On March 25, 2024, Justice Chan of the New York County Commercial Division issued a decision in Brand Squared LLC v. Ryse Up Sports Nutrition, LLC, 2024 NY Slip Op. 31031(U), dismissing a claim for breach of the covenant of good faith and fair dealing as duplicative of a breach of contract claim, explaining:
In order to state a claim for violation of the implied covenant of good faith and fair dealing, plaintiff must allege facts that tend to show that the defendant sought to prevent performance of the contract or to withhold its benefits from the plaintiff. However, a cause of action to recover damages for breach of the implied covenant of good faith and fair dealing cannot be maintained where the alleged breach is intrinsically tied to the damages allegedly resulting from a breach of the contract.
Here, defendant has successfully shown that plaintiff’s good faith and fair dealing claim merely duplicates the breach of contract claim. Both causes of action request the same relief in the form of $35 million in damages. Both claims similarly allege the same harm – defendant’s choice to stop paying royalties.
And, while not as obvious, both causes of action also allege that defendant violated the Agreement by directly reaching out to licensors. The breach of contract claim alleges this directly. The good faith and fair dealing claim does not state this directly, instead it claims that defendant acted to undercut plaintiffs long·term relationships with the very Licensors that created Licenses with the Defendant. The Dresner affidavit clarifies that defendants undercut plaintiff’s relationships by informing Licensors not to contact or interact with Plaintiff in regard to the License Agreements, and further unnecessarily de-positioning and harming Plaintiff’s relationships and reputation in the industry. Plaintiff argues that these breach and good faith and fair dealing allegations are not identical because there is a difference between reaching out directly to licensors and telling licensors not to interact with plaintiff. However, even in the light most favorable to plaintiff, this is a distinction without a difference. If defendant is negotiating directly with licensors, then defendant almost certainly would tell licensors not to contact plaintiff about those contracts, or else cause confusion among its licensors. In other words, the allegations supporting the breach claim necessarily encompasses the allegations supporting the good faith and fair dealing claim. The two claims are therefore duplicative.
(Internal quotations and citations omitted).