The Avon Company v. Fareva Morton Grove

Background The Avon Company and LG H&H Company, Ltd. sued Fareva Morton Grove, Inc. and Fareva S.A. The parties’ dispute involves two liquidated-damages provisions in a long-term Manufacturing and Supply Agreement: an Early Termination Fee provision and a Net Level Service Payment provision.

Both sides filed partial motions for summary judgment, asking the court to declare whether the provisions were enforceable. Summary judgment is a decision without a trial that is available only when there is no genuine dispute about any material fact and the moving party is entitled to judgment under the law.

Court’s analysis The court found disputed facts concerning the reasonableness—and therefore the enforceability—of both provisions. It explained that the parties’ use of the word “penalty” was not legally conclusive. Under New York Uniform Commercial Code section 2-718(1), the court must consider whether the liquidated-damages provisions are reasonable, and that determination depends on disputed facts.

Ruling and next steps Judge Hellerstein denied both parties’ partial motions for summary judgment. The court stated that the factual disputes require a trial on damages. It ordered that trial to be consolidated with the trial on Fareva’s counterclaims. The court also scheduled a meeting with the parties for October 27, 2025, to address further proceedings and set a trial date, and directed the Clerk of Court to terminate ECF Nos. 423 and 432.