KGK Jewelry v. ESDNetwork

U.S. DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
Contracts

New York Law Journal

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Judge Laura Taylor Swain

ESDNetwork provides web-based marketing to retailers. It is headed by Yeko. In late 2011, KGK Jewelry contracted to provide 70 retail jewelry stores with services for an online marketing program. A critical component was collection of customer's email addresses via in-store kiosks. After executing letters comprising the Yeko contract, ESDN and Yeko claimed they were owed $1 million. They allegedly breached the contract by improperly retaining customer email addresses. They also allegedly improperly contacted KGK stores to divert KGK's business to themselves. The court dismissed KGK's contract breach claim to the extent it was based on failure to perform unspecified obligations. Claims based on defendants' alleged withholding of customer information, improper communication with KGK's customers and failure to install kiosks survive. In addition to dismissing KGK's tortious interference with prospective business relationships claim, the court dismissed all claims against Yeko personally. The sole nonconclusory allegation—that Yeko signed the contracts absent specifying that he acted in a corporate capacity—did not raise an inference of unity between ESDN and Yeko such that ESDN was Yeko's alter ego.

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