George V. Eatertainment v. Elmwood Ventures

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GEORGE V. EATERTAINMENT S.A. and CREATIVE DESIGN FZ LLC, Plaintiffs, v. ELMWOOD VENTURES LLC and ARKADY VAYGENSBERG, Defendants.

No. 1:22-cv-08047 (JLR)

United States District Court, S.D. New York

March 8, 2023

OPINION AND ORDER

JENNIFER L. ROCHON, UNITED STATES DISTRICT JUDGE:

Plaintiffs George V Eatertainment S.A. (“GVE”) and Creative Design FZ LLC (“CDFZ” and, together with GVE “Plaintiffs”) commenced this action against Defendants Elmwood Ventures LLC (“Elmwood”) and Arkady Vaygensberg (“Vaygensberg” and, together with Elmwood, “Defendants”) for breach of two license agreements, trademark and trade dress infringement and unfair competition. See generally ECF No. 1 (“Compl.”). Pending before the Court is Defendants' motion to dismiss the Complaint and Plaintiffs' motion for a preliminary injunction.^[1] For the following reasons, Defendants' motion to dismiss is GRANTED based on forum non conveniens. Plaintiffs' motion for a preliminary injunction is DENIED as moot.

BACKGROUND

Plaintiff GVE is a French corporation and CDFZ is an Emirati limited liability company.

Compl. ¶¶ 1-2.^[2] Together, Plaintiffs are the developers and owners of the BUDDHA-BAR brand and concept. Id. ¶ 8. BUDDHA-BAR locations are “luxury restaurant/bar/lounges with DJs, where Pacific Rim fusion cuisine, world music, and East-meets-West decor blend together to create a unique signature experience.” Id. ¶ 9. GVE owns various BUDDHA-BAR trademarks. Id. ¶ 16. CDFZ owns the concept for the operation of BUDDHA-BAR locations. Id. ¶¶ 17-20. Plaintiffs enforce quality-control standards at the BUDDHA-BAR locations, which include requiring licensees to follow certain operating procedures and marketing guidelines. Id. ¶ 21.

Defendant Elmwood is a New York limited liability company. Id. ¶ 3. Vaygensberg is a founding member of Elmwood and responsible for its day-to-day management. Id. ¶ 4.

After an earlier BUDDHA-BAR location in New York City closed Elmwood entered into two license agreements with Plaintiffs to authorize Elmwood to operate a New York City location of BUDDHA-BAR. Id. ¶ 22. First, Elmwood and GVE entered into the Buddha-Bar Trademark License Agreement (the “TLA”), effective April 7, 2021, which granted Elmwood a license to use a BUDDHA-BAR trademark in connection with the New York City location. Id. ¶ 23. Second, Elmwood and CDFZ entered into the Buddha-Bar Restaurant Concept License, effective April 7, 2021, which granted Elmwood a license to use the BUDDHA-BAR concept in connection with the New York City location. Id. ¶ 24. Elmwood opened BUDDHA-BAR New York on July 13, 2021. Id. ¶ 26.

Among other obligations, the License Agreements required Elmwood to provide Plaintiffs quarterly financial statements, fees, and royalties. See id. ¶¶ 36-38. The License Agreements contain identical choice-of-law and forum-selection clauses: “All disputes arising out of or in connection with the present contract shall be governed by and construed in accordance with the laws of England and the parties irrevocably submit to the exclusive jurisdiction of the Courts of London.” TLA ¶ 16.1; CLA ¶ 18.1. The TLA identifies by registration number at least one BUDDHA-BAR trademark and addresses “any infringement against the Trademark” (TLA at p. 2 & ¶ 7.1), and the CLA addresses “infringement against the [BUDDHA-BAR] Concept” generally (CLA art. 10). The License Agreements contain several provisions concerning the effect of their termination or expiration and provide post-termination obligations. Compl. ¶¶ 48-50; see TLA art. 13; CLA art. 15.

On June 29, 2022, Plaintiffs delivered to Elmwood a Notice of Default. Compl. ¶ 41. Plaintiffs allege that Elmwood breached several obligations under the License Agreements, including obligations to provide financial statements, pay the license fee installment, and pay royalties due. Id. Defendants confirmed receipt of the Notice of Default. Id. ¶ 43. Plaintiffs allege that, because Elmwood breached the License Agreements and did not cure those breaches within 30 days of the Notice of Default, the License Agreements terminated on July 29, 2022. Id. ¶¶ 42, 44, 46. Plaintiffs allege that Elmwood has not satisfied its “post-termination obligations” pursuant to the License Agreements and “continued to operate” BUDDHA-BAR New York since July 2022. Id. ¶¶ 50-51. Plaintiffs further allege that Defendants' continued usage is unauthorized and infringes Plaintiffs' trademarks and concept. Id. ¶ 52.

Plaintiffs filed the Complaint on September 20, 2022. See generally id. The Complaint asserts four causes of action: (1) breach of contract against Defendant Elmwood; (2) federal trademark and trade dress infringement and counterfeiting against both Defendants; (3) federal unfair competition against both Defendants; and (4) common law trademark and trade dress infringement and unfair competition against both Defendants. See id. ¶¶ 53-75. On September 30, 2022, Plaintiffs filed a motion for a preliminary injunction. See PI Motion. On November 3, 2022, Defendants filed a motion to dismiss. See MTD. Among other grounds, Defendants seek dismissal based on the forum-selection clauses in the License Agreements that select London courts as the chosen forum. See Br. at 8-10. On December 22, 2022, the Court conducted an initial pretrial conference and heard from counsel regarding the pending motions. See ECF No. 45. At that conference, the Court granted Defendants' request to file a sur-reply to Plaintiffs' motion for a preliminary injunction. Id. The Court subsequently granted Plaintiffs leave to file a sur-reply to Defendants' motion to dismiss on the issue of forum non conveniens, and Plaintiffs filed their sur-reply on February 17, 2023. See ECF No. 50; Sur-Reply.

LEGAL STANDARD

“[T]he appropriate way to enforce a forum-selection clause pointing to a state or foreign forum is through the doctrine of forum non conveniens.” Atl. Marine Constr. Co. v. U.S. Dist. Ct. for W. Dist. of Tex., 571 U.S. 49, 60 (2013). In deciding a motion to dismiss based on a forum-selection clause, “a district court typically relies on pleadings and affidavits,” unless disputed facts exist that would require an evidentiary hearing. Martinez v. Bloomberg LP, 740 F.3d 211, 216-17 (2d Cir. 2014). Where a defendant moves for dismissal under Federal Rule of Civil Procedure 12(b)(3) based on a forum-selection clause, a court may “treat their motion as a motion to dismiss for forum non conveniens.” SingularDTV GmbH v. LeBeau, No. 21-cv-10130, 2022 WL 6771081, at *3 (S.D.N.Y. Oct. 11, 2022); see Martinez, 740 F.3d at 214, 216 (affirming dismissal under forum non conveniens where the defendant moved under Rule 12(b)(3)); AMTO, LLC v. Bedford Asset Mgmt., LLC, 168 F.Supp.3d 556, 563 n.8 (S.D.N.Y. 2016) (construing motion “to enforce the forum-selection clause under [Rule] 12(b)(3) . . . as proceeding under the forum non conveniens doctrine”).

“Determining whether to dismiss a claim based on a forum selection clause involves a four-part analysis.” Phillips v. Audio Active Ltd., 494 F.3d 378, 383 (2d Cir. 2007). Initially, the court considers: “(1) whether the clause was reasonably communicated to the party resisting enforcement; (2) whether the clause is mandatory or permissive, i.e., . . . whether the parties are required to bring any dispute to the designated forum or simply permitted to do so; and (3) whether the claims and parties involved in the suit are subject to the forum selection clause.” Martinez, 740 F.3d at 217 (quoting Phillips, 494 F.3d at 383) (internal quotation marks omitted). “If the forum clause was communicated to the resisting party, has mandatory force and covers the claims and parties involved in the dispute, it is presumptively enforceable.” Phillips, 494 F.3d at 383. “A party can overcome this presumption only by (4) ‘making a sufficiently strong showing that enforcement would be unreasonable or unjust, or that the clause was invalid for such reasons as fraud or overreaching.'” Martinez, 740 F.3d at 217 (quoting Phillips, 494 F.3d at 383-84).

“The overriding framework governing the effect of forum selection clauses in federal courts . . . is drawn from federal law.” Id. To determine whether to enforce a forum-selection clause, i.e., step four of the analysis, courts apply federal law. See id. “In answering the interpretive questions posed by parts two and three of the four-part framework, however, [courts] normally apply the body of law selected in an otherwise valid choice-of-law clause.” Id. at 21718. Where the parties' briefs do not rely on the law chosen in the agreement, the court may instead interpret the forum-selection clause under federal law and general contract principles. See id. at 223 (“Just as parties are free, via a choice-of-law clause, to select the law to govern the interpretation of a forum-selection clause, nothing prevents the parties in litigation from choosing not to ‘rely on any distinctive features of [the selected law] and [instead to] apply general contract law principles and federal precedent to discern the meaning and scope of the forum clause.'” (quoting Phillips, 494 F.3d at 386)); Donnay USA, Ltd. v. Donnay Int'l S.A., 705 Fed.Appx. 21, 24 n.3 (2d Cir. 2017) (affirming interpretation of a forum-selection clause under “general contract principles” because “the parties did not brief British law before the district court”).

DISCUSSION

Defendants argue that this case should be dismissed under forum non conveniens because the parties selected the “Courts of London” - not the Southern District of New York - as the chosen forum in the License Agreements. Br. at 8; see TLA ¶ 16.1; CLA ¶ 18.1. Specifically, Defendants argue that the forum-selection clauses were reasonably communicated to Plaintiffs, are mandatory...