Having just extricated itself from a lawsuit from Topps, Leaf now finds itself in another lawsuit, this time with Panini.
On February 23, Panini sued Leaf and its founder and president, Brian Gray, for tortious interference with a contractual relationship. Leaf was planning on releasing autographed stickers from Kevin Durant, one of Panini's exclusive athletes.
Legal translation: Durant is exclusive to Panini now. You can't have him.
From a review of the complaint and attached materials, it seems Leaf was in possession of 750 stickers signed by Kevin Durant. According to the exhibits filed by Panini, the signatures are on Upper Deck holograms. Leaf approached Panini to see if they would like to buy the stickers. Panini declined, and argued that future use of the stickers should be impermissible.
The complaint and exhibits (especially the exhibits) do a good job of telling the story for those who would like to read them. (Editor's note: Although these documents are now on public record, the original exhibits include personal email address and phone numbers. Out of respect to the parties involved, we have blacked out these personal numbers and email addresses, although the document and comments within them remain in tact.)
After Panini refused to buy the Durant autographs, it appears Leaf intends to use the Durant stickers in its upcoming 2012 Leaf Best of Basketball product. This could be what triggered Panini into filing the suit.
I called Brian Gray to comment on the lawsuit and he indicated that a hearing was already held on a motion by Panini for a temporary restraining order (TRO).
Legal translation: Panini told the court “We need a court ruling immediately!"
Basically, to succeed on a motion for a TRO, you need to prove to the court that you 1) are likely to win the case and 2) are currently being harmed in such a fashion that just receiving money is just not good enough.
Gray also indicated that Panini's motion was denied by the judge.
Legal translation: The court said, “Sorry, Panini…I can't give you immediate relief…we'll need to hear more from both sides."
So, although Leaf has been sued, it has won the first victory.
Does this mean Leaf will win the suit? Not necessarily. TROs are very difficult to get because it's hard to prove you are likely to win a lawsuit (it's a higher standard than what Panini would need to meet to win the lawsuit). So long as the other side has legitimate defenses and support for those defenses, TROs are typically declined.
That being said, it is a good indicator that Leaf may be in the driver's seat, at least for the time being.
How will this case turn out? I'd like to see Leaf's response before I fully speculate on that. Tortious interference claims are tricky and require proof that the defendant was purposefully trying to interfere with a contractual relationship and harmed the value of that contract or the business relationship.
It would seem to me that if Leaf is lawfully in possession of these signed stickers, then Panini's suit isn't strong. From reviewing the exhibits to the complaint, it appears that Leaf had the stickers in July, 2011. Durant's contract with Panini was not signed until December, 2011. This makes it unclear how Leaf's prior possession of such materials (if lawful) would interfere with a later contract.
But that's all information we will get from later filings.
From my experience, if a defendant obtains a denial of a TRO, typically those lawsuits wrap up pretty quick. Lawsuits run on momentum, and, as one of my mentors taught me, “Your lawsuit is strongest on the day you file it. It only falls apart from there." Since Panini lost the first round, it might be reassessing the strength of its case, and may want to seek a business solution to wrap the matter up.
What's also interesting is that the industry really is targeting Leaf's “Best of" products. The Topps lawsuit had to do with 2011 Leaf Best of Baseball. Nowthe Panini lawsuit appears to touch on Best of Basketball. I guess if Leaf wants to determine when it'll be sued next, it should begin preparing another “Best of" product for release.
We contacted both Panini and Leaf. Panini declined further comment at this time. Leaf's Gray said they will have an official comment soon.
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