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Spirit Halloween Superstores, LLC v. Wicked Systems Inc.

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY


October 14, 2008

SPIRIT HALLOWEEN SUPERSTORES, LLC, PLAINTIFF,
v.
WICKED SYSTEMS INC., AND FRANK KRIZE, DEFENDANTS.
SPIRIT HALLOWEEN SUPERSTORES, LLC, PLAINTIFF,
v.
WICKED SUPERSTORE, LLC, AND KIMBERLY F. CUNNINGHAM, DEFENDANTS.

The opinion of the court was delivered by: Irenas, Senior District Judge

ORDER DISCHARGING ORDERS TO SHOW CAUSE WHY PRELIMINARY INJUNCTIONS SHOULD NOT BE ISSUED AGAINST DEFENDANTS

This consolidated matter*fn1 appeared before the Court on Plaintiff's Motions for Orders to Show Cause why a preliminary injunction should not be issued against Defendants*fn2; the Court having issued the Orders to Show Cause and pursuant to those Orders, having held a preliminary injunction hearing on October 10, 2008; and it appearing that:

1. The Court's findings of fact were set forth on the record in open court and are incorporated herein by reference.

2. The Court holds:

a. The restrictive covenant contained in the 2006 Consignment Agreement is not unenforceable per se.*fn3

b. The temporal and geographic parameters of the non-competition clause contained in the 2006 Consignment Agreement are unreasonable under the circumstances. See Solari Indust. v. Malady , 55 N.J. 571, 585 (1970). Accordingly, exercising the Court's "blue pencil" powers, the non-competition clause is hereby limited in its geographic coverage to 3 miles, and limited in its period of enforceability to 1 year. See id.*fn4

c. In light of (indeed, because of) the blue penciled provisions, Plaintiff has not established a likelihood of success on the merits.

d. Alternatively, Plaintiff has failed to sustain its burden of demonstrating irreparable harm absent an injunction.

e. This Court has personal jurisdiction over Defendant Kimberly Cunningham.

f. The 2006 Consignment Agreement is enforceable against Defendant Cunningham.

3. The parties agree that Paragraph 8.2 of the 2006 Consignment Agreement provides that all other disputes, aside from the instant application for injunctive relief, must be submitted to binding arbitration. Accordingly, a final judgment will be issued and the case will be terminated. And for good cause shown,

IT IS on this 14th day of October, 2008, ORDERED THAT:

(1) The Court's Orders to Show Cause, dated September 4 and September 15, 2008, are hereby DISCHARGED. Plaintiff's applications for preliminary injunctions against Defendants are hereby DENIED.

(2) The Court hereby retains jurisdiction to enforce any of the arbitration provisions of the relevant agreement(s).

(3) The Clerk of Court is hereby directed to close this file.

JOSEPH E. IRENAS, S.U.S.D.J.


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