SymQuest Group, Inc. v. Canon U.S.A., Inc.

186 F. Supp. 3d 257, 2016 U.S. Dist. LEXIS 64432, 2016 WL 2855501
CourtDistrict Court, E.D. New York
DecidedMay 16, 2016
DocketCV 15-4200
StatusPublished
Cited by16 cases

This text of 186 F. Supp. 3d 257 (SymQuest Group, Inc. v. Canon U.S.A., Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
SymQuest Group, Inc. v. Canon U.S.A., Inc., 186 F. Supp. 3d 257, 2016 U.S. Dist. LEXIS 64432, 2016 WL 2855501 (E.D.N.Y. 2016).

Opinion

MEMORANDUM AND ORDER

WEXLER, District Judge

This diversity action was commenced by the Plaintiff, SymQuest Group, Inc. (“Sym-Quest”), against the Defendant, Canon U.S.A., Inc. (“Canon”), on July 17, 2015, alleging a number of claims arising from Canon’s termination of its Office Imaging Retail Dealer Agreement with SymQuest due to SymQuest’s change in ownership. After being denied both a temporary restraining order and a preliminary injunction, SymQuest amended its Complaint on September 30, 2015.

Before the Court is Canon’s motion to dismiss all but one claim in SymQuest’s First Amended Complaint, pursuant to Federal Rule of Civil Procedure 12(b)(6). SymQuest opposes the motion. For the following reasons, Canon’s partial motion to dismiss is granted in its entirety.

[261]*261 BACKGROUND

SymQuest is a full-service office imaging equipment distributor that designs, installs and supports various business technologies pertaining to the flow of information of both electronic and physical communications. (1st Am. Compl. ¶ 1.) Canon is one of the largest manufacturers and distributors of office imaging equipment in the United States, whose products consist primarily of multi-function printers, standard printers, copiers and scanners. (Id. ¶ 5.)

In 1996, SymQuest became a Canon dealer, selling various types of office imaging equipment distributed by Canon. (Id. ¶7.) The relationship was not exclusive and since at least 1999, SymQuest has sold products manufactured by Canon’s direct competitors as well. (Id.)

On or about February 26, 1999, Sym-Quest and Canon entered into an “Office Imaging Retail Dealer Agreement” (the “Dealer Agreement”), pursuant to which Canon would sell to SymQuest Canon-brand office equipment and SymQuest would resell that equipment and thereafter perform warranty and service work on that equipment for the end-user. (Id. ¶¶ 11-12.) Pursuant to the Dealer Agreement, SymQuest also agreed to purchase accessories, supplies and spare parts from Canon. (Id. ¶ 18.) The designation as an authorized dealer provided SymQuest with preferential pricing terms and other benefits from Canon. (Id. ¶ 14.)

Under the terms of the Dealer Agreement, SymQuest was required to conduct business and service operations only from authorized sales and service locations, as designated by Canon. (Id. ¶ 16.) The Dealer Agreement also obligated Sym-Quest to use its best efforts to promote and market Canon-brand office imaging products, including any accessories, supplies and spare parts. (Id. ¶ 16.) Sym-Quest was further required to maintain a satisfactory inventory of product models and to maintain and operate fully staffed and stocked sales locations. (Id.)

Pursuant to the Dealer Agreement, SymQuest was not permitted to sell any product unless it was able to provide services following the sale of said product. (Id. ¶ 17.) In connection with this requirement, the Dealer Agreement obligated SymQuest to provide a full range of repair equipment for all products that it sold. (Id. ¶ 18.) The Dealer Agreement further required SymQuest to provide Canon original equipment manufacturer (“OEM”) parts and supplies to end-users to whom it sold Canon copiers. (Id. ¶ 19.)

The Dealer Agreement also imposed various obligations upon SymQuest with respect to service and maintenance of the Cánon-brand products that SymQuest sold. For example, SymQuest was required, at its own expense, to create and maintain a “Service Organization” for the installation, maintenance and repair of Canon products at each authorized location by employing competent service-trained technicians and maintaining an adequate inventory of parts and supplies. (Id. 11 20-21.) The Dealer Agreement required SymQuest to service Canon end-users within four hours of a customer’s request. (Id. 22.)

To fulfill its service and maintenance obligations, SymQuest entered into Maintenance Agreements with its customers that lease or purchase Canon products. (Id. ¶ 24.) The Maintenance Agreements are typically for a five-year term and were negotiated based on SymQuest’s belief that it would have access to all of the supplies, software and information needed to service Canon products. (Id. ¶¶ 25-26.) Sym-Quest completes approximately 26,000 service calls per year, of which approximately 14,000 are for Canon products. (Id. ¶29.)

[262]*262In early 2015, SymQuest sought new investors and invited Canon, Xerox, Konica Minolta Business Solutions U.S.A., Inc. (“Konica Minolta”) and Kyocera, as well as two private equity firms, to submit formal offers by March 11, 2015. (Id. ¶ 44.) Canon did not make an offer to invest in SymQuest. (Id.) At its Board of Directors meeting on June 1, 2015, SymQuest approved the bid submitted by Konica Minolta for the purchase of 100% of SymQuest’s stock, although SymQuest would remain a separate corporate entity. (Id.) SymQuest advised Canon of the stock purchase on June 2, 2015. (Id.)

By letter dated June 9, 2015, Canon terminated the Dealer Agreement, effective immediately. (Id. ¶¶ 45-46.) The termination letter advised SymQuest that it must cease using Canon’s name and any reference to its status as an authorized dealer, as well as return all demonstration and loaner equipment, copies of price lists, promotional literature and technical information. (Id. ¶ 46.) The termination letter went on to state that SymQuest would have a one-time opportunity to purchase Canon brand equipment on June 12, 2015 and would thereafter no longer be able to purchase any new equipment from Canon. (Id.) Finally, SymQuest was advised that it would have a one-time opportunity to purchase Canon-brand spare parts and supplies on June 26, 2015 and would thereafter no longer be able to purchase any more Canon-brand parts and supplies. (Id.) SymQuest was required to pay in cash for these one-time purchase opportunities upon placement of the orders and no discounts or rebates were applicable. (Id.)

On June 11, 2015, Canon terminated SymQuest’s access to its E-Support, which is Canon’s dealer-only website for trained and authorized technicians. (Id. ¶ 47.) That same day, Canon terminated Sym-Quest’s right of entry to several other related web portals, including Canon’s License Management Site—where SymQuest activated licenses that it purchased and software already loaded on devices—and Canon’s ImageWare Remote, which provides updates on customer’s meter reads, equipment error codes and waste toner information. (Id. ¶ 48.)

After the parties participated in a contractually required mediation, Canon temporarily restored SymQuest’s access to the web portals. (Id. ¶ 49.) However, at the close of business on July 14, 2015, Canon once again terminated SymQuest’s access to E-Support, ImageWare Remote and Canon’s License Management Site. (Id. ¶ 50.) Without access to Canon’s web portals, SymQuest’s ability to service its end-users of Canon products is seriously impaired. (Id. ¶ 51.)

SymQuest commenced the within action on July 17, 2015 with the filing of a Complaint and an Order to Show Cause requesting a preliminary injunction.

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

Related

Cite This Page — Counsel Stack

Bluebook (online)
186 F. Supp. 3d 257, 2016 U.S. Dist. LEXIS 64432, 2016 WL 2855501, Counsel Stack Legal Research, https://law.counselstack.com/opinion/symquest-group-inc-v-canon-usa-inc-nyed-2016.