IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY
June 15, 2000
ERIC SOKOLOFF, ET AL., PLAINTIFFS,
GENERAL NUTRITION COMPANIES, INC., ET AL., DEFENDANTS.
The opinion of the court was delivered by: Simandle, District Judge
Not for Publication
Filed: June 13, 2000
In the instant case, plaintiffs Eric and Heidi Sokoloff, who entered into an agreement with defendant GNC Franchising ("Franchising") to own and operate a General Nutrition Center store in Delran, New Jersey, selling vitamins, mineral supplements, and other health related products manufactured by defendant General Nutrition Companies, Inc. ("GNCI"), allege that defendants GNCI and GNC Franchising breached their franchise agreement with plaintiffs by allowing defendant Rite Aid Corporation to sell vitamins manufactured by GNC and called PharmAssure within plaintiffs' "protected territory," as set forth in the franchise agreement. Plaintiffs also assert that defendant Rite Aid, through its agreement with GNC to sell GNC PharmAssure products in a nearby Rite Aid drug store, tortiously interfered with plaintiffs' prospective economic advantage through their customers and potential customers in the protected territory. The case is before this Court sitting in its diversity jurisdiction, pursuant to 28 U.S.C. § 1332, for there is more than $75,000 in dispute and because the parties are completely diverse: plaintiffs are citizens of, and reside in, New Jersey, while all three defendants are Delaware corporations with their principal places of business in Pennsylvania.
There are currently two motions before the Court: (1) plaintiffs' motion for preliminary injunctive relief barring GNC and GNC Franchising from selling PharmAssure products at Rite Aids in plaintiffs' protected territory, and (2) Rite Aid's motion to dismiss the Complaint against them for failure to state a claim, which, for reasons that follow. At oral argument held on May 22, 2000, this Court denied the motion for preliminary injunctive relief, for reasons to be expressed in the instant Opinion and Order. At that time, the Court also converted Rite Aid's motion to dismiss into a motion for summary judgment and reserved decision pending further submissions. *fn1 For the reasons that follow, this Court will grant Rite Aid's motion for summary judgment and deny the motion for preliminary injunctive relief.
I. BACKGROUND/FINDINGS OF FACT
The facts of this case, at this stage, are largely undisputed. The dispute lies only over the meaning of contractual language.
A. Plaintiffs' Franchise
General Nutrition Corporation ("GNC"), defendant GNC Franchising ("Franchising"), General Nutrition Products, Inc. ("GNPI"), General Nutrition Distribution, L.P. ("GND"), and General Nutrition Investment Company ("GNIC") are wholly owned subsidiaries of General Nutrition, Inc. ("GNI"), which is, in turn, a wholly-owned subsidiary of defendant General Nutrition Companies, Inc. ("GNC"). Together, they are collectively referred to as the "GNC Companies." GNC operates more than 2,400 corporately-owned GNC stores throughout the U.S. GNC Franchising, on the other hand, grants franchises to third parties for the operation of GNC Stores. GNPI manufactures, or subcontracts the manufacture of, vitamins and dietary supplements for GNC and third parties. GND delivers both GNC and third party vitamins and dietary supplements to GNC's corporately-owned GNC stores and franchised GNC stores. GNIC owns the GNC Companies' intellectual property.
In early 1996, plaintiffs Eric and Heidi Sokoloff first expressed an interest in purchasing a GNC Store franchise. In connection with the sale, GNC Franchising delivered to plaintiffs a copy of its Uniform Franchise Offering Circular ("UFOC"), which contained comprehensive information about the GNC franchise system and the GNC franchised business, and included copies of all franchise-related contracts, including a copy of GNC Franchising's standard franchise agreement. The plaintiffs met with GNC Franchising representatives on several occasions at GNC Franchising's principal headquarters in Pittsburgh, Pennsylvania.
In March of 1997, plaintiffs entered into a Franchise Agreement with defendant GNC Franchising, and pursuant to that Franchise Agreement, operate a General Nutrition Center Store ("the Sokoloff GNC Store") in the Millside Shopping Center in Delran, New Jersey. Plaintiffs paid a franchise fee of $22,500, signed a Promissory Note for $81,098.98, executed a Purchase Money Security Agreement, and executed a Product Sales Agreement and a five year Sub Lease, which includes a gross rental in excess of $125,000. In addition, plaintiffs invested approximately $75,000 in additional monies into the operation of the Sokoloff GNC Store. Pursuant to the terms of the Franchise Agreement, the plaintiffs attended and completed GNC Franchising's initial training program at GNC Franchising's headquarters in Pittsburgh, Pennsylvania. They began to operate in 1997.
Plaintiffs' franchise agreement provided that GNC Franchising would provide valuable services (such as merchandising assistance, operational support, and accounting services) from its headquarters, and it provided that plaintiffs would deliver periodic sales reports and royalty payments to GNC Franchising at its headquarters. Additionally, the Franchise Agreement provided that franchisee has a protected territory within one mile of the location of the franchise location. The agreement further provides in § II., ¶ I.C for the protection of the area against further encroachment:
For a period of one year, Franchisor, shall not itself operate, nor grant a franchise for the operation of, another General Nutrition Center under the System within the Protected Territory, as described on page 1. If after expiration of such two year period Franchisor identifies within the Protected Territory a site for development of a franchised GNC store which is (1) a new available site or an existing company-owned GNC store; (2) a transfer of an existing franchised GNC store repurchased by or made available to Franchisor; or (3) an existing independent store that does not convert to a GNC store but is made available to Franchisor, then Franchisor shall grant to Franchisee the right and option to franchise such site by providing to Franchisee a written notice and a completed agreement or Development Agreement for such site along with Franchisor's then current Uniform Franchise Offering Circular ("UFOC"). To exercise its right and option to franchise such site, Franchisee must execute the agreement or Development Agreement, UFOC receipt and return the agreement and receipt to Franchisor together with the then-current Initial Franchise Fee or Development Fee on or before expiration of thirty (30) days from receipt of the notice. If Franchisee does not exercise its right to elect within such period, or waives its right to elect within such period, then Franchisor shall be free to develop such site or to grant it to another party, which may be Franchisor's affiliate, and Franchisee's right and option to such site shall expire and be of no further force or effect. (Compl. Ex. A, § II, ¶¶ I.C. ) The agreement further provides in § II, ¶ I.D that
Franchisor retains the right, among others, on any terms and conditions Franchisor deems advisable, and without granting Franchisee any rights therein, (i) to use, and to license others to use, the System and Proprietary Marks for the operation of General Nutrition Centers at any location outside of the Protected Territory; (ii) to sell and distribute, directly or indirectly, any goods or services, including, without limitation, GNC Brand Vitamins under the Proprietary Marks or any other proprietary marks to business or individual consumers located within or outside the Protected Territory, through the use of direct mail, mail order, catalog sales, or any other similar method and (iii) to use and license the use of other proprietary marks in connection with the operation of retail vitamin, health food, nutrition, or fitness stores which are the same as, similar to, or different from the Franchised Business, and which may be located at any location; provided, however, that such stores shall not carry or offer for sale GNC Brand Vitamins if located within the Protected Territory. Except as provided in Section I.C. herein, Franchisee acknowledges and agrees that this franchise is nonexclusive and is granted subject to the terms of Section VIII.C.(3) hereof. (Id. § II, ¶¶ I.D.) Paragraph VIII.C.(3) sets forth that
Except as provided in Section I.C. hereof, the right and license of the Proprietary Marks granted hereunder to Franchisee is nonexclusive, and Franchisor thus has and retains one right among others:
(a) To grant other licenses for the Proprietary Marks;
(b) To use the Proprietary Marks in connection with selling products and services at locations within or without the Protected Territory as described in Section I.C.; and
(c) To develop and establish other systems for the same or similar Proprietary marks, or any other proprietary marks, and grant license or franchises thereto without providing any rights therein to Franchisee. Id.
The agreement, in the recitals section, defines "Proprietary Marks" as the "certain trademarks, trade names, service marks, logos, emblems, and other indicia of origin, including but not limited to the GNC(TM) and GENERAL NUTRITION CENTER(TM) marks, and other such trade names, service marks, and trademarks as are now designated (and may hereafter be designated by Franchisor) for use in connection with the system. (Compl. Ex. A, Phase I, page 2.) It defines "GNC Brand Vitamins" as "a special selection of vitamins manufactured or distributed by Franchisor or its affiliates under labels bearing the mark `GNC' and related marks...." (Id.) The GNC Store Inventory Addendum attached to the Franchise Agreement as Attachment A (Compl. Ex. A.) Provides that Franchise shall carry, and offer for sale, the following lines and type of GNC Brand Vitamins:
GNC Complete Line
Natural Brand Complete Line
Pro Performance Complete Line
Challenge Complete Line
Id. The phrase "GNC Brand Vitamins" is not defined anywhere else in the Franchise Agreement.
The GNC Companies' right to sell non-GNC Brand Vitamins in the Protected Territory was noted in the Uniform Franchise Offering Circular given to all potential franchisees before franchise agreements are signed. More specifically, item 12 of that UFOC contains a section called "Our Right to Establish Other Franchises or Company-Owned Outlets Using Our Trademark," which retains important rights for GNC to market non-GNC brand products to drug stores, stating:
We retain the rights, among others, at our discretion and without granting you any additional rights: (1) to use and to license others to use, the System and Proprietary Marks to operate General Nutrition Center stores at any location outside the Protected Territory; (ii) to sell and distribute, directly or indirectly, any goods or services under any other proprietary marks to businesses or individual consumers located within or outside the Protected Territory, using direct mail, mail order, catalog sales, or any other similar method; and to sell and distribute those goods and services to drug stores or to other non-competing retailers; and as described above, to use and license others to use GNC Brand Vitamins and the Proprietary Marks or other proprietary marks to operate retail vitamin, health food, nutrition, or fitness stores which are similar to or different from the Franchised Business, and which may be located at any location. However, these stores will not carry or offer for sale GNC Brand Vitamins if they are located within the Protected Territory. In our Franchise Agreements, we and our affiliates also reserve the right to establish other franchises or company-owned outlets which sell or distribute similar products or services under a different name or trademark....If your Store is located within a shopping mall, you may have to compete with other stores within the mall which may sell similar products to those which you sell. (UFOC at page 41 (emphasis added).)
B. GNC's and Rite Aid's PharmAssure Line
The GNC Companies have traditionally sold and distributed their variety of products widely and through a number of different distribution channels under many different labels, trademarks, and company names. Consistent with this practice, in January of 1999, the General Nutrition Companies and Rite Aid, a Pennsylvania-based company operating retail drug stores through the United States, announced a "strategic alliance" which contemplated the opening of full-line GNC Stores within 1,500 Rite Aid drug stores as well as the development of a new line of vitamins and nutritional supplements to be marketed under the name and trademark "PharmAssure." Pursuant to this alliance, GNPI manufactures, and the GNC Companies and Rite Aid jointly market, a line of PharmAssure products which is endorsed by Rite Aid pharmacists and is distributed exclusively through Rite Aid drug stores, GNC stores, and online at www.drugstore.com. Rite Aid orders PharmAssure products directly from GNPI, which sends orders to one of three Rite Aid distribution centers, for ultimate distribution to Rite Aid drug stores across the United States. There are two lines of products in the PharmAssure Brand - a basic line sold only by Rite Aid and a premium line sold in both Rite Aid and GNC stores, at the GNC franchisees' option.
PharmAssure is a trademark with a registration pending on the Principal Register of the U.S. Patent and Trademark Office. It is jointly owned by GNIC and Rite Aid. PharmAssure products do not carry the GNC trademark or any related marks on them; they do not identify GNC as manufacturer or mention GNC at all, although a press release and Internet website text explain that PharmAssure is a joint GNC-Rite Aid venture. GNC franchisees are not required to carry PharmAssure products, and though PharmAssure products may be sold at GNC stores, they do not count toward the minimum level of "GNC Brand Vitamins" which GNC franchisees are required to maintain in their stores.
Many PharmAssure products are, however, the same products as those sold and required to be purchased in the Sokoloff's GNC Store, and they are sold in similar bottles, just under a different name and label. This includes certain products which are represented by GNC as being GNC's exclusive product; now those products that are exclusively GNC products are available under either the GNC mark or the PharmAssure label. The products are simply relabeled, and they are sold at discount prices, lower than prices at which plaintiffs are able to sell their vitamins.
C. The Rite Aid Store in the Millside Shopping Center
Following the announcement of Rite Aid's joint venture with GNC, plaintiffs became aware that the defendants intended to open a mini-GNC store within the Rite Aid store in the Millside Shopping Center, adjacent to plaintiffs' store. Plaintiffs objected to the opening as a violation of its protected territory. Consequently, Rite Aid and the GNC companies decided not to open the mini GNC store in that particular Rite Aid. Instead, during the end of 1999, Rite Aid began to sell PharmAssure products in the Rite Aid store in the Millside Shopping Center.
Plaintiffs testified in their depositions that approximately eleven customers came into their Millside Shopping Center store and noted that PharmAssure products were cheaper than GNC Brand product, and then those customers left without purchasing any items. Plaintiffs also testified that they do not know the names or addresses of these customers and that customers often leave without purchasing anything.
Based on their feeling that they would lose business as a result of the sale of PharmAssure products (for which plaintiffs admitted in deposition testimony that they had no factual support, save the eleven hearsay customer statements), plaintiffs objected to the sale of PharmAssure products in the Millside Shopping Center Rite Aid store, complaining that the products are the exact same products, sold at prices lower than they can afford to offer. They contend that PharmAssure products are within category of GNC Brand Vitamins which GNC is prohibited from selling or allowing others to sell in the Protected Territory. Plaintiffs wrote to GNC Franchising, specifically to Russell L. Cooper, the Senior Vice President and Manager of GNC Franchising, to complain about this. Cooper wrote back, noting that GNC Franchising saw no problem with the sale of the PharmAssure products in the Rite Aid store.
On February 9, 2000, plaintiffs filed the instant complaint alleging, in Count One, that GNCI and GNC Franchising are liable for breach of contract through the violation of plaintiffs' protected territory, and in Count Two, that Rite Aid is liable for tortious interference with prospective economic advantage.
D. Harm to Plaintiffs
Uncontroverted evidence shows that, thus far, there has been no harm to plaintiffs' business as a result of the sale of PharmAssure products in the Rite Aid in the Millside Shopping Center. Plaintiffs' store did have a 2.24% decrease in sales in January 2000 compared to January 1999 and a 5.1% decrease in April 2000 over April 1999. However, plaintiffs' store had increases of 23.68% in February 2000 (compared to February 1999) and 13.3% in March 2000 (compared to March 1999), for a total of a 6.9% increase for the first quarter of 2000 over the first quarter of 1999. Plaintiffs have not produced evidence that sales of the overlapping product lines, if singled out, have been significantly reduced.
A. Summary Judgment
Defendant Rite Aid asks this Court to dismiss Count Two of the Complaint, the only count sought against Rite Aid, pursuant to Fed. R. Civ. P. 12(b)(6). Although the Court can consider the matters attached to the pleadings, most notably the Franchise Agreement, without converting the motion to dismiss to a motion for summary judgment, this Court has obviously considered matters outside of the pleadings to the extent that a preliminary injunction motion is before this Court. As some of the material of record, including affidavits describing the fact that PharmAssure products do not contain the name or mark GNC anywhere on them, affects defendant Rite Aid's motion, this Court will convert the motion to one for summary judgment. Summary judgment is appropriate when the materials of record "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c).
Count Two of the Complaint alleges that Rite Aid tortiously interfered with plaintiffs' prospective economic advantage in their customers and potential customers in the Protected Territory through Rite Aid's sales of PharmAssure products. The common law of New Jersey protects an individual's right to pursue a lawful business against unjustified interference. There are five elements to a claim of tortious interference with prospective economic advantage: (1) plaintiffs' existing or reasonable expectation of economic benefit or advantage; (2) defendant's knowledge of that expectancy; (3) defendant's wrongful, intentional interference with that expectancy; (4) causal connection between the interference and failure to receive the anticipated benefit; and (5) actual damages. Printing Mart-Morristown v. Sharp Electronics Corp., 116 N.J. 739, 751 (1989). The only difference between a tortious interference with prospective economic advantage claim and a tortious interference with contractual relations claim is simply the existence of a contract. See, e.g., Coast Cities Truck Sales, Inc. v. Navistar Intern. Transp. Co., 912 F. Supp. 747, 772 (D.N.J. 1995).
Under either tort, it is necessary that the plaintiffs "show some protectable right - a prospective economic or contractual relationship," MacDougall v. Weichert, 144 N.J. 380, 404 (1996), defendant's knowledge of that expectancy, and intentional, unjustified acts by the defendant that interfere with that right. In the instant case, plaintiffs contend that Rite Aid's contract with GNC to sell PharmAssure products in the Rite Store in the Millside Shopping Center, in the face of Rite Aid's alleged knowledge that its stores would be in plaintiffs' protected territory, interferes with plaintiffs' contractual rights to the protected territory and reasonable prospects (based on that contractual right to a protected territory) of business from customers in the territories. Based on the evidence and arguments that plaintiffs themselves placed before this Court, however, plaintiffs cannot sustain these tort claims because the Rite Aid-GNC agreement did not interfere with any of plaintiffs' contractual rights or reasonable prospects of economic advantage.
Paragraph I.D.(iii) of the Sokoloff-GNC franchise agreement sets forth the exceptions to the grant of a "Protected Territory": GNC Franchising (and its affiliates) may sell any GNC Brand products outside of plaintiffs' protected territories; GNC Franchising (and its affiliates) may sell GNC Brand products to people in plaintiffs' protected territories so long as done by direct mail, catalog sales, or similar means; and, most relevant for the purposes of this case, GNC Franchising (and its affiliates) may use and license the use of other proprietary marks in connection with the operation of retail vitamin, health food, nutrition, or fitness stores which are the same as, similar to, or different from the Franchised Business, and which may be located at any location; provided, however, that such stores shall not carry or offer for sale GNC Brand Vitamins if located within the Protected Territory.... [Emphasis added.] Id.
The Sokoloff-GNC franchise agreements were explicit in protecting the Sokoloffs from the prospect that other stores in the protected territory would sell GNC Brand products.
Plaintiffs contend that PharmAssure products are within the definition of "GNC Brand Vitamins," and thus that their sale within the Sokoloffs' protected territory violates the Sokoloffs' contractual right and reasonable expectation in the fruits of a protected territory. Plaintiffs' contention is based on the fact that numerous PharmAssure products being sold at the Rite Aids location are exactly the same as GNC products except for the change in label and lower price. Plaintiffs' contention, however, incorrectly reads the language of the Franchise Agreement. Plaintiffs seem to confound the terms "proprietary marks" and "GNC Brand Vitamins."
The term "proprietary marks" is broader. It encompasses "the trademarks, trade names, service marks, logos and other indicia of origin, including but not limited to GNC(TM) and GENERAL NUTRITION CENTER(TM) marks, and such other trade names, service marks, and trademarks as are now designated (and may hereafter be designated by Franchisor) for use in connection with the System." The Sokoloff-GNC Franchise Agreement does not prevent GNC from allowing any one else the use of any of the GNC Companies' proprietary marks within the Protected Territory, but, rather, only sale of the GNC Brand Vitamins in the Protected Territory. There are, thus, GNCI-manufactured or -distributed products which are not GNC Brand Vitamins. Those products may be different from GNC Brand Vitamins, or they may be the same as GNC Brand Vitamins in all respects except name and labeling.
The Agreement defined "GNC Brand Vitamins" as "a special selection of vitamins manufactured or distributed by Franchisor or its affiliates under labels bearing the mark `GNC' and related marks...." (Compl. Ex. A, Phase I, page 2.) The only further definition of the term is in Attachment A to the Franchise Agreement, which is attached to the Complaint as Exhibit A. That attachment notes, in relevant part, that
Franchise shall carry, and offer for sale, the following lines and type of GNC Brand Vitamins:
GNC Complete Line
Natural Brand Complete Line
Pro Performance Complete Line
Challenge Complete Line
Preventive Nutrition Id.
Plaintiffs' agreement with GNC specifically allows GNC to sell or license others to sell products which do not contain the GNC mark or related marks or names on them, even in the protected geographic area. Plaintiffs argue that the list of GNC Brand Vitamins is not limited to those products which contain "GNC" in the name, as shown by the fact that the list of products in Attachment A include several products the names of which do not contain the name "GNC." The list in Attachment A, however, does not contain a representative list of products, but rather a closed list of products. PharmAssure is not on that list. Furthermore, PharmAssure products do not have GNC marks anywhere on the product labels, not even to note that the products are manufactured by GNC. Though the GNC website may contain information that PharmAssure products are made by GNC, the products themselves do not, and they cannot be said to be within the "special selection of vitamins manufactured or distributed by Franchisor or its affiliates under labels bearing the mark `GNC' and related marks...." Thus, PharmAssure products are not within the definition of "GNC Brand Vitamins."
Given that the Sokoloff-GNC franchise agreement leaves GNC free to enter into an agreement such as the one it made with Rite Aid, it cannot be said that Rite Aid intentionally took actions which interfered with protected rights that it knew plaintiffs had. Even if the franchise contract language is later for some reason deemed invalid vis-a-vis GNC, Rite Aid would still not be liable for tortious interference, for Rite Aid was not a party to the plaintiffs' agreements with GNC, nor is there any allegation that Rite Aid helped procure plaintiffs' entrance into the franchise agreements with GNC. Even if we assume, as plaintiffs allege, that Rite Aid knew about the Sokoloff-GNC franchise agreements and the terms of those agreements, as a true third-party outsider to the Sokoloff-GNC agreement, Rite Aid was entitled to rely upon the validity of the language of the Sokoloff-GNC franchise agreement.
Therefore, as a matter of law, defendant Rite Aid did not tortiously interfere with plaintiffs' contractual rights or protected expectation of economic advantage. Summary judgment will be granted for defendant Rite Aid on Count Two.
B. Motion for Preliminary Injunction
In Count One, plaintiffs seek damages and a preliminary injunction against the GNC defendants for breach of contract, more specifically breach of the Protected Territory through the sale of PharmAssure products. Plaintiffs now bring a motion for that preliminary injunction. The decision of whether to grant a preliminary injunction is within the discretion of the district court. United States v. Price, 688 F.2d 204, 210 (3d Cir. 1982) When deciding a motion for a preliminary injunction under Rule 65(a), a district court must consider four factors:
(1) whether the movant has shown a reasonable probability of success on the merits; (2) whether the movant will be irreparably injured by denial of relief; (3) whether granting preliminary relief will result in even greater harm to the nonmoving party; and (4) whether granting the preliminary relief will be in the public interest. Council of Alternative Political Parties v. Hooks, 121 F.3d 876, 879 (3d Cir. 1997)(citing American Civil Liberties Union of New Jersey v. Black Horse Pike Regional Board of Educ., 84 F.3d 1471, 1477 n.2 (3d Cir. 1996)(en banc)). The Third Circuit has held that the moving party must demonstrate both a likelihood of success on the merits and the probability of irreparable harm in the absence of injunctive relief in order to obtain a preliminary injunction, and that a preliminary injunction granted by a district court will not be sustained on appeal if either of these requirements is not satisfied. Hoxworth v. Blinder, Robinson & Co., Inc., 903 F.2d 186, 197 (3d Cir. 1990).
Of course, if the plaintiffs are unable to prove likelihood of success on the merits, there is no need for the Court to look towards the other factors at all. Here, plaintiffs have not proven likelihood of success on the merits, essentially for the reasons stated above with regard to Rite Aid's motion to dismiss.
Although PharmAssure products may be exactly the same products as GNC Brand products in many instances (although sold with a different label and at a lower price), they are not within the definition of GNC Brand Vitamins. Technically, the sale of PharmAssure products, even within the Protected Territory, does not violate the Franchise Agreement. Indeed, plaintiffs were warned of the possibility of sale of even the exact same products under a different name in the Protected Territory before they signed the Franchise Agreement, in the UFOC. The UFOC also warned the Sokoloffs of the possibility that they'd be competing against sales of virtually identical products in the same shopping mall. The Franchise Agreement does not grant any exclusive distribution rights, and the plaintiffs cannot create, by negative implication, an inference of exclusivity where none exists.
It may be true that in New Jersey, franchise agreements are viewed with suspicion as contracts of adhesion. See Kubis & Perszyk Associates, Inc. v. Sun Microsystems, Inc., 146 N.J. 176 (1996). It may also be possible that evidence gathered in discovery will show that the contract as written here worked a fraud on the plaintiffs and violated the GNC defendants' duty of good faith. However, the evidence at this stage does not point to a likelihood of plaintiffs' success on any of those arguments. Plaintiffs may ultimately win their case, but they are not entitled to the extraordinary relief of a preliminary injunction now, in light of the weakness of their evidence at this point, in the face of unambiguous contractual language.
Additionally, this Court finds that while GNC would be harmed by the granting of an injunction, there is no evidence that plaintiffs will be irreparably harmed if it is denied. Though plaintiffs did have two months in the last quarter with slight declines in sales, they also had two months with large increases over sales compared to the same period of time just one year before, for a total of 6.9% increase for the first quarter of 2000 compared to the first quarter of 1999. The lack of harm in the last four months makes it more unlikely that plaintiffs will be irreparably harmed if the preliminary injunction is denied. Furthermore, defendant proffered at the preliminary injunction hearing that the overlap between GNC and PharmAssure occurs with respect to only a fraction of defendant's GNC product line, some 41 PharmAssure products out of 6,186 total products. (Cooper Aff.) Plaintiffs' stores do not face imminent harm from the PharmAssure impact if these facts are true.
This is especially so in light of the fact that plaintiffs have no evidence - other than their own "feelings" and recollection of eleven hearsay statements by unidentified customers who left the store without purchasing - that the sale of PharmAssure products in the Rite Aid in the Millside Shopping Center is at all responsible for the two months in which decline in sales occurred. Indeed, Mrs. Sokoloff testified that during the month of January 2000, due to a personal situation, she was hardly ever in the Millside Shopping Center GNC store at all, which may be what accounts for the 2.24% decrease in sales that month. Moreover, damages from lost sales are monetizable, in the even plaintiff prevails upon the merits. Economic damage, compensable in money, is not irreparable harm. Frank's GMC Truck Center, Inc. v. GMC, 847 F.2d 100, 102 (3d Cir. 1988). The temporary loss of income can ultimately be recovered, and such harm is not irreparable. Acierno v. New Castle Cty., 40 F.3d 645, 654-55 (3d Cir. 1994). The Third Circuit in Acierno noted that the inability to precisely measure harm does not make that harm irreparable or immeasurable. Id. at 655.
Therefore, given the facts that plaintiffs have not proven likelihood of success on the merits or irreparable harm to them if the preliminary injunction is not granted, and that defendant would be harmed by the granting of the preliminary injunction, plaintiffs' motion for preliminary injunctive relief will be denied.
For the reasons expressed above, this Court will deny plaintiffs' motion for a preliminary injunction and grant Rite Aid's motion to dismiss Count Two, which this Court considers as a motion for summary judgment. Judgment will be entered for Rite Aid on Count Two. Count One will continue in its normal course against defendants GNCI and GNC Franchising, who are not preliminarily enjoined from allowing Rite Aid to sell PharmAssure in the Millside Shopping Center Rite Aid. The accompanying Order is entered.
JEROME B. SIMANDLE U.S. District Judge
This matter comes before the court upon the motion by plaintiffs Eric and Heidi Sokoloff for preliminary injunctive relief barring defendants General Nutrition Companies, Inc. ("GNCI") and GNC Franchising from allowing defendant Rite Aid Corp. ("Rite Aid") from selling PharmAssure products in the Rite Aid store in the Millside Shopping Center, and upon a motion by defendant Rite Aid to dismiss Count Two of the Complaint; and the Court having considered the parties' submissions; and the Court having converted Rite Aid's motion to one for summary judgment; and for the reasons expressed in an Oral Opinion of today's date;
IT IS this day of June, 2000 hereby
ORDERED that plaintiffs' motion for preliminary injunctive relief be, and hereby is, DENIED; and it is
ORDERED that defendant Rite Aid's motion to dismiss Count Two, which this Court has considered as a motion for summary judgment, be, and hereby is, GRANTED.
JUDGMENT to be entered for defendant Rite Aid on Count Two, and the Complaint against defendant Rite Aid is thus dismissed. The case continues in its normal course against defendants GNCI and GNC Franchising on Count One.
JEROME B. SIMANDLE U.S. District Judge