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Commercial Division Blog

Current Developments in the Commercial Divisions of the
New York State Courts
Posted: October 5, 2015

Balance of Equities Favors Defendant Despite “Catastrophic Result” to Plaintiff

On September 14, 2015, Justice Ramos of the New York County Commercial Division issued a decision in Obsessive Compulsive Cosmetics, Inc. v. Sephora USA, Inc., 2015 NY Slip Op. 31812(U), declining to grant a preliminary injunction despite the “catastrophic result” to the plaintiff.

In Obsessive Compulsive Cosmetics, the plaintiff sought to enjoin the defendant from marking down and selling inventory that the plaintiff had provided to the defendant to sell. The court first found that the plaintiff was unlikely to succeed on the merits because the parties’ contract allowed to mark down and sale. As to the balance of the equities, the court held:

[The plaintiff] maintains that the balance of the equities weighs heavily in its favor, given the catastrophic result of an accelerated markdown. However, insofar as the vendor agreement explicitly permits [the defendant] to sell [the plaintiff’s] product at “whatever price” it determines in its “sole discretion,” and upon termination, [the plaintiff] is “responsible for accepting return of all remaining product in [the defendant’s] possession and reimbursing [the defendant] at full value”, the equities do not appear to weigh in [the plaintiff’s] favor.

(Internal citations omitted).

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