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Cabo Brands, Inc v. Mas Beverages

December 4, 2012

CABO BRANDS, INC., PLAINTIFF,
v.
MAS BEVERAGES, INC., DEFENDANT.



The opinion of the court was delivered by: Otis D. Wright, II United States District Judge

O

ORDER DENYING MAS'S MOTION FOR PRELMINARY INJUNCTION AND RELATED COUNTERCLAIMS [65]

Defendant MAS Beverages, Inc. asks the Court to enjoin Plaintiff Cabo Brands, Inc. from marketing, promoting, and selling tequila products in various territories including the United States. (ECF No. 65.) For the following reasons, the Court DENIES MAS's Motion for a Preliminary Injunction.*fn1

I.BACKGROUND

On November 16, 2010, Cabo and MAS entered into a Sales Agreement, whereby Cabo appointed MAS to promote and sell Ed Hardy Tequila, Kah Tequila, and Agave 99 Tequila in the territories of North, Central and South America, the Caribbean, Asia, Europe, Middle East, and Oceana. (Countercl. ¶¶ 20--22.) Under the Agreement, MAS would market and promote the tequila products, acquire clients in the various territories, and submit orders to Cabo, who would sell the products to MAS at the prices specified in the Agreement. (Countercl. ¶ 25.)

MAS alleges that Cabo subsequently conspired with other parties and contracted with them to sell the same products in the same territories, even though the Agreement granted MAS exclusivity. (Countercl. ¶ 27.) Cabo also allegedly raised the prices of the products without MAS's consent, required MAS's clients to purchase directly from Cabo, and refused to provide products to fulfill the orders MAS solicited. (Countercl. ¶¶ 31, 34, 37, 39.) MAS further alleges that Cabo received benefits from MAS's marketing efforts, including new orders and increased sales. (Countercl. ¶¶ 41--44.)

Thereafter, Cabo filed this declaratory judgment action against MAS on December 12, 2011. (ECF No. 1.) MAS filed counterclaims on March 16, 2012. (ECF No. 19.) MAS now seeks to enjoin Cabo from marketing, promoting, and selling the products. Further, MAS seeks from Cabo an accounting of monies received for past sales and specific performance by filling MAS's solicited sales orders.

II.LEGAL STANDARD

A preliminary injunction is an extraordinary remedy never awarded as of right. Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 24 (2008). A plaintiff seeking a preliminary injunction must establish that: (1) it is likely to succeed on the merits; (2) it is likely to suffer irreparable harm in the absence of preliminary relief; (3) the balance of equities tips in its favor; and, (4) an injunction is in the public interest. Id. at 20; Perfect 10, Inc. v. Google, Inc., 653 F.3d 976, 979 (9th Cir. 2011). In each case, a court "must balance the competing claims of injury and must consider the effect on each party of the granting or withholding of the requested relief." Amoco Prod. Co. v. Vill. of Gambell, 480 U.S. 531, 542 (1987). Further, courts of equity should pay particular regard for the public consequences in employing the extraordinary remedy of injunction. Weinberger v. Romero-Barcelo, 456 U.S. 305, 312 (1982).

III.DISCUSSION

MAS's Motion addresses the merits of its first two causes of action: breach of written contract and fraud.*fn2 The Court considers each in turn.

A.Likelihood of success on the merits

1.Breach of written contract

MAS argues that it will likely succeed on the merits for its breach of contract claim because Cabo breached the contract by not filling MAS's valid order. (Mot. 10.) Even though MAS acknowledges that the Agreement gives Cabo the right to accept or reject MAS's orders at will, MAS contends that Cabo violated the implied ...


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