Case 7:22-cv-09184 Document 1 Filed 10/26/22 Page 1 of 13
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`Case No. 7:22-cv-09184
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`COMPLAINT
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`Plaintiff,
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`-against-
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`AROMATHERAPY ASSOCIATES, INC.
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`BIRCHBOX, INC. and FEMTEC HEALTH,
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`Defendants.
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`Plaintiff Aromatherapy Associates, Inc. (“Aromatherapy”), by and through its attorneys,
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`LYONS MCGOVERN LLP, and as and for its Complaint against Birchbox, Inc. (“Birchbox”) and
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`FemTec Health (“FemTec”) alleges as follows:
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`PARTIES
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`1.
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`Aromatherapy is a corporation which is organized and existing under the laws of
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`the State of Texas, whose principal place of business is in the State of Texas. Aromatherapy is a
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`manufacturer and distributor of certain cosmetics, skin care, hair care, and grooming products.
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`2.
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`Upon information and belief, defendant Birchbox is a corporation organized and
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`existing under the laws of the State of Delaware whose principal place of business is located at 16
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`Madison Square West, 4th Floor, New York, New York, 10010. Birchbox is in the business of the
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`promotion and retail sale of consumer products through websites and retail stores.
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`3.
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`Upon information and belief, defendant FemTec is a corporation organized and
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`existing under the laws of the State of Delaware. At all times relevant to this Complaint, FemTec
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`was transacting business in New York through its acquisition of Birchbox, located at 16 Madison
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`Square West, New York, New York 10010. Upon information and belief, defendant FemTec is in
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`the women’s health and wellness business and acquired Birchbox in or about October 2021.
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` JURISDICTION and VENUE
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`This Court has jurisdiction pursuant to 28 U.S.C. § 1332(a)(2). Jurisdiction is
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`4.
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`proper because (1) the amount in controversy exceeds $75,000.00, exclusive of costs, interest, and
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`attorneys’ fees, and (2) Plaintiff and Defendants are citizens of different states.
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`5.
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`Venue is proper in the Southern District of New York pursuant to 28 U.S.C. §
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`1391(b)(2) because defendant Birchbox maintains a place of business in New York City which is
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`where the events giving rise to the claims occurred. Venue is also proper as Aromatherapy and
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`Birchbox consented to having any disputes arising under their Distribution Agreement adjudicated
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`in this Court and governed in accordance with the laws of the State of New York.
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`NATURE OF THE ACTION
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`This is an action by Aromatherapy to recover the sum of $424,195.08 due and
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`6.
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`owing from defendants, together with costs, plus interest and attorneys’ fees in connection with
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`Aromatherapy’s provision to Birchbox of certain products pursuant to a Distribution Agreement.
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`Said products were provided to Birchbox for the express purpose of being offered by Birchbox to
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`its customers through its subscription service.
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`7.
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`The Distribution Agreement further provides that the prevailing party shall be
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`entitled to attorneys’ fees and related expenses in any suit or proceeding with respect to the subject
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`matter of the Agreement or arising from or related to it.
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`Case 7:22-cv-09184 Document 1 Filed 10/26/22 Page 3 of 13
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`FACTUAL ALLEGATIONS
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`In or about January 26, 2021, Aromatherapy and Birchbox entered into a
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`8.
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`Distribution Agreement (the “Agreement”), pursuant to which Birchbox was designated an
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`authorized retailer of Aromatherapy’s products. Under the Agreement, Aromatherapy was to
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`provide Birchbox with certain products as ordered by Birchbox, which were to be offered to
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`Birchbox’s customers through its monthly subscription service. In exchange for these products,
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`Birchbox agreed to make payment to Aromatherapy as more specifically set forth therein.
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`9.
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`The Agreement was in effect from January 26, 2021 for an initial term of one year,
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`and the Agreement was to automatically renew for successive one-year terms unless notice of non-
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`renewal was served by either party. Neither party served a notice of non-renewal of the Agreement
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`which remained in full force and effect up through and including the time of Birchbox’s breach
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`beginning on or about March 2022.
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`10.
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`In or about October 2021, while the Agreement was still in full force and effect,
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`FemTec acquired Birchbox. Upon information and belief, this acquisition included the purchase
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`of all of the assets of Birchbox.
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`11.
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`Pursuant to the Agreement, Birchbox submitted to Aromatherapy periodic Purchase
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`Orders (collectively “Purchase Orders”) to request specific products in specific sizes and/or
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`quantities. In accordance with these Purchase Orders, Aromatherapy provided the specified
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`products to Birchbox. Invoices for the products were issued at the time of shipment, and payment
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`terms were net 30, subject to receipt and inspection of the products by Birchbox. This process was
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`repeated without incident from the effective date of the Agreement through January 2022.
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`12.
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`On January 24, 2022, Birchbox issued Purchase Order No. 340677 to
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`Aromatherapy for products totaling $214,500.00 (“Purchase Order No. 1”). The products were
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`ordered for delivery between April 15-29, 2022.
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`13.
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`In satisfaction of Purchase Order No. 1, Aromatherapy manufactured and shipped
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`the requested products to Birchbox’s receiving facility. On March 29, 2022, Aromatherapy issued
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`to Birchbox Invoice No. 69540 for the products totaling $214,437.08 (“Invoice No. 1”).
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`14.
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`The products included in Purchase Order No. 1 and Invoice No. 1 have been
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`delivered to and accepted by Birchbox. With the exception of a trivial quantity of damaged items
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`that were immediately credited, Birchbox has never otherwise expressed any displeasure with, or
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`raised any claims regarding their lack of satisfaction with, or questioned the sufficiency of, the
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`balance of the products in this order. Birchbox has received and accepted this order, but has made
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`no payment despite multiple requests by Aromatherapy.
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`15.
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`Also on January 24, 2022, Birchbox issued Purchase Order 340678 to
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`Aromatherapy for products totaling $187,500.00 (Purchase Order No. 2). The products were
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`ordered for delivery to be made between July 18 – August 1, 2022.
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`16.
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`In May 2022, Birchbox made payments to Aromatherapy in the sum of $1,251.50
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`and $983.00 for balances due on other invoices numbered 69736, 68584, 68604 and 69110
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`(collectively “Other Invoices”). However, no payment was made on the outstanding full balance
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`of $214,437.08 on Invoice No. 1 despite due demand therefor.
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`17.
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`In the intervening time since Purchase Orders Nos. 1 and 2 were issued in January
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`2022, Birchbox issued Purchase Orders 341158 for $1,248.00 (“Purchase Order No. 3”) and
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`341247 for $360.00 (“Purchase Order No.4”) in May 2022. The products ordered were shipped
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`and corresponding Invoices 70495 (“Invoice No. 3”) and 70382 (“Invoice No. 4”) were issued.
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`Upon information and belief, these shipments were received and accepted by Birchbox. Birchbox
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`has never expressed any displeasure with, or raised any claims regarding their lack of satisfaction
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`with, or questioned the sufficiency of, the products in these orders. Despite demand therefor,
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`Birchbox has not made payment for the amounts owed on Invoices Nos. 3 and 4.
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`18.
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`Thereafter, on June 7, 2022 Birchbox issued Purchase Order No. 341311, in the
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`amount of $10,650.00 (“Purchase Order No. 5”). Aromatherapy shipped these products and issued
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`Invoice No.70421 on June 8, 2022 in the amount of $10,650.00 (“Invoice No. 5”). Upon
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`information and belief, this shipment was received and accepted by Birchbox. At no time during
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`the prescribed shipment review period did Birchbox raise any issues as to the quality or sufficiency
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`or condition of the products it received. Additionally, no payment was ever made in relation to that
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`shipment. Nevertheless, in or around September 2022, Birchbox requested replacement of a trivial
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`quantity of the product which it alleged had been damaged during shipment. Birchbox did not
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`provide any evidence of the alleged damage to any of the products, and has never otherwise
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`expressed displeasure with, or raised claims regarding their lack of satisfaction with, or questioned
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`the sufficiency of, the balance of the products in this order. Despite demand therefor, Birchbox has
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`still not made payment for any portion of the amount owed on Invoice No.5.
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`19.
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`Despite having requested but not receiving payment for Invoices Nos.1, 3, 4, and
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`5, on June 22, 2022 Aromatherapy in good faith prepared for shipping the products contained in
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`Purchase Order No. 2. For this order, Aromatherapy issued Invoice No. 70566, dated June 22,
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`2022, in the amount of $187,500.00 (“Invoice No. 2”).
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`20.
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`In good faith, Aromatherapy corresponded with Birchbox repeatedly by email from
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`April 4, 2022 through July, 2022 to request payment of Invoice No. 1 which remained unpaid for
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`many months.
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`21.
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`As of July 18, 2022, Aromatherapy was ready and able to ship the items ordered in
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`Purchase Order No.2 and charged by Invoice No.2. However, as Aromatherapy had no assurances
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`or any payment for the multiple outstanding invoices, the shipment of this order was withheld. The
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`products were held and stored at the arrival port in New York for five days and were subsequently
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`shipped to Aromatherapy’s warehouse in Texas.
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`22.
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`The correspondences between Aromatherapy and Birchbox continued from July 20
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`through July 29, 2022 during which time Aromatherapy repeatedly requested payment from
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`Birchbox of the outstanding balance owed.
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`23.
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`By email dated July 20, 2022 defendant FemTec on behalf of Birchbox
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`acknowledged the outstanding amount when it communicated to Aromatherapy that it was seeking
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`internal approval of a proposed payment plan. The details of the proposed payment plan were then
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`shared by FemTec in an email to Aromatherapy on July 26, 2022 which also advised that internal
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`approval was necessary before a commitment could be made. Thereafter, despite follow-up emails
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`from Aromatherapy on July 28 and July 29, neither FemTech nor Birchbox responded to any
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`further communications regarding the proposed payment plan. At no time since has Birchbox or
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`FemTec paid or committed to paying any portion of the outstanding invoices.
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`24.
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`Despite multiple requests to Birchbox, Aromatherapy received no payment for the
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`outstanding Invoices Nos. 1, 3, 4, and 5. Birchbox’s non-payment of these four prior invoices
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`constituted clear and willful repudiation of the Agreement in breach thereof.
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`25.
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`As a result of this repudiation of the Agreement which constituted a material breach
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`by Birchbox, Aromatherapy was not obligated to continue performing under the Agreement by
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`shipping the products which were the subject of Purchase Order No. 2.
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`26.
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`Aromatherapy was ready and able to fulfill the order of the specially manufactured
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`goods as of the intended shipping date of July 18, 2022.
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`27.
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`Based on Birchbox’s continued failure to pay for the items it had already received
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`and accepted under prior Purchase Orders, which constituted repudiation and breach of the
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`Agreement, Aromatherapy withheld shipment of this order. The products were instead stored at
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`the arrival port in New York for several days and ultimately transferred to warehouse storage in
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`Texas where they have remained to the present time. Aromatherapy has incurred costs of $10,000
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`due to storage at the New York port and shipment to Texas thereafter.
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`28.
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`Other than as stated above, at no time during the communications about the
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`outstanding Invoices did Birchbox or FemTec dispute the obligation to pay Aromatherapy or
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`otherwise express any displeasure with, or raise any claims regarding their lack of satisfaction
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`with, or question the sufficiency of, the majority balance of the products that had been provided
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`by Aromatherapy pursuant to Purchase Orders 1, 3, 4, and 5.
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`29.
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`Accordingly, and by letter dated August 10, 2022, Aromatherapy made a formal
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`demand upon Birchbox to make payment of the sum of $414,195.08 (the “First Demand Letter”)
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`representing the total sum of Invoices Nos. 1, 2, 3, 4, and 5.
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`30.
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`Notwithstanding the First Demand Letter, Birchbox failed and refused to make
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`payment to Aromatherapy of the amounts due.
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`31.
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`By letter dated August 25, 2022, Aromatherapy made another formal demand,
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`through its counsel, for Birchbox to make payment, or make arrangements for payment, of the
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`outstanding balance by the close of business on September 6, 2022 (the “Second Demand Letter”).
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`32.
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`Notwithstanding the Second Demand Letter, Birchbox failed and refused to make
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`payment to Aromatherapy of the outstanding balance of $414,195.08 within the time contained in
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`the Second Demand Letter or thereafter.
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`AS AND FOR A FIRST CAUSE OF ACTION
`AGAINST BIRCHBOX
`FOR BREACH OF CONTRACT AS TO ORDER NOS. 1, 3, 4, AND 5
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`Aromatherapy repeats and realleges Paragraphs “1” through “32” of this Complaint
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`33.
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`as if fully set forth herein.
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`34.
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`Aromatherapy agreed to provide the Products as requested by Birchbox in Purchase
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`Orders Nos. 1, 3, 4, and 5, and Birchbox agreed to compensate Aromatherapy for same, for a
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`cumulative price of $226,695.08.
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`35.
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`Aromatherapy performed all of its obligations in connection with the provision of
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`the Products to Birchbox pursuant to Purchase Orders Nos. 1, 3, 4 and 5.
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`36.
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`Birchbox made no payment to Aromatherapy for the Products requested by
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`Purchase Orders No. 1, 3, 4, and 5 in the aggregate amount of $226,695.08
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`37.
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`There is now due and owing to Aromatherapy the outstanding balance of
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`$226,695.08 for Invoices 1, 3, 4, and 5.
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`38.
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`As a result of Birchbox’s failure to make full payment for the Products,
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`Aromatherapy has been damaged in the amount of $226,695.08, together with interest, costs, and
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`attorneys’ fees, and all other amounts due and to become due to Aromatherapy.
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`39.
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`Accordingly, Aromatherapy is entitled to a money judgment against Birchbox in
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`the amount of $226,695.08, plus interest, costs, and attorneys’ fees.
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`AS AND FOR A SECOND CAUSE OF ACTION
`AGAINST BIRCHBOX
`FOR PARTIAL ACCOUNT STATED AS TO ORDER NOS. 1,3,4 AND 5
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`Aromatherapy repeats and realleges Paragraphs “1” through “32” of this Complaint
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`40.
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`as if fully set forth herein.
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`41.
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`From January 2021 through June 2022, Aromatherapy rendered the Invoices to
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`Birchbox in the regular course of business.
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`42.
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`Each of the Invoices related to a Purchase Order and specifically set forth the
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`Purchase Order for which the respective Invoice was issued, and specifically set forth the amount
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`due therefor.
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`43.
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`Birchbox did not object to the Invoices orally or in writing, in whole or in part, or
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`in any way, shape, or manner, within any reasonable time after receipt thereof.
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`44.
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`Nevertheless, Birchbox has failed and refused to pay the balance remaining due to
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`Aromatherapy under Invoices Nos. 1, 3, 4, and 5 for which all products were shipped and received
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`by Birchbox, for an aggregate total of $226,695.08.
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`45.
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`By reason of the foregoing, a partial account stated has been established for the sum
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`of $226,695.08.
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`46.
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`Accordingly, Aromatherapy is entitled to a money judgment against Birchbox for
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`an account stated in the amount of $226,695.08, together with interest, costs, attorneys’ fees and
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`all other amounts due and to become due to Aromatherapy.
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`AS AND FOR A THIRD CAUSE OF ACTION
`AGAINST BIRCHBOX AND FEMTEC
`FOR UNJUST ENRICHMENT AS TO ORDER NOS. 1,3,4 AND 5
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`Aromatherapy repeats and realleges Paragraphs “1” through “32” of this Complaint
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`47.
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`as if fully set forth herein.
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`48.
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`In the alternative, and if the Court should find that Aromatherapy is not entitled to
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`recover against Birchbox under its breach of contract claim, it is entitled to recover the amounts
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`due from FemTec and Birchbox on the basis of unjust enrichment.
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`49.
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`Aromatherapy provided the Products which were the subject of Purchase Orders
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`Nos. 1, 3, 4, and 5 to Birchbox in good faith pursuant to the Agreement. As of the dates of these
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`shipments, FemTec had already acquired Birchbox and all of its assets and inventory, including
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`the products provided to Birchbox by Aromatherapy. The aggregate amount owed for these
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`products pursuant to the corresponding Invoices Nos. 1, 3, 4, and 5 is $226,695.08.
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`50.
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`Birchbox accepted and received the value and benefit of the Products and further
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`benefitted from the Products through increased revenues and profitability in an unknown amount.
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`As the owner of Birchbox, FemTec also received the value and benefit of the products and the
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`revenues and profit derived therefrom.
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`51.
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`It would be inequitable, unjust, and against good conscience to permit Birchbox
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`and FemTec to retain the benefit of the Products, and the profits realized therefrom, without
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`making payment to Aromatherapy.
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`52.
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`Birchbox and FemTec have been unjustly enriched by the benefit conferred upon
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`them, and Aromatherapy has been damaged, in an amount to be determined at trial, but not less
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`than $226,695.08.
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`53.
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`Accordingly, Aromatherapy is entitled to recover a money judgment against
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`Birchbox and FemTec in the amount of $226,695.08, together with interest, costs and attorneys’
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`fees.
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`AS AND FOR A FOURTH CAUSE OF ACTION
`AGAINST BIRCHBOX
`FOR ANTICIPATORY BREACH OF CONTRACT AS TO ORDER NO. 2
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`54. Aromatherapy repeats and realleges Paragraphs “1” through “28” of this Complaint
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`as if fully set forth herein.
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`55.
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`Purchase Order No. 2 requested delivery to Birchbox of a large quantity of certain
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`products in specific sizes for Birchbox to offer to its customers.
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`56.
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`The quantity and specific size of the products was manufactured and prepared for
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`shipment to Birchbox for the requested delivery between July 18, 2022 and August 1, 2022.
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`57. As of July 18, 2022, Birchbox had failed to make payment of any portion of the
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`aggregate amount of $226,695.08 owed to Aromatherapy under previously issued Invoices Nos.
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`1, 3, 4, and 5. This continued failure to make payment of the invoices for products shipped to
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`and received and accepted by Birchbox was a repudiation of the Agreement in breach thereof.
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`58.
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`Aromatherapy relied on Birchbox to perform under the contract, which reliance
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`was to its detriment.
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`59.
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`In anticipated further repudiation and breach of the Agreement by Birchbox,
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`Aromatherapy withheld shipment of the products which were the subject of Purchase Order No.2
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`which were valued in the amount of $187,500.00.
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`60.
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`Said products were manufactured in a large quantity and sized specifically as
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`requested by Birchbox for its exclusive use. As these products were manufactured specifically
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`for Birchbox, they are unable to be resold. The products remain warehoused and ready to be
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`shipped to Birchbox upon payment therefor.
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`61. As a result of Birchbox’s repudiation and breach of the Agreement, Aromatherapy
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`has sustained additional damages in the amount of $187,500.00 for the products which were
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`specially manufactured for Birchbox in accordance with Purchase Order No. 2.
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`62. As a further result of Birchbox’s repudiation and breach of the Agreement,
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`Aromatherapy has also incurred costs of $10,000.00 in fees for alternate storage and shipping of
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`the products which were specially manufactured for Birchbox in accordance with Purchase Order
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`No. 2.
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`63.
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`Accordingly, Aromatherapy is entitled to recover a money judgment against
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`Birchbox in the additional amount of $197,500.00, together with interest, costs and attorneys’ fees.
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`JURY DEMAND
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`64.
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`Aromatherapy demands a trial by jury of this action.
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`WHEREFORE, Aromatherapy respectfully demands judgment against Birchbox and
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`FemTec in the aggregate amount of $424,195.08 as follows:
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`(a)
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`(b)
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`(c)
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`(d)
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`as to the First Cause of Action for Breach of Contract, an Order issuing judgment
`against Birchbox in the amount of $226,695.08 plus interest; or in the alternative,
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`as to the Second Cause of Action for Partial Account Stated, an Order issuing
`judgment against Birchbox in the amount of $226,695.08 plus interest, costs, and
`fees; or in the alternative,
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`as to the Third Cause of Action for Unjust Enrichment, an Order issuing judgment
`against Birchbox and FemTec in the amount of $226,695.08 plus interest, costs,
`and fees; and,
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` as to the Fourth Cause of Action for Breach of Contract, and Order issuing
`judgment against Birchbox in the amount of $197,500.00 plus interest, costs and
`fees; and
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`for such other and further relief which as to this Court may seem just, equitable,
`and proper.
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`(e)
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`Dated: White Plains, New York
`October 26, 2022
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`_______________________
`Desmond C.B.Lyons
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`LYONS MCGOVERN LLP
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`By:
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`Attorneys for Plaintiff
`AROMATHERAPY ASSOCIATES, INC.
`399 Knollwood Road, Suite 216
`White Plains, New York 10603
`Telephone: (914) 631-1336
`Facsimile: (914) 631-1161
`Email: dlyons@lyons-mcgovern.com
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