Benihana, Inc. v. Benihana of Tokyo, LLC

784 F.3d 887, 2015 WL 1903587
Court of Appeals for the Second Circuit·Decided April 28, 2015·No. Docket No. 14-841·Published·Cited by 158 cases

Opinion

GERARD E. LYNCH, Circuit Judge:

Defendant-appellant Benihana of Tokyo, LLC (“Benihana of Tokyo”) appeals from a February 26, 2014 order of the United States District Court for the Southern District of New York (Paul A.- Engelmayer, /.) granting the application of plaintiff[890]*890appellee Benihana, Inc. (“Benihana America”) for a preliminary injunction in aid of arbitration of a dispute arising under the parties’ license agreement. The district court enjoined Benihana of Tokyo from: (1) selling unauthorized food items at the restaurant it operates pursuant to the license agreement; (2) using certain trademarks in connection with the restaurant in a manner not approved by the license agreement; and (3) arguing to the arbitral panel, if it rules that Benihana of Tokyo breached the license agreement, that Benihana of Tokyo should be given additional time to cure any defaults.

The district court did not abuse its discretion with respect to the menu offering or trademark use injunctions, because it reasonably concluded that each of the relevant factors favored Benihana America. But it erred in enjoining Benihana of Tokyo from arguing to the arbitral panel for an extended cure period. When a dispute is properly before an arbitrator, a district court should not interfere with the arbitral process on the ground that, in its view of the merits, a particular remedy would not be warranted. Benihana America may challenge an arbitrator’s decision in court only after it has been issued. It may not subvert its agreement to arbitrate by obtaining a determination from a district court in advance that there are no grounds for the arbitrator to grant a particular remedy.

We therefore AFFIRM IN PART and REVERSE IN PART the order of the district court.

BACKGROUND

I. The License Agreement

This case arises from a dispute between the parties resulting from the 1994 corporate division of the well-known Benihana restaurant chain. Under the parties’ Amended and Restated Agreement and Plan of Reorganization (the “ARA”), Benihana America received the right to operate Benihana restaurants and use Benihana trademarks in the United States, Latin America, and the Caribbean, while Benihana of Tokyo received those rights for all other territories. The one exception to this clean split was Hawaii: the ARA provided that Benihana America would grant Benihana of Tokyo a license to continue operating an existing Benihana restaurant in Honolulu.

Accordingly, on May 15, 1995 the parties entered into a License Agreement (the “Agreement”), governed by New York state law, granting Benihana of Tokyo a license and franchise to operate Benihana restaurants in Hawaii, subject to the terms of the Agreement. In the Agreement, Benihana of Tokyo acknowledged the “necessity of operating the [restaurant] in conformity with [Benihana America’s] standards and specifications,” Joint App’x at 31-32, many of which are spelled out in the Agreement. Most relevant here, the Agreement restricts Benihana of Tokyo’s menu selection and use of Benihana trademarks. Article 6.3 requires Benihana of Tokyo to “sell or offer for sale only such products and services as have been expressly approved for sale in writing” by Benihana America, provided that “such approval shall not be unreasonably withheld.” Id. at 42^43. Similarly, under Article 8.1(c), Benihana of Tokyo agreed “[t]o advertise, sell or offer for sale only those items which are sold by [Benihana America] in its company-owned restaurants or such other products as are approved by [Benihana America] in writing, which shall not be unreasonably withheld, prior to offering the same for sale.” Id. at 44^45. Article 5.2 provides that “[a]ny and all advertising ... or other matter employing in any way whatsoever the words ‘Benihana,’ ‘Benihana of Tokyo’ or the [Benihana] [891]*891‘flower’ symbol shall be submitted to [Benihana America] for its approval prior to publication or use. [Benihana America] shall not unreasonably withhold approval for any such publication or use.” Id. at 40.

The Agreement also sets forth conditions and procedures governing termination. Under Article 12.1, Benihana America has good cause to terminate the Agreement in the event of either: (I) a violation of “any ... substantial term or condition of th[e] Agreement [that Benihana of Tokyo] fails to cure ... within thirty days after written notice from [Benihana America]”; or (II) “three notices [by Benihana America] of any default hereunder (and such defaults are thereafter cured), within any consecutive twelve month period.” Id. at 52-53. The Agreement also provides that violation of certain articles— including Article 5.2 restricting Benihana of Tokyo’s trademark use and Article 8.1(c) restricting the items Benihana of Tokyo may advertise or sell — “would result in irreparable injury to [Benihana America] for which no adequate remedy at law may be available” and for which Benihana America may obtain “an injunction against [such] violation ... without the necessity of showing actual or threatened damage.” Id. at 48.

Finally, Article 13 contains two arbitration provisions:

13.1 If this Agreement shall be terminated by [Benihana America] and [Benihana of Tokyo] shall dispute [Benihana America’s] right of termination, or the reasonableness thereof, the dispute shall be settled by arbitration at the main office of the American Arbitration Association in the City of New York in accordance with the rules of said association and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The arbitration panel shall consist .of three (3) members, one (1) of whom shall be chosen by [Benihana America], and (1) by [Benihana of Tokyo] and the other by the two (2) so chosen.
13.2 In the event that any other dispute arises between the parties hereto in connection with the terms or provisions of this Agreement, either party by written notice to the other party may elect to submit the dispute to binding arbitration in accordance with the foregoing procedure. Such right shall not be exclusive of any other rights which a party may have to pursue, a course of legal action in an appropriate forum. Enforcement of any arbitration award, decision or order may be sought in any court having competent jurisdiction.

Id. at 55-56.

II. The Licensing Disputes

Things proceeded amicably enough under the Agreement for over fifteen years. But in 2012 Benihana America was purchased by Angelo Gordon & Co., which proved to be a more hands-on licensor. In May 2013, Benihana America wrote to Benihana of Tokyo that it had recently learned that Benihana of Tokyo was selling hamburgers — called “BeniBurgers”— at its Honolulu location. Benihana America reminded Benihana of Tokyo that the Agreement required Benihana America’s approval of new menu items, noted that hamburgers were not an authorized menu item, and demanded that the hamburgers be removed from the menu. When no remedial action was forthcoming, Benihana America sent a second letter on July 30, 2013 notifying Benihana of Tokyo that it [892]*892was in breach of the Agreement and had thirty days to cure.

Free access — add to your briefcase to read the full text and ask questions with AI

Benihana, Inc. v. Benihana of Tokyo, LLC, 784 F.3d 887, 2015 WL 1903587 (2d Cir. 2015).

784 F.3d 887 (Benihana, Inc. v. Benihana of Tokyo, LLC) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

Google LLC v. Does 1-25
S.D. New York, 2025
Sweigert v. Goodman
S.D. New York, 2024
Grier v. Karl III
S.D. New York, 2024
Equibal, Inc. v. 365 Sun LLC
S.D. New York, 2024
Mavashev v. Kaldykulov
E.D. New York, 2024
Empire Trust, LLC v. Cellura
S.D. New York, 2024
Haynes v. Maldonado
S.D. New York, 2024