Lavazza Premium Coffees Corp. v. Prime Line Distribs. Inc.

575 F.Supp.3d 445

LAVAZZA PREMIUM COFFEES CORP. and Luigi Lavazza S.p.A., Plaintiffs,

v.PRIME LINE DISTRIBUTORS INC., Defendant.

20 Civ. 9993 (KPF)

United States District Court, S.D. New York.

Signed December 10, 2021

David Benjamin Sunshine, Matthew E. Lewitz, John J. Sullivan, Cozen O'Connor, New York, NY, for Plaintiffs.

Jennifer Junger, Michael N. Kreitzer, Greenberg Traurig, P.A., Miami, FL, for Defendant.

OPINION AND ORDER

KATHERINE POLK FAILLA, District Judge:

This case instantiates the breakdown of the commercial relationship between two coffee manufacturers, Plaintiffs Lavazza Premium Coffees Corp. ("Lavazza") and Luigi Lavazza S.p.A. ("Luigi"), and a Florida-based coffee distributor, Defendant Prime Line Distributors Inc. Plaintiffs brought this action for breach of contract; contributory trademark infringement and unfair competition; and several related tort claims. Defendant has moved to dismiss the Complaint for (i) lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2) and (ii) failure to state a claim upon which relief may be granted under Federal Rule of Civil Procedure 12(b)(6). Alternatively, Defendant has moved to transfer this case to the Southern District of Florida pursuant to 28 U.S.C. § 1404. For the reasons that follow, the Court finds that it has personal jurisdiction over Defendant with respect to all of Plaintiffs’ claims and declines to transfer the case. Furthermore, while the Court grants Defendant's motion to dismiss Lavazza's claims for (i) account stated and (ii) tortious interference with contract, it denies the motion as to all other claims alleged in the Complaint.

BACKGROUND¹

A. Factual Background

1. The Parties

Lavazza is a Delaware corporation whose principal place of business is in New York, New York. (Compl. ¶ 4). Luigi is an Italian company whose principal place of business is in Turin, Italy. (Id. at ¶ 5). Defendant is a Florida corporation whose principal place of business is in Fort Lauderdale, Florida. (Id. at ¶ 6).

2. The Distribution Agreement

On April 10, 2017, Lavazza and Defendant entered into a Distribution Agreement (the "Agreement"). (Compl. ¶ 9; see also Agreement). Pursuant to the Agreement, Defendant received the right to sell Lavazza's coffee and other products throughout Florida. (Agreement § 1.1). Defendant would place purchase orders with Lavazza for espresso, coffee, and tea (id. at § 1.2), and then resell the products to restaurants, hotels, cafés, and coffee shops (id. at Art. 2; see also Compl. ¶ 11). Defendant could place two types of purchase orders: container orders, which Lavazza fulfilled by shipping products from Italy to Defendant (Agreement § 3.1; Compl. ¶ 24), and warehouse orders, which Lavazza fulfilled by shipping products from its domestic warehouse to Defendant (Agreement § 3.1; Compl. ¶ 25). To facilitate Defendant's marketing and sale of Lavazza's products, Defendant also received a nonexclusive sublicense to use Luigi's trademarks. (Agreement § 8.1).

In exchange for the rights it received under the Agreement, Defendant made several promises. First and foremost, Defendant agreed to pay for the products it purchased from Lavazza within 75 days of receiving an invoice for them. (Agreement § 3.3). Defendant also opted to participate in Lavazza's equipment loan program, which provided coffee machines to customers on the condition that the customers use the machines exclusively to serve Lavazza coffee. (Id. at §§ 10.1, 10.3; see also Compl. ¶ 13). Relatedly, Defendant promised to notify Lavazza if Defendant learned that a third party was infringing on Luigi's trademarks (Agreement § 8.5), or was using Lavazza's loaned equipment to serve a competitor's coffee (id. at § 10.3). Finally, Defendant agreed not to disclose certain confidential information related to Lavazza's financial and business affairs. (Id. at §§ 12.1-12.2).

The Agreement also contained two clauses that would govern in the event that litigation arose between the parties. The first clause was a forum-selection clause, which provided that "[t]he parties hereby consent to the exclusive jurisdiction of the State and Federal Courts located in New York County in any action arising out of, or connected in any way with this Agreement, and each party consents to personal jurisdiction of, and venue in such courts in any such matter." (Agreement § 16.2). The second clause was a choice-of-law provision, which stated that "[t]his Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to principles of conflict of laws." (Id. at § 16.1).

3. Defendant's Alleged Misconduct and Breaches of the Agreement

Plaintiffs allege that, both prior to and following the Agreement's expiration, Defendant engaged in a series of actions that violated the terms of the Agreement and undermined Plaintiffs’ commercial reputation. Defendant's alleged actions—which are detailed in the remainder of this section—include: (i) failing to pay for products it purchased from Lavazza; (ii) marketing and selling competitors’ coffee products to customers that it knew had equipment loan agreements with Lavazza; (iii) contributing to customers’ service of competing coffee products in circumstances that led consumers to mistakenly believe that they had purchased Lavazza's products; (iv) removing, unilaterally and without Lavazza's knowledge or permission, Lavazza's equipment from customers’ premises; (v) spreading damaging lies about Lavazza's pricing strategies during the height of the COVID-19 pandemic; and (vi) divulging Lavazza's confidential information.

First , Defendant failed to pay outstanding invoices for past orders and belated cancellations of container orders. (Compl. ¶¶ 52-57). In late July 2020, for instance, Defendant failed to pay $438,638.64 for products it purchased under the Agreement. (Id. at ¶ 54). Around the same time, Defendant also canceled multiple container orders on short notice, forcing Lavazza to incur $14,336 in unreimbursed costs to divert the container shipments from Florida to Lavazza's warehouse in New York. (Id. at ¶ 55).

Second , Defendant "engaged in a coordinated effort to market and sell competitor coffee products to customers using Lavazza" equipment, despite knowing that these customers had entered into equipment loan agreements with Lavazza. (Compl. ¶ 58; see also id. at ¶¶ 59-69). In furtherance of this effort, Defendant improperly marketed competitors’ products to a restaurant in Key West, Florida; a resort and spa in Naples, Florida; a hotel in Gainesville, Florida; and a bakery in West Palm Beach, Florida—all of whom had entered into equipment loan agreements with Lavazza. (Id. at ¶¶ 62-63). As a result of Defendant's actions, several restaurants in Florida and the Caribbean stopped purchasing and using Lavazza coffee and began to use competitors’ coffee in their Lavazza coffee machines. (Id. at ¶ 65).

Third , as Defendant pursued its coordinated effort to sell competitors’ coffee products to customers who had entered into loan agreements with Lavazza, it continued to supply Lavazza-branded coffee mugs and other Lavazza promotional materials to those same customers. (Compl. ¶¶ 73-74; see also id. at ¶¶ 70-82). By selling both competitors’ coffee and Lavazza-branded mugs and promotional materials, Defendant led its customers to serve competitors’ coffee in Lavazza-branded coffee cups and in view of Lavazza-branded signs. (Id. at ¶¶ 75-78). Defendant's actions created confusion in the marketplace by inducing consumers to associate Luigi's trademarks with Lavazza's competitors’ coffee products. (Id. at ¶¶ 78-79).

Fourth , following the expiration of the Agreement, Defendant removed, without Lavazza's authorization or knowledge, Lavazza's equipment from certain customers’ premises and refused at a key period of time to provide Lavazza with the information needed to identify the customers whose equipment had been removed. (Compl. ¶ 83). For instance, in October 2020, Plaintiffs learned that Defendant had removed and taken possession of coffee equipment that Lavazza had loaned to a restaurant in Key West, Florida (id. at ¶ 89), and stored the equipment in one of its warehouses (id. at ¶ 83). Plaintiffs were notified that Defendant had also taken Lavazza's loaned equipment from a resort in Lake Buena Vista, Florida, a hotel in Doral, Florida, and numerous other customers. (Id. at ¶¶ 88-89). Defendant had, at one point, acquired 141 of Lavazza's coffee machines, which were kept idle in a warehouse. (Id. at ¶ 85). Defendant then inexplicably refused to disclose to Lavazza the list of customers from whom it had taken equipment, preventing Lavazza from discovering which machines Defendant had taken. (Id. at ¶ 83).

Fifth , and beyond the actions Defendant took with respect to individual customers, Defendant engaged in a broader campaign to damage Lavazza's commercial reputation by spreading false statements about Lavazza's pricing during the COVID-19 pandemic. (See Compl. ¶¶ 92, 102). On multiple occasions in July and August 2020, Defendant falsely asserted that Lavazza had raised the prices of its products and then attacked Lavazza for doing so during the COVID-19 pandemic. (Id. at ¶¶ 93, 102). In July 2020, Defendant distributed a list of price increases to its "Valued Customers" that falsely represented that Defendant had "received an increase from Lavazza Coffee effective July 1st 2020," and that this was "the third increase [Defendant] received in just under 1 year." (Id. at ¶ 94). In truth, Lavazza had not increased its prices during this period; rather, Defendant had on its own accord raised the price it charged for Lavazza's coffee. (Id. ).

Defendant made several additional false representations to customers that Lavazza had increased its prices between July and August 2020. (See Compl. ¶¶ 97-99). In July 2020, Defendant told its customers that Lavazza was increasing its prices by 25%. (Id. at ¶ 97). In an ...