Opinion
Cause No. IP 00-0375 C-M/S
April 18, 2000
ORDER ON MOTION FOR PRELIMINARY INJUNCTION
This matter is before the Court on the motion filed by plaintiff CMG Worldwide, Inc. ("CMG") on April 5, 2000, seeking preliminary injunctive relief against 4 M Enterprises, Ltd. ("4 M") under Federal Rule of Civil Procedure 65. CMG contends that it will be irreparably harmed absent an injunction compelling 4 M to honor a license agreement negotiated on its behalf by CMG with The Upper Deck Company ("Upper Deck"). This Court held a hearing on April 13, 2000, during which the parties offered live testimony, introduced their documentary evidence and presented arguments with respect to the issues raised by the pending motion. Having reviewed the evidence and considered the arguments, the Court hereby DENIES the motion for a preliminary injunction against 4 M, as further explained below.
At this relatively early stage in the proceedings, the background given is a summary of the allegations of the complaint, preliminary findings from the evidentiary hearing and an account of the significant procedural history. See Thomas Betts Corp. v. Panduit Corp., 138 F.3d 277, 292 (7th Cir. 1998), cert. denied, 525 U.S. 929 (1998) (noting difference between findings of fact and conclusions of law at preliminary injunction stage and summary judgment stage).
CMG is an Indiana corporation which represents celebrities and the heirs, families and estates of deceased celebrities for the purposes of licensing to third parties permission to use the names, likenesses, voices, rights of publicity, trademarks and endorsement of such celebrities for commercial purposes. Compl. ¶ 2. 4 M, a Texas limited partnership, is the successor in interest to the Estate of Mickey Mantle, one of the preeminent baseball players of the twentieth century. Def.'s Ex. 4. 4 M is comprised of the heirs of Mickey Mantle and deals with the licensing of all proprietary rights concerning Mantle. Enfield Aff. ¶ 1.
In March of 1999, CMG and 4 M entered into a representation agreement where 4 M hired CMG to act as its exclusive agent to obtain, service and negotiate license agreements for exploitation of the various property rights devolved from Mantle. Pl.'s Ex. A. The agreement contained two provisions relevant to the parties' dispute which stated:
2. TERM. The term of this Agreement shall commence on the date of this Agreement and shall continue up to and including December 31, 2000 (hereinafter the "Initial Term"). Principal may terminate this agreement until after July 28, 1999 if in Principal's discretion a reasonable amount of royalties are not guaranteed in writing to principal during the Initial Term of this agreement.
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9. TERMINATION. If either party hereunder breaches any of the material terms and conditions of this Agreement (which "breach" shall include Agent becoming insolvent or committing an act of bankruptcy), the non-breaching party, in addition to its other rights and remedies, shall have the right to notify the defaulting party of the nature of the breach and its intention to terminate this Agreement upon failure to cure same. The defaulting party shall have fourteen (14) days from the giving of such notice to cure said breach; and if same is not cured within said period of time, then the non-breaching party may terminate this Agreement upon written notice to the defaulting party.
Id.
In December of 1999, CMG was in the process of finalizing negotiations with Upper Deck, a corporation which produces sports trading cards, to grant Upper Deck a license to use the name, likeness, signature, symbol and visual representation of Mickey Mantle in connection with a limited edition baseball trading card set entitled "Yankee Masters Collection," which would feature legendary members of the Yankees baseball team. Pl.'s Ex. D. Each set would include a limited edition baseball card for each player and a piece of memorabilia, such as an autograph or piece of a game bat. Id. CMG negotiated a $130,000 fee for this use and license. Enfield Aff. ¶ 8.
On December 15, 1999, 4 M sent CMG a letter which stated that it was terminating CMG for cause. Pl.'s Ex. B. The letter provided in relevant part:
I am writing in connection with our business relationship and feel that the amount of royalties generated under our agreement are not sufficient to justify an ongoing exclusive contract with your company. Under paragraph 2, we are exercising our rights to terminate, effective immediately. We, of course, recognize our continuing obligations under paragraph 3.
We certainly appreciate your efforts on our behalf and if you wish to continue working on a non-exclusive basis, we would be happy to discuss this with you.
Id. In a letter dated January 11, 2000, CMG responded to 4 M's letter of termination. The response stated that CMG was "certainly willing to abide by [4 M's] wishes," however, it couldn't help but believe that 4 M didn't fully understood what CMG had accomplished in laying the foundation for the marketing of Mickey Mantle. Pl.'s Ex. C. It then outlined several negotiations which were ready or close to being finalized, including the Upper Deck agreement. Id. In closing, the letter provided: "We are very proud of the hard work that we have put in for your family and have been honored to work for you. We hope that we will be able to continue that work, but we will abide by whatever you decide." Id.
On January 18, 2000, representatives from CMG participated in a telephone conference with Merlyn Mantle, the widow of Mickey Mantle, and Danny Mantle, the president of 4 M and son of Mickey Mantle. Enfield Aff. ¶ 5. During the conversation, CMG contends that the Mantles stated that they were revoking the December 15th termination letter, that the representation agreement would remain in effect and that CMG would continue its efforts as 4 M's exclusive licensing agent. Id. ¶ 4-8. In addition, it claims that 4 M specifically instructed CMG to finalize various negotiations for several pending license agreements. Id. ¶ 7. With respect to the Upper Deck deal, CMG states that it discussed the terms and conditions of the agreement with the Mantles in detail. Id. ¶ 7-8. At the hearing, Peter Enfield, Vice-President for CMG, testified that the Mantles then told CMG that they would approve the agreement as presented and that they wanted the money from Upper Deck by the following Friday. Accordingly, Enfield communicated the Mantles' approval to Upper Deck later that day via phone conversation and letter.
In contrast to CMG's belief that the Mantles had approved the Upper Deck deal, 4 M claims that at no time during the course of the conference call did the Mantles revoke 4 M's previous termination of the representation agreement with CMG. Danny Mantle Aff. ¶ 4. Nevertheless, 4 M advised CMG that it could complete the negotiations on any pending proposed licensing agreements and that the proposed agreements should be forwarded to 4 M for its review with a copy to be sent to 4 M's attorney Dorothy Weber ("Weber"). Id. ¶ 5. On January 31, 2000, Weber sent a letter to CMG which stated that she was responding to the company's January 11th letter on behalf of 4 M. Weber stated:
The Mantle family has had the opportunity to discuss your letter and their telephone conversation with you. While they have considered your comments, they stand by their December 15th termination. With regard to the proposals listed in your letter of January 11, 2000, you are not authorized to proceed with those negotiations.
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We look forward to a smooth transition and would appreciate receiving copies of all agreements executed during the term of the agreement so that we have a complete file. Please do not hesitate to communicate with me if you have any questions.
Def.'s Ex. 6.
On February 1, 2000, CMG faxed a copy of the proposed agreement with Upper Deck to Weber. The fax cover stated:
Attached is the Upper Deck agreement for your review. Given the nature of the program, this agreement is slightly different than the standard license agreement used for the Mantles. With your and the family's approval, Upper Deck is ready to execute the contract and forward the appropriate payment. Thank you.
Def.'s Ex. 9. In response, Weber then sent an email to CMG which stated:
I have had a preliminary discussion with the Mantles concerning the Upper Deck Company, while they are still not sure how they wish to proceed, they have indicated that they will not consider the proposal unless the grant of rights is only for (i) and (iii), that is ii, iv, and v are not acceptable as being included in the deal.
Def.'s Ex. 1. Notwithstanding this notice that the Upper Deck agreement was not acceptable, CMG sent payment to the Mantles as well as a copy of the agreement executed by Upper Deck for their signature on February 7, 2000. The Mantles responded to this communication on February 9, 2000 with a letter from Weber which provided:
At the hearing, Peter Enfield testified that to his knowledge the check had not yet been cashed by the Mantles.
We are in receipt of your letters dated February 4th and February 7th, 2000. I have spoken extensively to the Mantle family and reviewed their files in connection with Majestic and Upper Deck contracts. I had left a message for you yesterday in the hope of discussing this matter by phone. In view of what is now a clear dispute, I wanted to write to set forth our position so that there are no misunderstandings.
CMG's agreement was terminated by letter dated December 15, 1999 as acknowledged by you in your January 11th, 2000 letter to them. The termination was never withdrawn.
As you are aware, our office never received copies of the proposed agreements and I am assured by Danny Mantle that he repeatedly advised CMG not to do anything before materials were sent to us and then approved by them. Immediately upon our receipt of the Majestic and Upper Deck agreement (last week for the first time), we instructed CMG that the two deals were not acceptable.
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My clients assure me that you were not directed to negotiate and finalize these contracts. On the contrary, they advised you to send any contracts to us for review before they would make a final determination.
You are (and have been) instructed by the Mantles not to proceed with the Majestic and Upper Deck contracts. You are instructed to immediately return any monies received by Upper Deck and Majestic to notify them that there are no agreements. If we do not have your written confirmation that you are following the specific instructions of your principal no later than 5:00 p.m. New York time today, we shall communicate directly with these entities. We trust you will be guided accordingly.
Def.'s Ex. 2. That same day, Weber also wrote to Upper Deck stating:
We are the attorneys for Four M Enterprises and the family of Mickey Mantle. Please be advised that our clients have not approved the contract submitted to you by CMG Worldwide and are not prepared to proceed with a license. We have instructed CMG to return the checks submitted to you. Please be further advised that you are not authorized in any manner to exploit the name, image or likeness or any intellectual property of Mickey Mantle without the appropriate written license agreement.
We are of course available if you have any questions or you wish to discuss this matter in greater detail.
Pl.'s Ex. E.
On February 14, 2000, CMG filed an action in the Hamilton Superior Court alleging breach of contract. Compl. ¶ 26. The complaint included a request for injunctive relief. Id. ¶ 32. The case was removed to federal court on March 1, 2000. Having reviewed the factual background, the Court now turns to a brief overview of the standards governing its decision followed by its analysis.
II. DISCUSSION A. STANDARDS
A preliminary injunction is an extraordinary remedy. Eli Lilly and Co. v. American Cyanamid Co., 82 F.3d 1568, 1578 (Fed. Cir. 1996). In order to be entitled to such relief in a patent case, a plaintiff must show:
(1) a reasonable likelihood of success on the merits;
(2) irreparable harm;
(3) the balance of hardships tipping in its favor; and
(4) the impact of the injunction on the public interest.
Hybritech Inc. v. Abbott Lab., 849 F.2d 1446, 1451 (Fed. Cir. 1988). These factors must be balanced against each other and against the magnitude of the relief sought. Id. The injunction will not issue if the factors do not favor the movant. In addition, the party seeking the injunction has the burden of proving entitlement to such relief. Reebok Intern. Ltd. v. J. Baker, Inc., 32 F.3d 1552, 1555 (Fed. Cir. 1994).
Although courts should make findings with respect to each of the four factors and weigh them against each other, it is not always necessary to make findings about the relative harms and the public interest when a movant has failed to carry its burden on the first two crucial factors. Id. at 1556 (declining "to require a district court to articulate findings on the third and fourth factors when the court denies a preliminary injunction because a party fails to establish either of the two critical factors"(emphasis in the original)). On the other hand, when a court grants a preliminary injunction, it must make findings on all four factors. Id. A movant who clearly establishes the first factor, however, will enjoy the benefit of a presumption on the second. Id. The presumption is rebuttable. Moreover, it does not even arise unless there is a strong showing of a likelihood of success on the merits. Id. Logically then, any preliminary injunction analysis should begin with determining the plaintiff's likelihood of success on the merits.
B. LIKELIHOOD OF SUCCESS ON THE MERITS
CMG argues that 4 M breached the representation agreement by failing to comport with its terms regarding termination and by subsequently sabotaging and interfering with CMG's licensing efforts. The threshold for showing a likelihood of success on this claim is low. Cooper v. Salazar, 196 F.3d 809, 813 (7th Cir. 1999). CMG need only demonstrate a "better than negligible chance of succeeding." Id. (quoting Boucher v. School Bd. of Greenfield, 134 F.3d 821, 824 (7th Cir. 1998)).
The elements of a breach of contract action are the existence of a contract, the defendant's breach thereof and damages. J.S. Sweet Co. v. White County Bridge Comm'n., 714 N.E.2d 219, 228 (Ind.Ct.App. 1999). Here, CMG first contends that 4 M breached the representation agreement by terminating CMG without fourteen days notice and the opportunity to cure as required by paragraph nine. Paragraph nine provides that when either party "materially breaches" the contract, the non-breaching party shall notify the defaulting party of the nature of the breach and its intention to terminate the agreement. Pl.'s Ex. A. The defaulting party then has fourteen days from the date notice is given to cure the breach. Id. The non-breaching party can terminate the agreement only after this notice is given and the defaulting party fails to cure. Id. Applying this language, CMG asserts that 4 M breached its contract because the first notice it received of 4 M's desire to terminate the agreement was 4 M's December 15th letter which stated that its termination was effective immediately and there was no chance to cure.
Looking at the language of the agreement in its entirety, the Court finds that CMG's argument is without merit because the fourteen day notice and opportunity to cure required by paragraph nine only comes into play when one party believes that the other has committed a material breach. Such is not the case here. This is not a situation in which 4 M sought to terminate its contract with CMG because CMG had breached a material term or condition of the agreement. Rather, in this case, 4 M indicated in its termination letter that it was ending its business relationship with CMG because the Mantles "feel that the amount of royalties generated under our agreement are not sufficient to justify an ongoing exclusive contract with [the] company." Def.'s Ex. 3. This is the exact situation provided for in paragraph two of the agreement which states that 4 M may terminate the relationship after January 28, 1999 if "in the principal's discretion a reasonable amount of royalties are not guaranteed in writing to principal during the initial term of this agreement." Def.'s Ex. 4 (emphasis added).
Applying this provision, the Court concludes that 4 M was required to provide neither advanced notice of its intent to terminate the agreement nor an opportunity for cure. Moreover, it finds that the evidence presented by CMG in fact supports this application of the contract language. Specifically, the Court notes that in a letter to 4 M dated January 11, 2000, or nearly one month after it received 4 M's letter of termination, CMG stated that while it was "very surprised and disappointed" by 4 M's desire to discontinue their association CMG was "certainly willing to abide by [4 M's] wishes." Without mention of 4 M's failure to give the requisite notice or opportunity to cure, such language suggests that at the time CMG received 4 M's letter of termination the company itself believed that the relationship had been severed.
Still, CMG claims that even if 4 M's December 15th letter did terminate the representation agreement, the Mantles told CMG during a telephone conference on January 18, 2000 that they wanted to revoke their previous decision to terminate and therefore 4 M's failure to honor the licensing agreement negotiated by CMG with Upper Deck constitutes a breach of contract. The allegation that 4 M revoked its termination letter is heavily disputed by the Mantles who state that at no time during the course of the conference call did anyone revoke 4 M's previous decision. However, the Court need not resolve this discrepancy because the evidence presented still does not show that CMG has a likelihood of success on its breach of contract claim for two reasons.
First, even if the Mantles did in fact revoke their prior termination of representation, 4 M has provided affidavits from both Danny and Merlyn Mantle which state that 4 M advised CMG during the conference call that they could complete negotiations on any pending proposed licensing agreements and that the proposed agreements should be forwarded to 4 M's attorney, Dorothy Weber. Stated differently, 4 M conditioned its approval of the Upper Deck deal on Weber's subsequent review and approval of the agreement. Given that Peter Enfield testified at the hearing that in the past 4 M had never conditioned its approval of a licensing agreement on review by its lawyer, the Mantles' affidavit testimony is corroborated by the fact that CMG faxed a copy of the proposed agreement to Weber on February 1, 2000 and wrote: "With your and the family's approval, Upper Deck is ready to execute the contract and forward the appropriate payment." In addition, the Mantles' statements are confirmed by Weber's February 9th letter to CMG which provided in relevant part:
As you are aware, our office never received copies of the proposed agreements and I am assured by Danny Mantle that he repeatedly advised CMG not to do anything before materials were sent to us and then approved by them. Immediately upon our receipt of the Majestic and Upper Deck agreement (last week for the first time), we instructed CMG that the two deals were not acceptable.
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My clients assure me that you were not directed to negotiate and finalize these contracts. On the contrary, they advised you to send any contracts to us for review before they would make a final determination.
Pl.'s Ex. 2. Because any approval given by 4 M for the Upper Deck deal was contingent on review of the agreement by Weber, the Court concludes that 4 M did not accept Upper Deck's offer during the January 18th teleconference.
Second, even if there was any miscommunication between the parties as to whether the termination of the representation agreement was revoked during the teleconference, subsequent communications dated January 31, 2000 and February 9, 2000 from 4 M's attorney to CMG expressly confirmed the Mantles' decision to terminate the relationship as provided for in paragraph two of the agreement. While CMG appears to contend that the Upper Deck deal was finalized during the period between January 18th and January 31st, the license agreement submitted by CMG in support of its motion reveals that the agreement was not signed by Upper Deck until February 1, 2000 at which point CMG was on notice that it was without the authority to act as an agent on behalf of 4 M. Thus, CMG's contention that 4 M was bound to the deal is without merit. As the Court concludes that CMG has not shown that it is likely to succeed on the merits of its claim, it need not address whether failure to compel 4 M to honor the license agreement with Upper Deck will cause immediate and irreparable harm.
IV. CONCLUSION
The Court has thoroughly reviewed the evidence presented by the parties in support of their positions at the hearing held in this matter on April 13, 2000 and that was attached to their briefs. After careful consideration of this evidence and the parties' arguments, the Court finds that CMG's motion for a preliminary injunction should be DENIED.