Arizona Family Florists LLC v. 1-800-Flowers.com, Inc.
2:16-cv-02638
| E.D.N.Y | Oct 26, 2021Background:
- Plaintiffs (Arizona Family Florists LLC et al.) sued 1-800-Flowers and affiliated entities; the case reached cross-motions for summary judgment and a 65‑page R&R by Magistrate Judge Shields.
- Central statutory issue: whether defendants could invoke the registration exemption in N.Y. Gen. Bus. Law § 684(3) and therefore be relieved of the registration/disclosure obligations in §§ 683(2) and 683(8) (Plaintiffs had not received the full FDD disclosures for the Fruit Bouquet franchise).
- Plaintiffs sought summary judgment on Seventh and Eighth claims (NY Franchise Sales Act); Magistrate recommended denial based on factual disputes; District Judge Azrack adopted the R&R with modifications and concluded the exemption applied as a matter of law.
- Contract dispute: Arizona Plaintiffs claimed breach of contract and that expired written agreements were extended by an implied-in-fact contract based on continued performance through December 2016; defendants relied on a continuing BloomNet agreement and a February 24, 2014 letter setting new terms.
- Court ruled plaintiffs waived (at oral argument) the implied-contract theory; on the merits the implied-contract theory fails because (1) evidence is insufficient, (2) the BloomNet Agreement remained in effect, and (3) the February 2014 letter governed post‑expiration conduct (or, even if not accepted, BloomNet still controls).
- Disposition highlights: Plaintiffs’ motion denied in full; defendants’ motions granted in part and denied in part (including summary judgment for defendants on the Seventh and Eighth claims because the statutory exemption applies as a matter of law). Other claims were resolved as listed in the order.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can prior annual FDD registrations bar invocation of § 684(3) exemption? | Prior registration precludes later claiming the exemption. | Statute permits invoking exemption even if registrations were previously filed or challenged. | Rejected Plaintiff: prior registration does not preclude invoking § 684(3); exemption available. |
| If exempt under § 684(3), must franchisor still provide § 683(2)/§ 683(8) disclosures? | Yes — exemption should not excuse required disclosures to prospective franchisees. | No — if franchise is not "subject to registration," disclosure duties do not apply. | Agreed with Defendants: exemption means franchisor is not subject to §§ 683(2)/(8) disclosure obligations (court follows Dunkin’ Donuts). |
| Did parties form an implied-in-fact contract extending the expired OFAs/LFC after expiration? | Continued performance and payments created an implied contract extending terms until Dec 2016. | No implied contract: argument was not properly pressed at oral argument; evidence is insufficient; BloomNet agreement and Feb 2014 letter govern. | Implied-contract theory waived and fails on merits; summary judgment for defendants on implied-contract theory. |
| Did the Feb 24, 2014 letter become binding only if signed, or could silence/continued performance constitute acceptance? | Letter required signature; silence/performance cannot be acceptance. | Continued performance after receipt constituted acceptance of the new terms. | Court: Plaintiffs’ continued performance constituted acceptance (or in any event BloomNet Agreement independently controls). |
| Are defendants’ counterclaims time‑barred or barred for failure to follow notice/cure provisions? | Many aspects accrued before limitations cut-off; notice/cure precludes counterclaims. | Remaining counterclaims are not wholly time‑barred; notice/cure provisions do not bar claims here. | Court declined to fully resolve statute‑of‑limitations trimming now; notice/cure argument rejected as to all claims. |
Key Cases Cited
- Dunkin’ Donuts, Inc. v. HWT Assocs., Inc., 181 A.D.2d 711 (N.Y. App. Div.) (exemption from registration can relieve franchisor from specific § 683 disclosure requirements)
- Olivieri v. McDonald’s Corp., 678 F. Supp. 996 (E.D.N.Y. 1988) (earlier district court view that § 683 disclosures might be required despite exemption; court here declines to follow)
- Watts v. Columbia Artists Mgmt., Inc., 188 A.D.2d 799 (N.Y. App. Div.) (standard for implied‑in‑fact contract based on post‑expiration conduct)
- Martin v. Campanaro, 156 F.2d 127 (2d Cir. 1946) (continuing performance after expiration can imply assent to a new contract absent an intervening governing agreement)
- Int’l Techs. Mktg., Inc. v. Verint Sys., Ltd., 157 F. Supp. 3d 352 (S.D.N.Y.) (discussing implied contracts where post‑expiration conduct can recreate terms of expired contracts)