United States District Court, D. Connecticut
ELEMENT SNACKS, INC. Plaintiff,
GARDEN OF LIGHT, INC., d/b/a BAKERY ON MAIN Defendant.
MEMORANDUM OF DECISION DENYING DEFENDANT'S MOTION
TO AMEND OR ALTER JUDGMENT TDKT. 401 AND MOTION TO MODIFY
INJUNCTION TDKT. 421
VANESSA L. BRYANT UNITED STATES DISTRICT JUDGE.
the Court is Defendant's Motion to Modify the [Dkt. 38]
Order on Plaintiff's Motion for Preliminary Injunction
(the "Order"). [Dkt 42]. Plaintiff, Element Snacks,
Inc. ("Element") and Defendant, Garden of Light,
Inc., d/b/a Bakery on Main ("Bakery") are involved
in a dispute over their Manufacturing Agreement (the
"Agreement") which obligates Bakery to manufacture
Element's rice cake products for an agreed-upon price.
[See Dkt. 1-1 (Manufacturing Agreement)]. On August
1, 2018, the Court held a hearing on Element's Motion for
Preliminary Injunction (the "August 1 Hearing").
[Dkt. 36]. On August 9, 2018, the Court issued an Order
directing Bakery to continue producing Element's products
by the terms of the Agreement at the price the parties agreed
upon in September 2017. [Dkt. 38 at 16-17]. Bakery asks the
Court to modify the pricing terms specified in the Order,
hold Element's security with the Court rather than
Element's counsel, and amend the duration of the Order.
[Dkt. 42]. Bakery also filed a Motion to Stay the Order while
the Court resolves the Motions to modify the Order. [Dkt.
41]. Bakery's Motions are DENIED for the reasons stated
September 2017 Pricing
requests that the Order be amended to provide that "A)
the parties are ordered to attempt to reach agreement on new
pricing; and B) the parties are ordered to appear before
Magistrate Smith on a date certain (preferably no later than
August 23, 2018) to resolve any remaining differences
regarding the new pricing of product to be supplied by
defendant pursuant to this Order." [Dkt. 42 at 3]. In
support of this request, Defendant asserts that "the
Court's injunction does not maintain the status quo but
significantly alters the Agreement." [Id. at
2]. Bakery argues that the Order is "contrary to the
explicit terms of the parties' Agreement (Section 2)
which provides for periodic updating of prices."
[Ibid.]. Bakery also claims that the September 2017
pricing does not address the production of certain products
which were developed after September 2017. [Id. at
Motion for Preliminary Injunction asked the Court to maintain
the status quo between the parties while their dispute is
arbitrated. [Dkt. 2-1 (Plaintiff's Motion for Preliminary
Injunction) at 2]. As stated in the Order, it is the law in
this circuit that the status quo sought to be maintained by a
preliminary injunction is "the last actual, peaceable,
uncontested status which preceded the pending
controversy." LaRouche v. Kezer, 20 F.3d 68, 74
n.7 (2d Cir. 1994); North American Soccer League, LLC. v.
United States Soccer Federation, inc., 883 F.3d 32, 37
(2d Cir. 2018). "The decision whether to modify a
preliminary injunction involves an exercise of the same
discretion that a court employs in an initial decision to
grant or deny a preliminary injunction." Weight
Watchers Intern., Inc. v. Luigino's Inc., 423 F.3d
136, 141 (2d Cir. 2005). The Court has "inherent"
discretionary authority to modify its injunction. Sierra
Club v. U.S. Army Corps of Engineers, 732 F.2d 253, 256
(2d Cir. 1984).
had the opportunity to present evidence regarding the status
quo both in writing and at the August 1 Hearing. [See Dkt.
36]. The Court asked Bakery's CEO, Michael Smulders,
whether continuing production of Element's products at a
loss would "impact the viability of [Bakery's]
business," to which Mr. Smulders replied that it would
not. [Dkt. 36 (Testimony of Michael Smulders) at
3:41:00-3:41:15]. Bakery's counsel told the Court at the
conclusion of Mr. Smulders' testimony that Bakery had no
further questions for Mr. Smulders and no further witnesses
to offer. [Id. at 4:37:04-4:37:15]. The Court
indicated that it would rule based on the facts before it at
the conclusion of the August 1 Hearing, and Bakery did not
object. [Id. (Ruling) at 4:57:30-4:57:50]. Bakery
presented no evidence that the parties had agreed to update
the price following September 2017 and prior to the dispute.
At no time prior to entry of the Order did Bakery raise the
issue of pricing for products not included in the original
price agreement. The Court declines to modify the pricing
established in the Order.
has not shown that the Order incorrectly characterizes the
status quo ante. The evidence presented to the Court shows
that the last time the Parties agreed upon a price was
September of 2017. Element paid Bakery based on this price
until the current dispute, which began when Bakery threatened
to terminate the Agreement. [Dkt. 24 (Amended Affidavit of
Nadia Leonelli) ¶ 55]. Element asserts that it considers
the September 2017 price, based on a detailed invoice from
Bakery following trial production runs, to be the last price
agreed upon. [Id. ¶¶ 36, 42]. Bakery
presented no evidence of any superseding agreement on price.
In contrast, Mr. Smulders testified that there was never an
agreement on price. [Dkt. 36 (Testimony of Michael Smulders)
at 3:14:45 ("There is no agreed-upon price");
4:16:32 (there was no agreement on price in September 2017)].
This interpretation of the facts is implausible based on the
language of the Agreement and the performance of the parties.
Prior to the threatened termination, Bakery was producing
Element's products and accepting Element's payments.
Bakery insisted at the August 1 Hearing that the Agreement
did not bind the parties to a fixed price for each six-month
period, but Plaintiff's interpretation more closely
aligns with the language of the Agreement. [See Dkt. 38 at
2-4]. Bakery acknowledged that it had not provided Plaintiff
with sufficient information to reach an updated agreement on
price until early July 2018, as the most recent proposals
sent by Bakery contained errors. [Dkt. 36 (Testimony of
Michael Smulders) 1:37:O(M:39:OO]. The state of affairs
maintained by the Order is the arrangement by which Element
was paying Bakery at the September 2017 price and Bakery was
manufacturing Element's products.
in its request to modify the pricing conditions, effectively
seeks to re-litigate the issues addressed in the parties'
submissions on Element's Motion for Preliminary
Injunction and at the August 1 Hearing. Reopening the record
for this purpose requires disregarding the "law of the
case" doctrine. Under that doctrine, "when a court
has ruled on an issue, that decision should generally be
adhered to by that court in subsequent stages in the same
case unless cogent and compelling reasons militate
otherwise." Johnson v. Holder, 564 F.2d 95, 99
(2d. Cir. 2009) (internal quotation marks omitted). This is a
discretionary doctrine that does not limit the Court's
ability to modify its own injunction, but it "expresses
the general practice of refusing to reopen what has been
decided." Brody v. Vill. Of Port Chester, 345
F.3d 103, 110 (2d. Cir. 2OO3)(quoting United States v.
Martinez, 987 F.2d 920, 923 (2d Cir. 1993). In the
District of Connecticut, motions to reconsider a judgment
"will generally be denied unless the movant can point to
controlling decisions or data that the court overlooked in
the initial decision or order." D. Conn. Local R.
has not provided "cogent and compelling reasons"
for modification of the Order. Instead, Bakery unilaterally
proposes an entirely new scheme of injunctive relief. Bakery
refuses to accept the Court's decision, claiming that the
Order requires Bakery to "sell product to plaintiff at
prices lower than the prices plaintiff is entitled to charge
pursuant to the parties' Agreement." [Dkt. 43
(Affidavit of Michael Smulders) ¶ 10]. The task for this
Court is not to discern and mandate a price that Element is
entitled to charge, it is to maintain the status quo as it
existed prior to the parties' dispute.
of additional products that were not accounted for in
September 2017 was not presented to the Court at the August 1
Hearing or discussed in the parties' submissions, and the
Court has no basis on which to evaluate the effect of these
products on the status quo ante. The Court leaves it to the
parties to resolve the prices for these products in
accordance with the terms of the Agreement and consistent
with the price paid prior to the dispute.
Bakery asks the Court to go beyond maintenance of the status
quo, asking for referral to a magistrate judge to facilitate
the parties' heretofore unsuccessful price negotiations.
[Dkt. 42 at 3]. At the August 1 Hearing, the Court offered to
refer the parties to a magistrate judge prior to ruling on
the preliminary injunction. [Dkt. 36 (The Court) at
4:51:5O-4:52:38]. This offer of referral was an effort to
ensure that Bakery was paid a reasonable price for its
performance. Bakery appeared pessimistic about the
possibility of settlement, explaining to the Court the
complexity of such negotiations. [Id. (Statements of
Counsel) at 4:48:22-4:48:50]. The parties did not request a
referral at the August 1 Hearing and made no joint motion for
referral. Absent such a joint request, the proper forum for
the resolution of the parties' payment disputes, as
contemplated by the Agreement, is the ongoing arbitration.
Through the arbitration, Bakery can obtain damages for the
difference, if any, between the correct contract price and
the price Element has paid. This Court seeks only to preserve
the position of the parties during the arbitral proceedings.
Where Funds to be Posted as Security by Plaintiff Shall
Court recognizes Bakery's concerns regarding
Element's posted security. [Dkt. 42 at 3]. The Court
ordered Element to place $150, 000 in escrow with
Element's counsel. [Dkt. 38 at 17]. Element's
counsel, Matthew Ritchie, provided notice that the security
ordered by the Court has been received from Element. [Dkt.
44]. The Court directs Element to hold the security with
local counsel, Pamela LeBlanc, a member of the Bar of the
District of Connecticut, rather than visiting Attorney
Duration of the ...