved to dismiss and Plaintiff moved for
summary judgment, Plaintiff served Adidas AG with the summons and Complaint. (Adidas AG
Ltr. dated July 18, 2016, Docket Entry No. 37.) On September 6, 2016, Adidas AG moved to
dismiss the Complaint for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal
Rules of Civil Procedure and for failure to state a claim upon which relief may be granted
pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. (Def. Adidas AG Mot. to
Dismiss (“Adidas AG Mot.”), Docket Entry No. 40.)
For the reasons discussed below, the Court adopts Judge Mann’s recommendations in
their entirety, which recommendations are that the Court grant Defendants’ motion to dismiss as
to Plaintiff’s breach of contract and declaratory relief claims, deny Defendants’ motion to
dismiss as to the defamation and unjust enrichment claims, deny Plaintiff’s motion for summary
judgment as to the defamation, breach of contract and declaratory relief claims and grant Plaintiff
leave to amend the Complaint to assert quasi-contract claims. The Court also denies Adidas
AG’s separate motion to dismiss for lack of personal jurisdiction, which was filed after the R&R.
I.

Background
LPD is a New York limited-liability company based in Brooklyn, New York; Adidas

America is a Delaware corporation based in Portland, Oregon; and Adidas AG is a German
company based in Herzogenaurach, Germany.1 (Compl. ¶¶ 2–5.) According to Plaintiff, Adidas

1

For the purposes of deciding Defendants’ motion to dismiss, the Court assumes the
truth of the allegations in the Complaint.

2

America conducts any and all operations related to the United States for Adidas AG. (Id. ¶ 6.)
Defendants “conduct substantial business in New York, including advertising, promoting,
marketing, distributing, and selling” Adidas merchandise through physical and online stores. (Id.
¶¶ 8–9.)
LPD is a fashion company that creates “streetwear” products. (Id. ¶¶ 15–16.) In October
of 2013, Defendants contacted LPD to discuss a possible “collaboration” in which LPD would
create unique streetwear-style designs for Defendants’ brand and five National Collegiate
Athletic Association (“NCAA”) basketball teams sponsored by Defendants.2 (Id. ¶ 19.) LPD
expressed interest in the collaboration and later developed two design “capsules” for the
collaboration: a “Classics Capsule” and a “Collaboration Capsule.” (Id. ¶¶ 20–21.) The Classics
Capsule consisted of “a series of design proposals for NCAA Basketball Teams, which included
prints for tee shirts, basketball jerseys, basketball shorts, and team jackets” that Defendants
would help design in conjunction with LPD. (Id. ¶ 21.) The Collaboration Capsule consisted of
“a series of design proposals for basketball jerseys, tee-shirts, outerwear, jackets, hats, shorts,
sports bras, lanyards and pants” for an athletic-streetwear collection designed primarily by LPD.
(Id.) After receiving some of the designs for the Classics Capsule, Defendants responded that
they were “excited” about the designs. (Id. ¶¶ 22–23.)
On November 17, 2013, LPD asked Defendants how the pieces from the Classics
Capsule “should/will be branded (with both LPD and Adidas logos) and how/where they will be
distributed (in Adidas’ stores/distributors or otherwise).” (Id. ¶ 24.) Defendants responded that
“the rules are really what [the parties] want them to be” because the project was the first time

2

Throughout the Complaint, Plaintiff refers to Adidas America and Adidas AG as one
entity, Adidas. (See Compl., Docket Entry No. 1.) Thus, the Court is unable to determine what
allegations relate to Adidas America, Adidas AG, or both.
3

Adidas’s basketball division was “coordinating with a fashion brand.” (Id. ¶ 25.) Defendants
subsequently proposed that:
Branding
Due to NCAA rules the uniforms can only be branded
adidas. So our actual on court product we will be badged as
adidas.
There is an opportunity for co-branding on your retail pieces
and our Satin Jacket. Our designers could collab for a cool
jocktag or woven label that would be badged with both
logos.
If you want to just badge your product LPD only we
understand the option but we would want to at least show a
true collaboration to demonstrate “court to street.”
Retail
This part is also new. But after having [internal]
discussion[s] . . . we have a few options of where we would
retail.
Adidas.com - Our own retail would love to feature this [as]
an exclusive collection. Your retail pieces are at a price point
where we could feature our retail shorts with your retail
pieces and make it an exclusive release online.
Your retailers - because these pieces are at a higher price
point than our sales reps deal with your access to boutique
and footprint accounts.
NYC stop-in-shop. We would do an in-store collab where we
split the store in half with your retail and some of our higher
price point retail and highlight this collection but gain
momentum for both brands.
Or the option of all 3. Let me know your thought as I think
we will have to write our rules because this has not happened
with an actual on-court kit before.
(Id. (alterations in original).) LPD replied that it liked the idea of the true collaboration and
wanted to get to work on the tags and labels for the pieces, was interested in exploring all of the

4

proposed retail options, and could get to work on “visuals” as soon as it had “samples of the first
approved products.” (Id. ¶ 26.) In addition, LPD asked if “it would be possible to get a letter of
intent for the collaboration.” (Id.) Defendants thought “a letter of intent [would be] perfect” and
agreed to “work on putting some of this into a document with the purpose of this along with
details.” (Id. ¶ 27 (alterations omitted).)
On January 13, 2014, LPD informed Defendants that it was going to begin creating
samples from the Classics Capsule design proposal. (Id. ¶ 29.) On February 25, 2014, LPD sent
Defendants “a concept proposal for the Collaboration Capsule.” (Id. ¶ 33.) By March of 2014,
Defendants had not responded, and LPD followed up to get Defendants’ feedback regarding the
Collaboration Capsule and a letter of intent. (Id. ¶ 34.) A week later, Defendants replied, stating
that they approved of the designs for the Collaboration Capsule and that “[t]he letter of intent is a
work in progress” due to some “developmental boundaries.” (Id. ¶ 35.) Defendants also
provided “some key next steps,” which included “[l]etter of intent finalization.” (Id.) LPD then
asked how the parties would divide or allocate the “sales and profits,” to which Defendants
responded that the products from the Classics Capsule would be provided to the NCAA teams at
no cost, Defendants’ licensed apparel division would purchase the Collaboration Capsule
materials related to the NCAA teams, and the “royalties [from those sales] would go to the
schools,” and the “capsule collection profits would likely be primarily profits to LPD because
Defendants’ products were mainly ‘on court school products.’” (Id. ¶¶ 36–37.) Defendants also
stated that the details of the collaboration would be finalized and confirmed “once the mission
statement is complete.” (Id. ¶ 37.) In response, LPD asked that Defendants “just let LPD know
the specifics and that everything is confirmed once [Defendants] know for sure.” (Id. ¶ 38.)

5

As LPD began making arrangements to prepare samples of products for both capsules, it
contacted Defendants to determine whether Defendants or LPD would cover the costs of
producing the samples and to specify the location of the manufacturing for the final products.
(Id. ¶¶ 39, 41.) Defendants gave LPD a “budget code” to pay for the production of the samples
and told LPD that the final products would be manufactured in Defendants’ facilities. (Id. ¶¶ 40,
42.) Because LPD’s “pattern-and-sample maker” refused to accept Defendants budget code to
cover the sample production costs, LPD paid the costs and sought reimbursement from
Defendants. (Id. ¶ 47.)
On June 12, 2014, Defendants notified LPD that there was “a large re-alignment within
its group[,] so many of [Defendants’] projects had been on hold.” (Id. ¶ 50 (alterations omitted).)
Nevertheless, Defendants told LPD that it wanted to finalize and launch the collaboration and
instructed LPD to do the following: (1) send the “art” from the capsules for Defendants’ to
review, (2) send information regarding the Classics Capsule for Defendants’ “teams” to “agree
and sign off,” and (3) keep any information regarding the teams involved in the collaboration
confidential. (Id.) Defendants also agreed to reimburse the sample production costs and told
LPD that further details regarding the collaboration should be handled in “the next few weeks.”
(Id.) As to the prices for the collaboration products, LPD informed Defendants that they could
not “pin down exact[] [pricing] since it depends on production (specifically whether LPD is
producing the pieces here or at [Defendants’] facilities abroad and how many units . . . are
ordered.” (Id. ¶ 51 (alterations omitted).) LPD also requested “some sort of confirmation that
the collaboration . . . will be happening.” (Id.) Defendants responded that “the collaboration
would only be confirmed once [Defendants] were ‘100% on board’” and could “dedicate more
funding to the collaboration.” (Id. ¶ 52.)

6

The following week, LPD followed up, again asking about the location of the
manufacturing and also sending Defendants its final design proposal for the collaboration. (Id.
¶ 53.) Defendants responded that “upper management approved the designs” and gave LPD
“permission to move forward with the collaboration.” (Id. ¶ 54.) Defendants subsequently sent
LPD sample products that it produced based on the Classics Capsule and allowed LPD to pitch
products from both capsules to potential buyers. (Id. ¶¶ 56–57.) Thereafter, LPD notified
Defendants that its buyers were interested in the products and inquired as to the status of the
reimbursement for the sample production costs it had incurred. (Id. ¶ 58–59.) Defendants
expressed their intent to reimburse the sample production costs, noted that they were having a
meeting soon to discuss “a marketing budget and promotional plan,” and stated that they had
“enough signoff to continue to push through and continue on with the collab[oration].” (Id. ¶ 60
(alterations omitted).) During a subsequent telephone call, LPD informed Defendants it would
soon begin producing “marketing materials” to promote the collaboration. (Id. ¶ 63.)
On September 8, 2014, LPD began selling women’s clothing items from the
collaboration.3 (Id. ¶ 69.) LPD also secured promotional publications with several online and
print media outlets and continued to promote the collaboration in various places. (Id. ¶¶ 69, 72–
73, 76.) As a part of its promotion efforts, LPD created a “provocative” marketing video for the
Collaboration Capsule. (Id. ¶ 76.) In November of 2014, V Magazine reached out to LPD,
seeking to secure an exclusive feature of the Collaboration Capsule. (Id. ¶ 77.) LPD agreed.
(Id. ¶ 78.) After V Magazine published the feature, a representative from Defendants called one

3

It is unclear from the Complaint whether the sales were from the Classics Capsule, the
Collaboration Capsule, or both.
7

of V Magazine’s senior editors and told her that the collaboration was “illegitimate.” (Id. ¶¶ 79–
80.) As a result, V Magazine withdrew the feature. (Id. ¶ 82.)
LPD obtained the contact information for Defendants’ representative that contacted V
Magazine, and provided him with the information for the people LPD had been in contact with
concerning the collaboration. (Id. ¶¶ 83–84.) LPD also reached out to their contacts at
Defendants’ company, seeking clarification of the basis for the statement made by Defendants’
representative to V Magazine. (Id. ¶ 85.) Defendants responded that the promotional material
regarding the collaboration “took another route” than that which the parties discussed and “raised
some flags” with its public relations team. (Id. ¶ 86.) Defendants also told LPD that the
executive who approved the collaboration was no longer with the company and while they “did
provide initial green lights to proceed[,] . . . all content needed to be approved by [Defendants’]
higher ups.” (Id.) LPD expressed its confusion and sent Defendants copies of all the materials it
had regarding the collaboration. (Id. ¶ 87.) Defendants then told LPD that “products are good to
go” but the promotional video could not be show anymore and any sales from the Classics
Capsule had to be placed on hold because it could cause legal issues with the NCAA teams. (Id.
¶ 88.)
LPD continued to promote and sell items from the Collaboration Capsule but, in January
of 2015, a buyer refused to accept delivery and pay for the items because he doubted the
legitimacy of the collaboration. (Id. ¶¶ 90, 94, 95.) To resolve the issue, LPD requested that
Defendants send the buyer a letter confirming the collaboration’s legitimacy. (Id. ¶ 96.)
Defendants sent the letter but the buyer requested additional assurance, and LPD requested
further confirmation of the collaboration. (Id. ¶¶ 97–99.)

8

In May of 2015, Defendants sent LPD a “back-dated licensing agreement” dated June 1,
2014, which provided that LPD had the right to “use the [A]didas name and Three-Stripes
trademark” for both capsules “provided that LPD paid 10% royalties” to Defendants. (Id. ¶ 100.)
The proposed licensing agreement also sought to “terminate LPD’s right to manufacture and sell
pieces from the Classics and Collaboration Capsules” as of May 1, 2015. (Id.) LPD refused to
sign the agreement and again requested reimbursement for the sample production costs. (Id. ¶¶
101–02.) Defendants threatened to sue LPD for trademark infringement. (Id. ¶ 102.)
Based on the foregoing, LPD filed the Complaint in this action. (Id. ¶ 1.)
II. Discussion
a. Standards of review
i.

Report and recommendation

A district court reviewing a magistrate judge’s recommended ruling “may accept, reject,
or modify, in whole or in part, the findings or recommendations made by the magistrate judge.”
28 U.S.C. § 636(b)(1)(C). When a party submits a timely objection to a report and
recommendation, the district court reviews the parts of the report and recommendation to which
the party objected under a de novo standard of review. Id.; see also United States v. Romano,
794 F.3d 317, 340 (2d Cir. 2015). The district court may adopt those portions of the
recommended ruling to which no timely objections have been made, provided no clear error is
apparent from the face of the record. John Hancock Life Ins. Co. v. Neuman, No. 15-CV-1358,
2015 WL 7459920, at *1 (E.D.N.Y. Nov. 24, 2015). The clear error standard also applies when
a party makes only conclusory or general objections, or simply reiterates its original arguments.
Chime v. Peak Sec. Plus, Inc., 137 F. Supp. 3d 183, 187 (E.D.N.Y. 2015) (“General or
conclusory objections, or objections which merely recite the same arguments presented to the
magistrate judge, are reviewed for clear error.” (citation omitted)); see also DePrima v. N.Y.C.
9

Dep’t of Educ., No. 12-CV-3626, 2014 WL 1155282, at *3 (E.D.N.Y. Mar. 20, 2014) (collecting
cases).
ii. Rule 12(b)(2)
On a motion to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the
Federal Rules of Civil Procedure, “[a] plaintiff bears the burden of demonstrating personal
jurisdiction over a person or entity against whom it seeks to bring suit.” Troma Entm’t, Inc. v.
Centennial Pictures Inc., 729 F.3d 215, 217 (2d Cir. 2013) (citing Penguin Grp. (USA) Inc. v.
Am. Buddha, 609 F.3d 30, 34 (2d Cir. 2010)); see also Thackurdeen v. Duke Univ., 660 F. App’x
43, 44–45 (2d Cir. 2016) (“In opposing a motion to dismiss for lack of personal jurisdiction,
plaintiffs bear the burden of establishing that the court has jurisdiction over defendants.”
(citations, alterations and internal quotation marks omitted)). The showing a plaintiff must make
to meet that burden is governed by a “sliding scale,” which “varies depending on the procedural
posture of the litigation.” Dorchester Fin. Sec., Inc. v. Banco BRJ, S.A., 722 F.3d 81, 84 (2d Cir.
2013) (quoting Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990)).
If a defendant challenges personal jurisdiction by filing a Rule 12(b)(2) motion, “the plaintiff
need persuade the court only that its factual allegations constitute a prima facie showing of
jurisdiction.” Id. at 85 (quoting Ball, 902 F.3d at 197); Eades v. Kennedy, PC Law Offices,
799 F.3d 161, 167–68 (2d Cir. 2015) (same). Prior to discovery, a plaintiff need only plead “an
averment of facts that, if credited by the trier, would suffice to establish jurisdiction over the
defendant.” Dorchester, 722 F.3d at 84 (quoting Ball, 902 F.3d at 197); see also Chirag v. MT
Marida Marguerite Schiffahrts, 604 F. App’x 16, 19 (2d Cir. 2015) (“A prima facie case requires
non-conclusory fact-specific allegations or evidence showing that activity that constitutes the
basis of jurisdiction has taken place.” (citing Jazini v. Nissan Motor Co., 148 F.3d 181, 185

10

(2d Cir. 1998))). After discovery, the plaintiff’s prima facie showing must be factually
supported. Dorchester Fin. Sec., 722 F.3d at 85 (quoting Ball, 902 F.3d at 197).
The court must “construe the pleadings and any supporting materials in the light most
favorable to the plaintiffs.” Licci ex rel. Licci v. Lebanese Canadian Bank, SAL, 732 F.3d 161,
167 (2d Cir. 2013) (citing Chloé v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158, 163 (2d Cir.
2010)); Grundstein v. Eide, 598 F. App’x 45, 46 (2d Cir. 2015) (citing DiStefano v. Carozzi N.
Am., Inc., 286 F.3d 81, 84 (2d Cir. 2001)). However, the court need not “accept as true a legal
conclusion couched as a factual allegation.” In re Terrorist Attacks on Sept. 11, 2001, 714 F.3d
659, 673 (2d Cir. 2013), cert. denied sub nom. O’Neill v. Al Rajhi Bank, 134 S. Ct. 2870 (2014)
(quoting Jazini, 148 F.3d at 185). In resolving a motion to dismiss for lack of personal
jurisdiction pursuant to Rule 12(b)(2), a district court may consider materials outside the
pleadings. Dorchester Fin. Sec., 722 F.3d at 86 (citing S. New Eng. Tel. Co. v. Global NAPs
Inc., 624 F.3d 123, 138 (2d Cir. 2010)); Pinto-Thomaz v. Cusi, No. 15-CV-1993, 2015 WL
7571833, at *3 (S.D.N.Y. Nov. 24, 2015) (citing DiStefano, 286 F.3d at 84).
In a case based on diversity jurisdiction, personal jurisdiction is determined by the law of
the state in which the court sits. Ash v. Richards, 572 F. App’x 52, 53 (2d Cir. 2014) (citing
Whitaker v. Am. Telecasting, Inc., 261 F.3d 196, 208 (2d Cir. 2001)). The court must first look
to the state’s long-arm statute. Whitaker, 261 F.3d at 208. If the court can exercise jurisdiction
pursuant to the long-arm statute, the court must subsequently determine whether the exercise of
personal jurisdiction over the defendant would comport with the Due Process Clause of the
United States Constitution. Best Van Lines, Inc. v. Walker, 490 F.3d 239, 242 (2d Cir. 2007)
(“If, but only if, our answer is in the affirmative, we must then determine whether asserting
jurisdiction under that provision would be compatible with requirements of due process

11

established under the Fourteenth Amendment to the United States Constitution.” (citing Int’l
Shoe Co. v. Washington, 326 U.S. 310, 315 (1945))).
iii. Rule 12(b)(6)
In reviewing a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil
Procedure, a court must construe the complaint liberally, “accepting all factual allegations in the
complaint as true and drawing all reasonable inferences in the plaintiff’s favor.” Concord
Assoc’s, L.P. v. Entm’t Prop. Trust, 817 F.3d 46, 52 (2d Cir. 2016) (quoting Chambers v. Time
Warner Inc., 282 F.3d 147, 152 (2d Cir. 2002)); see also Tsirelman v. Daines, 794 F.3d 310, 313
(2d Cir. 2015) (quoting Jaghory v. N.Y. State Dep’t of Educ., 131 F.3d 326, 329 (2d Cir. 1997)).
A complaint must plead “enough facts to state a claim to relief that is plausible on its face.” Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible “when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Matson v. Bd. of Educ., 631 F.3d 57, 63 (2d Cir. 2011) (quoting
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)); see also Pension Ben. Guar. Corp. ex rel. St.
Vincent Catholic Med. Ctrs. Ret. Plan v. Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705, 717–18
(2d Cir. 2013). Although all allegations contained in the complaint are assumed to be true, this
tenet is “inapplicable to legal conclusions.” Iqbal, 556 U.S. at 678.
iv. Summary judgment
Summary judgment is proper only when, construing the evidence in the light most
favorable to the non-movant, “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); Davis v. Shah, 821 F.3d 231,
243 (2d Cir. 2016); see also Cortes v. MTA NYC Transit, 802 F.3d 226, 230 (2d Cir. 2015);
Tolbert v. Smith, 790 F.3d 427, 434 (2d Cir. 2015). The role of the court “is not to resolve
disputed questions of fact but only to determine whether, as to any material issue, a genuine
12

factual dispute exists.” Rogoz v. City of Hartford, 796 F.3d 236, 245 (2d Cir. 2015) (first quoting
Kaytor v. Elec. Boat Corp., 609 F.3d 537, 545 (2d Cir. 2010) and then citing Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 249–50 (1986)). A genuine issue of fact exists when there is sufficient
“evidence on which the jury could reasonably find for the plaintiff.” Anderson, 477 U.S. at 252.
The “mere existence of a scintilla of evidence” is not sufficient to defeat summary judgment. Id.
The court’s function is to decide “whether, after resolving all ambiguities and drawing all
inferences in favor of the non moving party, a rational juror could find in favor of that party.”
Pinto v. Allstate Ins. Co., 221 F.3d 394, 398 (2d Cir. 2000).
b. Unopposed recommendations
Adidas America does not object to Judge Mann’s recommendations that the Court deny
its motion to dismiss Plaintiff’s defamation and unjust enrichment claims and grant Plaintiff
leave to file an amended complaint to add quasi-contract claims. (Adidas Am. Opp’n to Pl. Obj.
(“Adidas Am. Opp’n”), Docket Entry No. 52.)
The Court has reviewed the unopposed portions of the R&R and, finding no clear error,
the Court adopts these recommendations pursuant to 28 U.S.C. § 636(b)(1). Accordingly, the
Court denies Adidas America’s motion to dismiss Plaintiff’s claims for defamation and unjust
enrichment and grants Plaintiff leave to file an amended complaint asserting quasi-contract
claims.
c.

Plaintiff’s objections to the R&R

Plaintiff objects to Judge Mann’s recommendations that the Court dismiss its breach of
contract and declaratory relief claims and deny summary judgment as to its defamation claim.
(Pl. Obj. 22–46.) For the reasons discussed below, the Court adopts Judge Mann’s
recommendations in their entirety.

13

i.

Breach of contract claim

Judge Mann recommended that the Court dismiss the breach of contract claim, reasoning
that Plaintiff’s allegations fail to show the formation of a contract. (R&R 21–25.) Judge Mann
found that exchanges detailed in the Complaint illustrated that the parties never agreed upon the
profit-sharing arrangements, the duration of any licensing regarding Defendants’ trademarks,
royalties and quantity of the merchandise to be sold. (Id.) Judge Mann examined the discussions
where the parties agreed or expressed an intention to complete a formalized document regarding
the collaboration but concluded that no formal agreement was ever completed. (Id.)
Plaintiff argues that Judge Mann erred in recommending dismissal of the breach of
contract claim because: (1) neither party expressed an intention not to be bound absent a
formalized agreement; (2) the parties abandoned any intention to formalize an agreement; (3) the
absence of a formal agreement does not preclude finding that the parties formed a contract;
(4) the parties agreed on the “material terms” of the contract and New York law gap-fills any
terms that were not agreed upon; and (5) Defendants’ conduct “expressly recognized” the
existence of a contract.4 (Pl. Obj. 22–34, 37–42.) Adidas America argues that Judge Mann’s
recommendation was sound because, given the nature of the alleged agreement, Plaintiff fails to
show that the parties agreed to the material terms necessary to form a contract.5 (Adidas Am.

4

Plaintiff also argues that the R&R erred by raising and applying the Statute of Frauds.
(Pl. Obj. 34–37.) The Court does not address the Statute of Frauds arguments as the Statute of
Frauds was an alternative finding in the R&R that is not relevant where, as here, there is no
contract between the parties.
5

Adidas AG separately moved to dismiss the complaint for failure to state claim upon
which relief may be granted but incorporated by reference Adidas America’s arguments.
(Adidas AG Mem. of Law in Support of Adidas AG Mot. (“Adidas AG Mem.”) 7, Docket Entry
No. 42.) Therefore, the Court’s analyses and decisions as to the substance of Plaintiff’s claims
apply to both Defendants.

14

Opp’n 3–12.) For the reasons explained below, the Court finds that Plaintiff’s allegations fail to
establish the existence of a binding contract.
Under New York law,6 a plaintiff alleging breach of contract must show “(1) the
existence of a contract, (2) adequate performance of the contract by the plaintiff, (3) breach of
contract by the defendant, and (4) damages.” Hudson & Broad, Inc. v. J.C. Penny Corp., Inc.,
553 F. App’x 37, 39 (2d. Cir. 2014) (internal quotation marks omitted) (citing Harasco Corp. v.
Sequi, 91 F.3d 337, 348 (2d Cir. 1996)). Where the allegations establish that the parties failed to
execute a formalized written agreement, the existence-of-a-contract analysis depends on whether
the parties entered a “binding preliminary agreement.” Vacold LLC v. Cerami, 545 F.3d 114,
123 (2d Cir. 2008); Bear Stearns Inv. Prods. Inc. v. Hitachi Auto. Prods. Inc., 401 B.R. 598, 617
(S.D.N.Y. 2009); Tri-Cty. Motors Inc. v. Am. Suzuki Motor Corp., 494 F. Supp. 2d 161, 169–70
(E.D.N.Y. 2007).
“Binding preliminary agreements fall into one of two categories” — “Type I” and “Type
II.” Vacold, 545 F.3d at 124 (alteration and internal quotation marks omitted) (citing Adjustrite
Sys. Inc. v. G.A.B. Bus. Servs., Inc., 145 F.3d 543, 548 (2d Cir. 1998); see Bear Stearns, 401
B.R. at 617–18. Type I preliminary agreements are “fully binding preliminary agreements,
which are created when the parties agree on all points that require negotiation (including whether
to be bound) but agree to memorialize their agreement in a more formal document.” Vacold, 545

6

As Judge Mann noted in the R&R, based on the parties’ motion papers, they assume
without explicitly stating that New York law applies. Accordingly, because a substantial amount
of the conduct at issue occurred in New York, the Court assumes that New York law governs the
dispute. See Vacold LLC v. Cerami, 545 F.3d 114, 122-23 (2d Cir. 2008) (holding that New
York law applies where a substantial amount of the conduct at issue underlying the contractformation dispute occurred in New York and the defendant raised no objection to the application
of New York law).

15

F.3d at 124 (citations, alterations and internal quotation marks omitted); see Shann v. Dunk, 84
F.3d 73, 77 (2d Cir. 1996) (“Type I is where all essential terms have been agreed upon in the
preliminary contract, no disputed issues are perceived to remain, and a further contract is
envisioned primarily to satisfy formalities.”). Type I preliminary agreements adhere to the
“well-settled principle of New York law” that a contract is formed if it is “reasonably certain in
its material terms.” Hudson, 553 F. App’x at 39 (citing Cobble Hill Nursing Home v. Henry &
Warren Corp., 74 N.Y.2d 105, 109 (1981)). Conversely, “if an agreement is not reasonably
certain in its material terms, there can be no legally enforceable contract.” Id. (citing Cobble
Hill, 74 N.Y.2d at 109)). The Second Circuit has established the following four-factor test to
determine if an agreement is a Type I preliminary agreement:
(1) whether there is an expressed reservation of right not to be bound
in the absence of a writing; (2) whether there has been partial
performance of the contract; (3) whether all the terms of the alleged
contract have been agreed upon; and (4) whether the agreement at
issue is the type of agreement that is usually committed to writing.
Vacold, 545 F.3d at 124 & n.2 (citing Brown v. Cara, 420 F.3d 148, 154 (2d Cir. 2005)).
Type II preliminary agreements, on the other hand, are “binding preliminary
commitments [where] . . . the parties agree on certain major terms, but leave other major terms
open for further negotiation.” Id. (first citing Adjustrite, 145 F.3d at 548 and then citing Shann,
84 F.3d at 77); see Bear Stearns, 401 B.R. at 624 (explaining that Type II preliminary
agreements are “incomplete agreement[s]” that bind the parties “to negotiate together in good
faith in an effort to reach a final agreement within the scope that has been settled in the
preliminary agreement.” (citation omitted)). The difference between a Type II preliminary
agreement and an unenforceable “agreement to agree” is that Type II preliminary agreements
“leave discrete material terms unspecified but nevertheless set mechanisms for objectively

16

setting material terms in the future.” Hudson, 553 F. App’x at 39 (citing Abitron Inc. v. Tralyn
Broad., Inc., 400 F.3d 130, 137 (2d Cir. 2005)). Under a Type II preliminary agreement, if the
parties fail to reach a final agreement after a good-faith effort to settle the open terms, “there is
no further obligation.” Vacold, 545 F.3d at 124 (citation omitted); see Bear Stearns, 401 B.R. at
624 (explaining that a Type II preliminary agreement provides an agreement regarding
negotiation, not an agreement that “a final contract will result” (citation omitted)). The Second
Circuit has established the following five-factor test to determine if an agreement is a Type II
preliminary agreement:
(1) whether the intent to be bound is revealed by the language of the
agreement; (2) the context of the negotiations; (3) the existence of
open terms; (4) partial performance; and (5) the necessity of putting
the agreement in final form, as indicated by the customary form of
such transactions.
Vacold, 545 F.3d at 124 & n.2 (citing Brown, 420 F.3d at 157).
The predominant factor under both tests is “whether the parties intended to be bound, and
if so, to what extent.” Id. at 125 (citing Adjustrite, 145 F.3d at 548–49); see Tri-Cty. Motors, 494
F. Supp. 2d at 170 (“Court confronted with the question of whether there is a preliminary
agreement . . . must first look to the intent of the parties: whether the parties intended to be
bound, and if so, to what extent.” (citing Adjustrite, 145 F.3d at 548–49)).
Given the substantial similarity between the tests for determining whether an agreement
is a Type I or Type II preliminary agreement, the Court will simultaneously address whether the
parties executed a Type I or Type II preliminary agreement, if any, noting any differences
between the two tests where necessary. See Vacold, 545 F.3d at 125–29 (simultaneously
analyzing whether the parties executed a Type I or Type II preliminary agreement or had no
agreement at all).

17

1. Intent of the parties
The intent of the parties is the most important factor. Adjustrite, 145 F.3d at 548–49; TriCty. Motors, 494 F. Supp. 2d at 170 (“The first factor — the language of the [alleged]
preliminary agreement — is the most important.” (citing Arcadian Phosphates Inc. v. Arcadian
Corp., 884 F.2d 69, 72 (2d Cir. 1996)). In assessing the parties’ intent, “a court must look to the
words and deeds of the parties.” Adjustrite, 145 F.3d at 549; Bear Stearns, 401 B.R. at 618
(noting that “courts in this Circuit look to what the parties said (and/or did), and at the language
of the [alleged] preliminary agreement for an indication [as to] whether . . . they intended not to
be bound until the conclusion of final formalities.” (citations and internal quotation marks
omitted)). “There is a strong presumption against finding binding obligation in agreements
which include open terms, call for future approvals and expressly anticipate future preparation of
and execution of contract documents.” Bear Stearns, 401 B.R. at 619 (citation omitted); Miller
v. Tawii, 165 F. Supp. 2d 487, 492 (S.D.N.Y. 2001) (citation omitted). The presumption may be
overcome if the party seeking to establish a binding preliminary agreement points to language
indicating that the parties entered a “binding agreement.” Miller, 165 F. Supp. 2d at 492 (citation
omitted). “[A] party that wishes to be bound can very easily protect itself by refusing to accept
language that shows an intent not to be bound.” Id. (citation and alterations omitted).
Here, the parties’ communications reflect that Defendants lacked the intent to be bound
absent a formal agreement. Defendants repeatedly expressed that they intended to proceed with
the collaboration, but wanted to ensure that a final agreement was consummated. Shortly after
the parties’ negotiations began, Defendants stated that a “letter of intent is perfect” and that they
would “work on putting some of this into a document.” (Compl. ¶ 27.) Two months later, in
March of 2014, Defendants stated that “[t]he letter of intent is currently a work in progress” and

18

explained that a “key next step[]” was “[l]etter of intent finalization.” (Id. ¶ 35.) That same
month, Defendants responded to Plaintiff’s inquiry as to profit allocation and stated that they
would “confirm” any arrangements “once the mission statement is complete [and] those details
will be in that document.” (Id. at 37.) In June of 2014, Defendants advised Plaintiff that the
collaboration “would only be confirmed once [Adidas] was 100% on board.” (Id. at 53.) In
addition, after disagreements arose between the parties concerning the collaboration, Defendants
sent Plaintiff “a back-dated licensing agreement” that limited Plaintiff’s right to sell the
collaboration merchandise and included a royalty charge. (Id. ¶ 100.) Plaintiff refused to sign
the agreement. (Id. ¶ 101.) Like Defendants, Plaintiff also expressed its intent to execute a
formal agreement by raising and following up on the completion of a letter of intent. (Id. ¶¶ 26,
34.) However, the parties never completed a letter of intent or a mission statement.
Based on the parties’ communications, the Court finds that Defendants never expressed
an intent to be bound to a preliminary agreement. Courts in this Circuit have repeatedly found
that language anticipating future preparation and execution of contract documents, as expressed
by both Plaintiff and Defendants, prevents a finding of intent to be bound. See Adjustrite, 145
F.3d at 549–50 (holding that the parties never expressed an intent to be bound because they
contemplated the future “execution of a sales agreement contract”); Bear Stearns, 401 B.R. at
619 (finding no intent to be bound because, after the parties negotiated some of the contract
terms, Bear Stearns stated that it would have its “lawyers start drafting” an agreement); Spencer
Trask Software and Info. Servs. LLC v. RPost Int’l Ltd., 383 F. Supp. 2d 428, 442 (S.D.N.Y.
2003) (finding no intent to be bound because the defendants stated that they were “prepared to
move promptly to consummate this transaction following the execution” of a letter agreement);
Miller, 165 F. Supp. 2d at 492 (finding no intent to be bound because the defendant’s letter stated

19

that “an employment contract outlining the [terms] will be prepared and submitted for
agreement” (alteration omitted)); Gorodensky v. Mitsubishi Pulp Sales, Inc., 92 F. Supp. 2d 249,
255 (S.D.N.Y. 2000) (finding no intent to be bound because defendant stated, inter alia, that it
was “prepared to enter into a commercial agreement”). In light of Defendants’ repeated
statements that they wanted to execute a formal agreement, Plaintiff could have insisted on the
completion of a binding agreement. See Gorodensky, 92 F. Supp. 2d at 255; see also Miller, 165
F. Supp. 2d at 492 (finding that a party seeking to be bound “can very easily protect itself” by
insisting on binding language). In addition, similar to Adjustrite, the Court’s finding that there
was no intent to be bound is bolstered by the fact that the parties never executed a letter of intent
or completed any draft agreements, even though they contemplated such completion. See
Adjustrite, 145 F.3d at 545–47, 550 (holding that the intent of the parties weighed against finding
the existence of an agreement because any agreement “was expressly contingent . . . []on the
execution of a sales agreement contract” that the parties never executed). Therefore, Plaintiff
fails to overcome the presumption that a binding agreement does not exist where the parties
expressed that they planned on executing a formal contract but never executed a contract. See
Bear Stearns, 401 B.R. at 619. The first factor accordingly weighs heavily in Defendants’ favor
and supports a finding that the parties did not have a binding preliminary agreement.7 See id.

7

For the same reasons articulated in this section, Plaintiff’s allegations fail to establish
the existence of an implied-in-fact contract. See Turner v. Temptu Inc., 586 F. App’x 718, 721–
22 (2d Cir. 2014) (holding that a plaintiff failed to establish the existence of an “implied-in-fact
contract” because the parties never “manifested the requisite intent to enter into a binding . . .
agreement”); Missigman v. USI Northeast, Inc., 131 F. Supp. 2d 495, 512–13 (S.D.N.Y. 2001)
(finding that the plaintiff failed to establish the existence of an implied-in-fact contract because
the defendant’s conduct indicated that it did not want to be bound absent a formal, written
agreement).
20

2. Partial performance
Partial performance of the agreed-upon bargain under the terms of the alleged agreement
is a “factor of major significance when one party has partially performed and that performance
has been accepted by the party disclaiming the contract.” CAC Grp. Inc. v. Maxim Grp. LLC,
523 F. App’x 802, 805 (2d Cir. 2013) (citation and internal quotation marks omitted); see also
Bear Stearns, 401 B.R. at 619. But if a party’s performance is inconsistent with the terms of the
alleged agreement, it does not support finding a binding preliminary contract. See CAC Grp.
Inc., 523 F. App’x at 805; see also Miller, 165 F. Supp. 2d at 493 n.8.
In this case, the partial-performance factor weighs slightly in Plaintiff’s favor. As alleged
in the Complaint, the primary focus of the collaboration was for Defendants to capitalize on the
“cool factor” and “streetwear status” of Plaintiff’s brand. (Compl., ¶¶ 19, 25, 35, 37, 51.) In
furtherance of the collaboration, Plaintiff created design proposals, produced sample products,
developed a marketing and publicity campaign, and eventually sold items from the collaboration.
(Id. ¶¶ 21–22, 26, 29, 31, 33, 36, 43, 48, 53, 59, 63–64, 68–69, 72–79, 90–91.) Defendants
partially accepted Plaintiff’s performance as they approved the design proposals, agreed to
reimburse Plaintiff for the sample production costs, and allowed Plaintiff to publicize and market
items from the collaboration, essentially delivering, in part, on boosting the “streetwear status” of
Defendants’ brand. (Id. ¶¶ 23, 27, 35, 40, 44, 46, 50, 54, 60, 66.)
The weight of Plaintiff’s partial performance, however, is diminished by the fact that
Defendants had to advise Plaintiff that it could not sell items from the Classics Capsule without
one of the parties paying royalty fees to the NCAA teams, instructed Plaintiff to stop showing its
marketing video for the collaboration, and eventually sought to prohibit Plaintiff from selling any
more merchandise from the collaboration. (Id. ¶¶ 86, 88, 100.) Defendants’ actions demonstrate

21

that they were not fully satisfied with LPD’s partial performance, and indeed, refused to accept
some of it. Thus, Plaintiff’s performance conferred on Defendants only slight benefits, and
accordingly, this factor slightly favors Plaintiff. See CAC Grp. Inc., 523 F. App’x at 805 (holding
that the plaintiff’s partial performance does not weigh in favor of finding a binding preliminary
agreement if that performance is not fully accepted by the defendants); Spencer Trask, 383 F.
Supp. 2d at 444 (finding that the partial-performance factor slightly favored the plaintiff because
it conferred some, albeit disputable, benefit on the defendant); Miller, 165 F. Supp. 2d at 493 n.8
(finding that the partial-performance factor weighed against the plaintiff because its performance
did not comport with the terms set forth in the alleged agreement); Tri-Cty. Motors, 494 F. Supp.
2d at 171 (finding that the partial-performance factor weighed against the plaintiff because there
was no evidence that its actions conferred any benefit on the defendant).
3. Open terms
“The existence of open terms is always a factor tending against the conclusion that the
parties have reached a binding agreement.” Vacold, 545 F.3d at 128 (citation omitted). Indeed,
“there can be no . . . binding contract where material terms remain to be negotiated.” Bear
Stearns, 401 B.R. at 620 (citing Ciarmella v. Reader’s Digest Ass’n, Inc., 131 F.3d 320, 325 (2d
Cir. 1997)). Thus, plaintiffs asserting the existence of a contract face a “strong presumption” that
a binding agreement cannot exist where there are material “open terms.” Vacold, 545 F.3d at
128; Tri-Cty. Motors, 494 F. Supp. 2d at 172.
Here, there is a plethora of material open terms. During the parties’ communications, the
only terms they appeared to agree upon were branding and design. (See Compl. ¶¶ 25–27, 35–
36, 50–54, 61, 88.) The parties had significant back-and-forth communications regarding the
branding and design of the products and eventually agreed on and produced merchandise for

22

sale. (See id.) But the parties never reached an agreement on the majority of the remaining
terms they discussed, including, but not limited to, profit sharing, retail sales locations,
manufacturing, royalties and price.8
First, regarding profit sharing, the parties appeared to have an understanding as to how
the profits would be allocated. (See id. ¶ 37.) Defendants stated that “the capsule collection
profits would likely be primarily profits to LPD . . . [but] [we] will have to confirm this . . . once
the mission statement is complete.” Id. As noted above, the parties never completed a mission
statement and therefore left the profit-sharing arrangement unconfirmed. See Missigman v. USI
Ne., Inc., 131 F. Supp. 2d 495, 510 (S.D.N.Y. 2001) (finding that the parties’ failure to complete
an anticipated agreement supported finding that material terms remained open).
Second, as to retail sales locations, Defendants proposed three options. (Id. ¶ 25.)
Plaintiff replied that it “would love to explore all three options,” but the parties engaged in littleto-no discussion concerning retail sales locations thereafter. (See id. ¶¶ 25–102.) Thus, sales
locations was a material term on which the parties failed to agree and accordingly weighs against
finding that the parties had a binding preliminary agreement. See Tri-Cty. Motors, 494 F. Supp.
2d at 172 (finding that the location for a vehicle dealership was a material term that the parties
left open and therefore weighed against finding a binding preliminary agreement).

8

In addition, there is no indication that the parties agreed on the duration of the
collaboration or the quantity of merchandise to be sold, (see Compl. ¶¶ 25–102), which are
additional open terms that weigh against finding a binding preliminary agreement. See Hudson
& Broad, Inc. v. J.C. Penny Corp. Inc., 553 F. App’x 37, 40 (2d Cir. 2014) (holding that an
alleged contract for the manufacture of a “large number of light fixtures” was too vague as to
quantity to be enforceable); Miller v. Tawil, 165 F. Supp. 2d 487, 493 n.8 (S.D.N.Y. 2001)
(noting that the duration of the contract is a material term that, if left open, weighs against
finding a binding preliminary agreement); cf. Scientific Components Corp. v. Isis Surface
Mounting, Inc., 539 F. Supp. 2d 653, 658 (E.D.N.Y. 2008) (noting that quantity is a material
term, but finding that the parties had agreed upon it).
23

Third, the parties initially discussed that the manufacturing of the collaboration
merchandise would occur at Defendants’ facilities. (Id. ¶¶ 41–42.) Plaintiff, however,
subsequently manufactured some of the merchandise on its own, not at Defendant’s facilities,
and Defendants later sought to prohibit Plaintiff from manufacturing any further items. (Id. ¶¶
51, 75, 91–92, 94, 100.) The parties conduct illustrates that they failed to agree on the terms of
the manufacturing location. See Tri-Cty. Motors, 494 F. Supp. 2d at 172; see also Bear Stearns,
401 B.R. at 621 (noting that plaintiff’s argument that the parties agreed on certain terms was
undermined by the fact that the parties’ behavior was inconsistent with conduct that would
evidence the existence of agreed-upon terms).
Fourth, as evidenced by Defendants’ proposed back-dated licensing agreement, the
parties failed to agree on the royalty arrangements. (See id. at 100.) Initially, the only discussion
regarding royalties pertained to the royalties that Defendants owed the NCAA teams for using
the school names and logos. (Id. ¶ 37.) However, the royalty arrangements were unsettled. It
appears that Plaintiff sold merchandise from the Classics Capsule without paying any royalties,
and Defendants requested a ten-percent royalty fee on all sales in the proposed back-dated
licensing agreement, which Plaintiff rejected. (Compl. ¶¶ 42, 72–75, 86, 88, 100); see Hanwha
Corp. v. Cedar Petrochem., Inc., 760 F. Supp. 2d 426, 433 (S.D.N.Y. 2011) (finding that when a
dispute arose of a contract term, it was an indication that it was a material term that the parties
had not agreed upon).
Finally, the parties’ communications reflect that they never agreed on the price for the
merchandise. In June of 2014, Defendants requested Plaintiff’s input on pricing for the
merchandise, to which Plaintiff responded that a “price point” was “hard to pin down exactly
since it depends on production . . . .” (Compl. ¶¶ 50–51.) While it appears that the parties settled

24

on pricing for Defendants’ pieces in the Classics Capsule, (see id. ¶¶ 69, 71), the Complaint
contains no further information regarding any discussion related to the pricing for the
Collaboration Capsule, (see id. ¶¶ 25–102). If the pricing is “uncertain, the contract [is] void of a
critical term.” Gorodensky, 92 F. Supp. 2d at 256 (citation omitted).
The number of open terms weighs heavily against the finding of a binding preliminary
agreement.9 See Adjustrite, 145 F.3d at 550 (holding that the “the existence of open items” was a
factor that “weigh[ed] strongly in favor of defendants, for there remained numerous open
terms”); Tri-Cty. Motors, 494 F. Supp. 2d at 172 (finding that “the existence of open terms also
weighed strongly in favor of [the defendant]” because it was “clear that the parties never had a
true meeting of the minds” on the material terms of the alleged contract).
4. Customarily reduced to writing
The fourth factor assesses whether the alleged agreement is “of the type that is usually
reduced to writing.” Vacold, 545 F.3d at 125; Bear Stearns, 401 B.R. at 621 (“Whether the
agreement at issue is the type that is usually committed to writing is also relevant” to
determining “whether a binding preliminary agreement exists.” (citation omitted)). In

9

While the standard regarding open terms is more forgiving in determining whether
there is Type II preliminary agreement, see Bear Stearns Inv. Products Inc. v. Hitachi Auto.
Products Inc., 401 B.R. 598, 626 (S.D.N.Y. 2009), the parties must at least “establish a
determinate framework” to reach an agreement on those terms, Vacold, 545 F.3d at 128; see
Hudson, 553 F. App’x at 39 (holding that “agreements to agree” are only enforceable if they
leave “discrete material terms unspecified but nevertheless set mechanisms for objectively
setting material terms in the future.” (citation omitted)). Plaintiff’s allegations do not support an
inference that the parties had a framework in place to settle the open material terms. (See
Compl. ¶¶ 25–102.) Further, there can be no preliminary agreement of either type if “the number
of material terms left open [is] so large, that the contract is completely unenforceable.” Vacold
LLC, 545 F.3d at 132 n.1 (Hall, J., dissenting) (citing Tractebel Energy Mktg., Inc. v. AEP Power
Mktg., Inc., 487 F.3d 89, 95 (2d Cir. 2007)). As explained above, the number of open material
terms weighs against finding the existence of a contract. Accordingly, even under a Type II
analysis, the open-terms factor weighs against Plaintiff. See Hudson, 553 F. App’x at 40.
25

determining whether an agreement is of the type that parties customarily reduce to writing,
courts in this Circuit consider: (1) the size and complexity of the transaction; (2) the duration of
the contract; (3) the subject matter of the contract; and (4) the amount of money to be exchanged.
Rubenstein v. Clark & Green, Inc., 395 F. App’x 786, 790 (2d Cir. 2010); Bear Stearns, 401 B.R.
at 622; Missigman, 131 F. Supp. 2d at 495.
Plaintiff fails to set forth any allegations pertaining to the size and complexity of the
contract, the duration of the contract or the amount of money at issue. (See Compl.) Therefore,
the Court is unable to evaluate “whether the agreement is of a type usually reduced to writing”
due to the lack of information regarding the alleged agreement. See Vacold LLC, 545 F.3d at
125. Accordingly, this factor “does not aid [the Court’s] analysis because [the Court] cannot
discern what is usual in this context.” See id.; cf. Learning Annex Holdings, LLC v. Whitney
Educ. Grp., Inc., 765 F. Supp. 2d 403, 415–16 (S.D.N.Y. 2011) (analyzing the factor concerning
whether the agreement is customarily reduced to writing because the parties had a prior history
of business deals, the parties asserted that licensing agreement had “the potential to be a multimillion dollar venture” and asserted that “[t]hese types of transactions are usually committed to
written contracts”).
5. Context of the negotiations
The consideration of the context of the negotiations is only relevant to the analysis
regarding whether the parties entered a Type II preliminary agreement. Spencer Trask, 383 F.
Supp. 2d at 446; see also Vacold, 545 F.3d at 128 n.2. In making that determination, courts look
to whether the parties intended to be bound “to good faith efforts to reach an agreement on the
remaining terms” of a preliminary agreement. Vacold, 545 F.3d at 128; see also Bear Stearns,
383 F. Supp. 2d at 446.

26

Here, this factor weighs in favor of Defendants. While Defendants repeatedly stated that
they were interested in finalizing the collaboration, (Compl. ¶¶ 18, 25, 35, 37, 50, 60, 62, 86, 88,
100), Defendants also repeatedly noted that many of the terms needed to be formalized, approved
or documented, and they never expressed that they believed a preliminary agreement was in
place, (id.). See Gorodesky, 92 F. Supp. 2d at 256 (finding that the context of the negotiations
weighed against plaintiff because “[n]othing in the context of the negotiations suggests that the
parties intended” to enter a “binding preliminary agreement.”); cf. Bear Stearns, 401 B.R. at 626
(finding that the context of the negotiations weighed in plaintiff’s favor because defendant
acknowledged that the preliminary “terms were binding” and told one of its teams to “go ahead
with Bear Stearns under the current agreement we reached . . .”). The context of the negotiations
also tips in Defendants’ favor because the parties never executed a draft agreement or a letter of
intent. Cf. Main Street Baseball, LLC v. Binghamton Mets Baseball Club, Inc., 103 F. Supp. 3d
244, 260 (N.D.N.Y. 2015) (finding that the context of the negotiations weighed in the plaintiff’s
favor because the parties executed a letter of intent and continued to negotiate the terms
thereafter); Gas Natural Inc. v. Iberdola, S.A., 33 F. Supp. 3d 373, 381–82 (S.D.N.Y. 2014)
(finding that the context of the negotiations weighed in favor of finding a Type II preliminary
agreement because “the parties exchanged several drafts of the [letter of intent], which . . .
support[s] the existence of a Type II agreement”); Learning Annex Holdings, LLC, 765 F. Supp.
2d at 415 (finding that the context of the negotiations favored the plaintiff because the “the
document” stated “the parties intent to proceed in good faith toward the contractual goal”);
Spencer Trask, 383 F. Supp. 2d at 447 (finding that the context of the negotiations weighed in
plaintiff’s favor because the parties executed a formal-written preliminary agreement and
continued to negotiate the outstanding terms thereafter). This factor weighs in Defendants’ favor

27

because the circumstances indicated that Defendants intended not to be bound absent a formal,
written agreement and the parties never executed a draft agreement or letter of intent.
In weighing these factors, the Court finds that Plaintiff’s allegations fail to establish the
existence of a binding preliminary agreement. The two most important factors — intent of the
parties and open material terms — weigh heavily in Defendants’ favor, the context of the
negotiations also weighs in Defendants’ favor, partial performance weighs slightly in Plaintiff’s
favor, and whether the agreement is customarily reduced to writing does not weigh in favor of
either party. Thus, there is no binding preliminary agreement because the overall weight of the
factors favors Defendants. See Gorodesky, 92 F. Supp. 2d at 256. Accordingly, the Court finds
that Plaintiff’s allegations fail to establish the existence of a contract and therefore adopts Judge
Mann’s recommendation. The Court grants the motion to dismiss as to the breach-of-contract
claim.
ii. Declaratory relief claims
Judge Mann recommended that the Court dismiss Plaintiff’s trademark abandonment
claims because, even assuming that Defendants gave Plaintiff a license to use their trademarks,
Defendants exercised sufficient control over Plaintiff’s use of their trademarks. (R&R 28–30.)
Plaintiff argues that Judge Mann erred because Defendants “expressly authorized”
Plaintiff to use Defendants’ trademarks and Defendants granted Plaintiff a “naked license”
because they never inspected the quality of the collaboration merchandise. (Pl. Obj. 42–44.)
Defendants argue that Judge Mann properly dismissed Plaintiff’s trademark abandonment claims
because Plaintiff fails to show the existence of a valid licensing agreement and Defendants
actively monitored Plaintiff’s use of their trademarks. (Adidas Am. Opp’n 14–16.) For the
reasons explained below, the Court finds that Judge Mann properly dismissed Plaintiff’s
trademark abandonment claims.
28

When the owner of a trademark gives a license to another party for the use of its
trademark, the owner must exercise some control or supervision over the licensee’s use of the
mark. Gen. Motors Corp. v. Gibson Chem. & Oil Corp., 786 F.2d 105, 110 (2d Cir. 1986);
Patsy’s Italian Rest., Inc. v. Banas, 508 F. Supp. 2d 194, 212 (E.D.N.Y. 2007) (“The owner of a
trademark has not only the right to license the use of its trademark to others, but also a
concurrent duty to exercise control and supervision over the licensee’s use of the mark.”
(citations omitted)); Hawaii-Pac. Apparel Grp., Inc. v. Cleveland Browns Football Co. LLC, 418
F. Supp. 2d 501, 506 (S.D.N.Y. 2006) (“A licensor . . . is required to exercise some degree of
control over the use of the mark by the licensee, at the risk of abandonment of the mark.” (citing
Twentieth Century Fox Film Corp. v. Marvel Enters., Inc., 277 F.3d 253, 259 (2d Cir. 2002))). A
licensor’s failure to exercise control over its trademark may result in “a naked or uncontrolled
license [that] may provide the basis for an inference of abandonment of [the] trademark.” Gen.
Motors Corp., 786 F.2d at 110; see also Fendi Adele S.R.L. v. Burlington Coat Factory
Warehouse Corp., 689 F. Supp. 2d 585, 596 (S.D.N.Y. 2010) (“A naked license is a license to use
a trademark without sufficient quality control provided by the licensor[,]” which may result in
the licensor being “deemed to have involuntarily abandoned the rights to the mark.” (citation and
internal quotation marks omitted)); Patsy’s, 508 F. Supp. 2d at 212 (“Where a licensor retains no
control over the nature or quality of the goods or services provided in connection with the
mark, . . . such naked licensing will result in abandonment.” (internal quotation marks omitted)
(quoting Dawn Donut Co. v. Hart’s Food Stores, Inc., 267 F.2d 358, 367 (2d Cir. 1959))). A
party asserting that it was granted a naked license faces “a high burden of proof.” Patsy’s, 508 F.
Supp. 2d at 212 (quoting Warner Bros., Inc. v. Gay Toys, Inc., 724 F.2d 327, 334 (2d Cir. 1983);
see Fendi, 689 F. Supp. 2d at 596 (quoting Patsy’s, 508 F. Supp. 2d at 212).

29

Here, assuming that Defendants granted Plaintiff a license to use their trademarks,
Plaintiff’s allegations belie its assertion that Defendants issued it a naked license because
Defendants exercised sufficient control over Plaintiff’s use of the trademarks. The Court finds
Hawaii-Pacific Apparel Group Incorporated v. Cleveland Browns Football Company LLC, 418
F. Supp. 2d at 506, instructive. In Hawaii-Pacific, the plaintiff asserted that the defendant issued
it a naked license, thereby abandoning any claims for trademark infringement. Id. at 507. The
court found that the defendant exercised sufficient control over its mark as to all its licensees,
even where one licensee stated that she was only required to “submit artwork to [the defendant]
for its approval prior to using it on apparel” and another licensee stated that it was required to
submit design approvals. Id. at 507–08.
Similarly, here, Plaintiff’s allegations establish that Defendants inspected the designs and
artwork for the collaboration merchandise, (Compl. ¶¶ 21–23, 35, 50, 53–54, 61, 84, 88),
received “samples” of some of Plaintiff’s work, (id. ¶¶ 34, 45, 61), produced some of the
merchandise from the Classics Capsule itself, (id. ¶¶ 50, 56), ensured that their trademarks were
not placed on the merchandise until the designs were approved, (id. ¶¶ 52–54), reviewed
photographs of items from the Collaboration Capsule, (id. ¶¶ 65–66), decided that the
manufacturing of the merchandise should occur at their facilities, (id. ¶ 42), and attempted to
prevent Plaintiff from continuing to sell and manufacture any of the merchandise from the
collaboration, even threatening to sue for infringement if Plaintiff continued to sell and
manufacture the merchandise, (id. ¶ 100). Defendants’ actions cannot be characterized as a
failure to exercise control over their trademarks.
Plaintiff primary argument is that Defendants failed to physically inspect the final
merchandise produced. (Pl. Obj. 43.) The law, however, does not require physical inspection of

30

products; it requires Plaintiff to show that Defendants exercised “no control over the nature or
quality of the goods or services provided in connection with the mark.” See Patsy’s, 508 F. Supp.
2d at 212 (emphasis added); see also Gen. Motors Corp., 786 F.2d at 110 (2d Cir. 1986) (“The
critical question . . . is whether the licensees’ operations are policed adequately to guarantee the
quality of products sold under the mark.” (citation omitted)); Carl Zeiss Stiftung v. V.E.B. Carl
Zeiss, Jena, 293 F. Supp. 892, 917–18 (S.D.N.Y. 1968) (“A naked license may be the basis for an
inference of abandonment where the licensor maintains no control over the quality of the good
made by the licensee.” (emphasis added) (citation and internal quotation marks omitted)).
Because the record demonstrates that Defendants exercised control over Plaintiff’s use of
Defendants’ trademarks, the Court adopts Judge Mann’s recommendation and grants Defendants’
motion to dismiss Plaintiff’s trademark abandonment claims.
iii. Defamation claim
Judge Mann recommended that the Court deny Plaintiff’s motion for summary judgment
as to its defamation claim. (R&R 33–35.) Judge Mann found that summary judgment was
improper because nothing in the record establishes that Defendants’ representative who told V
Magazine that the collaboration was “illegitimate” knew that the collaboration was valid. (Id.)
Plaintiff argues that the recommendation was erroneous because the representative’s
awareness of the collaboration is irrelevant. (Pl. Obj. 44–46.) Plaintiff further argues that the
representative’s statement is facially defamatory and the representative is imputed with
knowledge of the collaboration because he worked for Defendants. (Id.) Defendants argue that
Plaintiff’s failure to establish the existence of a contract shows that Plaintiff is not entitled to
summary judgment on the defamation claim. (Adidas Am. Opp’n 13–14.) For the reasons
discussed below, the Court finds that Judge Mann properly denied the motion for summary
judgment.
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“Defamation . . . is the invasion of the interest in a reputation and good name” and
“consist[s] of the twin torts of libel and slander.” Albert v. Loksen, 239 F.3d 256, 265 (2d Cir.
2001) (citations omitted). “Generally, spoken defamatory words are slander; written defamatory
words are libel.” Id. (citations omitted); see also Biro v. Conde Nast, 883 F. Supp. 2d 441, 456
(S.D.N.Y. 2012) (“Defamation is the injury to one’s reputation either by written expression,
which is libel, or by oral expression, which is slander.” (citation omitted)). To establish a
defamation claim under New York law, a plaintiff must show (1) a false statement, (2) about the
plaintiff, (3) published without privilege or authorization (4) fault, rising to at least negligence,
by the publisher, and (5) special harm or defamation per se. Celle v. Filipino Reporter Enters.
Inc., 209 F.3d 163, 169 (2d Cir. 2000); Tannerite Sports LLC v. NBC Universal Media, LLC, 135
F. Supp. 3d 219, 232 (S.D.N.Y. 2015); Lang Sang v. Ming Hai, 951 F. Supp. 2d 504, 517
(S.D.N.Y. 2013) (“The elements of a cause of action to recover damages for defamation are a
false statement, published without privilege or authorization to a third party, fault and either
causing special harm or constituting defamation per se.” (citations and alterations omitted));
Thompson v. Bosswick, 855 F. Supp. 2d 67, 76 (S.D.N.Y. 2012) (“New York law allows a
plaintiff to recover for defamation by proving that the defendant published to a third party a
defamatory statement of fact that was false, was made with the applicable level of fault, and
either was defamatory per se or caused the plaintiff special harm.” (citing Chandok v. Klessig,
632 F.3d 803, 814 (2d Cir. 2011))). A defamatory statement is one that exposes the plaintiff “to
public hatred, shame, obloquy, contumely, odium, contempt, ridicule, aversion, ostracism,
degradation, or disgrace, or . . . induces an evil opinion of one in the minds of right-thinking
persons, and . . . deprives one of . . . confidence and friendly intercourse in society.’” Biro, 883
F. Supp. 2d at 456 (alterations in original) (quoting Karedes v. Ackerley Grp., Inc., 423 F.3d 107,

32

113 (2d Cir. 2005)). “A statement that tends to injure another in his or her trade, business or
profession is defamatory per se.” Biro, 883 F. Supp. 2d at 456 (citation omitted). Statements
that tend to injure a business’s reputation are statements “made with reference to a matter of
significance and importance for the operation of the business . . . .” Thompson, 855 F. Supp. 2d
at 77 (citation omitted).
Here, Plaintiff is not entitled to summary judgment because it cannot satisfy the fourth
element, which requires a showing of fault.10 Plaintiff must establish that Defendants, through
their representative, “culpably published the alleged defamatory statements,” meaning that it
“must show that [D]efendants were at least negligent with respect to the truth . . .” Greene v.
Paramount Pictures Corp., 138 F. Supp. 226, 236 (E.D.N.Y. 2015); see also Medcalf v. Walsh,
938 F. Supp. 2d 478, 487 (S.D.NY. 2013) (dismissing plaintiff’s defamation action because the
complaint failed to allege that the “statements were made with the applicable level of fault” as
“no facts . . g[a]ve rise to a plausible inference that [defendants] negligently” published the
statements at issue); Tuff-N-Rumble Mgmt., Inc. v. Sugarhill Music Pub. Inc., 8 F. Supp. 2d 357,
362 (S.D.N.Y. 1998) (noting that a plaintiff asserting a defamation claim must establish that the
defendant “was negligent in its failure to ascertain the truth or falsity of the statement before
communicating it” (citation omitted)).
Plaintiff’s defamation claim is based on the statement that the collaboration was
“illegitimate” made by of one of Defendants’ public relations employees to V Magazine.
(Compl. ¶¶ 111–16.) In support of its motion, Plaintiff submits a declaration from its founder
and emails related to the statement at issue. (Decl. of Benjamin Fainlight (“Fainlight Decl.”),

10

Because the Court finds that Plaintiff fails to allege fault, the Court does not discuss
whether Plaintiff has satisfied the other elements of a defamation claim.
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annexed to Pl. Mot. as Ex. 4; Emails re “illegitimate” statement (“V Magazine Emails”), annexed
to Fainlight Decl. as Exs. 32, 33, 34, 35 and 36.) Fainlight states that on November 20, 2014,
Katherine Zarella, Senior Editor at V Magazine, informed him that an Adidas representative
contacted her and told her the collaboration was “illegitimate.” (Fainglight Decl. ¶ 59.)
Fainglight asked Zarella for the contact information of the representative who made the
statement. (Id. ¶ 61.) After Zarella replied, Fainglight emailed the representative, Brett
Anderson, and explained that Plaintiff and Defendants had been collaborating “for a year at that
point and [A]didas had signed off” on the collaboration. (Id. ¶ 63.) Fainlight then emailed his
contact at Adidas, Jarrett Mann, to gain an understanding of Anderson’s statement. (Id. ¶ 65.)
Mann explained that Plaintiff and Defendants “ha[d] not been able to connect in quite some
time,” Defendants public relations team had “no knowledge” of the collaboration, and “the press
. . . was bought to [their] attention” the day it was released. (Id. ¶ 66.) After Fainglight replied,
Mann informed him that Defendants’ “PR team is pretty unhappy . . . due to the lack of
knowledge they had about the material . . . .” (Id. ¶ 68.)
Plaintiff’s evidence fails to establish that Anderson acted negligently when he told
Zarella that the collaboration was illegitimate. First, Plaintiff submits no evidence as to whether
Anderson had any knowledge that Plaintiff and Defendants were collaborating. In fact,
Plaintiff’s evidence indicates that Anderson and Defendants’ public relations team had “no
knowledge” of the collaboration. (Id. ¶ 66). Second, Plaintiff submits no evidence showing that
Anderson acted negligently by failing to investigate whether the collaboration was legitimate.
Moreover, the evidence only shows that Anderson was a “representative” of Defendants.
Plaintiff submits no evidence regarding Anderson’s role in Defendants’ companies, what
department Anderson worked in, Anderson’s office location, or any similarly relevant

34

information.11 (Id. ¶¶ 59–64.) Therefore, Plaintiff has not shown that “[D]efendants were at
least negligent with respect to the truth.” See Greene, 138 F. Supp. at 236; see also Albert, 239
F.3d at 271 (holding that it could not decide the issue of defendant’s fault in making the
allegedly defamatory statements because the record lacked sufficient evidence on the issue).
Accordingly, the Court finds that Plaintiff failed to state a defamation claim and therefore
adopts Judge Mann’s recommendation. The Court denies Plaintiff’s motion for summary
judgment on the defamation claim.
d. Adidas AG’s motion to dismiss for lack of jurisdiction
Adidas AG separately moves to dismiss the Complaint, arguing that Plaintiff’s allegations
fail to establish that the Court can exercise personal jurisdiction over Adidas AG. (Adidas AG
Mem. of Law in Supp. of Adidas AG Mot. (“Adidas AG Mem.”) 4–7, Docket Entry No. 42.)
Adidas AG contends that it lacks sufficient contacts with New York for general personal
jurisdiction, and because Adidas America’s actions cannot be imputed to Adidas AG, there is no
specific personal jurisdiction. (Id.) Plaintiff argues that the Court can exercise personal
jurisdiction over Adidas AG because it is Adidas America’s parent company, and therefore
Adidas America was acting on its behalf and for its benefit during the collaboration. (Pl. Opp’n
to Adidas AG Mot. (“Pl. Opp’n”) 10–19, Docket Entry No. 46.) Based on Plaintiff’s allegations

11

Based on the lack of evidence regarding Anderson’s role with Defendants, the Court
alternatively denies Plaintiff’s motion because it fails to establish that Anderson’s allegedly
defamatory statement may be imputed to Defendants under the doctrine of respondeat superior.
See Garrison v. Toshiba Bus. Solutions (USA) Inc., 907 F. Supp. 2d 301, 307, 309 (E.D.N.Y.
2012) (dismissing the plaintiff’s defamation claim because “[a]n employer is liable for the
defamatory conduct of an employee under the [respondeat superior] theory only if the employee,
in committing the act complained of, was acting within the scope of his employment,” which the
plaintiff failed to establish).

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and Adidas AG’s submissions, the Court finds that Plaintiff has not established that the Court has
personal jurisdiction over Adidas AG but grants Plaintiff jurisdictional discovery.
i.

Personal jurisdiction

Plaintiff argues that the Court can exercise specific personal jurisdiction over Adidas AG
based on an agency theory of jurisdiction.12 (Pl. Opp’n 10–19 (arguing that jurisdiction over
Adidas AG is proper because “America is AG’s All-Purpose U.S. Agent . . . .”).) Adidas AG
argues that the Court lacks personal jurisdiction over it because it has not transacted any business
in New York and Adidas America was not acting as its agent with respect to the collaboration
because it had no involvement with, or control over, the collaboration. (Adidas AG Mem. 4–7.)
Under New York law, when a plaintiff seeks to establish the Court’s specific personal
jurisdiction over a parent company based on the acts of its subsidiary, “the subsidiary must be
either an ‘agent’ or ‘mere department’ of the foreign parent.” Jazini, 148 F.3d at 184 (citation
omitted); see also Gallelli v. Crown Imps., LLC, 701 F. Supp. 2d 263, 271 (S.D.N.Y. 2010)
(“New York C.P.L.R. 301 jurisdiction may be established by attributing the acts of related
entities to the named [d]efendant. Specifically, the related entity [must] be either a ‘mere
department’ of the named [d]efendant, or its agent.” (citation omitted)).
To prove that a subsidiary is an agent of a parent company, a plaintiff must establish that
the “subsidiary does all the business which the parent corporation could do were it here by its
own officials.” Jazini, 148 F.3d at 184 (alteration omitted) (quoting Frummer v. Hilton Hotels
Int’l, Inc., 19 N.Y.2d 533, 537 (1967)); Gallelli, 701 F. Supp. 2d at 272. “[W]hen considering
the agency issue, the court[s] consider whether the subsidiary is carrying out its own business or
the business of the parent.” Gallelli, 701 F. Supp. 2d at 272 (citation omitted). A plaintiff
12

The Court does not discuss general personal jurisdiction because Plaintiff argues only
that the Court has specific personal jurisdiction over Adidas AG.
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demonstrates that a subsidiary was doing all the business of the parent by establishing that the
subsidiary’s “activities were for the benefit of and with the knowledge and consent of the
[parent-company] defendant, and that the [parent-company] defendant exercised some control
over the subsidiary in the matter that is the subject of the lawsuit.” Ingenito v. Riri USA, Inc., 89
F. Supp. 3d 462, 447 (E.D.N.Y. 2015) (internal quotation marks omitted) (quoting Kreutter v.
McFadden Oil Corp., 71 N.Y.2d 460, 467 (1988)); see also Universal Trading & Inv. Co., Inc. v.
Credit Suisse, 560 F. App’x 52, 55 n.1 (2d Cir. 2014) (noting that a parent company’s general
control over a subsidiary is insufficient to exercise personal jurisdiction over the parent
company); Wilder v. New Corp., No. 11-CV-4847, 2015 WL 5853763, at *6 (S.D.N.Y. Oct. 7,
2015) (noting that a court has personal jurisdiction over a company where “the parent exerts
pervasive control” over the subsidiary and its action in the forum); Gallelli, 701 F. Supp. 2d at
272 (same).
Plaintiff’s allegations fail to establish that Adidas America was “do[ing] all the business”
of Adidas AG, see Jazini, 148 F.3d at 184, because Plaintiff fails to show that Adidas AG had
any “knowledge” or “control over [Adidas America] in the matter that is the subject of the
lawsuit,” see Ingenito, 89 F. Supp. 3d at 447. There is no dispute that Adidas America is a
wholly owned subsidiary of Adidas AG. (See Decl. of Paul Erlich in Supp. of Adidas AG Mot.
(“Erlich Aff.”) ¶ 4, Docket Entry No. 41 (“[A]didas America, Inc. is a wholly owned subsidiary
of [A]didas AG . . . .”).) Plaintiff alleges that “[Adidas] America, Inc. directs all U.S.-based
operations on behalf of [A]didas AG, including, inter alia, sales, brand marketing, product
marketing, product design, public relations, distribution, contract formation, licensing of and for
[A]didas-branded merchandise, enforcement of [A]didas trademarks, and quality control of
[A]didas-branded merchandise . . . .” (Compl. ¶ 6.) Adidas AG, however, is not subsequently

37

mentioned in the Complaint, (see Compl.), and is never mentioned in Fainlight’s affidavit, (see
Fainlight Aff.). Nor does Plaintiff submit any allegations of contact between Adidas America
and Adidas AG pertaining to the collaboration. Adidas AG, on the other hand, states that it “has
not communicated with Plaintiff regarding any potential collaboration between Plaintiff and
[A]didas America or [A]didas AG.” (Erlich Aff. ¶ 5.)
While Plaintiff’s allegations show a close connection between Adidas AG and Adidas
America, Plaintiff’s allegations do not show that Adidas AG exercised any control over or had
any knowledge of the collaboration between Plaintiff and Adidas America, which collaboration
gave rise to Plaintiff’s suit. Thus, the Court cannot exercise specific personal jurisdiction over
Adidas AG as there is no direct link between Adidas AG and the conduct at issue. See Sonera
Holding BV v. Cukorova Holding A.S., 750 F.3d 221, 255 (2d Cir. 2014) (“Specific or conduct
linked jurisdiction depends on” a defendant’s affiliation with “the underlying controversy . . . .”);
Universal Trading, 560 F. App’x at 54 (noting that “[s]pecific personal jurisdiction exists” when
a defendant has contacts that with the forum that are related to the conduct at issue); Jazini, 148
F.3d at 184 (holding that “the presence of a subsidiary alone” is insufficient to establish personal
jurisdiction over the parent); cf. Uebler v. Boss Media, AB, 432 F. Supp. 2d 301, 305–06
(E.D.N.Y. 2006) (holding that plaintiff established personal jurisdiction over a parent company
by showing that the parent was “responsible for processing certain transactions” related to the
business dealings giving rise to the plaintiff’s suit).
ii. Jurisdictional discovery
In view of Plaintiff’s allegations, the Court grants Plaintiff limited jurisdictional
discovery to determine whether there was contact between Adidas America and Adidas AG
regarding the collaboration. See APWU v. Potter, 343 F.3d 619, 627 (2d Cir. 2003) (“[The] court
should take care to give the plaintiff ample opportunity to secure and present evidence relevant to
38

the existence of jurisdiction.” (citation and internal quotation marks omitted)). The bar for
granting “jurisdictional discovery” is “low,” Universal Trading, 560 F. App’x at 55, and it is
appropriately granted where a plaintiff’s allegations make a “sufficient start” toward establishing
personal jurisdiction, Uebler, 363 F. Supp. 2d at 506.
Here, Plaintiff has made a sufficient start to establish personal jurisdiction over Adidas
AG. Plaintiff alleges that “[Adidas] America, Inc. directs all U.S.-based operations on behalf of
[A]didas AG, including, inter alia, sales, brand marketing, product marketing, product design,
public relations, distribution, contract formation, licensing of and for [A]didas-branded
merchandise, enforcement of [A]didas trademarks, and quality control of [A]didas-branded
merchandise . . . .” (Compl. ¶ 6.) As discussed above, based on these allegations, Plaintiff’s
personal jurisdiction argument fails only because it lacks evidence and allegations regarding
whether Adidas AG was in any way involved in the collaboration at issue in this case. Moreover,
because Defendants have exclusive knowledge of the facts regarding whether Adidas AG was in
any way involved in the collaboration, jurisdictional discovery is warranted. See Uebler, 363 F.
Supp. 2d at 506 (noting that allowing “jurisdictional discovery in this case is bolstered by the
fact that the facts necessary to establish personal jurisdiction lie within [Defendant’s] exclusive
knowledge” (citation omitted)).
After jurisdictional discovery concludes, Plaintiff shall submit to the Court evidence it
believes establishes the Court’s personal jurisdiction over Adidas AG. If Adidas AG believes
Plaintiff still fails to establish personal jurisdiction after such submission, Adidas AG may renew
its motion to dismiss.

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III. Conclusion
For the foregoing reasons, the Court adopts Judge Mann’s recommendations in their
entirety. The Court therefore grants Defendants’ motion to dismiss as to the breach of contract
and declaratory relief claims, denies Defendants’ motion to dismiss as to the defamation and
unjust enrichment claims, and denies Plaintiff’s motion for summary judgment as to the
defamation, breach of contract and declaratory relief claims. The Court grants Plaintiff leave to
amend the Complaint to assert quasi-contract claims.
The Court denies Adidas AG’s motion to dismiss for lack of personal jurisdiction and
grants Plaintiff jurisdictional discovery. Plaintiff shall file an amended complaint within thirty
(30) days of this Memorandum and Order asserting any quasi-contract claims it wishes to pursue.

SO ORDERED:
s/ MKB
MARGO K. BRODIE
United States District Judge
Dated: March 27, 2017
Brooklyn, New York

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