Asset Co IM Rest, LLC v. Katzoff
- John Cronan
- 1:23-cv-09691
- U.S. District Court · Southern District of New York
- 2
In Asset Co IM Rest v. Katzoff, Judge Cronan set a $10,000 injunction bond after finding some risk of harm.
The order affected the plaintiffs, who were required to provide $10,000 in security, and the defendants, who could potentially recover against that security if the injunction was later found wrongful.
What happened
Asset Co IM Rest, LLC v. Katzoff involved the amount of security required for an injunction affecting the interior design of Il Giglio. The court reviewed the parties’ submissions under Federal Rule of Civil Procedure 65(c).
The defendants estimated that complying with the injunction and later reversing the changes could cost $150,000, but the court found the supporting evidence limited. The defendants also said they had already made some changes using in-house labor without substantial costs and did not yet have fixed costs for some other changes.
The court concluded that some risk of harm existed because of the décor changes, but that the injunction affected only part of Il Giglio’s décor. Judge Cronan ordered security of $10,000.
The detailed version
- Asset Co IM Rest, LLC v. Katzoff · No. 1:23-cv-09691
- John Cronan
- Feb. 2, 2024
Background
The court considered how much security the plaintiffs had to provide under Federal Rule of Civil Procedure 65(c) in connection with an injunction issued in a separate order on the same date. Rule 65(c) generally allows a court to require security to protect defendants from losses if they are later found to have been wrongfully restrained or enjoined. The court noted that it had broad discretion to set the amount, including discretion to waive security when there is no proof of likely harm.
The injunction required the defendants to make several changes to Il Giglio’s interior design. Defendant Gerald “Jerry” Katzoff submitted a declaration stating that $150,000 was a reasonable estimate of the costs of complying with the injunction and reversing the décor changes if necessary. The defendants later said that estimate was based on earlier costs for similar items and the possible cost of creating new murals if the plaintiffs did not prevail on their trade-dress claims.
Evidence Considered
The court described the evidentiary record as sparse. It had given the defendants two opportunities to provide more support for the proposed amount. The defendants acknowledged that they had not incurred substantial costs for painting over a mural and the “Downtown” graphic and removing glass pendants, because they used in-house labor. They also said that they did not yet have fixed costs for some other intended design changes.
The plaintiffs pointed to decisions stating that the party seeking security must provide a rational basis for the proposed bond amount. The court said it was debatable, charitably stated, whether the defendants had done so. At the same time, the court found it difficult to conclude that there was no likely harm from the décor changes. The preliminary-injunction record also included evidence that the former Il Mulino Tribeca’s décor had cost more than $240,000, although the court noted that the injunction affected only some of Il Giglio’s décor and that the defendants had already made significant changes without substantial costs.
Ruling
The court determined that $10,000 was appropriate security under Rule 65(c). The order therefore set the security amount at $10,000; it did not decide the merits of the plaintiffs’ trade-dress claims in this order.
Read the full 2-page opinion on CourtListener, the free public archive maintained by the Free Law Project.