business litigation: the year in review · 2016. 12. 5. · table of contents page business...

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2016 Seminar Material

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New Jersey Institute for Continuing Legal Education

A Division of the State Bar Association NJICLE.com

BUSINESS LITIGATION:

THE YEAR IN REVIEW

S0331.16

c

BUSINESS LITIGATION:

THE YEAR IN REVIEW

Moderator/Speaker Edward T. Kole, Esq. Wilentz, Goldman & Spitzer, P.A. (Woodbridge, Eatontown; New York City; Philadelphia, PA)

Speakers Tracy Armstrong, Esq. Wilentz, Goldman & Spitzer, P.A. (Woodbridge, Eatontown; New York City; Philadelphia, PA) Paul R. Marino, Esq. Day Pitney LLP (Parsippany) Mark S. Olinsky, Eq. Sills Cummis & Gross, P.C (Newark) Andrea J. Sullivan, Esq. Greenbaum, Rowe, Smith & Davis, LLP (Iselin, Roseland) Rosaria A. Suriano, Esq. Brach Eichler LLC (Roseland; New York City; Palm Beach, FL)

In cooperation with the New Jersey State Bar Association Business and

Commercial Litigation Special Committee and Senior Lawyers Special

Committee S0331.16

Christopher Walsh, Esq. Gibbons, P.C. (Newark)

© 2016 New Jersey State Bar Association. All rights reserved. Any copying of material herein, in whole or in part, and by any means without written permission is prohibited. Requests for such permission should be sent to NJICLE, a Division of the New Jersey State Bar Association, New Jersey Law Center, One Constitution Square, New Brunswick, New Jersey 08901-1520.

Table of Contents Page Business Litigation The Year in Review Unfair Competition and the Lanham Act Edward T. Kole, Esq. 1 Unfair Competition 1 The Lanham Act 2 Third Circuit Cases 2 New Jersey State Court Cases 3 Attachments Telebrands Corp. v. Newmetro Design, LLC 5 Three Rivers Confections, LLC v. Warman, et al. 11 Checker Cab of Philadelphia, et al. v. Uber Technologies, Inc., et al. 17 Samsung Electronics America v. Westpark Electronics, LLC 21 Remedies in Shareholder Disputes Rose A. Suriano, Esq. 29 Introduction 29 A Corporation 29 A Limited Liability Company 30 Fair Value 34 “Closely Held Family Businesses: What Happens When the Family is No Longer Close” Rosaria A. Suriano Melissa A. Clarke 37 “Jurisdiction and Choice of Law in Minority Oppression Cases” Stuart L. Pachman 41 “Counting Shareholders” Stuart L. Pachman 45 Federal Arbitration Act 47 New Jersey Arbitration Act 55 Committee of Complex Litigation Judges by Vicinage 91 Notice to the Bar: Reminder of the Availability of the Complex Business Litigation Program 92 About the Panelists… 93

Business Litigation The Year in Review Unfair Competition and the Lanham Act

Edward T. Kole, Esq.

Unfair Competition

o Primarily comprised of torts that cause an economic injury to a business through a deceptive or wrongful business practice

o Two broad categories:

Torts meant to confuse consumers as to the source of the product

Trademark infringement

False advertising

"Bait and switch" selling tactics

Unauthorized substitution of one brand of goods for another

Unfair trade practices Misappropriation

Use of another's confidential information to solicit customers

Theft of trade secrets

Breach of restrictive covenant

Trade libel

False representation

o Generally governed by state common law, though federal law may apply to trademarks, copyrights, and false advertising

o "New Jersey's law of unfair competition is an amorphous area of jurisprudence. it knows of no clear boundaries...The concept is as flexible and elastic as the evolving standards of commercial morality demand." Duffy v. Charles Schwab & Co., 123 F. Supp. 2d 802, 815 (D.N.J. 2000).

1

The Lanham Act

o 15 U.S.C. § 1051 et seq.

o Primary federal trademark statute in the United States

o Prohibits trademark infringement, false advertising

o Elements of Trademark under the Lanham Act:

1. The mark is valid and legally protectable; 2. The mark is owned by the plaintiff; 3. The defendant used the mark in commerce/in

connection with goods or services 4. Defendants use was in a manner likely to create

confusion concerning the origin of the goods or services

o Elements of False Advertising under the Lanham Act:

1. Defendant made false or misleading statements as to his own products (or another's);

2. Actual deception, or at least a tendency to deceive a substantial portion of the intended audience;

3. The deception is material; i.e. likely to influence purchasing decisions;

4. The advertised goods travel in interstate commerce; and

5. Plaintiff can demonstrate a likelihood of injury

Third Circuit Cases

o Telebrands Corp. v. Newmetro Design, LLC, 2016 WL 5852855 (D.N.J. Oct. 4, 2016).

Plaintiff's motion to dismiss Defendant's counterclaim for copyright infringement was denied in part where Plaintiff unpersuasively argued that Defendant's copyright was invalid because it was made up of a number of familiar symbols and designs; further, it is not within the Court's jurisdiction to cancel copyright registrations.

2

o Three Rivers Confections, LLC v. Warman, 2016 WL 5335025 (3d Cir. Sept. 23, 2016)

Defendant's appeal was denied where Plaintiff demonstrated that an entity owned by Defendant had secured a loan by collateral including the trademarked word "Fudgetopia" and a "Fudgie Wudgie" logo mark, and that the marks belonged to the entity rather than Defendant personally.

o Checker Cab of Philadelphia Inc. v. Uber Technologies, Inc., 643 Fed.Appx. 229 (3d Cir. March 10, 2016)

Plaintiff sought a preliminary injunction against Defendant based on unfair competition laws and alleged that, in the absence of an injunction, Plaintiff would suffer irreparable harm by losing customers, calling it "a harm that can be shown but not quantified." The Court denied the application, calling the loss of customers a "purely economic harm that can be adequately compensated with a monetary award following adjudication on the merits."

New Jersey State Court Cases

o Samsung Electronics American, Inc. v. Westpark Electronics, LLC, A-3777-14T3 (App. Div. Dec. 4, 2015)

Plaintiff brought suit against Defendant, alleging Defendant induced Plaintiff's resellers to breach their contracts so Defendant could resell Plaintiff's products at reduced prices. Defendant's supplier list did not constitute a trade secret where the parties had entered into a confidentiality agreement in the case, where there existed a pool of hundreds of available suppliers, and because a "free market seller of consumer products would not have an expectation of privacy unless they were involved in some nefarious activity."

3

Telebrands Corp. v. Newmetro Design, LLC, Slip Copy (2016)

© 2016 Thomson Reuters. No claim to original U.S. Government Works. 1

2016 WL 5852855 Only the Westlaw citation is currently available.

NOT FOR PUBLICATION United States District Court,

D. New Jersey.

Telebrands Corp., Plaintiff, v.

Newmetro Design, LLC, Defendant.

Cv. No. 16-1981 (WHW-CLW) |

Signed 10/04/2016

Attorneys and Law Firms

Liza M. Walsh, Hector Daniel Ruiz, Katelyn O’Reilly,

Walsh Pizzi O’Reilly Falanga LLP, Newark, NJ, Tonia A.

Sayour, Cooper & Dunham LLP, New York, NY, for

Plaintiff.

Daniel Saul Finnegan, Dunlap Bennett Ludwig PLLC,

Washington, DC, for Defendant.

OPINION

Walls, Senior District Judge

*1 This matter involves a dispute over the ownership of

intellectual property rights in two nearly identical

microwave steam cleaning products. Plaintiff Telebrands

Corp. (“Telebrands”), marketer of a product known as the

“ANGRY MAMA,” brings various federal and state law

claims against Defendant-Counterclaimant NewMetro

Design, LLC (“New Metro”) for trademark, trade dress,

and copyright infringement, unfair competition and fraud

on the United States Patent and Trademark Office. New

Metro, marketer of a product known as the

“ANGRY-MAMA,” brings various federal and state law

counterclaims against Telebrands for trademark, trade

dress, and copyright infringement and unfair competition,

as well as a claim opposing Telebrands’ federal trademark

applications. Both parties also seek declaratory judgments

of non-infringement for their own products. Plaintiff

Telebrands now moves to dismiss several of New Metro’s

counterclaims. Decided without oral argument, Fed. R.

Civ. P. 78, Telebrands’ motion to dismiss is granted in

part and denied in part.

FACTUAL AND PROCEDURAL HISTORY

I. The Parties, the products, and the intellectual

property

Plaintiff Telebrands, a New Jersey corporation with its

principal place of business in Fairfield, New Jersey, is a

direct marketing company that markets and sells a

microwave steam cleaning product known as the ANGRY

MAMA. Defendant-Counterclaimant New Metro, a

Pennsylvania limited liability company with its principal

place of business in Duncansville, Pennsylvania, markets

and sells a nearly identical microwave steam cleaning

product known as the “ANGRY-MAMA.” Both products

consist of a plastic microwaveable device that is filled

with water and vinegar and heated in the microwave.

Upon being microwaved, the product emits steam that

loosens stains and allows for easier microwave cleaning.

The two products are essentially identical. See ECF No. 1

¶ 11 (description and photograph of ANGRY MAMA

product); ECF No. 13 ¶ 7 (description and photograph of

ANGRY-MAMA product). Both products resemble an

“angry woman,” with a blue, roughly-cylindrical body

styled to resemble a floral-printed dress accessorized with

a pearl necklace; arms held akimbo; a scowling face; and

a circular red hair style with holes on top for steam to

escape.1 See ECF No. 1 ¶ 11 (describing appearance as the

Telebrands product trade dress); ECF No. 13 ¶ 7. The

ANGRY MAMA and ANGRY-MAMA were initially

developed and manufactured as a single product by the

Hong Kong-based company Daka Research, Inc.

(“Daka”), which is not a party to this action. ECF No. 1 ¶

9; ECF No. 13 ¶ 23.

Telebrands and New Metro agree about several basic facts

regarding Daka and the history of the ANGRY

MAMA/ANGRY-MAMA product: (a) Daka developed

the product, at least in part, in 2014; (b) Daka initially

manufactured the product for New Metro to sell in the

United States; (c) Daka eventually began manufacturing

the product for Telebrands to sell in the United States; (d)

Telebrands informed New Metro that it no longer had

permission to sell the product in the United States because

Telebrands had exclusive rights to the product; and (e)

New Metro continued to sell the product.

*2 The parties hotly contest the remaining facts.

Telebrands claims that, in November 2015, it received an

“exclusive license” from Daka to market the ANGRY

5

mcohen

Typewritten Text

----- Reprinted from Westlaw with permission of Thomson Reuters.

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MAMA product in the United States. ECF No. 1 ¶ 9.

Telebrands also claims it is the “owner by assignment of

all right, title and interest in and to the common law

trademarks relating to the ANGRY MAMA product,”

including the word mark “ANGRY MAMA,” and any

design mark relating to the product, along with all right,

title and interest in and to the product trade dress. Id. ¶ 14.

On March 17, 2016, Telebrands received U.S. Copyright

Registration No. VA 1-995-574, which protects the

“distinctive sculptural design of the ANGRY MAMA

product.” Id. ¶¶ 19–20; see also Certificate of

Registration, ECF No. 1 Ex. A.

In its answer and counterclaims, New Metro states that it

began marketing ANGRY-MAMA products in the United

States on or about March 23, 2015, several months before

Telebrands began marketing its ANGRY MAMA

products. ECF No. 13 ¶¶ 8, 24, 37-38. New Metro

allegedly sold its first ANGRY-MAMA products to U.S.

customers in April 2015. Id. ¶ 9. New Metro claims that

after May 2015, Telebrands became aware of the

ANGRY-MAMA’S success and began marketing and

selling their “infringing product.” Id. ¶¶ 37–38. New

Metro received U.S. Copyright Registration No. VA

2-001-024 for the “Steam Design”2 featured on the

ANGRY-MAMA packaging on April 22, 2016. Id. ¶ 21;

see also Id. Ex. A. (Certificate of Registration).

The parties also accuse each other of committing various

frauds during the copyright and trademark application

process. Telebrands alleges that New Metro “fraudulently

applied to register in its own name” the trademarks

“ANGRY MAMA” and the Steam Design with the United

States Patent and Trademark Office. ECF No. 1 ¶ 24.

Telebrands claims that New Metro knowingly submitted

false declarations to the U.S. Patent and Trademark Office

that New Metro was entitled to use the marks in

commerce and that no other persons had the right to use

the marks in commerce. Id. ¶ 25.

New Metro alleges that Telebrands has made fraudulent

statements to various government agencies regarding its

ownership of the rights to ANGRY-MAMA/ANGRY

MAMA products. ECF No. 13 ¶¶ 48–54. New Metro also

claims that after Telebrands became aware that New

Metro had begun marketing ANGRY-MAMA products in

commerce, Telebrands fraudulently changed the “first

use” dates in the trademark application underlying their

alleged trademark rights in ANGRY MAMA. Id. ¶¶

51–52. Finally, New Metro claims Telebrands

fraudulently stated in its application for U.S. Copyright

Registration No. VA 1-995-574 that the design was

created as “work made for hire” for Telebrands. Id. ¶¶

155–58.

II. The complaint and counterclaims

On April 8, 2016, Telebrands filed an eleven-count

complaint against New Metro in this Court. ECF No. 1.

Telebrands charges New Metro with trademark, trade

dress, and unfair competition violations under the Lanham

Act and New Jersey law, copyright infringement under

the Copyright Act of 1976, misappropriation of

Telebrands’ intellectual property and fraud on the United

States Patent and Trademark office in violation of New

Jersey common law. Id. ¶¶ 44–93. Telebrands also seeks

various declaratory judgments of non-infringement under

the Lanham and Copyright acts. Id. ¶¶ 94–111.

On May 18, 2016, Defendant-Counterclaimant New

Metro filed an answer denying Plaintiff’s claims and

asserting twelve counterclaims against Telebrands, many

of which are identical to Telebrands’ claims under the

Lanham, Copyright acts and New Jersey law. ECF No.

13. New Metro claims that Telebrands’ products,

packaging, advertisements, and Steam Design are all

similar to those used by New Metro, ECF No. 13 ¶¶

37–45, and that Telebrands’ marketing of its products has

and will cause confusion among consumers and injure the

“valuable reputation and goodwill” of New Metro. Id. ¶

43. New Metro also alleges that, on at least one occasion,

“Telebrands contacted a customer of New Metro and

attempted to interfere with New Metro’s attempts to sell

ANGRY MAMA Products to the customer.” Id. ¶ 46.

III. Telebrands’ motion to dismiss New Metro’s

counterclaims

*3 On June 22, 2016, Plaintiff Telebrands filed a motion

to dismiss Counts Three, Eleven, and Twelve of New

Metro’s counterclaims for failure to state a claim and lack

of subject matter jurisdiction. ECF No. 44. Telebrands

argues that Count Three, which charges Telebrands with

infringing New Metro’s Copyright Registration No. VA

2-001-024, must be dismissed because the allegedly

infringing work is not “substantially similar” and because

the allegedly protected Steam Design is not copyrightable

as a matter of law, id. at 5–9; that Count Eleven, which

seeks an order opposing Telebrands’ pending trademark

applications, must be dismissed because the Court lacks

subject matter jurisdiction, id. at 9–10, and that Count

Twelve, which seeks an order canceling Telebrands’

Copyright Registration No. VA 1-995-574, must be

dismissed because the Court lacks authority to issue such

an order. Id. at 10–11.

New Metro filed a brief on June 30, 2016 consenting to

the dismissal of Count Eleven but opposing the dismissal

6



of Counts Three and Twelve. ECF No. 53. Telebrands

filed a brief in further support of its motion to dismiss on

July 12, 2016. ECF No. 60. The Court now considers

Telebrands’ motion to dismiss Counts Three and Twelve

of New Metro’s counterclaims.

STANDARD OF REVIEW

I. Motion to dismiss for failure to state a claim

Under Federal Rule of Civil Procedure 8(a)(2), a pleading

must contain a “short and plain statement of the claim

showing that the pleader is entitled to relief.” Fed. R. Civ.

P. 8(a)(2). Rule 12(b)(6) allows a party to move to

dismiss a pleading for failure to state a claim upon which

relief can be granted. Fed. R. Civ. P. 12(b)(6). “To

survive a motion to dismiss, a complaint must contain

sufficient factual matter, accepted as true, ‘to state a claim

to relief that is plausible on its face.’ ” Ashcroft v. Iqbal,

556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v.

Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible

on its face “when the plaintiff pleads factual content that

allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Id. “A

pleading that offers labels and conclusions or a formulaic

recitation of the elements of a cause of action will not do.

Nor does a complaint suffice if it tenders naked assertions

devoid of further factual enhancement.” Id. (internal

quotations and alterations omitted).

In considering the plaintiff’s claims, the Court may

consider the allegations of the complaint, as well as

documents attached to or specifically referenced in the

complaint. See Sentinel Trust Co. v. Universal Bonding

Ins. Co., 316 F.3d 213, 216 (3d Cir. 2003); Charles A.

Wright, Arthur R. Miller & Mary Kay Kane, Federal

Practice and Procedure § 1357 at 299 (3d ed. 2014). “A

‘document integral to or explicitly relied on in the

complaint’ may be considered ‘without converting the

motion [to dismiss] into one for summary judgment.’ ”

Mele v. Fed. Reserve Bank of N. Y., 359 F.3d 251, 256 n.5

(3d Cir. 2004) (citing In re Burlington Coat Factory Sec.

Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)).3

A court may also consider and take judicial notice of

matters of public record. Sands v. McCormick, 502 F.3d

263, 268 (3d Cir. 2007); Buck v. Hampton Tp. School

Dist., 452 F.3d 256, 260 (3d Cir. 2006). Such matters of

public record may include earlier judicial proceedings,

McTernan v. City of York, Penn., 577 F.3d 521, 526 (3d

Cir. 2009), filings with the SEC, Schmidt v. Skolas, 770

F.3d 241, 249 (3d Cir. 2014), and other documents

deemed to be public records by law, Del. Nation v.

Pennsylvania, 446 F.3d 410, 414 n. 6 (3d Cir. 2006).

*4 If a complaint fails to state a claim upon which relief

can be granted, a plaintiff should ordinarily be granted the

right to amend its complaint. Foman v. Davis, 371 U.S.

178, 182 (1962). In the Third Circuit, plaintiffs whose

complaints fail to state a cause of action are entitled to

amend their complaint unless doing so would be

inequitable or futile. Fletcher-Harlee Corp. v. Pote

Concrete Contrs., Inc., 482 F.3d 247, 252 (3d Cir. 2007).

DISCUSSION

Telebrands argues that Count Three of New Metro’s

counterclaims, which charges Telebrands with copyright

infringement, and Count Twelve, which seeks an order

canceling Telebrands’ own copyright registration, must be

dismissed for failure to state a claim; and that Count

Eleven, which seeks an order denying registration of

Application Serial Number 86/753, 767 with the U.S.

Patent and Trademark Office and enjoining Telebrands

from registering any other ANGRY MAMA trademarks,

should be dismissed for lack of subject matter

jurisdiction. ECF No. 44. To repeat, New Metro consents

to the dismissal of Count Eleven. See ECF No. 53 at 8.

The Court denies Telebrands’ motion to dismiss Count

Three and grants its motion to dismiss Count Twelve.

A. Count Three adequately states a claim for

copyright infringement

In Count Three of its counterclaims, New Metro charges

Telebrands with infringing its rights to Copyright

Registration No. VA 2-001-024, which protects New

Metro’s “ANGRY-MAMA Product Packaging,” see ECF

No. 13 Ex. A, by “manufacturing, importing, displaying,

distributing, selling, offering for sale, promoting and

advertising” ANGRY MAMA products in “product

packaging that is substantially similar or identical to New

Metro’s copyright-protected packaging” and/or that

displays a logo that is substantially similar or identical to

the Steam Design. ECF No. 13 ¶¶ 73–77. Telebrands

argues that New Metro fails to allege its own packaging is

similar to New Metro’s and that the Steam Design is

ineligible for copyright protection as a matter of law.

1. Applicable Law

7



To establish a prima facie case for copyright infringement

under 17 U.S.C. § 501, a plaintiff must show (1)

ownership of a valid copyright, and (2) unauthorized

copying of original elements of the plaintiff’s work. Dun

& Bradstreet Software Serves. v. Grace Consulting, Inc.,

307 F.3d 197, 206 (3d Cir. 2002). Protection under the

Copyright Act of 1976 “subsists ... in original works of

authorship fixed in any tangible medium of expression.”

17 U.S.C. § 102. To qualify for copyright protection a

work must be “original to the author,” meaning that it

“was independently created by the author (as opposed to

copied from other works), and that it possesses at least

some minimal degree of creativity.” Feist Publications,

Inc. v. Rural Telephone Service Co., Inc., 499 U.S. 340,

345 (1991). “To be sure, the requisite level of creativity is

extremely low; even a slight amount will suffice.” Id.

Although “a ‘copyright,’ as a right, vests immediately

upon the creation of the work” and “must not be confused

with the act of registering that right,” Brownstein v.

Lindsay, 742 F.3d 55, 66 (3d Cir. 2014), registration with

the United States Copyright Office is a “precondition to

filing a claim” for copyright infringement under the

Copyright Act. Reed Elsevier, Inc. v. Muchnick, 559 U.S.

154, 157 (2010). “In any judicial proceedings the

certificate of a registration made before or within five

years after first publication of the work shall constitute

prima facie evidence of the validity of the copyright and

of the facts stated in the certificate.” 17 U.S.C. § 410.

2. Analysis

*5 New Metro pleads the first prong of a prima facie case

for copyright infringement by showing that it owns a

valid, federally registered copyright in the packaging of

its ANGRY-MAMA product. See ECF No. 13 Ex. A.

Telebrands argues that the copyright is invalid, at least

with respect to the Steam Design on the packaging,

because the Design is “comprised entirely of ...

uncopyrightable content.” ECF No. 44 at 7. According to

Telebrands, the United States Copyright Office typically

refuses to register logos that consist of only “[w]ording ...

[m]ere scripting or lettering, either with or without

uncopyrightable ornamentation.... [m]ere spatial

placement or format of trademark, logo, or label elements

... [u]ncopyrightable use of color [and] [m]ere use of

different fonts.” Id. (quoting Compendium of U.S.

Copyright Office Practices, at § 913.1, Third Edition

(Dec. 22, 2014) (“Compendium”), available at

http://www.copyright.gov/comp3/docs/compendium.pdf).

Also unprotected are “familiar symbols and designs,”

including “[s]ymbols typically found on a keyboard.” Id.

(citing 37 C.F.R. § 202.1(a)). Telebrands claims that the

Steam Design is not eligible for copyright protection

because it consists of “mere lettering” accompanied by an

image of a “steam cloud,” which it claims is a “familiar

symbol[ ] and design[ ].” Id. Telebrands creatively argues

that the steam cloud is unprotected because it consists of

three straight lines, which can be reproduced using the “\

” “|” and “/” symbols on a keyboard, and a “simple

cloud,” which is similar to a star (listed as an

uncopyrightable symbol in Compendium, § 313.4(J)),

because it is a “natural object in the sky.” Id. at 8.

The unexplained significance of celestial objects aside,

this Court is not convinced by Telebrands’ reasoning. As

an initial matter, the Court repeats that New Metro’s

copyright registration is prima facie evidence of the

validity of the copyright protection. 17 U.S.C. § 410.

Additionally, several Courts of Appeals, including the

Third Circuit, have held that works composed of

“common elements” that are rearranged, changed, and

combined are “sufficiently original under copyright law.”

Mon Cheri Bridals, Inc. v. Wen Wu, 383 Fed.Appx. 228,

234 (3d Cir. 2010) (citing Folio Impressions, Inc. v. Byer

California, 937 F.2d 759, 764-65 (2d Cir. 1991)); see also

Bouchat v. Baltimore Ravens, Inc., 241 F.3d 350, 356 (4th

Cir. 2000) (holding that a drawing containing “several

public domain elements which are not protectable” was

protectable as a whole because the elements “were

selected, coordinated, and arranged in such a way as to

render the work original.”). That individual components

of the Steam Design may be ineligible for copyright

protection does not render the Design as a whole

ineligible. Similarly, even if the Steam Design were

ineligible for copyright protection, this would not

necessarily render the product packaging as a whole

ineligible. Telebrands does not overcome the presumption

that New Metro owns a valid, protected copyright interest

in the Steam Design and the product packaging.

Telebrands also argues that New Metro fails to establish

the second prong of its copyright infringement claim

because the allegation that Telebrands’ “product

packaging ... is substantially similar or identical to New

Metro’s copyright protected packaging,” see ECF No. 13

¶ 75, is a legal conclusion without any factual support.

ECF No. 44 at 5–6. This is incorrect. First, New Metro

specifically alleges that Telebrands “included the exact

same ‘Steam’ logo on its packaging” that New Metro

does. ECF No. 13 ¶ 38. Although is true that New Metro

does not list any other specific similarities between the

Parties’ packaging in its counterclaims,4 New Metro does

include side-by-side photographs of the two companies’

packages to illustrate the claim that Telebrands’ “product

packaging ... is substantially similar or identical to New

Metro’s product packaging.” Id. With these photographs

8



directly embedded in the counterclaims, New Metro’s

allegations rise above the level of mere “labels and

conclusions or a formulaic recitation of the elements of a

cause of action,” Iqbal, 556 U.S. at 678, to state a

plausible claim for relief.

B. The Court cannot order cancellation of a copyright

registration, as sought in Count Twelve

*6 In Count Twelve of its counterclaims, New Metro

alleges that Telebrands engaged in fraud in its registration

of Copyright Registration No. VA 1-995-574, which

protects the design of the ANGRY MAMA product, by

falsely stating that the work is a “sculpture” and a “work

made for hire” for Telebrands in 2014. ECF No. 13 ¶¶

141–65. New Metro seeks “an order directing Telebrands

to cancel U.S. Copyright Registration No. VA

1-995-574.” Id. ¶ 165.

In its motion to dismiss, Telebrands does not challenge

New Metro’s allegation that the copyright is “invalid and

unenforceable against New Metro.” Id. ¶ 163. Instead,

Telebrands challenges the remedy New Metro seeks,

arguing –correctly – that copyrights and copyright

registrations are distinct and that this Court has no

authority to cancel registrations with the U.S. Copyright

Office. ECF No. 44 at 10 (citing Brownstein v. Lindsay,

742 F.3d 55, 75-77 (3d Cir. 2014) holding that, while

courts may invalidate underlying copyrights, the

Copyright Act gives federal courts no authority to cancel

copyright registrations with the U.S. Copyright Office));

see also Syntek Semiconductor Co. v. Microchip Tech.

Inc., 307 F.3d 775, 781–82 (9th Cir. 2002) (In case

challenging “the validity of the registration, not the

copyright,” referring complaint seeking declaratory

judgment that copyright registration was invalid to the

U.S. Copyright Office under the doctrine of primary

jurisdiction because “[c]ancellation is an action taken by

the Copyright Office,” not the courts) (citing 37 C.F.R. §

201.7(a)); Innovation Ventures, L.L.C. v. Aspen Fitness

Products, Inc., No. 11-CV-13537, 2015 WL 11071470, at

*21 (E.D. Mich. Mar. 31, 2015) (dismissing claim

seeking cancellation of allegedly fraudulently obtained

copyright registration for lack of jurisdiction because

“[t]he Register or [sic] Copyrights is vested with the

exclusive and comprehensive authority to set regulations

consistent with the Copyright statutes.” (citing

Brownstein, 742 F.3d at 75; Syntek Semiconductor, 307

F.3d at 781–82).

New Metro responds that Count Twelve does not seek an

order directing the Copyright Office to cancel Registration

No. VA 1-995-574, but rather an order directing

Telebrands to cancel the copyright “using the cancellation

procedure required by the U.S. Copyright Office.” ECF

No. 53 at 7 (quoting ECF No. 13 ¶ 44). New Metro refers

to a treatise on copyright law stating that “when a court is

convinced that a registration should be canceled, it should

hold the registration invalid, and order the holder of the

certificate to request the Copyright Office to cancel the

registration.” Id. (quoting 5 William Patry, Patry on

Copyright § 17:108 (2016)). New Metro does not refer to

any statutory or judicial authority authorizing the Court to

issue such an order.

To repeat, this Court’s inability to compel the cancellation

of Copyright Registration No. VA 1-995-574 does not

mean the underlying copyright is valid, nor does it mean

New Metro may not seek to cancel the copyright

registration through other avenues. New Metro may

incorporate its allegations that Telebrands committed

fraud on the U.S. Copyright Office into Count Ten of the

counterclaims, which seeks a declaratory judgment that

New Metro is not infringing any of Telebrands’

copyrights, see ECF No. 13 ¶¶ 112–17, as well as into its

defense to Telebrands’ own claims of copyright

infringement. See, e.g., Vaad L’Hafotzas Sichos v.

Krinsky, 133 F. Supp. 3d 527, 537 (E.D.N.Y. 2015)

(holding that fraud on the Copyright Office is not an

affirmative cause of action, but that it is “recognized as

one of the various ways in which a registered copyright

can be challenged as a defense to infringement”). New

Metro may also “pursue its dispute regarding registration

through the Copyright Office.” App Dynamic ehf v.

Vignisson, 87 F. Supp. 3d 322, 331 (D.D.C. 2015) (citing

Brownstein, 742 F.3d at 75–77). This Court, however,

cannot grant New Metro the relief it seeks in Count

Twelve. Because this Court does not have authority to

order the U.S. Copyright Office to cancel the registration

of Copyright Registration No. VA 1-995-574 or to order

Telebrands to cancel the registration, it must dismiss

Count Twelve for failure to state a claim upon which

relief can be granted.

C. New Metro consents to the dismissal of Count

Eleven

*7 As discussed, New Metro agrees to dismiss Count

Eleven of its counterclaims. ECF No. 53 at 8. The Court

dismisses Count Eleven without prejudice.

CONCLUSION

Plaintiff Telebrands’ motion to dismiss Counts Three,

Eleven, and Twelve of Defendant-Counterclaimant New

9



Metro’s counterclaims is granted in part and denied in

part. Counts Eleven and Twelve of the counterclaims are

dismissed without prejudice. An appropriate order

follows.

DATE: 4 October 2016.

All Citations

Slip Copy, 2016 WL 5852855

Footnotes 1

The photographs the Parties provides of their own products are identical. Telebrands also provides a photograph of a slightly different ANGRY-MAMA product, allegedly marketed by New Metro, in which the flowers on the blue body are replaced with a raised Steam Design. See ECF No. 1 ¶ 26 (describing product as “almost identical” to Telebrands’ ANGRY MAMA product).

2

The Steam Design is a logo featured on ANGRY-MAMA packaging that consists of the word “ANGRY-mama,” with “ANGRY” written in uppercase font, “mama” written in lowercase font, and a simple, graphical representation of a cloud of steam rising from the “A” in “ANGRY.” ECF No. 13 ¶¶ 12–13 (picture of “Steam Design”)

3

“Plaintiffs cannot prevent a court from looking at the texts of the documents on which its claim is based by failing to attach or explicitly cite them.” Mele, 359 F.3d 251, 255 n.5 (3d Cir. 2004).

4

In its opposition to Telebrands’ motion to dismiss, New Metro lists several additional supposed similarities. See ECF No. 51 at 4. The Court will consider only allegations in the pleadings or incorporated documents on a motion to dismiss. See Sentinel Trust Co., 316 F.3d at 216.

End of Document

© 2016 Thomson Reuters. No claim to original U.S. Government Works.

10

Three Rivers Confections, LLC v. Warman, --- Fed.Appx. ---- (2016)


2016 WL 5335025 Only the Westlaw citation is currently available.

This case was not selected for publication in West’s Federal Reporter.

See Fed. Rule of Appellate Procedure 32.1 generally governing citation of judicial decisions issued on or after Jan. 1, 2007. See also U.S.Ct. of Appeals 3rd

Cir. App. I, IOP 5.1, 5.3, and 5.7. United States Court of Appeals,

Third Circuit.

Three Rivers Confections, LLC v.

Christopher M. Warman, Trading and Doing Business as Art of Fudge, Trading and Doing

Business as Fudgco; Fudgetopia, LLC Christopher M. Warman, Appellant

No. 15–3436 |

Submitted Pursuant to Third Circuit LAR 34.1(a) September 22, 2016

| (Opinion filed: September 23, 2016)

On Appeal from the United States District Court for the

Western District of Pennsylvania (D.C. Civil Action No.

2–12–cv–01089), District Judge: Honorable Joy Flowers

Conti


Phillip E. Cannatti, Esq., Lehtola & Cannatti, East Dallas,

TX, for Plaintiff–Appellee.

Christopher M. Warman, Pittsburgh, PA, for

Defendant–Appellant.

Before: JORDAN, RESTREPO and BARRY, Circuit

Judges

OPINION*

PER CURIAM

*1 Appellee Three Rivers Confections, LLC (“TRC”),

filed a complaint alleging thirteen causes of action against

Appellant Christopher M. Warman (t/d/b/a “Art of

Fudge” and “Fudgeco”) and Fudgetopia, Inc., for, inter

alia, trademark infringement. The suit arises out of the

disputed ownership of the wordmarks “Fudgetopia” and

“Fudgie Wudgie,” and a related logo mark (collectively

the “FW marks”). In an order entered July 29, 2015, the

District Court granted TRC’s motion for partial summary

judgment on its claim that it was the lawful and rightful

owner of the FW marks.1 This appeal ensued. For the

following reasons, we will affirm the judgment.

I.

Because the parties are familiar with the facts, we only

briefly summarize them here. In 2009, Fudgie Wudgie,

L.P. (FWLP), and its general partner, FW Chocolatier,

Inc. (FWC) (collectively the “FW entities”), applied for

registration of the wordmark “Fudgetopia” and a “Fudgie

Wudgie” logo mark. In 2010, the FW entities applied for

registration of the wordmark “Fudgie Wudgie.” The

United States Patent and Trademark Office (PTO)

assigned registration numbers to the FW marks. At the

time of registration, in 2011 and 2012, Warman was an

officer of FWLP, and his then-wife, Christine Falvo, was

CEO of the FW entities.2

Beginning in 2009, FWLP, through FWC, executed a

series of four loan agreements, signed by Falvo and

secured by FWLP’s “collateral,” including the FW

trademarks. The lenders filed timely UCC–13 financing

statements with the Office of the Secretary of State of

Pennsylvania perfecting their interests in the collateral.

TRC subsequently purchased these loans and took

assignment of the underlying security interests. TRC

re-filed UCC–1 financing statements reflecting its

security interests in FWLP and its assets, including the

FW trademarks.

In May 2012, Falvo executed an agreement on behalf of

the FW entities, through which FWLP acknowledged (1)

its liability to TRC in the amount of $2,224,881.57,

stemming from its default on the four loans, and (2) that

the amount was secured by the collateral, as described in

the UCC–1 financing statements, to which no third party

had a superior title. Pursuant to the agreement, FWLP

signed a bill of sale conveying all its rights, title, and

interest in its collateral to TRC in partial satisfaction of

the loans. In June 2012, FWLP, through Falvo, executed a

“Trademark Assignment” assigning its rights and interest

in the Fudgie Wudgie trademarks, the goodwill of the

business, and the right to sue “for any past, present or

future infringement” of these rights.4

*2 In August 2012, TRC filed this trademark

11

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infringement suit. It moved for partial summary judgment

on its claim that it was the “lawful and rightful owner of

the Fudgie Wudgie Marks,” that Warman and Fudgetopia

have “no property or other rights” in the marks, and that

transfers of the marks were “lawful, valid and proper.”

TRC argued that it acquired ownership of the FW marks

either by operation of the UCC or as a result of the 2012

sheriff’s sale. In response, Warman maintained that he

was the owner of the FW marks, that he never assigned

them to the FW entities, and, therefore, TRC could not

have acquired the rights to the marks. The District Court

granted summary judgment on TRC’s declaratory

judgment claim, holding that the trademarks were

lawfully transferred to TRC, and that Warman had no

property or other rights in them.5 Warman filed a notice of

appeal, and, subsequently, TRC filed a stipulation of

dismissal of the remaining claims.

II.

We exercise appellate jurisdiction pursuant to 28 U.S.C. §

1291.6 We review de novo a grant of summary judgment.

Groman v. Township of Manalapan, 47 F.3d 628, 633 (3d

Cir. 1995). Summary judgment is proper where there is

no genuine issue of material fact and the moving party is

entitled to judgment as a matter of law. Fed. R. Civ. P. 56;

Kaucher v. County of Bucks, 455 F.3d 418, 422–23 (3d

Cir. 2006). We “view the facts and draw inferences in the

light most favorable to the nonmoving party,” and, as

Warman proceeds pro se, we must liberally construe his

filings. Ray v. Township of Warren, 626 F.3d 170, 173

(3d Cir. 2010); Renchenski v. Williams, 622 F.3d 315,

337 (3d Cir. 2010).

Under the Lanham Act, 15 U.S.C. § 1115(a), federal

registration of a trademark is prima facie evidence “of the

mark’s validity, the registrant’s ownership of the mark,

and its exclusive right to use the mark in commerce.”

Lucent Info. Mgmt., Inc., v. Lucent Tech., Inc., 186 F.3d

311, 315 (3d Cir. 1999). TRC provided records from the

PTO’s online database indicating that it was the current

owner of the registered FW marks.7 We agree with the

District Court that Warman did not overcome this

presumption because he failed to show that the marks

were wrongfully registered. See Door Sys., Inc. v.

Pro–Line Door Sys., Inc., 83 F.3d 169, 172 (7th Cir.

1996) (“The presumption of validity that federal

registration confers ... evaporates as soon as evidence of

invalidity is presented.”). Warman first maintained that

the Fudgetopia trademark was not used as stated in the

registration. However, FWLP had filed an intent-to-use

application pursuant to 15 U.S.C. § 1051(b), which

neither relies on nor requires any prior use of the mark.

Rather, within six months of filing (absent an extension),

FWLP was required to show that the mark was being used

in commerce. 15 U.S.C. § 1051(d)(1); see Zazu Designs

v. L’Oreal, S.A., 979 F.2d 499, 503 (7th Cir. 1992). The

PTO approved the registration showing a first use date of

December 1, 2011. As the District Court noted, trademark

registration creates “a rebuttable presumption of use as of

the filing date.” Id. at 504. On appeal, Warman argues

that TRC never provided proof to rebut his statements that

Fudgetopia was not used as registered. But it was TRC

which had the presumption of use by virtue of its

registration, and Warman wholly failed to present

evidence to rebut it. Warman’s contention that Falvo

“confirm[ed] factually that the Fudgetopia mark was not

used by the FW Entities” is not born out by Falvo’s

declaration8, which does not even reference the FW

entities’ use of the FW trademarks.

*3 Warman also attacked the validity of the Fudgie

Wudgie wordmark (“FW wordmark”) and logo, asserting

that their registration was procured through fraud. A

trademark infringement claim is subject to the affirmative

defense of fraud. 15 U.S.C. § 1115(b)(1); see also L.D.

Kichler Co. v. Davoil, Inc., 192 F.3d 1349, 1351 (Fed.

Cir. 1999) (“Fraud in procuring a ... mark occurs when an

applicant knowingly makes false, material representations

of fact in connection with an application.”). For

substantially the reasons provided by the District Court,

we agree with its conclusion that Warman failed to create

a material dispute of fact with respect to his claim that the

registrations fraudulently listed the wrong “first use” date

or the wrong owner. In particular, Warman failed to

provide sufficient evidentiary support for his claim that he

had priority as the “senior user” of the FW wordmark and

that his name should have been listed on the registration.9

See Williams v. Borough of West Chester, 891 F.2d 458,

460 (3d Cir. 1989) (nonmoving party cannot simply assert

factually unsupported allegations to meet burden at

summary judgment).

A “ ‘senior user’ is the first to adopt and use a mark

anywhere in the country.” Lucent Info. Mgmt., 186 F.3d

at 316. Generally, under common law, the senior user’s

trademark rights prevail over a subsequent user’s rights to

the same mark in the same geographical area. See

Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 415,

36 S.Ct. 357, 60 L.Ed. 713 (1916) (holding that “[i]n the

ordinary case of parties competing under the same mark

in the same market, it is correct to say that prior

appropriation settles the question.”). To establish

ownership as the senior user of the FW wordmark,

Warman had to show “not only that at some date in the

past [he] used the mark, but that such use has continued to

the present.” 2 J. Thomas McCarthy, McCarthy on

12



Trademarks and Unfair Competition § 16:9 (4th ed.

2016). In particular, he was required to show significant

“market penetration” and a “clear entitlement” to

protection of the FW wordmark in a particular market.

Nat. Footwear Ltd. v. Hart, Schaffner & Marx, 760 F.2d

1383, 1397 (3d Cir. 1985).

Warman asserted that he created the mark Fudgie Wudgie

in 1989, that he has used and controlled the mark since

then, and that he has never assigned the goodwill or rights

he had in it to the FW Entities. But his evidence in

support of this claim is lacking. He claimed generally that

he “used the name for many years” prior to 2006, at

which point he and Falvo created a corporate entity—the

name of which he could not recall (“It may have been FW

Chocolatier LLC.”)—which used the mark.10 IN addition

to being vague, this statement undermines his claim that

he alone had ownership of the FW wordmark. The claim

is further undermined by the record evidence, including a

joint application for registration of the FW logo mark,

filed in 2006, listing Warman and Falvo as co-owners of

the logomark, and Warman’s deposition testimony, in

which he admitted that he filed the 2006 application as

“50/50 joint owner” of the mark with Falvo, but that later

“somehow some way the trademark was registered under

the Fudgie Wudgie name instead of [his] name and

[Falvo’s].”

*4 The only documentary evidence Warman provided in

support of his senior user claim was a copy of the

Pennsylvania Department of State listing for “Fudgie

Wudgie Junior,” a business created in 2006 and owned by

Jeremy Gabriel. Warman asserted that in 2003, he

licensed Gabriel to use the FW wordmark, and, in 2006,

he licensed Fudgie Wudgie Junior to Gabriel. Falvo also

stated that Warman “allowed use of the Fudgie Wudgie

name and trademark” to Gabriel in 2006. Notably absent

from the record is any evidence tying Gabriel’s Fudgie

Wudgie Junior business directly to Warman, such as a

licensing agreement. As the nonmoving party, Warman

had to raise more than a mere “scintilla of evidence” in

his favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Absent

further evidence of ownership, such as market

penetration, from which a reasonable jury could conclude

that Warman owned the FW wordmark and logo as a

senior user, summary judgment for TRC was warranted.11

Warman argued alternatively that the Fudgetopia

trademark was abandoned. To establish abandonment, he

had to show non-use and intent to abandon. 15 U.S.C. §

1127; U.S. Jaycees v. Phila. Jaycees, 639 F.2d 134, 139

(3d Cir. 1981) (“abandonment, being in the nature of a

forfeiture, must be strictly proved”). Warman failed to

provide evidence of either requirement. In support,

Warman referred to a meeting during which Falvo

allegedly stated that the “Fudgetopia mark was

[Warman’s] and that she didn’t care about it, that

[Warman] had created it. Fudgie Wudgie was not using

the mark and had no intent to use the mark ...” Although

he asserted that these statements were memorialized in a

document, he failed to make the document part of the

record. The District Court determined that Warman’s

account of these statements is insufficient under Rule

56(c) because it is based on inadmissible hearsay. On

appeal, Warman argues that because Falvo made the

statements while CEO of the FW entities, the District

Court should have considered them admissible as

admissions by a party-opponent under Fed. R. Evid.

801(d)(2)(A). However, statements made by a

predecessor in interest or employees of a predecessor are

not admissible under Rule 801(d)(2)(A). See Calhoun v.

Baylor, 646 F.2d 1158, 1162–63 (6th Cir. 1981); Huff v.

White Motor Corp., 609 F.2d 286, 290–91 (7th Cir.

1979). Accordingly, the District Court properly declined

to consider the statements as evidence.

Warman also averred generally that he could establish

presumptive abandonment based on TRC’s alleged

non-use of the trademarks. Falvo stated in her February

2015 declaration that, “to the best of her knowledge,”

TRC was no longer producing fudge or any other product

in Pittsburgh, and had terminated almost all of its staff as

of December 2014. As noted, supra, a statement

conditioned as such is insufficient under 28 U.S.C. §

1746. Moreover, even assuming it could be considered, at

best it was evidence of recent non-use, and far short of the

three consecutive years of non-use required to show

abandonment. See 15 U.S.C. § 1127.

Finally, Warman’s allegation that the Fudgetopia

trademark was “orally assigned” to him failed on two

fronts. First, “the Lanham Act requires that assignments

of federally registered marks ... be in writing.” 3

McCarthy on Trademarks and Unfair Competition §

18:43 (4th ed. 2016); see also Beauty Time, Inc. v. VU

Skin Sys., Inc., 118 F.3d 140, 150 (3d Cir. 1997)

(explaining that trademark which was orally assigned,

rather than acquired in connection with the sale of a

business or otherwise transferred with the goodwill

associated with the trademark, constitutes an invalid

assignment in gross). Moreover, as the District Court

noted, the evidence in support of this claim was lacking.

Falvo stated in her declaration that she had emailed

corporate counsel to transfer ownership of the Fudgetopia

trademark to Warman. In the email, which was made part

of the record, Falvo merely advised counsel that she

“would like to transfer the ownership of the trademarks

for Fudgetopia” to Warman. There is no evidence to

suggest that any steps were taken, beyond this email, to

13



effectuate the transfer of the trademark. Accordingly,

TRC was entitled to summary judgment.

III.

*5 We now turn to Warman’s argument that the District

Court erred in denying his motion for leave to file an

amended answer and a counterclaim. We review a District

Court’s refusal to grant leave to amend a pleading for

abuse of discretion. Lake v. Arnold, 232 F.3d 360, 373

(3d Cir. 2000).

After a responsive pleading has been filed, a party may

amend its pleading only by leave of court or by written

consent of the adverse party, and leave shall be “freely

give[n] when justice so requires.” Fed. R. Civ. P. 15(a).

Denial of leave may be justified where there has been

undue delay or where amendment would be futile. See

Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9

L.Ed.2d 222 (1962).

Warman’s motion to amend was filed after discovery had

closed, after TRC’s motion for partial summary judgment

was briefed, and after he had been granted two extensions

of time to file his summary judgment response. Warman

failed to provide any explanation for the delay. And, as

the District Court noted, his proposed counterclaims,

which were presented, in part, as arguments against

summary judgment, are without merit. Under these

circumstances, we find no abuse of discretion.

For the foregoing reasons, we will affirm the judgment of

the District Court.

All Citations

--- Fed.Appx. ----, 2016 WL 5335025

Footnotes *

This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not constitute binding precedent.

1

Previously, in an order entered September 24, 2014, the District Court entered default judgment against Fudgetopia, Inc.

2

According to Warman’s deposition testimony, “for all intents and practical purposes [he] was the CEO” of FWLP.

3

All references to the “UCC” are to the Pennsylvania Commercial Code, 13 Pa. Cons. Stat. § 1101 et seq.

4

In November 2011, another creditor, Sysco Corporation and Sysco Pittsburgh, LLC, obtained a default judgment against Falvo and the FW entities in the Court of Common Pleas of Allegheny County. In August 2012, the FW entities’ collateral was sold at a sheriff’s sale pursuant to a writ of execution obtained by Sysco. TRC was the highest bidder at the sale and obtained a “Bill of Sale” listing the property, including “All Trade names and trademarks.”

5

In the same order, the District Court denied Warman’s motion for leave to amend his answer and to file a crossclaim.

6

Although Warman’s notice of appeal was premature, it ripened when TRC stipulated to dismissal of the remaining claims and the District Court entered its final order. See Cape May Greene, Inc. v. Warren, 698 F.2d 179, 184–85 (3d Cir. 1983) (holding that a Court of Appeals may decide a premature appeal from a non-final order if an order which is final is entered before an adjudication on the merits).

7

In addition to the PTO records, TRC provided documents evidencing its assignment of the loans and its security interests in the FW entities’ collateral, including the August 2012 Bill of Sale.

8

Warman submitted two declarations by Falvo. The first “declaration of fact” was properly disregarded by the District Court as it did not state it was made “under penalty of perjury” as required by 28 U.S.C. § 1746. The District Court properly considered the second declaration—which included all of the information in the first—to the extent that it met the requirements of Fed. R. Civ. P. 56(c).

14



9

We reject TRC’s assertion on appeal that this argument should be deemed waived. See Tri–M Grp., LLC v. Sharp, 638 F.3d 406, 416 (3d Cir. 2011) (“It is axiomatic that arguments asserted for the first time on appeal are deemed to be waived and consequently are not susceptible to review in this Court absent exceptional circumstances.”) (quotation marks omitted). In his summary judgment response, Warman argued that he was the owner of the mark based on prior and continuous use, and the District Court’s Memorandum Opinion (at pgs. 21–25) specifically addressed it.

10

Falvo stated in her affidavit that, “to the best of [her] knowledge,” Warman was using the FW wordmark “as part of his product line and marketing” as early as 1989. As the District Court noted, however, this conditional statement is insufficient to satisfy the “personal knowledge” requirement of 28 U.S.C. § 1746. See Lopez–Carrasquillo v. Rubianes, 230 F.3d 409, 414 (1st Cir. 2000) (holding that affidavit submitted in opposition to motion for summary judgment which stated that “ ‘it is correct in all its parts to the best of my knowledge’ ” was “insufficient as a proffer of evidence because affidavits submitted in opposition to a motion for summary judgment must be based on the affiant’s personal knowledge”).

11

Even assuming Warman could establish common law rights to these marks, it is unclear whether they would have merged with those of the FW entities. See Metro Traffic Control, Inc. v. Shadow Network Inc., 104 F.3d 336, 340 (Fed. Cir. 1997) (noting that companies which operate as one entity may be treated as such for trademark purposes). Indeed, Warman stated in his response to the summary judgment motion that the 2006 corporate entity, which he co-owned with Falvo, “was ultimately merged into FW entities.” As the District Court noted, then, it is possible that the FW entities were owners of the marks under a predecessor in title theory. See 15 U.S.C. § 1127.

End of Document


15

Checker Cab of Philadelphia Inc. v. Uber Technologies, Inc., 643 Fed.Appx. 229 (2016)


643 Fed.Appx. 229 This case was not selected for publication in West’s

Federal Reporter. See Fed. Rule of Appellate Procedure 32.1 generally governing citation of judicial decisions issued on or after Jan. 1, 2007. See also U.S.Ct. of Appeals 3rd

Cir. App. I, IOP 5.1, 5.3, and 5.7. United States Court of Appeals,

Third Circuit.

CHECKER CAB OF PHILADELPHIA INC, t/a 215–Get–A–Cab; AF Taxi, Inc.; AG Taxi, Inc.; AGB Trans, Inc.; ATS Cab, Inc.; Batyam Cab

Company; Bont Taxi, Inc.; BSP Trans, Inc.; DB Taxicab Co.; DG Cab, Inc.; DR Cab, Inc.; Fad

Trans, Inc.; GA Cab, Inc.; GD Cab, Inc.; Global Cab, Inc.; GN Trans, Inc.; God Bless America

Trans, Inc.; Gor Trans, Inc.; Grace Trans, Inc.; IA Trans Co., Inc.; IL Trans, Inc.; Jane Cab Company; Jaydan, Inc.; KB Trans, Inc.; L & M Taxi, Inc.; Lan Trans, Co.; LMB Taxi, Inc.; MAF Trans, Inc.; MDS

Trans, Inc.; MG Trans Co, Inc.; MO Taxi, Inc.; Noble Cab, Inc.; Rav Trans, Inc.; RD Cab, Inc.;

SAJ Trans, Inc.; SF Taxi, Inc.; Society Taxi, Inc.; SS Taxi Cab, Inc.; Steele Taxi, Inc.; TGIF Trans, Inc.; V & S Taxi, Inc.; Val Trans, Inc.; VB Trans,

Inc.; VSM TRANS, Inc., Appellants v.

UBER TECHNOLOGIES, INC.; Travis Kalanick; Jon Feldman; Rasier, LLC; Gegen, LLC; Google Ventures, LLC; Igor Khmil; Lee Rudakewych; William E. Smith; Shahrair Chowdhury; Jean

Litard Jean–Phillipe; Felipe Israel Munoz Moreno; Pharide Ernest Roufai; Isfandiyor

Thousanov; George Robet Holmes, Jr.; Jonathon M. Brannan; Felix A. Delahoz; Raymond Reyes; Victor Abiodun Fakolujo; Timothy Judelsohn; David A. Bieker; Warqar Y. Grumman; Zaye El

Bey.

No. 15–1834. |

Submitted Pursuant to Third Circuit L.A.R. 34.1(a) March 3, 2016.

| Filed: March 10, 2016.

Synopsis

Background: Taxicab companies and taxicab dispatch

company brought action against provider of transportation

services, alleging that it was violating Pennsylvania’s

unfair competition law. Taxicab companies moved for

preliminary injunction. The United States District Court

for the Eastern District of Pennsylvania, Nitza I. Quinones

Alejandro, J., 2015 WL 966284, denied motion. Taxicab

companies appealed.

Holding: The Court of Appeals, Smith, Circuit Judge,

held that taxicab companies would not likely suffer

irreparable harm by loss of customers in absence of

preliminary injunction preventing provider of

transportation services from operating in Philadelphia.

Affirmed.

*230 On Appeal from the United States District Court for

the Eastern District of Pennsylvania, District Court No.

2–14–cv–07265, District Judge: The Honorable Nitza I.

Quiñones Alejandro.


Zachary L. Grayson, Esq., Salaman, Grayson & Henry,

Philadelphia, PA, Michael S. Henry, Esq., Philadelphia,

PA, for Appellants.

A. Scott Bolden, Esq., Reed Smith, Washington, DC,

Raymond A. Cardozo, Esq., David J. de Jesus, Esq., Reed

Smith, San Francisco, CA, Shannon E. McClure, Esq.,

Nipun J. Patel, Esq., Carolyn P. Short, Esq., Reed Smith,

Philadelphia, PA, for Appellees Uber Technologies Inc.,

Travis Kalanick, Jon Feldman, Rasier LLC, Gegen LLC.

Tonya M. Harris, Esq., Wesley R. Payne, IV, Esq., White

& Williams, Philadelphia, PA, Arthur M. Roberts, Esq.,

Quinn Emanuel Urquhart & Sullivan, San Francisco, CA,

Stephen Swedlow, Esq., Quinn Emanuel Urquhart &

Sullivan, Chicago, IL, for Google Ventures LLC.

James Hickey, Esq., David P. Temple, Esq., Gallagher &

Turchi, Philadelphia, PA, for Appellee Igor Khmil.

Before: McKEE, Chief Judge, SMITH, and HARDIMAN,

Circuit Judges.

OPINION*

SMITH, Circuit Judge.

This case comes to us on appeal from the District Court’s

17

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denial of Checker *231 Cab’s1 motion for a preliminary

injunction. Checker Cab alleged that Uber2 was violating

Pennsylvania’s unfair competition law and sought an

injunction to prevent Uber from operating in Philadelphia

until the underlying lawsuit was resolved. The District

Court denied this motion because Checker Cab failed to

show irreparable harm. We hold that the District Court

did not abuse its discretion in so concluding, and therefore

will affirm.

I.

Checker Cab sued Uber in the United States District

Court for the Eastern District of Pennsylvania, alleging

(1) violations of Pennsylvania unfair competition laws,

(2) false advertising under the Lanham Act, and (3)

several violations of the federal Racketeer Influenced and

Corrupt Organizations Act. As Checker Cab makes clear,

“[t]he gravamen of [its] Complaint is that the Uber

defendants are operating an illegal gypsy cab operation in

the City of Philadelphia in violation of law and

regulation.” Accordingly, Checker Cab alleges that it is

“being harmed daily by [Uber’s] illegal gypsy operation”

because “Uber is taking away customers from the

medallion cabs” and is thus causing “damage to their

business, reputation, and goodwill.”

Checker Cab then filed a motion for a preliminary

injunction against Uber. This motion was based solely on

Uber’s alleged violation of Pennsylvania unfair

competition laws and asserted only one irreparable harm:

the loss of customers by medallion cabs resulting from

Uber’s operations in Philadelphia. This motion was

denied by the District Court for failure to show (1) a

likelihood of success on the merits and (2) irreparable

harm. Checker Cab then filed a motion to vacate and

reconsider. This was denied for failure to raise any

arguments implicating the “narrowly-prescribed

circumstances necessary for reconsideration.” Checker

Cab then appealed the District Court’s order denying its

preliminary injunction, but did not appeal the motion to

reconsider.

II.3

“We review the District Court’s decision to grant or deny

a preliminary injunction for abuse of discretion. The

district court’s findings of fact are reviewed for clear error

and its conclusions of law are subject to plenary review.”

Ferring Pharm., Inc. v. Watson Pharm., Inc., 765 F.3d

205, 210 (3d Cir.2014) (citation omitted). Preliminary

injunctive relief is an “extraordinary remedy, which

should be granted only in limited circumstances.”

Novartis Consumer Health, Inc. v. Johnson &

Johnson–Merck Consumer Pharm. Co., 290 F.3d 578,

586 (3d Cir.2002) (internal quotation marks and citations

omitted). “A plaintiff seeking a preliminary injunction

must establish that he is likely to succeed on the merits,

that he is likely to suffer irreparable harm in the absence

of preliminary relief, that the balance of equities tips in

his favor, and that an injunction is in the public interest.”

Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20, 129

S.Ct. 365, 172 L.Ed.2d 249 (2008). The “failure to

establish any element ... renders a preliminary injunction

inappropriate.” *232 NutraSweet Co. v. Vit–Mar Enters.,

Inc., 176 F.3d 151, 153 (3d Cir.1999). The movant bears

the burden of showing that these four factors weigh in

favor of granting the injunction. Opticians Ass’n of Am. v.

Indep. Opticians of Am., 920 F.2d 187, 192 (3d Cir.1990).

III.

We thus turn to Checker Cab’s claim that the District

Court erred in concluding that Checker Cab failed to

allege an irreparable harm. As we held in Campbell Soup

Co. v. ConAgra, “[t]he law ... is clear in this Circuit: In

order to demonstrate irreparable harm the plaintiff must

demonstrate potential harm which cannot be redressed by

a legal or an equitable remedy following a trial. The

preliminary injunction must be the only way of protecting

the plaintiff from harm.” 977 F.2d 86, 91 (3d Cir.1992)

(internal quotation marks and citations omitted).

Additionally, “[t]he ‘requisite feared injury or harm must

be irreparable—not merely serious or substantial,’ and it

‘must be of a peculiar nature, so that compensation in

money cannot atone for it.’ ” Id. at 91–92 (quoting ECRI

v. McGraw–Hill, Inc., 809 F.2d 223, 226 (3d Cir.1987)).

Indeed, as we have also recognized, “[t]his is not an easy

burden.” Adams v. Freedom Forge Corp., 204 F.3d 475,

485 (3d Cir.2000). Plaintiff must “demonstrate[ ] a

significant risk that he or she will experience harm that

cannot adequately be compensated after the fact by

monetary damages.” Id. at 484–85. Accordingly, it is

clear that this Court has “long held that an injury

measured in solely monetary terms cannot constitute

irreparable harm.” Liberty Lincoln–Mercury, Inc. v. Ford

Motor Co., 562 F.3d 553, 557 (3d Cir.2009).

Checker Cab fails to carry this heavy burden. The only

harm Checker Cab alleges in its motion for a preliminary

injunction is the loss of customers: “irreparable harm can

be shown by the fact that Uber is taking away customers

from the medallion cabs, a harm that can be shown but

not quantified—the definition of irreparable harm.” This,

18



however, is a purely economic harm that can be

adequately compensated with a monetary award following

adjudication on the merits. In re Arthur Treacher’s

Franchisee Litig., 689 F.2d 1137, 1145 (3d Cir.1982)

(“[W]e have never upheld an injunction where the

claimed injury constituted a loss of money, a loss capable

of recoupment in a proper action at law.”).

Checker Cab raises additional allegations4 of irreparable

harm in its motion to reconsider and on appeal, but these

arguments are forfeited. They were not raised in Checker

Cab’s motion for a preliminary injunction and there are

no grounds for granting a good cause exception.5 See

Macfarlan v. Ivy Hill SNF, LLC, 675 F.3d 266, 269 (3d

Cir.2012) (“[W]e sua sponte have the obligation of

considering and confining an appellant to the issue which

he has chosen to appeal.”); Elfman Motors, Inc. v.

Chrysler Corp., 567 F.2d 1252, 1254 (3d Cir.1977)

(“When an appeal is taken *233 from a specified

judgment only or from a part of a specified judgment, the

court of appeals acquires thereby no jurisdiction to review

other judgments or portions thereof not so specified or

otherwise fairly to be inferred from the notice.”).

Accordingly, we conclude that the District Court did not

abuse its discretion in denying Checker Cab’s motion for

a preliminary injunction.6

All Citations

643 Fed.Appx. 229

Footnotes *

This disposition is not an opinion of the full court and pursuant to I.O.P. 5.7 does not constitute binding precedent.

1

Plaintiffs consist of 45 taxicab companies and a taxicab dispatch company who provide taxi services in Philadelphia (collectively, “Checker Cab”).

2

Defendants consist of Uber Technologies, Inc., several of Uber’s officers, two of Uber’s wholly-owned subsidiaries, various investors, and a number of drivers who used Uber Technologies, Inc. to provide transportation services in Philadelphia (collectively, “Uber”).

3

The District Court had jurisdiction pursuant to 28 U.S.C. §§ 1331, 1367; we have jurisdiction pursuant to 28 U.S.C. § 1292(a)(1).

4

Checker Cab claims that “[w]hile it is true that Defendants are ‘stealing’ fares from Plaintiffs, the most dire consequence of Defendants’ unfair business practices is that certain of the [Plaintiffs] may soon lose their businesses and possibly their homes.” While we conclude that this argument is forfeited, we also have doubts about its viability for the reasons articulated by the District Court in its denial of Checker Cab’s motion for reconsideration.

5

To the extent that there is any confusion among the parties, we note that the Notice of Appeal only covered the District Court’s denial of Checker Cab’s preliminary injunction motion and did not cover the subsequent motion to reconsider.

6

Because Checker Cab’s motion fails to allege an irreparable harm, there is no need to reach the second ground on which the District Court dismissed Checker Cab’s motion: lack of likely success on the merits. See Ferring Pharm., Inc. v. Watson Pharm., Inc., 765 F.3d 205, 210 (3d Cir.2014) (“The failure to establish any element ... renders a preliminary injunction inappropriate.” (internal quotation marks and citations omitted)).

End of Document


19

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3777-14T3

SAMSUNG ELECTRONICS AMERICA,

INC., Plaintiff-Respondent,

v .

WESTPARK ELECTRONICS, LLC

d/b/a ABE'S OF MAINE,

Defendant-Appellant.

Argued October 21, 2015 — Decided December 4,

2015 Before Judges Fuentes, Koblitz and Gilson.

On appeal from the Superior Court of New

Jersey, Law Division, Bergen County, Docket

No. L-5446-14.

Ryan J. Cooper argued the cause for

appellant (Pashman Stein, attorneys; Michael

S. Stein, on the brief).

Richard B. Brosnick argued the cause for

respondent (Akerman, attorneys; Mr. Brosnick,

on the brief).

PER CURIAM

Plaintiff Samsung Electronics America, Inc. (SEA), filed

a complaint against defendant Westpark Electronics, LLC, d/b/a

Abe's Of Maine (Westpark), alleging tortious interference, as

well as two violations of N.J.S.A. 56:4-1: unfair competition

21

2 A-3777-14T3

and infringement of trademark. SEA alleged that Westpark

repeatedly induced SEA's authorized resellers to breach their

contracts with SEA, by selling to Westpark at reduced prices,

thereby allowing Westpark to sell genuine SEA televisions online

at reduced prices. Although Westpark claimed its supplier list

was a trade secret, a November 21, 2014 order compelled Westpark

to provide a list of its Samsung suppliers, and a February 26,

2015 order denied reconsideration, as well as denying the

additional request for in camera review of the list. We granted

leave to appeal both orders on April 17, 2015, and now affirm,

substantially for the reasons provided by Judge Robert C. Wilson

in his thoughtful written opinion attached to his February

order.

As an initial matter, we "apply an abuse of discretion

standard to decisions made by ..... trial courts relating to

matters of discovery." Pomerantz Paper Corp. v. New Cmty.

Corp., 207 N.J. 344, 371 (2011) (citing Bender v. Adelson, 187

N.J. 411, 428 (2006)). "New Jersey's discovery rules are to be

construed liberally in favor of broad pretrial discovery."

Payton v. N.J. Tpk. Auth., 148 N.J. 524, 535 (1997) (citing

Jenkins v. Rainner, 69 N.J. 50, 56 (1976)).

Judge Wilson stated in his February 2015 opinion that

defendant claimed to have generated $16 million to $18 million

22

3 A-3777-14T3

in revenue from the sale of Samsung televisions since July 2013.

Defendant claims to have purchased these televisions through

proper means, and claims also that its suppliers have no

contractual relationship with SEA. Without knowing their

identity, it is extremely difficult to determine whether

Westpark's suppliers are affiliated with SEA's authorized

dealers.

To establish a claim of tortious interference with a

contract a plaintiff must demonstrate that the defendant

"intentionally and improperly interfere[d] with the performance

of a contract . . . between [the plaintiff] and a third person

by inducing or otherwise causing the third person not to perform

the contract." Nostrame v. Santiago, 213 N.J. 109, 122 (2013)

(quoting Restatement (Second) of Torts § 766 (Am. Law Inst.

1979)). "Interference with a contract is 'intentional if the

actor desires to bring it about or if he knows that the

interference is certain or substantially certain to occur as a

result of his action.'" Russo v. Nagel, 358 N.J. Super. 254,

268 (App. Div. 2003) (quoting Restatement (Second) of Torts

766A cmt. e (Am. Law Inst. 1979)).

The parties entered into a protective order in December

2014. The order mandated that confidential information obtained

during discovery be used solely for the purpose of litigation of

23

4 A-3777-14T3

the current action, and that it be made available only to

specified personnel. This order laid to rest any concerns

defendant might have about plaintiff taking legal action against

the named suppliers. Pursuant to this agreement, a party needed

only "a good-faith belief" to label information "confidential."

Defendant claims it is not buying televisions from SEA's

authorized dealers. Plaintiff maintains that it is not always

easy to ascertain the precise identity of a supplier, so that a

supplier might be connected with an authorized dealer even if

the connection is not readily apparent, just as Westpark does

business as Abe's of Maine. Defendant asserts that revealing

the names of its suppliers would cause plaintiff to depose

those suppliers, who would then be scared away from supplying

defendant with Samsung televisions in the future. Such an

argument could be made in any litigation, as witnesses rarely

want to be drawn into court proceedings.

Westpark also claims that its list of suppliers is a trade

secret. As the parties and Judge Wilson in his decision point

out, no New Jersey case has expressly provided protection to a

supplier list as a trade secret. Several foreign courts have

acknowledged that supplier lists may constitute trade secrets.

See Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101,

1108 (9th Cir. 2001) (finding that supplier lists may be a trade

24

5 A-3777-14T3

secret under Montana law); Hudson Hotels Corp. v. Choice Hotels

Int'l, Inc., 995 F.2d 1173, 1176-77 (2d Cir. 1993) (stating that

"[c]ompilations of information, traditionally viewed and

protected under trade secret law, are items like customer and

supplier lists and pricing and cost information."); John Paul

Mitchell Sys. v. Randalls Food Mkts., 17 S.W.3d 721, 738 (Tex.

App. 2000) (finding that supplier lists may be a trade secret

under Texas law); Allen v. Hub Cap Heaven, 484 S.E.2d 259, 263

(Ga. Ct.. App. 1997) (recognizing that tangible lists of

suppliers may constitute a trade secret in some circumstances).

But see Cent. Plastics Co. v. Goodson, 537 P.2d 330, 334-35

(Okla. 1975) (noting that a "majority of jurisdictions recognize

the rule that the names and addresses of customers and suppliers

which are easily ascertainable or available generally to the

public or trade do not constitute trade secrets or confidential

information").

In New Jersey, six factors are generally analyzed in

determining whether the information sought is a trade secret:

(1) the extent to which the information is

known outside of the business; (2) the

extent to which it is known by employees and

others involved in the business; (3) the

extent of measures taken by the owner to

guard the secrecy of the information; (4)

the value of the information to the business

and to its competitors; (5) the amount of

effort or money expended in developing the

information; and (6) the ease or difficulty

25

6 A-3777-14T3

with which the information could be properly

acquired or duplicated by others.

[Ingersoll-Rand Co. v. Ciavatta, 110 N.J.

609, 637 (1988) (citing Restatement of Torts

§757 cmt. b (1939) (Am. Law Inst., amended

1979); see Hammock by Hammock v. Hoffmann-

Laroche, 142 N.J. 356, 384 (1995).]

Evaluating these factors in light of the facts of this

case, defendant did not demonstrate that its supplier list is a

trade secret. Indeed, looking at the fourth factor, the "value

of the information," the list of defendant's suppliers does not

seem particularly valuable in light of defendant's claim that

it uses only twelve suppliers, while there exists a pool of

hundreds of available suppliers. Also, because the parties

entered into a confidentiality agreement that will protect the

supplier list, the analysis of these factors is not as useful as

it might otherwise be. Additionally, as Judge Wilson noted,

"[a] free market seller of consumer products would not have

an expectation of privacy unless they were involved in some

nefarious activity." It is not disputed by the parties that

defendant is selling genuine Samsung televisions at a lower

price than is permitted by the contracts between SEA and its

authorized dealers. Although the consumer may benefit from

this activity, from plaintiff's perspective it might well be

perceived as "nefarious." Judge Wilson did not abuse his

discretion in ordering defendant to supply its list of

26

7 A-3777-14T3

suppliers, nor did he abuse his discretion when he refused to

reconsider his order or review the list in camera.

Affirmed.

hereby certify that the foregoing is a true copy of the original on file in my office.

CLERK OF THE APPELLATE DIVISION

27

REMEDIES IN SHAREHOLDER DISPUTES

Rose A. Suriano, Esq.

I

Introduction

Relief for minority oppression first became part of New Jersey corporate statutory law in

1974. Many reported cases have addressed the subject both in New Jersey and elsewhere since

then. Today small businesses are more often forming as limited liability companies rather than

corporations. Until recently, the concept of minority oppression was not a part of LLC law. New

Jersey’s Revised Uniform Limited Liability Company Act adopted in 2013 added the concept of

relief for oppression of a minority member to LLC statutory law in New Jersey.

Thus although we will continue to see cases brought under the corporate statute, we will

also be seeing cases brought under the LLC minority oppression provision.

II

A CORPORATION

There were no significant recent rulings on corporate minority oppression in New Jersey,

but there is a 2015 decision of the Supreme Court of Maryland worth noting. Bontempo v. Lare,

119 A.3d 791 (Md. 2015), is included in your materials. The court was faced with fashioning a

remedy where the plaintiff claimed that when he became a shareholder, he had the expectation of

employment and thus asserted a claim based on that expectation. The court found the plaintiff to

be an at-will employee, and did not award damages on the claim for continued employment. It

noted that a court is not required to match a remedy to the plaintiff’s expectation, and that, in

fashioning a remedy, the court may take into account the interests of others associated with the

corporation. Thus reinstatement of the shareholder/former employee might not be a viable option

where the parties are unable to run a business together.

29

As to oppression, the Maryland court, consistent with our Supreme Court’s decision in

Brenner v. Berkowitz, 134 N.J. 488 (1993), noted that oppression arises “only when the majority

conduct substantially defeats expectations that, objectively viewed, were both reasonable under

the circumstances and were central to the [minority shareholder’s] decision to join the venture.”

What is of value to litigators from this case is that the decision takes pains to list various

forms of relief short of dissolution (a) which a plaintiff might seek or (b) a defendant might suggest,

or (c) a court apply.

The dissenting opinion is significant because it points out that when there is no buy-out

and the plaintiff remains as a minority shareholder, the court’s remedy should provide some

mechanism against the majority resuming its wrongful conduct when the case is over. Perhaps

this may be accomplished by the appointment of a fiscal agent or provisional director, who is

subject to removal subsequently on application and notice.

III

A LIMITED LIABILITY COMPANY

The factors that give rise to oppression in a closely-held corporation are also present in an

LLC. Because limited liability companies are creatures of contract more than of statute, the

participants are able, through an operating agreement, to provide for exit and the terms of the exit.

Thus, cases of minority oppression involving LLCs may more likely arise where formation has

occurred without the advice of counsel or where an operating agreement is silent on the issue of

exit.

An LLC operating agreement can expressly provide for expulsion of a member. LLC

statutes, even before our new LLC statute, permitted a court to order judicial expulsion of a

member who has engaged or is engaging in conduct relating to the company’s activities and affairs

30

which makes it not reasonably practicable to carry on the activities and affairs with the person as

a member. See, N.J.S.A. 42:2B-24(b)(3) and N.J.S.A. 42:2C-45.

In August, our Supreme Court decided IE Test, LLC v. Carroll, 226 N.J. 166 (2016), a case

which arose under the New Jersey’s old LLC Act, but which did not provide for minority

oppression.1 The reasoning of the Court, however, may provide some guidance to practitioners in

dealing with minority oppression.

In IE Test, LLC the LLC in question had three members. In a prior business venture with

his two co-members, Defendant Carroll lost a considerable amount of money. Defendant Carroll

demanded that the operating agreement for the new venture provide some recompense for his

earlier loss. His co-members would not agree, so no operating agreement was adopted. After the

business began to operate, the other two members sought to have the court expel Carroll under

N.J.S.A. 42:2B-24(b)(3)(c), the statute’s “not reasonably practical to operate” provision.

The trial court and Appellate Division ordered expulsion, but the Supreme Court reversed

accepting Carroll’s argument that his disagreement with his co-members over the terms of the

operating agreement did not necessarily compel expulsion if they could operate the LLC without

an operating agreement. The Supreme Court’s opinion lists a series of factors to assist trial courts

in determining whether it is reasonably practicable to operate an LLC in light of the conduct of a

member whom the others desire to expel.

1 The New Jersey Limited Liability Company Act (the old LLC act) (applicable in this

case) was replaced in 2014 with the New Jersey Revised Uniform Limited Liability Company Act (RULLCA). However, the “not reasonably practicable” language remains in a similar context. (See N.J.S.A. 42:2C-46e(3)). Footnote 6 of the Supreme Court’s decision in IE Test, LLC, acknowledged that the old LLC Act and RULLCA are identical for purposes of applying the “not reasonably practicable” standard.

31

To accomplish such an assessment the Court held that the following factors need to be

considered:2

1. What is the nature of the LLC member’s conduct relating to the LLC’s business?

2. With the LLC member remaining a member, can the entity be managed so as to promote the purposes for which it was formed?

3. Does the dispute among the LLC members preclude them from working with one another to pursue the LLC’s goals?

4. Is there deadlock among the members?

5. Despite a deadlock, can members make decisions on the management of the company pursuant to the operating agreement or in accordance with applicable statutory provisions?

6. Is there still a business to operate despite the LLC’s financial position?

7. Is it financially feasible for the LLC to continue with the subject member remaining as a member?

The New Jersey Supreme Court looked to a Colorado Appellate Division decision, Gagne

v. Gagne for guidance in arriving at these seven factors.3 The Gagne case arose in the context of a

plaintiff seeking an LLC’s dissolution under language similar to what is now contained in

RULLCA at N.J.S.A. 42:2C-48(b).

The Supreme Court in IE Test, LLC, supra, essentially held that the conduct of the person

whose expulsion is desired must be so disruptive that the business could not reasonably continue

unless he or she was expelled. The court in Carroll held that the LLC statutory provision

authorizing the court to order expulsion does not authorize a court to expel a member merely

because of a conflict among the members. Instead, the member’s conduct must be evaluated in

relation to whether the LLC can be managed notwithstanding his or her conduct and must be so

2 Id. at *183

3 338 P.3d 1153 (Colo. App. 2014)

32

disruptive that the operation of the businesses going forward will be in jeopardy. The Supreme

Court’s analysis and holdings in IE Test, LLC is consistent with traditional minority oppression

law in that a court will not grant a no fault divorce.

The IE Test, LLC, decision appears to reflect the Supreme Court’s view that strict standards

must be met for courts to resolve disputes among LLC members by ordering remaining members

to buy out the interests held by dissenting members.

The important factor to impress upon clients is to have an operating agreement that

addresses exit factors among members. In addition, the following lessons can be taken away from

the IE Test, LLC. First, to rely on the “not reasonably practicable” test in the context of court-

ordered expulsion of a member (N.J.S.A. 42:2C-46e(3)) or in the context of court-ordered

dissolution of the entity (N.J.S.A. 42:2C-48(b)) a plaintiff needs to provide substantial evidence to

show the LLC cannot continue in the same manner as before. The adverse member’s behavior

must have demonstrable adverse impact on the business. Potential litigants should also expect that

adverse members of an LLC be in the LLC for quite some time. Otherwise, a court cannot evaluate

adverse consequences that have not existed for a long enough time period.

Second, the bad actor’s behavior weighs heavily on the Court’s evaluation in the context

of the LLC’s financial results, not how disagreeable the bad actor is for the other members to work

with.

Thus, each of the parties needs evidence: 1) establishing what the bad actor’s behavior is

and how it is preventing the company from operating, and then 2) showing the centrality of that

behavior for the LLC. The final factors focus on the current success of the company, rather than

on management’s plans for the company.

33

A preliminary agreement that contemplates a full operating agreement for the company to

follow may not turn out to be a good strategy. Carroll and the other members signed a short

preliminary agreement that affirmed Carroll’s membership but contemplated a more thorough

agreement to follow. The members could not agree on the more thorough agreement. The interim

solution ended up favoring Carroll, who put in little effort toward the success of the ongoing

business, but the Court made his membership secure without requiring him to make any further

effort. Reaching a full-scale operating agreement at the outset of a business, although often

difficult, is the best approach.

Minority members have often viewed court-ordered dissolution of an LLC under the test

that now appears at NJ.S.A. 42:2C-48(b) as a tool to force dominant members to buy out the

interests of minority members. In the face of the hurdles the Supreme Court has now erected to the

use of this approach, this tool will be hard for a dissident member to use. A court will not be likely

to find that a minority holder has had or will have any actual adverse impact on the company’s

success. That lack of impact is a prime feature of minority status.

The Supreme Court’s decision does not include any citations to economic analysis

regarding whether forcing people who can no longer stand each other to remain in business

together serves the public interest. If there is any empirical information regarding success of

businesses whose owners hate one another, perhaps such information would be pertinent in a future

case.

IV

FAIR VALUE

One of the issues in any minority oppression case, whether involving a corporation or an

LLC is the determination of fair value. Two recent out of state cases are pertinent to that issue.

34

Although, In re Appraisal of Dell Inc., 2016 WL 3186538, (Del. Ch. May 31, 2016),

involves dissenters’ rights rather than minority oppression, the discussion of fair value is worth

considering.

Another often litigated issue involves the application of minority and lack of marketability

discounts. That issue is discussed in Wagner v. Wagner, 371 P.3d 807 (Idaho, 2016), where the

court affirmed the lower court’s refusal to apply discounts saying that their use might be permitted

but is not mandatory.

Finally, please review pages 504-623 of 2017 Edition of my partner, Stuart Pachman’s

treatise on Corporations, Title 14A, Pachman, Title 14A-Corporations (2017).

Also attached to these materials are relevant articles published by Stuart Pachman, Esq.

and me regarding Corporations and minority oppression.

Rose A. Suriano is a partner with Brach Eichler,

LLC focusing her practice on commercial

litigation and contract disputes, both in state

and federal court for middle market companies

35

Consider the case of a closely held family business started by a parent or grandparent. Hard work, sacrifice, and significant finances

went into starting the business, building it, and overseeing profitable years. Now, the business is being turned over to the next generation, a process that can be fraught with disagreement regarding the transition and succession planning. Conflict develops as family members fail to see eye-to-eye on who can and should run the company. Each family member may have an ownership interest in the business; however, the more dominant family member may abuse his or her power, make decisions without involving other family members, and take control of the company. Can the controlling family member exclude or ‘freeze out’ the other members? What are the rights and remedies of the family members who do not control the company?

The Rights of Oppressed Minority Shareholders

In 1968, New Jersey enacted the minority oppres-sion statute, codified at N.J.S.A 14A:12-7. The act, as amended in 1988, was designed to solve problems peculiar to “close corporations,” corporations having “25 or less shareholders.”1 It was enacted to help address the concerns of powerless “minority” shareholders, who had been left in “freeze out” situations or where those in control acted fraudulently or illegally, mismanaged the corporation, abused their authority, or otherwise acted oppressively or unfairly toward one or more of the minority shareholders.2

In freeze out situations, the act gives a minority shareholder a remedy where he or she has been elimi-nated from the company, where his or her voting power has been drastically reduced, where the shareholder has been otherwise deprived of the ability to participate in the decisions of the company, or where he or she is deprived of corporate income or advantage to which he

or she is entitled.3 The act presently embodies a legisla-tive determination that freeze out maneuvers in a close corporation constitute an abuse of power.4

The act, however, is not rendered inapplicable where a plaintiff is the majority shareholder. A majority share-holder not in control of the company may seek relief under the act.5 The real concern of the statute, rather than the amount of stock held, is “protection from the abuse of power.”6 “[T]he question of whether one is a minority shareholder should not ‘be determined through a mechanistic count of stock ownership percent-ages…but rather by a qualitative evaluation of the actual control a particular shareholder may exert on a closely held corporation..’”7 As such, where a shareholder owns the majority interest in the corporation, an action under the act may be brought by the majority share-holder where such an individual cannot reach a major-ity vote and, consequently, does not have control of the company.8 Under this scenario, the court will rule on the plaintiff ’s status based on a qualitative examination of his or her power in that corporation. Thus, a non-controlling majority member in a closely held business may also seek relief under the act to protect his or her interest and/or to enjoin the controlling member from any oppressive and/or improper actions.

Deadlock Under the Shareholder Oppression Statute

What happens when the shareholders cannot agree on significant decisions or there is deadlock on major issues concerning the operations of the corporation? Deadlock can be proven if a party can show that direc-tors “are unable to effect action on one or more substan-tial matters respecting the management of the corpora-tion’s affairs.”9 Where there is deadlock, a court can take remedial action.

Closely Held Family Businesses: What Happens When the Family is No Longer Closeby Rosaria A. Suriano and Melissa A. Clarke

3New Jersey State Bar Association Business Law Section 3Go to

Index

37

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---- This article was originally published in the September 2013 issue of the New Jersey State Bar Association Business Law Section Newsletter, a publication of the New Jersey State Bar Association and is reprinted here with permission. Copying or other reproduction of this material without express authorization is prohibited.

Showing Oppression Under the Shareholder Oppression Statute

“[T]he intent and purpose of N.J.S.A. 14A:12-7 is to prevent abuse and oppression by those in control of a closely-held corporation upon those with inferior inter-ests” or power.10 A primary “measure of oppression in the small corporation is whether the fair expectations of the parties have been met.”11 “When personal relations among the participants in a close corporation break down, the ‘reasonable expectations’ that participants had, for example…that they would enjoy meaningful partic-ipation in the management of the business, become difficult, if not impossible, to fulfill.”12 When expectations involv-ing the management of the corporation are not met, the act affords relief to the oppressed shareholder.

Remedies Under the ActThe act provides specific statutory remedies includ-

ing, among others, injunctive relief, the appointment of a receiver, the purchase of a shareholder’s stock, or dissolution. Courts are not limited to the statutory reme-dies but have a wide variety of other remedies available to them. The statute also permits the court to award counsel fees and costs to any party if the court finds the other party acted “arbitrarily, vexatiously, or without good faith.”13

Action in EquityThe superior court, Chancery Division, general

equity part has jurisdiction of all actions in which the plaintiff ’s primary right or principal relief is equitable in nature. One of the many benefits of an action in equity is that the court has the discretion to adapt the relief to the circumstances of the case and may compel or restrict the actions of one party. Indeed, the general equity part of the superior court may be best equipped for efficient disposition of a corporate deadlock or oppressed minority shareholder action because the court has the ability to order dissolution, to appoint a custo-dial receiver, fiscal agent, or provisional director, or to fashion another appropriate equitable remedy.

Procedurally, a complaint or a verified complaint and order to show cause (OSC) may be filed to initiate the case. If injunctive relief is sought, an emergent applica-tion may be made by filing an OSC with temporary restraints. An initial hearing regarding the temporary restraints will likely be required within a few days of filing of the action, pursuant to Rule 4:52-1(a). On the

return date of the OSC, the court may impose a prelimi-nary injunction that will last until final disposition of the case or until the defendant succeeds in moving for a dissolution of the restraints.

Where a family member finds him or herself a party to an oppressed minority shareholder suit, a decision regarding the control, and/or abuse of that control, or deadlock can be made on the return date of the OSC, pending a full resolution of all issues through litiga-tion. An application to dissolve or modify a preliminary injunction may require more than a motion return date. The court may schedule a plenary hearing to consider the sworn testimony of accountants, financial advisors, and others to resolve any factual disputes and decide how to proceed.

The Limited Liability Company and the Minority Oppression Statute

Increasingly, many closely held businesses are being structured not as close corporations but as limited liability companies (LLCs). As a result, one might question whether a minority owner of an LLC has the same protections against oppression and whether the minority oppression statute can afford relief to LLC minority owners.

When the state Legislature first enacted the New Jersey Limited Liability Company Act (LLCA), codi-fied at N.J.S.A. 42:2B-1 et seq., it did not incorporate the minority oppression contained in the New Jersey Business Corporation Act (BCA), codified at N.J.S.A. 14A:12–7(1)(c). Therefore, minority members of LLCs did not have an equivalent minority shareholder oppres-sion cause of action. The problems common to both the corporation and the LLC have served as the basis for some courts to fill gaps in the LLCA using the BCA.14 The New Jersey Appellate Division, however, has expressly held that LLCs in New Jersey are governed solely by the LLCA.15 The District Court of New Jersey reached a similar conclusion and refused to permit a former member of an LLC to bring a claim of share-holder oppression under N.J.S.A. 14A:12–7(1)(c), noting that the court was “unaware of any case in which a member of a New Jersey limited liability company was able to successfully bring a cause of action under the shareholder oppression act.”16

On Sept. 19, 2012, Governor Chris Christie signed the Revised Uniform Limited Liability Company Act RULLCA, codified at P.L. 2012, c.50, N.J.S.A. 42:2C 1


Index

38

through 42:2C94, which applies to any LLCs formed on or after March 18, 2013, and all pre-existing LLCs beginning on April 1, 2014. The RULLCA affords minor-ity members of an LLC several remedies for deadlock and oppression, including dissolution, appointment of a custodian, or sale of a member’s LLC interest. Thus, where an LLC’s managers or controlling members are acting illegally, fraudulently, or oppressively to another member, LLC members will be able to seek comparable relief under the RULLCA once the new statute takes effect. In the meantime, however, LLC minority owners will have little recourse, as the Appellate Division recently reiterated that “[g]iven the lack of an oppressed member provision in the LLCA, our holding in Denike and the Legislature’s recent actions [enacting the Revised LLC Act with its oppressed member provision], we think it clear that the BCA’s oppressed shareholder provisions have no application to an LLC.”17

ConclusionThe minority oppression statute can serve as a

powerful tool for those family members who find them-selves powerless, oppressed, frozen out of decisions, or

otherwise treated unfairly by another family member who is in control of the corporation. An action in the general equity part of the superior court via an order to show cause (with or without temporary restraints) may be the most efficient and effective source of relief for such a party, given the court’s ability to fashion an equi-table remedy. While the RULLCA now provides reme-dies for deadlock and oppression, oppressed minority members of LLCs existing prior to March 18, 2013, will have to wait until April 1, 2014, (when the new statute takes effect) for any relief, as the Appellate Division has made clear that the BCA’s oppressed member provision does not extend to LLCs.

Rose A. Suriano is a partner with Meyner and Landis, LLP focusing her practice on commercial litigation and contract disputes, both in state and federal court for middle market companies.

Melissa A. Clarke is an associate at Meyner and Landis LLP, focusing her practice in the areas of commercial and environ-mental litigation.

Endnotes1. N.J.S.A. 14A:12-7 (1)(c).2. Id.3. Id.4. Exadaktilos v. Cinnaminson Realty Co., Inc., 167 N.J.

Super. 141, 154 (Law Div. 1979), aff’d, 173 N.J. Super. 559 (App. Div.), certif. denied, 85 N.J. 112 (1980).

5. Bonavita v. Corbo, 300 N.J. Super. 179, 187 (Ch. Div. 1996).

6. Id.7. Id. (quoting Berger v. Berger, 249 N.J. Super. 305, 315

(Ch. Div. 1991)).8. See Balsamides v. Protameen Chemicals, Inc., 160 N.J.

352, 371 (1999).9. N.J.S.A. 14A:12-7(6).10. Berger, 249 N.J. Super. at 316.11. Muellenberg v. Bikon Corp., 143 N.J. 168, 180 (1996).12. Id. (emphasis added).

13. Belfer v. Merling, 322 N.J. Super. 124, 146 (App. Div.), certif. denied, 162 N.J. 196 (1999).

14. See Percontino v. Camporeale, No. BER-C-5-05, 2005 WL 730234, at *3 (Ch. Div. March 24, 2005) (holding the court had the ability to appoint a receiver in the case of a limited liability company, regardless of the absence of any specific provision within the LLCA).

15. Denike v. Cupo, 394 N.J. Super. 357, 378 (App. Div. 2007), rev’d on other grounds, 196 N.J. 502 (2008).

16. Casella v. Home Depot USA, Inc., No. CIV.A. 09-0421 (JAP), 2010 WL 3001919, at *3–4 (D.N.J. July 28, 2010) (“[A] former member of a limited liability company ... clearly does not fall within the plain meaning of the minority oppression statute which reserves the right solely for ‘corporations with 25 or less shareholders.”).

17. Tutunikov v. Markov, Docket No. A-1827-10T3 (App. Div. Aug. 1, 2013).


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Jurisdiction and Choice of Lawin Minority Oppression Casesby Stuart L. Pachman

any states, including New Jersey in

1974, have amended their business

corporation statutes to provide reme-

dies for minority oppression. The

ultimate relief authorized is a judg-

ment dissolving the corporation.

When the corporation has been formed in a state different

from the forum state, questions of jurisdiction and conflict of

laws arise.

The Minority Oppression StatuteBefore addressing those issues, a brief discussion of what

has come to be known as New Jersey's corporate minority

oppression statute is in order. The New Jersey Business Corpo-

ration Act, at N.J.S.A. 14A:12-7(1)(c), authorizes the New Jer-

sey Superior Court, Chancery Division, upon competent proof

of minority oppression, to appoint a custodian, appoint a pro-

visional director, order a sale of the corporation's stock, or

enter a judgment dissolving the corporation. The statute was

adopted to remedy the situation where, in a small corporation

where there is no market for the corporation's shares, a minor-

ity, treated unfairly by a controlling majority, was unable to

exit the enterprise.' Partnership law traditionally afforded an

unhappy partner in a general partnership the ability to dis-

solve the partnership at will. An unhappy corporate minority

shareholder, where there was no market for his or her shares,

had no similar power and consequently was locked in. The

statute affords judicial assistance to minority shareholders

who believe themselves to be oppressed. It strikes a balance

between: 1) the right of the majority to manage the corpora-

tion as it sees fit with 2) its "duty of fairness" to the minority.2

The following is an oversimplified example illustrating the

operation of the statute.

A corporate majority, with or without good reason,removes the minority (plaintiff) from the board of directors

and reduces the plaintiff's compensation as an employee. The

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plaintiff has neither the votes to effect

change within the corporation nor, as a

practical matter, the ability to sell his or

her shares to a third party. The statute

authorizes the plaintiff to file a com-

plaint in the Chancery Division of the

superior court for relief, which may

include a judgment of dissolution.

Without admitting the plaintiff's allega-

tions, the defendants may move to buy

the plaintiff's shares. If the court grants

the motion, the case devolves into a

proceeding to determine the fair value

of the plaintiffs shares. If the defen-

dants choose not to move to buy out the

plaintiff (or in the unlikely event the

motion were not granted), the plaintiff

is required to prove the allegations of

the complaint. If the plaintiff fails, no

relief is afforded. If the plaintiff proves

his or her case, the court will grant

appropriate relief, which can take vari-

ous forms including, possibly, dissolu-

tion of the corporation.

This is not a problem where the

domicile of the corporation is the same

as the state in which the court is situat-

ed. But what happens when the state of

incorporation differs from the forum

state?

Hypothetical (But Not Unusual) FactsWhen Mary, Moe and Jack were dis-

cussing the idea of going into business

together several years ago, before limit-

ed liability companies became the vehi-

cle of choice for 'small' business, a well-

meaning but ill-advised acquaintance

told them they should incorporate in

Delaware, the home of large well-known

corporations. The three New Jersey resi-

dents formed MMJ Corp. in Delaware,

leased a location in New Jersey, and

opened for business.

MMJ Corp. prospered, and 25 years

later Mary and Jack continue to plug

away, but Moe no longer wants to work

as hard. As a result of his frequent

absences, Mary and Jack have begun

making business decisions without him.

They have also increased their compen-

sation in relation to Moe's.

Moe considers himself oppressed and

would like to avail himself of New Jer-

sey's minority oppression statute. MMJ

Corp, however, is a Delaware corpora-

tion, and the Delaware General Corpora-

tion Law does not have a similar statuto-

ry provision. Moreover, a longstanding

principle of corporate law, the internal

affairs doctrine, provides that only the

state of incorporation should regulate

matters that pertain to the relationship

between and among the corporation, its

shareholders, directors, and officers. The

reason behind the doctrine is that only

one state should have the authority to

regulate a corporation's internal affairs,so the directors and officers know what

law will be applied to their actions and

the shareholders know by what stan-

dards management will be measured. A

century ago, New Jersey's then highest

court "emphatically" repudiated the idea

that a New Jersey court had jurisdiction

regarding the management of the inter-

nal affairs of a foreign corporation.'

Thus, the first question is whether the

internal affairs doctrine is a bar to the

New Jersey court taking jurisdiction of

Moe's claim.

If New Jersey has jurisdiction, the

next question is whether the New Jersey

minority oppression statute or Delaware

law is to be applied.

Finally, if New Jersey has jurisdiction

and New Jersey law is applied, and if dis-

solution is the appropriate remedy, may

a New Jersey court enter a judgment dis-

solving a foreign corporation?

JurisdictionThe jurisdictional bar imposed by the

internal affairs doctrine began to erode in

New Jersey as early as 1925.6 A few years

later, Vice Chancellor John 0. Bigelow

noted the rule in most states is that

where the court has personal jurisdiction

over the necessary parties, it may grant

relief even though the suit involves the

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internal affairs of a foreign corporation.

The question today is not whether the

court has power to exercise jurisdiction

but rather the wisdom of doing so.' Prior

to the enactment of N.J.S.A. 14A:12-

7(1)(c), where a receiver was sought

because of "dissention existing between

the majority and minority stockholders,"

although the court denied the appoint-

ment of a receiver, it exercised its discre-

tion to take jurisdiction where the busi-

ness and assets of the foreign corporation

were in New Jersey, all of the directors

were before the court, and there were suf-

ficient allegations of fraud or bad faith.'

In a minority oppression case, a New

York court ruled that where a corporation

was foreign 'in name only,' but most of

the assets, employees, officers, and oper-

ations were in New York, it would exer-

cise jurisdiction.0

When drafting the New Jersey Busi-

ness Corporation Act, the commission-

ers stated "our courts remain free under

this revision.. .to retain jurisdiction in

cases involving the internal affairs of a

foreign corporation and to grant relief

on equitable principles...."" The

'emphatic' jurisdictional bar once posed

by the internal affairs doctrine no longer

prevails.2 New Jersey can take jurisdic-

tion of Moe's claim.

Choice of LawThe fact that a state may take juris-

diction does not necessarily mean the

law of that state is applicable. One state

may be an appropriate forum while

another's laws are the proper ones to be

applied." In a case involving a New York

corporation, where minority oppression

was not the issue, the New Jersey

Supreme Court affirmed the trial court's

application of New Jersey law because

New Jersey had "more significant rela-

tionships to the parties and the transac-

tions than New York."14

The internal affairs doctrine does not

require application of the law of the

state of incorporation where the forum

NEW JERSEY LAWYER I December 2015 59

42

state has a more significant relationship

to the parties. When the corporation

does all, or nearly all of its business in

the forum state, most of its shareholders

are domiciled there, and the corporation

has little contact with its state of incor-

poration, application of law other than

that of the state of incorporation is jus-

tified." Some balancing is required.6

The Claim for DissolutionThe question remains regarding the

power to enter judgment dissolving a for-

eign corporation. Although acknowledg-

ing the 'internal' aspect of dissolution,

courts have retained jurisdiction because

a remedy short of dissolution could be

fashioned." Indeed, the New Jersey

statute and case law not only provide

that remedies other than dissolution are

authorized, but that they are favored."

The pure question of a forum state's

ability to order dissolution of a corpora-

tion of another state is not clear cut," but

if all of the shareholders and all of the

directors are before the court, the court

should be able to order them to take steps

to dissolve the corporation in the foreign

jurisdiction and to oversee the liquida-

tion and distribution of the enterprise.

The Unreported New Jersey DecisionsMinority oppression rights in foreign

corporations have been addressed in two

New Jersey decisions, neither of which is

officially reported. One involved a Mas-

sachusetts corporation.2 0 The question

was whether Massachusetts or New Jer-

sey law should apply to the oppressed

minority shareholder claim. Both the

trial court and the Appellate Division

found there was insufficient difference

between the laws of the two states to

warrant a finding that a conflict of laws

existed, but ruled that on the facts New

Jersey had a greater interest and its law

should apply. The court applied a buy-

out remedy, noting it had authority to

fashion any remedy that ameliorated the

wrongdoing.

60 NEW JERSEY LAWYER I December 2015

Shortly thereafter, a minority oppres-

sion case involving a Delaware corpora-

tion was decided by Judge Peter Doyne in

the Bergen County Chancery Division.2 '

The allegations, assumed to be true, were

that the corporation's principal place of

business was in New Jersey; that its con-

trolling shareholder, president and chief

executive officer as well as members of its

board of directors resided in New Jersey;

and that corporate meetings were held,and corporate records maintained, in

New Jersey. On a motion to dismiss, the

court acknowledged that the internal

affairs of a foreign corporation usually

require application of the law of the state

of incorporation, but that is not always

dispositive. The court applied the New

Jersey flexible 'governmental-interest'

standard, which requires the application

of the law of the state with the greater

interest in resolving the particular issue. 22

ConclusionIn their treatise, Oppression of Minority

Shareholders and LLC Members, professors

F. Hodge O'Neal and Robert B. Thomp-

son note that minority shareholders

who acquiesce in their corporation

being formed in Delaware may be placed

at a disadvantage because Delaware law

is oriented and drafted for the needs of

large, publicly held corporations and,consequently, "business participants

who seek to use it for their more inti-

mate venture will find that Delaware

statutes and judicial decisions give

minority shareholders less avenues to

contest majority conduct after there has

been a falling out between the parties."2 3

Because of MMJ Corp.'s significant

relationships with New Jersey, in spite of

the unwise choice of corporate domicile

he and his 'partners' made 25 years ago

(and 25 years of unnecessary franchise

fees paid to another state), it is the

author's opinion that Moe will be able

to claim oppression under the New Jer-

sey statute. CA

Stuart L. Pachman is a member of

Brach Eichler L.L.C. in Roseland, where he

is in general practice with an emphasis on

business law. He is a director emeritus and

former chair of the NJSBA Business Law

Section, and the author of Title 14A Cor-

porations, published by Gann Law Books,

and numerous articles on business law. He

was one of the three Business Law Section

members who wrote the New Jersey Non-

profit Corporation Act.

ENDNOTES1. For a history of the law leading to the

adoption of NJ.S.A. 14A:12-7(1)(c), seePachman, Divorce Corporate Style: Dis-sension, Oppression, and CommercialMorality, 10 Seton Hall Law Review 315(1979).

2. See Orchard v. Covelli, 590 F. Supp. 1548,1556-1557 (W.D. Pa. 1984).

3. Cases that have been decided and thenumerous issues raised by NJ.S.A. 14:12-7(1)(c), such as who can be oppressed,what constitutes actionable conduct,procedural questions, remedies, valua-tion and application of discounts, andcosts and counsel fees are discussed inPachman, Title 14A Corporations, Chap-ter 12, Commentary 2 (Gann 2016 ed.).

4. Vantagepoint Venture Partners, 1996 v.Examen, Inc., 871 A.2d 1108, 1113-1115(Del. 2005).

5. Jackson v. Hooper, 76 NJ. Eq. 592, 604 (E& A 1910).

6. Baldwin v. Berry Automatic LubricatorCorp., 99 N.J. Eq. 57, 60 (Ch. 1926),where, although the court acknowl-edged that resort must be had to thestate of incorporation for regulation of acorporation's internal affairs, certainrelief may be granted when the corpora-tion is engaged in business in New Jerseyand has property here.

7. Mayer v. Oxidation Products Company,Inc., 110 N.J. Eq. 141, 154 (Ch. 1932).

8. O'Brien v. Virginia-Carolina Chem. Corp.,44 N.J. 25, 39 (1965), cert. den. sub nom.O'Brien v. Socony Mobile Oil Co., 389 U.S.825 (1967). See, also, Koster v. AmericanLumbermens Mut. Casualty Co., 330 U.S.518 (1947), subordinating, as one of thefactors to be considered, the place ofincorporation.

9. Appleton v. Worne Plastics Corp., 140 N.J.Eq. 324, 331 (Ch. 1947).

10. In re Dohring, 537 N.Y.S. 2d 767 (Sup. Ct.1989).

11. Commissioners' Comment - 1968 toN.J.S.A. 14A:13-2. This comment, how-ever, preceded the subsequent enact-ment of NJ.S.A. 14A:12-7(1)(c), author-

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43

izing a judgment of dissolution whereminority oppression is established.

12. Restatement (Second) of Conflict ofLaws, Section 313 (1971).

13. In Dohring, the matter was settled afterthe court retained jurisdiction but beforethe conflict of laws issue was deter-mined.

14. Francis v. United Jersey Bank, 87 NJ. 15,27-28 (1981). It may be noted that theparties also agreed New Jersey lawshould apply.

15. Restatement (Second) of Conflict ofLaws, Section 302, comment g. Delawareappears to be more inclined to find thelaws of the state of incorporation apply.Rosenmiller v. Bordes, 607 A.2d 465, 468-469 (Del. Ch. 1971).

16. Clark v. B.H. Holland Co., Inc., 852 F.Supp. 1268, 1273 (E.D.N.C. 1994), wherethe court applied North Carolina law toSouth Carolina corporations. See, simi-larly, Sokol v. Venturers Education SystemsCo., 2005 WL 3249447 (N.Y. Sup. Ct.2005), where the court, as in Dohring,took jurisdiction because it could grantlesser or alternative relief "short of disso-lution," but nevertheless applied thesubstantive law of the state of incorpora-tion.

17. In reDohring, 537 N.Y.S. 2d 767 (Sup. Ct.

1989); Sokol v. Venturers Education Sys-tems Co., 2005 WL 3249447 (N.Y. Sup.Ct. 2005).

18. For example, see Brenner v. Berkowitz, 134NJ. 488, 516 (1993); Walensky v.Jonathan Royce Intern., 265 NJ. Super.276 (App. Div.), certif. den. 134 NJ. 480(1993).

19. Compare Bellvue Gardens v. Hill, 297 F.2d185 (D.C. Cir. 1961), with Warde-McCannv. Commex, Ltd., 522 N.Y.S. 2d 19 (App.Div. 1987).

20. Krzastek v. Global Resource Industrial andPower, Inc., 2008 W.L. 4161662 (App.Div. 2008). Neither jurisdiction nor thecourt's authority to order dissolutionwas raised.

21. Conway v. Dialamerica Marketing, Inc.,Docket No. BER-C-116-08.

22. In In re U.S. Eagle Corporation, 484 B.R.640 (Bkcy. D. NJ. 2012), on the proce-dural history the court applied Floridachoice of law principles, with the resultthat the law of Delaware, the state ofincorporation, was applied. The connec-tion to New Jersey appears tenuous.Although the Delaware corporation'sheadquarters was in New Jersey, it oper-ated through three wholly owned sub-sidiaries that had their principal place ofbusiness in California.

23. O'Neal and Thompson, Oppression ofMinority Shareholders and LLC Members,Revised 2nd Ed., Vol. 2, Section 7.27,page 224.

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N.J. Stat. § 2A:23B-1

This section is current through New Jersey 217th First Annual Session, L. 2016, c. 55, and J.R. 6

LexisNexis® New Jersey Annotated Statutes > Title 2A. Administration of Civil and Criminal Justice > Subtitle 6. Specific Civil Actions > Chapter 23B. Arbitration and Arbitration Proceedings

§ 2A:23B-1. Definitions relative to arbitration after 2002

For the purposes of this act:

“Arbitration organization” means an association, agency, board, commission or other entity that is neutral and initiates, sponsors or administers an arbitration proceeding or is involved in the appointment of an arbitrator.

“Arbitrator” means an individual appointed either as a neutral arbitrator or as a party arbitrator to render an award, alone or with others, in a controversy that is subject to an agreement to arbitrate.

“Court” means the Superior Court of New Jersey.

“Court rules” means the Rules Governing the Courts of the State of New Jersey.

“Knowledge” means actual knowledge.

“Person” means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government; governmental subdivision, agency, or instrumentality; public corporation; or any other legal or commercial entity.

“Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

History

L. 2003, c. 95, § 1, eff. Jan. 1, 2003.

LexisNexis® New Jersey Annotated Statutes

Copyright © 2016 All rights reserved.

End of Document

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N.J. Stat. § 2A:23B-2



§ 2A:23B-2. Notice

a. Except as otherwise provided in this act, a person gives notice to another person by taking action that is reasonably necessary to inform the other person in ordinary course, whether or not the other person acquires knowledge of the notice.

b. A person has notice if the person has knowledge of the notice or has received notice.

c. A person receives notice when it comes to the person’s attention or the notice is delivered at the person’s place of residence or place of business, or at another location held out by the person as a place of delivery of such a notice.

History

L. 2003, c. 95, § 2, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-3



§ 2A:23B-3. When act applies

a. This act governs all agreements to arbitrate made on or after January 1, 2003 with the exception of an arbitration between an employer and a duly elected representative of employees under a collective bargaining agreement or collectively negotiated agreement.

b. This act governs an agreement to arbitrate made before January 1, 2003 if all the parties to the agreement or to the arbitration proceeding so agree in a record with the exception of an arbitration between an employer and a duly elected representative of employees under a collective bargaining agreement or collectively negotiated agreement.

c. On or after January 1, 2005, this act governs an agreement to arbitrate whenever made with the exception of an arbitration between an employer and a duly elected representative of employees under a collective bargaining agreement or collectively negotiated agreement.

d. This act shall not apply to agreements to arbitrate made before July 4, 1923.

History

L. 2003, c. 95, § 3, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-4



§ 2A:23B-4. Effect of agreement to arbitrate; nonwaivable provisions

a. Except as otherwise provided in subsections b. and c. of this section, a party to an agreement to arbitrate or to an arbitration proceeding may waive or, the parties may vary the effect of, the requirements of this act to the extent permitted by law.

b. Before a controversy that is subject to an agreement to arbitrate arises, a party to the agreement may not:

(1) waive or agree to vary the effect of the requirements of section 5a., 6a., 8, 17a., 17b., 26, or 28 of this act;

(2) agree to unreasonably restrict the right to notice of the initiation of an arbitration proceeding pursuant to section 9 of this act;

(3) agree to unreasonably restrict the right to disclosure of any facts by an arbitrator pursuant to section 12 of this act; or

(4) waive the right of a party to an agreement to arbitrate to be represented by a lawyer pursuant to section 16 of this act at any proceeding or hearing pursuant to this act.

c. A party to an agreement to arbitrate or arbitration proceeding may not waive, or the parties may not vary the effect of, the requirements of this section or section 3a., 3c., 7, 14, 18, 20d., 20e., 22, 23, 24, 25a., 25b., 29, 30, 34 or 35. Provided however, that nothing in this act shall preclude the parties from expanding the scope of judicial review of an award by expressly providing for such expansion in a record.

History

L. 2003, c. 95, § 4, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-5



§ 2A:23B-5. Application for judicial relief

a. Except as otherwise provided in section 28 of this act, an application for judicial relief pursuant to this act shall be made upon commencement of a summary action with the court and heard in the manner provided for in such matters by the applicable court rules.

b. Unless a civil action involving the agreement to arbitrate is pending, notice of commencement of a summary action pursuant to this act shall be served in the manner provided by the court rules for serving process in summary actions.

History

L. 2003, c. 95, § 5, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-6



§ 2A:23B-6. Validity of agreement to arbitrate

a. An agreement contained in a record to submit to arbitration any existing or subsequent controversy arising between the parties to the agreement is valid, enforceable, and irrevocable except upon a ground that exists at law or in equity for the revocation of a contract.

b. The court shall decide whether an agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate.

c. An arbitrator shall decide whether a condition precedent to arbitrability has been fulfilled and whether a contract containing a valid agreement to arbitrate is enforceable.

d. If a party to a judicial proceeding challenges the existence of, or claims that a controversy is not subject to, an agreement to arbitrate, the arbitration proceeding may continue pending final resolution of the issue by the court, unless the court otherwise orders.

History

L. 2003, c. 95, § 6, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-7



§ 2A:23B-7. Application to compel or stay arbitration

a. On filing a summary action with the court by a person showing an agreement to arbitrate and alleging another person’s refusal to arbitrate pursuant to the agreement:

(1) if the refusing party does not appear or does not oppose the summary action, the court shall order the parties to arbitrate; and

(2) if the refusing party opposes the summary action, the court shall proceed summarily to decide the issue and order the parties to arbitrate unless it finds that there is no enforceable agreement to arbitrate.

b. On filing a summary action with the court by a person alleging that an arbitration proceeding has been initiated or threatened but that there is no agreement to arbitrate, the court shall proceed summarily to decide the issue. If the court finds that there is an enforceable agreement to arbitrate, it shall order the parties to arbitrate.

c. If the court finds that there is no enforceable agreement, it may not, pursuant to subsection a. or b. of this section, order the parties to arbitrate.

d. The court may not refuse to order arbitration because the claim subject to arbitration lacks merit or grounds for the claim have not been established.

e. If a proceeding involving a claim referable to arbitration pursuant to an alleged agreement to arbitrate is pending in court, an application pursuant to this section shall be made in that court. Otherwise, an application pursuant to this section may be made in any court as provided in section 27 of this act.

f. If a party commences a summary action to order arbitration, the court on just terms shall stay any judicial proceeding that involves a claim alleged to be subject to the arbitration until the court renders a final decision pursuant to this section.

g. If the court orders arbitration, the court on just terms shall stay any judicial proceeding that involves a claim subject to the arbitration. If a claim subject to the arbitration is severable, the court may limit the stay to that claim.

History

L. 2003, c. 95, § 7, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-8



§ 2A:23B-8. Provisional remedies

a. Before an arbitrator is appointed and is authorized and able to act, the court, in such summary action upon application of a party to an arbitration proceeding and for good cause shown, may enter an order for provisional remedies to protect the effectiveness of the arbitration proceeding to the same extent and pursuant to the same conditions as if the controversy were the subject of a civil action.

b. After an arbitrator is appointed and is authorized and able to act:

(1) the arbitrator may issue orders for provisional remedies, including interim awards, as the arbitrator finds necessary to protect the effectiveness of the arbitration proceeding and to promote the fair and expeditious resolution of the controversy, to the same extent and pursuant to the same conditions as if the controversy were the subject of a civil action; and

(2) a party to an arbitration proceeding may move the court for a provisional remedy only if the matter is urgent and the arbitrator is not able to act timely or the arbitrator cannot provide an adequate remedy.

c. A party does not waive a right of arbitration by making an application pursuant to subsection a. or b. of this section.

History

L. 2003, c. 95, § 8, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-9



§ 2A:23B-9. Initiation of arbitration

a. A person initiates an arbitration proceeding by giving notice in a record to the other parties to the agreement to arbitrate in the manner agreed between the parties or, in the absence of agreement, by certified or registered mail, return receipt requested and obtained, or by service as authorized for the commencement of a civil action. The notice shall describe the nature of the controversy and the remedy sought.

b. Unless a person objects for lack or insufficiency of notice pursuant to subsection c. of section 15 of this act not later than the beginning of the arbitration hearing, the person, by appearing at the hearing, waives any objection to the lack or insufficiency of notice.

History

L. 2003, c. 95, § 9, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-10



§ 2A:23B-10. Consolidation of separate arbitration proceedings

a. Except as otherwise provided in subsection c. of this section, upon application of a party to an agreement to arbitrate or to an arbitration proceeding, the court may order consolidation of separate arbitration proceedings as to all or some of the claims if:

(1) there are separate agreements to arbitrate or separate arbitration proceedings between the same persons or one of them is a party to a separate agreement to arbitrate or a separate arbitration proceeding with a third person;

(2) the claims subject to the agreements to arbitrate arise in substantial part from the same transaction or series of related transactions;

(3) the existence of a common issue of law or fact creates the possibility of conflicting decisions in the separate arbitration proceedings; and

(4) prejudice resulting from a failure to consolidate is not outweighed by the risk of undue delay or prejudice to the rights of or hardship to parties opposing consolidation.

b. The court may order consolidation of separate arbitration proceedings as to some claims and allow other claims to be resolved in separate arbitration proceedings.

c. The court may not order consolidation of the claims of a party to an agreement to arbitrate if the agreement prohibits consolidation.

History

L. 2003, c. 95, § 10, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-11



§ 2A:23B-11. Appointment of arbitrator; service as a neutral arbitrator

a. If the parties to an agreement to arbitrate agree on a method for appointing an arbitrator, that method shall be followed, unless the method fails. If the parties have not agreed on a method, the agreed method fails, or an arbitrator appointed fails or is unable to act and a successor has not been appointed, the court, on application of a party to the arbitration proceeding, shall appoint the arbitrator. An arbitrator so appointed has all the powers of an arbitrator designated in the agreement to arbitrate or appointed pursuant to the agreed method.

b. An individual who has a known, direct, and material interest in the outcome of the arbitration proceeding or a known, existing, and substantial relationship with a party may not serve as an arbitrator required by an agreement to be neutral.

c. An individual who has a known, direct, and material interest in the outcome of the arbitration proceeding or a known, existing, and substantial relationship with a party may not serve as a party arbitrator if such information has not been disclosed pursuant to section 12 of this act.

d. An individual appointed as a party arbitrator may be predisposed toward the appointing party. From and after the commencement of an arbitration, an arbitrator shall act in good faith and exercise the arbitrator’s responsibilities in a manner consistent with the authority placed in the arbitrator by the courts of this State and this act.

History

L. 2003, c. 95, § 11, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-12



§ 2A:23B-12. Disclosure by arbitrator

a. Before accepting appointment, an individual who is requested to serve as an arbitrator, after making a reasonable inquiry, shall disclose to all parties to the agreement to arbitrate and arbitration proceeding and to any other arbitrators any known facts that a reasonable person would consider likely to affect the impartiality of the arbitrator in the arbitration proceeding, including:

(1) a financial or personal interest in the outcome of the arbitration proceeding; and

(2) an existing or past relationship with any of the parties to the agreement to arbitrate or the arbitration proceeding, their counsel or representatives, a witness, or other arbitrators.

b. An arbitrator has a continuing obligation to disclose to all parties to the agreement to arbitrate and arbitration proceeding and to any other arbitrators any facts that the arbitrator learns after accepting appointment which a reasonable person would consider likely to affect the impartiality of the arbitrator.

c. If an arbitrator discloses a fact required by subsection a. or b. of this section to be disclosed and a party timely objects to the appointment or continued service of the arbitrator based upon the fact disclosed, subject to the provisions of section 11d. of this act, the objection may be a ground pursuant to paragraph (2) of subsection a. of section 23 of this act for vacating an award made by the arbitrator.

d. If the arbitrator did not disclose a fact as required by subsection a. or b. of this section, upon timely objection by a party, the court pursuant to paragraph (2) of subsection a. of section 23 may vacate an award.

e. An individual appointed as an neutral arbitrator who does not disclose a known, direct and material interest in the outcome of the arbitration proceeding or a known, existing, and substantial relationship with a party is presumed to act with evident partiality pursuant to paragraph (2) of subsection a. of section 23 of this act.

f. An individual appointed as a party arbitrator who does not disclose a known, direct and material interest in the outcome of the arbitration proceeding is presumed to act with evident partiality pursuant to paragraph (2) of subsection a. of section 23 of this act.

g. If the parties to an arbitration proceeding agree to the procedures of an arbitration organization or any other procedures for challenges to arbitrators before an award is made, substantial compliance with those procedures is a condition precedent to a summary action to vacate an award on that ground pursuant to paragraph (2) of subsection a. of section 23 of this act.

h. Should an individual designated as an arbitrator make full disclosure as required by this section and a party fails to object within a reasonable time, the party receiving such information shall be held to have waived any right to object to the designation of the arbitrator on the grounds so revealed.

History

L. 2003, c. 95, § 12, eff. Jan. 1, 2003.


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N.J. Stat. § 2A:23B-13



§ 2A:23B-13. Action by majority

If there is more than one arbitrator, the powers of an arbitrator shall be exercised by a majority of the arbitrators, but all of them shall conduct the hearing pursuant to subsection c. of section 15 of this act.

History

L. 2003, c. 95, § 13, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-14



§ 2A:23B-14. Immunity of arbitrator; competency to testify; attorney’s fees and costs

a. An arbitrator or an arbitration organization acting in that capacity is immune from civil liability to the same extent as a judge of a court of this State acting in a judicial capacity.

b. The immunity afforded by this section supplements any immunity pursuant to other law.

c. The failure of an arbitrator to make a disclosure required by section 12 of this act does not cause any loss of immunity pursuant to this section.

d. In a judicial, administrative, or similar proceeding, an arbitrator or representative of an arbitration organization is not competent to testify, and may not be required to produce records as to any statement, conduct, decision, or ruling occurring during the arbitration proceeding, to the same extent as a judge of a court of this State acting in a judicial capacity. This subsection does not apply:

(1) to the extent necessary to determine the claim of an arbitrator, arbitration organization, or representative of the arbitration organization against a party to the arbitration proceeding; or

(2) to a hearing in a summary action to vacate an award pursuant to paragraph (1) or (2) of subsection a. of section 23 of this act if the movant establishes prima facie that a ground for vacating the award exists.

e. If a person commences a civil action against an arbitrator, arbitration organization or representative of an arbitration organization arising from the services of the arbitrator, organization or representative or if a person seeks to compel an arbitrator or a representative of an arbitration organization to testify or produce records in violation of subsection d. of this section, and the court decides that the arbitrator, arbitration organization or representative of an arbitration organization is immune from civil liability or that the arbitrator or representative of the organization is not competent to testify, the court shall award to the arbitrator, organization or representative reasonable attorney’s fees and other reasonable expenses of litigation.

History

L. 2003, c. 95, § 14, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-15



§ 2A:23B-15. Arbitration process

a. An arbitrator may conduct an arbitration in such manner as the arbitrator considers appropriate for a fair and expeditious disposition of the proceeding. The authority conferred upon the arbitrator includes the power to hold conferences with the parties to the arbitration proceeding before the hearing and, among other matters, determine the admissibility, relevance, materiality, and weight of any evidence.

b. An arbitrator may decide a request for summary disposition of a claim or particular issue:

(1) if all interested parties agree; or

(2) upon request of one party to the arbitration proceeding if that party gives notice to all other parties to the proceeding, and the other parties have a reasonable opportunity to respond.

c. If an arbitrator orders a hearing, the arbitrator shall set a time and place and give notice of the hearing not less than five days before the hearing begins. Unless a party to the arbitration proceeding makes an objection due to lack or insufficiency of notice not later than the beginning of the hearing, the party’s appearance at the hearing waives the objection. Upon request of a party to the arbitration proceeding and for good cause shown, or upon the arbitrator’s own initiative, the arbitrator may adjourn the hearing from time to time as necessary but may not postpone the hearing to a time later than that fixed by the agreement to arbitrate for making the award unless the parties to the arbitration proceeding consent to a later date. The arbitrator may hear and decide the controversy upon the evidence produced although a party who was duly notified of the arbitration proceeding did not appear. The court, on request, may direct the arbitrator to conduct the hearing promptly and render a timely decision.

d. At a hearing pursuant to subsection c. of this section, a party to the arbitration proceeding has a right to be heard, to present evidence material to the controversy, and to cross-examine witnesses appearing at the hearing.

e. [If] an arbitrator ceases or is unable to act during the arbitration proceeding, a replacement arbitrator shall be appointed in accordance with section 11 of this act to continue the proceeding and to resolve the controversy.

History

L. 2003, c. 95, § 15, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-16



§ 2A:23B-16. Representation by lawyer

A party to an arbitration proceeding may be represented by a lawyer.

History

L. 2003, c. 95, § 16, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-17



§ 2A:23B-17. Witnesses; subpoenas; depositions; discovery

a. An arbitrator may issue a subpoena for the attendance of a witness and for the production of records and other evidence at any hearing and may administer oaths. A subpoena shall be served in the manner for service of subpoenas in a civil action, and upon filing a summary action with the court by a party to the arbitration proceeding or the arbitrator, enforced in the manner for enforcement of subpoenas in any civil action.

b. In order to make the proceedings fair, expeditious, and cost effective, upon request of a party to or a witness in an arbitration proceeding, an arbitrator may permit a deposition of any witness to be taken for use as evidence at the hearing, including a witness who cannot be subpoenaed for or is unable to attend a hearing. The arbitrator shall determine the conditions pursuant to which the deposition is taken.

c. An arbitrator may permit such discovery as the arbitrator decides is appropriate in the circumstances, taking into account the needs of the parties to the arbitration proceeding and other affected persons and the desirability of making the proceeding fair, expeditious, and cost effective.

d. If an arbitrator permits discovery pursuant to subsection c. of this section, the arbitrator may order a party to the arbitration proceeding to comply with the arbitrator’s discovery-related orders, issue subpoenas for the attendance of a witness and for the production of records and other evidence at a discovery proceeding, and take action against a noncomplying party to the extent a court could if the controversy were the subject of a civil action in this State.

e. An arbitrator may issue a protective order to prevent the disclosure of privileged information, confidential information, trade secrets, and other information protected from disclosure to the extent a court could if the controversy were the subject of a civil action in this State.

f. All laws compelling a person under subpoena to testify and all fees for attending a judicial proceeding, a deposition or a discovery proceeding as a witness apply to an arbitration proceeding as if the controversy were the subject of a civil action in this State.

g. The court may enforce a subpoena or discovery-related order for the attendance of a witness within this State and for the production of records and other evidence issued by an arbitrator in connection with an arbitration proceeding in another State upon conditions determined by the court so as to make the arbitration proceeding fair, expeditious, and cost effective. A subpoena or discovery-related order issued by an arbitrator in another State shall be served in the manner provided by law for service of subpoenas in a civil action in this State and, upon filing a summary action with the court by a party to the arbitration proceeding or the arbitrator, enforced in the manner provided by law for enforcement of subpoenas in any civil action in this State.

History

L. 2003, c. 95, § 17, eff. Jan. 1, 2003.


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N.J. Stat. § 2A:23B-18



§ 2A:23B-18. Judicial enforcement of preaward ruling by arbitrator

If an arbitrator makes a preaward ruling in favor of a party to the arbitration proceeding, the party may request the arbitrator to incorporate the ruling into an award pursuant to section 19 of this act. A prevailing party may file a summary action with the court for an expedited order to confirm the award pursuant to section 22 of this act, in which case the court shall summarily decide the application. The court shall issue an order to confirm the award unless the court vacates, modifies, or corrects the award pursuant to section 23 or 24 of this act.

History

L. 2003, c. 95, § 18, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-19



§ 2A:23B-19. Award

a. An arbitrator shall make a record of an award. The record shall be signed or otherwise authenticated by any arbitrator who concurs with the award. The arbitrator or the arbitration organization shall give notice of the award, including a copy of the award, to each party to the arbitration proceeding.

b. An award shall be made within the time specified by the agreement to arbitrate or, if not specified therein, within the time ordered by the court. The court may extend or the parties to the arbitration proceeding may agree in a record to extend the time. The court or the parties may do so within or after the time specified or ordered. A party waives any objection that an award was not timely made unless the party gives notice of the objection to the arbitrator before receiving notice of the award.

History

L. 2003, c. 95, § 19, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-20



§ 2A:23B-20. Change of award by arbitration

a. On application to an arbitrator by a party to an arbitration proceeding, the arbitrator may modify or correct an award:

(1) upon a ground stated in paragraph (1) or (3) of subsection a. of section 24 of this act;

(2) if the arbitrator has not made a final and definite award upon a claim submitted by the parties to the arbitration proceeding; or

(3) to clarify the award.

b. An application pursuant to subsection a. of this section shall be made and notice given to all parties within 20 days after the aggrieved party receives notice of the award.

c. A party to the arbitration proceeding shall give notice of any objection to the application within 10 days after receipt of the notice.

d. If a summary action with the court is pending pursuant to section 22, 23, or 24 of this act, the court may submit the claim to the arbitrator to consider whether to modify or correct the award:

(1) upon a ground stated in paragraph (1) or (3) of subsection a. of section 24 of this act.

(2) if the arbitrator has not made a final and definite award upon a claim submitted by the parties to the arbitration proceeding; or

(3) to clarify the award.

e. An award modified or corrected pursuant to this section is subject to sections 19a., 22, 23, and 24 of this act.

History

L. 2003, c. 95, § 20, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-21



§ 2A:23B-21. Remedies; fees and expenses of arbitration proceeding

a. An arbitrator may award punitive damages or other exemplary relief if such an award is authorized by law in a civil action involving the same claim and the evidence produced at the hearing justifies the award in accordance with the legal standards otherwise applicable to the claim.

b. An arbitrator may award reasonable attorney’s fees and other reasonable expenses of arbitration if such an award is authorized by law in a civil action involving the same claim or by the agreement of the parties to the arbitration proceeding.

c. As to all remedies other than those authorized by subsections a. and b. of this section, an arbitrator may order such remedies as the arbitrator considers just and appropriate under the circumstances of the arbitration proceeding. The fact that such a remedy could not or would not be granted by the court is not a ground for refusing to confirm an award pursuant to section 22 [C.2A:23B-22] of this act or for vacating an award pursuant to section 23 [C.2A:23B-23] of this act.

d. An arbitrator’s expenses and fees, together with other expenses, shall be paid as provided in the award.

e. If an arbitrator awards punitive damages or other exemplary relief pursuant to subsection a. of this section, the arbitrator shall specify in the award the basis in fact justifying and the basis in law authorizing the award and state separately the amount of the punitive damages or other exemplary relief.

History

L. 2003, c. 95, § 21, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-22



§ 2A:23B-22. Confirmation of award

After a party to an arbitration proceeding receives notice of an award, the party may file a summary action with the court for an order confirming the award, at which time the court shall issue a confirming order unless the award is modified or corrected pursuant to section 20 or 24 of this act or is vacated pursuant to section 23 of this act.

History

L. 2003, c. 95, § 22, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-23



§ 2A:23B-23. Vacating award

a. Upon the filing of a summary action with the court by a party to an arbitration proceeding, the court shall vacate an award made in the arbitration proceeding if:

(1) the award was procured by corruption, fraud, or other undue means;

(2) the court finds evident partiality by an arbitrator; corruption by an arbitrator; or misconduct by an arbitrator prejudicing the rights of a party to the arbitration proceeding;

(3) an arbitrator refused to postpone the hearing upon showing of sufficient cause for postponement, refused to consider evidence material to the controversy, or otherwise conducted the hearing contrary to section 15 of this act, so as to substantially prejudice the rights of a party to the arbitration proceeding;

(4) an arbitrator exceeded the arbitrator’s powers;

(5) there was no agreement to arbitrate, unless the person participated in the arbitration proceeding without raising the objection pursuant to subsection c. of section 15 of this act not later than the beginning of the arbitration hearing; or

(6) the arbitration was conducted without proper notice of the initiation of an arbitration as required in section 9 of this act so as to substantially prejudice the rights of a party to the arbitration proceeding.

b. A summary action pursuant to this section shall be filed within 120 days after the aggrieved party receives notice of the award pursuant to section 19 of this act or within 120 days after the aggrieved party receives notice of a modified or corrected award pursuant to section 20 of this act, unless the aggrieved party alleges that the award was procured by corruption, fraud, or other undue means, in which case the summary action shall be commenced within 120 days after the ground is known or by the exercise of reasonable care would have been known by the aggrieved party.

c. If the court vacates an award on a ground other than that set forth in paragraph (5) of subsection a. of this section, it may order a rehearing. If the award is vacated on a ground stated in paragraph (1) or (2) of subsection a. of this section, the rehearing shall be before a new arbitrator. If the award is vacated on a ground stated in paragraph (3), (4), or (6) of subsection a. of this section, the rehearing may be before the arbitrator who made the award or the arbitrator’s successor. The arbitrator shall render the decision in the rehearing within the same time as that provided in subsection b. of section 19 of this act for an award.

d. If the court denies an application to vacate an award, it shall confirm the award unless an application to modify or correct the award is pending.

History

L. 2003, c. 95, § 23, eff. Jan. 1, 2003.


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N.J. Stat. § 2A:23B-24



§ 2A:23B-24. Modification or correction of award

a. Upon filing a summary action within 120 days after the party receives notice of the award pursuant to section 19 of this act or within 120 days after the party receives notice of a modified or corrected award pursuant to section 20 of this act, the court shall modify or correct the award if:

(1) there was an evident mathematical miscalculation or an evident mistake in the description of a person, thing, or property referred to in the award;

(2) the arbitrator made an award on a claim not submitted to the arbitrator and the award may be corrected without affecting the merits of the decision upon the claims submitted; or

(3) the award is imperfect in a matter of form not affecting the merits of the decision on the claims submitted.

b. If an application made pursuant to subsection a. of this section is granted, the court shall modify or correct and confirm the award as modified or corrected. Otherwise, unless an application to vacate is pending, the court shall confirm the award.

c. An application to modify or correct an award pursuant to this section may be joined with an application to vacate the award.

History

L. 2003, c. 95, § 24, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-25



§ 2A:23B-25. Judgment on award; attorney’s fees and litigation expenses

a. Upon granting an order confirming, vacating without directing a rehearing, modifying, or correcting an award, the court shall enter a judgment in conformity with the arbitrator’s award. The judgment may be recorded, docketed, and enforced as any other judgment in a civil action.

b. A court may allow reasonable costs of the summary action and subsequent judicial proceedings.

c. On application of a prevailing party to a contested judicial proceeding pursuant to section 22, 23, or 24 of this act, the court may add reasonable attorney’s fees and other reasonable expenses of litigation incurred in a judicial proceeding after the award is made to a judgment confirming, vacating without directing a rehearing, or substantially modifying or correcting an award.

History

L. 2003, c. 95, § 25, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-26



§ 2A:23B-26. Jurisdiction

a. A court of this State having jurisdiction over the controversy and the parties may enforce an agreement to arbitrate.

b. An agreement to arbitrate providing for arbitration in this State confers exclusive jurisdiction on the court to enter judgment on an award pursuant to this act.

c. Wherever reference is made to any procedural matter stated in this act, the New Jersey Supreme Court rules governing summary actions, or such other rules as may be adopted by the Supreme Court of New Jersey shall apply.

History

L. 2003, c. 95, § 26, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-27



§ 2A:23B-27. Venue

A summary action pursuant to section 5 of this act shall be commenced in the court of the county that would have venue if the matter were subject to Superior Court rules in civil actions, or to a court in which the agreement to arbitrate specifies the arbitration hearing is to be held or, if the hearing has been held, in the court of the county in which it was held.

History

L. 2003, c. 95, § 27, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-28



§ 2A:23B-28. Appeals

a. An appeal may be taken from:

(1) an order denying a summary action to compel arbitration;

(2) an order granting a summary action to stay arbitration;

(3) an order confirming or denying confirmation of an award;

(4) an order modifying or correcting an award;

(5) an order vacating an award without directing a rehearing; or

(6) a final judgment entered pursuant to this act.

b. An appeal pursuant to this section shall be taken as from an order or a judgment in a civil action.

History

L. 2003, c. 95, § 28, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-29



§ 2A:23B-29. Uniformity of application and construction

In applying and construing this uniform act, consideration shall be given to the need to promote uniformity of the law with respect to its subject matter among states that enact it.

History

L. 2003, c. 95, § 29, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-30



§ 2A:23B-30. Relationship to Electronic Signatures in Global and National Commerce Act

The provisions of this act governing the legal effect, validity, and enforceability of electronic records or electronic signatures, and of contracts performed with the use of such records or signatures conform to the requirements of the “Electronic Signatures in Global and National Commerce Act,” 15 U.S.C. § 7002.

History

L. 2003, c. 95, § 30, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-31



§ 2A:23B-31. Prior action or proceeding

This act does not affect an action or proceeding commenced or right accrued before this act takes effect. Subject to section 3 [C. 2A:23B-3] of this act, an arbitration agreement made before the effective date of this act is governed by N.J.S. 2A:24-1 et seq. and P.L. 1987, c. 54 (C. 2A:23A-1 et seq.).

History

L. 2003, c. 95, § 31, eff. Jan. 1, 2003.



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N.J. Stat. § 2A:23B-32



§ 2A:23B-32. Statutes and procedures not affected

This act shall not apply to the substance and procedure of “The New Jersey Alternative Procedure for Dispute Resolution Act, ” P.L. 1987, c. 54 (C. 2A:23A-1 et seq.), nor shall this act apply to arbitrations governed by P.L. 1987, c. 329 (C. 2A:23A-20 et seq.), P.L. 1983, c. 358 (C. 39:6A-24 et seq.) or section 24 of P.L. 1998, c. 21 (C. 39:6A-5.1);and, unless otherwise agreed by the parties, any other non-binding court annexed arbitration procedures authorized under court rules or where under existing statutes the application of N.J.S. 2A:24-1 through 2A:24-11 is expressly excluded.

History

L. 2003, c. 95, § 32, eff. Jan. 1, 2003.



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COMMITTEE OF COMPLEX BUSINESS LITIGATION JUDGES BY VICINAGE

(Updated March 3, 2016)

Vicinage County(ies) Judge

1 Atlantic/Cape May Hon. J. Christopher Gibson, J.S.C. (primary) Hon. James P. Savio, J.S.C. (back-up)

2 Bergen Hon. Robert C. Wilson, J.S.C.

3 Burlington Hon. John E. Harrington, P.J.Cv.

4 Camden Hon. Michael J. Kassel, J.S.C.

5 Essex Hon. Stephanie Ann Mitterhoff, J.S.C.

6 Hudson Hon. Jeffrey R. Jablonski, J.S.C.

7 Mercer Hon. Paul Innes, P.J.Ch.

8 Middlesex Hon. Arnold L. Natali, Jr., J.S.C.

9 Monmouth Hon. Katie A. Gummer, J.S.C.

10 Morris/Sussex Hon. Stephen C. Hansbury, P.J.Ch.

11 Passaic Hon. Thomas L. LaConte, J.S.C.

12 Union Hon. Thomas J. Walsh, J.S.C.

13 Somerset/Hunterdon/Warren Hon. Yolanda Ciccone, A.J.S.C. (Committee Chair)

14 Ocean Hon. Craig L. Wellerson, P.J.Cv.

15 Cumberland/Gloucester/Salem Hon. Richard J. Geiger, J.S.C.

Committee Staff Taironda (Tori) E. Phoenix, Esq. Chief, Civil Practice Division

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About the Panelists… Tracy Armstrong is a member of the Employment Law Team at Wilentz, Goldman & Sptitzer, P.A. in Woodbridge and Eatontown, New Jersey; New York City; and Philadelphia, PA. She represents management in employer/employee disputes and the laws governing the employer/employee relationship, and offers highly skilled representation in claims and matters involving employment laws including, but not limited to, the New Jersey Law Against Discrimination (LAD), the Conscientious Employee Protection Act (CEPA), the Family Medical Leave Act (FMLA), the New Jersey Family Leave Act (NJFLA), the Americans with Disabilities Act (ADA) and the Age Discrimination in Employment Act (ADEA). Admitted to practice in New Jersey and before the United States District Court for the Southern District of New York, Ms. Armstrong has been a member of the Monmouth Bar Association’s Labor and Employment Committee and the Executive Committee of the New Jersey State Bar Association Labor and Employment Section. She has also been a member of the New Jersey Women Lawyers Association and the American and New Jersey Associations of Legal Administrators, and has lectured to professional groups and associations. Ms. Armstrong received her B.A. from Monmouth University and her J.D. from Seton Hall University School of Law, where she was a director of the Seton Hall University Juvenile Justice Clinic. Edward T. Kole is a Shareholder in Wilentz, Goldman & Spitzer P.A. with offices in Woodbridge and Eatontown, New Jersey; New York City; and Philadelphia, PA. He is Chair of the Business Litigation Department and engages in complex corporate and commercial litigation. Mr. Kole is also experienced in complex contract disputes, restrictive covenant and trade secret litigation, securities and derivative actions, as well as litigation concerning business, shareholder/partnership and franchise disputes. In addition to handling business and commercial litigation matters in the federal and state courts of New Jersey, he has handled cases in several other courts around the country. Mr. Kole is Second Vice President of the Association of the Federal Bar of the State of New Jersey and Past Chair of the Federal Practice and Procedure Committee of the New Jersey State Bar Association. He is also Chair of the Business and Commercial Litigation Committee of the NJSBA and previously served on the Appellate Practice Committee. A Fellow of the American Bar Foundation, Mr. Kole is Co-Chair of the Pro Bono Committee for the United States District Court for the District of New Jersey and a member of the Court’s Lawyers Advisory Committee. He is a frequent lecturer on federal and appellate practice, restrictive covenant and trade secret litigation as well as shareholder disputes, and has conducted and moderated numerous seminars for ICLE. Mr. Kole received his B.A. from Rutgers College and his J.D. from Seton Hall University School of Law. He was a judicial intern to the Honorable Leonard I. Garth, United States Court of Appeals, Third Circuit, and to the Honorable Robert E. Cowen, United States District Court for the District of New Jersey, and also clerked for the Honorable Eugene D. Serpentelli, Assignment Judge, Superior Court of New Jersey, Ocean County.

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Paul R. Marino is a Partner in Day Pitney LLP in Parsippany, New Jersey, where he represents individuals and corporate fiduciaries in contest trust, estate and guardianship matters. Chair of the firm’s Probate Litigation Practice Group, he also defends lawyers and law firms against malpractice and related claims in state and federal courts. His clients have included individual transactional lawyers and litigators, and regional and international law firms, and he also litigates construction, franchise and securities matters as well as consumer class actions. Mr. Marino is admitted to practice in New Jersey and New York, and before the United States District Court for the District of New Jersey and the Eastern, South and Western Districts of New York; and the Second Circuit Court of Appeals. Chair of the New Jersey State Bar Association’s Federal Practice and Procedure Section, he is a member of the American Bar Association’s Forum on Franchising, the New Jersey Chapter of The Federal Circuit Bar Association and the New York State Bar Association. He is the recipient of the New Jersey State Bar Association’s Pro Bono Award for 2013 and Day Pitney’s New Jersey representative on the Tri-State Diversity Council. Mr. Marino received his B.A., magna cum laude, from Loyola University and his J.D., with high honors, from the University of North Carolina School of Law, where he was a member of the Order of the Coif. Mark S. Olinsky is a Member of Sills Cummis & Gross P.C. in Newark, New Jersey, where he is Chair of the Health Care Government Investigations Practice Group. A civil and criminal trial lawyer for more than thirty years, Mr. Olinsky has conducted numerous corporate internal investigations and has represented both individuals and corporations in a wide variety of government investigations, particularly in the health care and pharmaceutical industries. He has successfully represented large health care systems and high-level executives in recent investigations involving alleged violations of the False Claims Act, the Anti-Kickback Statute and other federal health care statutes and regulations. Mr. Olinsky is admitted to practice in New York, New Jersey and the District of Columbia; and before the United States District Court for the District of New Jersey and the Southern, Eastern, Northern and Western Districts of New York; the Second and Third Circuit Court of Appeals; and the United States Supreme Court. He is a Fellow of the American Bar Foundation and President of the Association of the Federal Bar of New Jersey. He is a member of the Litigation and Criminal Justice Sections of the American Bar Association as well as the Enforcement Committee of the American Health Lawyers Association’s Fraud and Abuse Practice Group. Mr. Olinsky is also a member of the Association of Criminal Defense Lawyers of New Jersey and the New Jersey State Bar Association, and a Trustee of The Historical Society of the United States District Court for the District of New Jersey and several other organizations. His articles have appeared in the New Jersey Law Journal, New Jersey Lawyer, the Metropolitan Corporate Counsel and other publications, and he has lectured for ICLE, the New Jersey Hospital Association and other organizations. Mr. Olinsky received his B.A., summa cum laude, from Yale University, where he was elected to Phi Beta Kappa, and his J.D., cum laude, from Harvard Law School. Andrea J. Sullivan is a Partner in the Litigation Department of Greenbaum, Rowe, Smith & Davis LLP with offices in Iselin and Roseland, New Jersey. Her practice includes commercial litigation, estate litigation, matrimonial litigation, chancery litigation and alternative dispute

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resolution, and she represents professionals in actions from professional malfeasance to claims of fraud, and in cases of alleged professional malpractice. She has also appeared before numerous professional boards, including those of accountancy, dentistry and mortuary science. Admitted to practice in New Jersey and before the United States District Court for the District of New Jersey and the Third Circuit Court of Appeals, Ms. Sullivan is President of the Middlesex County Bar Association and has been Chair of the Association’s Chancery Practice Committee and a member of the Women in the Profession Section. She is a member of the Board of Trustees of the New Jersey State Bar Association Women in the Profession Section and a member and Past Vice Chair of the Equity Jurisprudence Committee. Past President of the Middlesex County Bar Foundation, Ms. Sullivan has been Chair of the Foundation’s Finance Committee and a member of the Scholarship Committee. She is also a member of Executive Women of New Jersey and Past President and a member of the Board of Trustees of Central Jersey Legal Services. Ms. Sullivan has lectured for ICLE and the New Jersey State and Middlesex County Bar Associations, and is co-author of New Jersey Business Litigation (New Jersey Law Journal Books, 2015 Edition) and Guidebook to Chancery Practice in New Jersey (ICLE, 9th Edition, 2014). She is the recipient of the 2010 Robert J. Cirafasi Chancery Practice Award bestowed by the Middlesex County Bar Association as well as several other honors. Ms. Sullivan received her A.B., cum laude, from Mount Holyoke College and her J.D., with high honors, from Rutgers University School of Law-Newark, where she was a member of the Order of the Coif and the recipient of an Alumni Senior Prize. She was Law Clerk to the Honorable Eriminie Lane Conley, Chancery Division, General Equity Part, Superior Court of New Jersey. Rosaria A. Suriano is a Partner in the Commercial Litigation Department of Brach Eichler LLC in Roseland, New Jersey; New York City; and Palm Beach, FL. With more than 25 years of trial and appellate court experience in state and federal courts, she has litigated complex matters involving contract disputes, restrictive covenant claims, computer-related claims (including the taking of confidential and proprietary computer data), vendor agreements and business-related claims. She has litigated several significant cases that are the subject of published and reported opinions. Admitted to practice in New Jersey and before the United States District Court for the District of New Jersey and the Third Circuit Court of Appeals, Ms. Suriano is a member of the Essex County Bar Association and its Chancery Division Practice Group as well as the New Jersey State Bar Association’s Business Law Section, Executive Women of New Jersey and the Women President’s Association. She is also a member of the Industrial/Commercial Real Estate Women, the Commerce and Industry Association of New Jersey, the National Association of Corporate Directors and the New Jersey Chapter of the Professional Women in Construction. Ms. Suriano has lectured on commercial litigation issues, contract disputes and electronic discovery in litigation. She has authored articles on the enforceability of restrictive covenants, the Trade Secrets Act, the Minority Shareholder Oppression Act and the Computer Related Offenses Act, and is the recipient of several honors. Ms. Suriano received her B.A. from Seton Hall University and her J.D. from Seton Hall University School of Law. She interned for the Honorable Alfred J. Lechner, Jr., United States District Court for the District of New Jersey, and was as a law clerk to the Honorable Erminie Conley, Superior Court of New Jersey, Chancery Division, General Equity (t/a to the Appellate Division).

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Christopher Walsh is a Director in the Business & Commercial Litigation Department of Gibbons P.C. in Newark, New Jersey. In his broad commercial litigation practice, he assists businesses in resolving and, when necessary, aggressively litigating through trial, complex commercial disputes involving a wide range of issues. He represents clients in contract disputes with customers and vendors; corporate governance disputes with investors; business tort and antitrust disputes with customers, vendors, and competitors; restrictive covenant disputes with employees and competitors; and class actions, including antitrust, securities, and consumer fraud matters. Admitted to practice in New Jersey and New York, and before the United States District Court for the District of New Jersey and the Southern and Eastern Districts of New York, and the United States Court of Appeals for the Third and Second Circuits, Mr. Walsh is Past Chair of the New Jersey State Bar Association’s Federal Practice and Procedure Section and the author of the chapter “Service of Summons and Personal Jurisdiction” in New Jersey Federal Civil Procedure. In addition, the November 23, 2015 issue of the New Jersey Law Journal published an article he authored on the 2015 amendment to the Federal Rules of Civil Procedure. Mr. Walsh received his B.A., magna cum laude, from Texas Christian University, where he was elected to Phi Beta Kappa. He received his M.A. from Rutgers University and his J.D., with honors, from Rutgers School of Law-Newark, where he was a member of the Order of the Coif and Articles Editor of the Rutgers Law Review. He was Law Clerk to the Honorable Robert N. Wilentz, Chief Justice, New Jersey Supreme Court.

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