An upscale Suffolk County watch and jewelry retailer, Maddaloni Jewelers, Inc. , claimed that luxury wristwatch manufacturer, Rolex Watch USA, Inc. , was in breach of a written contract -- an "Official Rolex Jeweler Agreement" or "ORJ" -- which governed (among other things) Rolex's response time to orders placed by Maddaloni.
In a lawsuit filed in the New York County Supreme Court, Maddaloni alleged the watchmaker's representatives demanded "extra-contractual cash payments" -- or "bribes," as some New Yorkers might call them -- if Maddaloni wanted the products delivered in a timely manner. When Maddaloni refused, it alleged to have lost sales and customers as a result of the watchmaker's failure to process orders on an expeditious basis.
When Rolex's motion seeking the litigation's dismissal was denied, the manufacturer appealed to the Appellate Division, First Department, which concluded that it was premature to dismiss the jeweler's case in all respects.
While the ORJ provided that the filling of orders was subject to the manufacturer's discretion, since parties to a contract are required to perform their obligations "fairly" and in "good faith," the AD1 was of the opinion there were unresolved questions as to whether Rolex acted "arbitrarily or irrationally." As a result, the appellate court directed that there be a formal hearing or trial as to whether the manufacturer violated the ORJ and whether Maddaloni had been damaged as a result.
This time, Rolex took a lickin' ... but will it keep on tickin'?
For a copy of the Appellate Division's decision, please use this link: Maddaloni Jewelers, Inc. v. Rolex Watch U.S.A., Inc.