Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—D.N.J.: U.S. perfume distributor’s claims against Emirati perfumery pass smell test, (May 7, 2025)

By Donielle Tigay Stutland, J.D.

Various letters and emails, referring to a retailer as the “U.S. distributor,” as well as marketing expenditures by a retailer satisfied pleading requirements of a valid implied contract.

The federal district court in Newark, New Jersey denied a motion to dismiss two counts in a lawsuit brought by a U.S. online perfume retailer against an Emirati perfumery and related entities for damages from a shipment diversion while the ordered goods were in transit, and for the perfume manufacturer's termination of the retailer's distributorship contract. The court found that the distributor had sufficiently pled an implied contract existed between the parties, through evidence of letters and emails designating the seller as the sole U.S. distributor, as well as evidence of significant marketing investments by the distributor. The court also denied the motion to dismiss the claim for breach of the implied covenant of good faith and fair dealing, having found a valid implied contract that was terminated without notice (Marina Group LLC v. Shirley May International US, Inc., No. 2:21-cv-18733-BRM-MAH (D.N.J. Apr. 30, 2025)).

Background. Swiss Arabian Perfumes Industry, LLC (Swiss Arabian) is a perfume manufacturer based in the United Arab Emirates. Shirley May International FZE (Shirley May FZE) is an Emirati free zone enterprise affiliated entity of Swiss Arabian that markets the Shirley May perfume brand. Shirley May International US, Inc. (Shirley May US) is a U.S.-based affiliated entity of Swiss Arabian and Shirley May FZE. Marina Group LLC (Marina) is an online retailer of perfumes and related items.

In 2017, Marina began purchasing Swiss Arabian products and selling them on its website, and continued to do so through 2020. In April 2021, Marina placed an order with Swiss Arabian for an assortment of products at a total price of approximately $100,000 and remitted an advance down payment of $60,000. The order was placed aboard a ship in the UAE; per the bill of lading, Shirley May FZE was the shipper and Marina was the consignee. The shipment was slated to arrive at the Port of Los Angeles on July 16, 2021.

Swiss Arabian acknowledged receipt of the shipment's balance due on July 13, 2021. By that time, the shipment had been transferred to another vessel slated for arrival at the Port of New York on October 2, 2021, and the consignee had been changed from Marina to Shirley Mae US. On August 16, 2021, Swiss Arabian informed Marina that its distributorship agreement was terminated.

Marina was unable to cover replacement goods from alternate sources, and accordingly had to decline orders from its own retail customers during the traditionally busy holiday season when it normally made a significant sales volume. Marina sued Swiss Arabian and its two affiliates in a New Jersey state court for damages from the diverted shipment. The case was removed to federal district court.

On November 21, 2023, Marina filed its Second Amended Complaint with claims for: (I) Conversion against Shirley May US; (II) Breach of Contract against Swiss Arabian; (III) Breach of the Implied Covenant of Good Faith and Fair Dealing against Swiss Arabian; (IV) Tortious Interference with Contract against Shirley May International and Swiss Arabian; and (V) Tortious Interference with Prospective Economic Advantage against Shirley May US. The defendants filed a Motion to Dismiss Counts II and III of the Second Amended Complaint for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6) and the Court granted Defendants’ Motion to Dismiss as to Marina’s breach of contract and breach of implied covenant without prejudice and with leave to amend.

Marina filed a Third Amended Complaint alleging claims for: (I) Conversion against Shirley May US; (II) Breach of Contract against Swiss Arabian; (III) Breach of the Implied Covenant of Good Faith and Fair Dealing against Swiss Arabian; (IV) Tortious Interference with Contract against Shirley May US; and (V) Tortious Interference with Prospective Economic Advantage against Shirley May US. Defendants filed a Motion to Dismiss Counts II and III of Marina’s Third Amended Complaint for failure to state a claim.

Breach of contract. The court began its analysis of the breach of contract claim by outlining that in order plead the existence of a contract, a plaintiff must allege “(1) a meeting of the minds; (2) an offer and acceptance; (3) consideration; and (4) reasonably certain contract terms.”

Marina alleged an implied exclusive distributorship agreement based on Swiss Arabian’s letters and conduct, and also offered evidence of Marina’s significant marketing investments to support this claim. While the distribution agreement was not reduced to a single writing, Marina averred that Swiss Arabian acknowledged Marina “as its United States Distributor on multiple occasions,” including in an Authorization Letter, a Confirmation Letter and in emails. Marina also spent over $361,892 on advertising the Swiss Arabian brand between January 1, 2021, and September 30, 2021, and $275,155 on marketing in the three months before the 2021 holiday season. Marina asserts that Swiss Arabian breached the parties’ agreement by diverting shipments, supplying other distributors, and terminating the agreement without notice. Additionally, Marina claims an implied exclusive distributorship agreement can be proven via parties’ respective actions and the Uniform Commercial Code (“UCC) is able to supply all the missing terms.

Swiss Arabian argues that the breach of contract claim should be dismissed because there was not a valid contract between the parties; Swiss Arabian argues there was no mutual assent, offer, acceptance, consideration, or clear terms. Additionally, Swiss Arabian asserts that the diverted shipment to themselves did not breach exclusivity.

The court found that Marina sufficiently alleged the circumstances of the contract’s formation, including any express or implied offer and acceptance by either party, mutual assent at the time of formation, and consideration exchanged. The court noted that Marina provided multiple letters which, when combined with the facts asserted, make an exclusive distributorship plausible. The court also found that, as an implied contract is “inferred from the conduct of the parties” rather than any explicit written or verbal communication, the letters from Swiss Arabian describing Marina as the “Sole Distributor for USA territory” and specifying that Marina is “the only authorized distributor/reseller for the Swiss Arabian Product range... covering the American market” as well as Swiss Arabian directing a third party to “purchase all Swiss Arabian products from our representative office in USA,” i.e., Marina, “as part of our new strategic policies of our company” demonstrate a meeting of the minds or mutual assent.

The court denied the motion to dismiss the breach of contract claim having found an exclusive distributorship was plausibly pled and the Complaint asserting shipments occurred to distributors within the exclusive territory in violation of the agreement, a breach of said contract has been sufficiently alleged.

Breach of implied covenant of good faith and fair dealing. The court next turned to the claim for breach of implied Covenant of Good Faith and Fair Dealing. Swiss Arabian also argued that this claim should be dismissed due to the failure to allege a valid contract. Marina argued that a valid contract existed and included an implied covenant of good faith and fair dealing, which, Marina asserted, in the case of a distributorship, meant the contract may only be terminated upon reasonable notice.

The court found that having found a valid implied contract, every contract includes an implied covenant of good faith and fair dealing. Marina adequately alleged a breach through Swiss Arabian’s sudden termination without notice and actions to deprive Marina of holiday season sales, causing damages. The court denied the motion to dismiss this claim.

The Case is No. 2:21-cv-18733-BRM-MAH.

Judge: Martinotti, B.

Attorneys: Elliot David Ostrove (Epstein Ostrove, LLC) for Marina Group LLC. Andrew David Bochner (Bochner PLLC) for Shirley May International US Inc.

Companies: Marina Group LLC; Shirley May International US Inc.

Cases: FranchisingDistribution NewJerseyNews GCNNews