Kraft vs. Starbucks: The Beginning To The End (3)

In response, Starbucks argued that an injunction was unnecessary because Kraft failed to show that it would suffer irreparable harm in the absence of injunctive relief. Starbucks stated that it had the undisputed right to terminate the contract at any time because Kraft had materially breached the terms by failing to perform its obligations under the contract by “withholding sales presentations and other materials” and failing to improve Starbucks’ declining sales, thereby releasing Starbucks of its obligations under the contract. (Response, pp 6). Further, pursuant to the termination provision of the underlying contract, the damages that Kraft would suffer would be compensable by money damages based on Kraft’s alleged harm of losing the exclusive right to distribute a product through Starbucks. Kraft is the largest food company in North America, and revenues from Starbucks account for 1% of Kraft’s annual revenue. (Response, pp 16).

Is this numerical value significant enough to demonstrate irreparable harm to Kraft? Starbucks said no and cited the following cases. In Litho Prestige, Div. of Unimedia Group, Inc. v. News Am. Publ’g, Inc., 652 F. Supp. 804, 808 (S.D.N.Y. 1986), the court stated that an argument that a four percent business loss would cripple the plaintiff was “wholly unpersuasive”. In Reiter’s Beer Distribs., Inc. v. Christian Schmidt Brewing Co., No. 86 CS 534, 1986 WL 13950, at *11 (E.D.N.Y. Sept. 9, 1986), the court found no irreparable harm where sales of beers at issue constituted between 17% and 29% of distributor’s total sales. Based on these holdings, the potential 1% loss of Kraft’s annual revenue is far from demonstrating irreparable harm. 

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