AVAYA INC. v. TELECOM LABS, INC. et al

Filing 1498

MEMORANDUM OPINION. Signed by Chief Judge Jerome B. Simandle on 12/23/2016. (TH, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

AVAYA INC.,

HONORABLE JEROME B. SIMANDLE
Plaintiff,
Civil Action No.
06-2490 (JBS/KMW)

v.
TELECOM LABS, INC.,
TEAMTLI.COM CORP., CONTINUANT,
INC., SCOTT GRAHAM, DOUGLAS
GRAHAM, and BRUCE SHELBY,

MEMORANDUM
OPINION

Defendants.

SIMANDLE, Chief Judge:
After prevailing on its appeal from an adverse judgment,
Plaintiff Avaya, Inc. has moved [Docket Item 1491] to release
the supersedeas bonds that it had posted pending its appeal at
Docket Items 1407 & 1471.

The U. S. Court of Appeals for the

Third Circuit denied Defendant/Counterclaimant TLI/C’s petition
for rehearing on November 16, 2016, and the Third Circuit issued
its mandate returning the case to this Court for further
proceedings including a new trial on December 5, 2016.

This

Court thus has jurisdiction upon remand to consider the motion.
The Court has considered the submissions of counsel in support,
opposition, and reply [Docket Items 1491, 1493 & 1494], and the
motion is decided without oral argument pursuant to Rule 78,
Fed. R. Civ. P.
The Court finds as follows:

1.

On September 17, 2014, following a jury trial, this

Court entered judgment in favor of TLI/C and against Avaya in
the amount of $62,613,052.10 [Docket Item 1400].

Avaya filed a

notice of appeal on October 10, 2014 [Docket Item 1404], and on
October 24, 2014, pursuant to an agreed order to stay execution
of the judgment pending appeal, Avaya posted a supersedeas bond
numbered 106112073 in the amount of $62,785,237.99 [Docket Item
1407], posted by its surety, Travelers Casualty and Surety
Company of America (“Travelers”).
2.

On February 23, 2016, pursuant to a consent order

requiring Avaya to post an additional bond numbered 106281352 as
security for a then-anticipated award of attorney’s fees,
expenses, and costs to TLI/C as prevailing party, in the amount
of $7,500,000 [Docket Item 1471], also posted by Travelers.
3.

The two bonds total $70,285,237.99.

Avaya continues

to incur a cost of approximately $1.4 million per year to
maintain these bonds, including the cost of bond premiums and a
letter of credit to secure the bonds.

Declaration of Nancy

Jordan ¶3.
4.

On September 30, 2016, the Third Circuit issued a

decision and judgment reversing the trial court’s judgment in
favor of TLI/C in its entirety and remanding to this Court for
further proceedings.

Avaya Inc. v. Telcom Labs. Inc., 838 F.3d

354 (3d Cir 2016) [Docket Item 1487].
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In its Opinion of

September 30, the Court of Appeals:

(1) reversed the trial

judge’s decision to dismiss four of Avaya’s affirmative claims,
and it reinstated Avaya’s claims against TLI/C for tortious
interference with prospective economic advantage, fraud, unfair
competition, and breach of contract; (2) vacated the jury's
verdict on the two antitrust counterclaims decided in TLI/C’s
favor at trial (namely, PBX attempted monopolization and PDS
patches tying); (3) found in Avaya’s favor on the portion of
TLI/C’s PBX monopolization claim with respect to PBXs sold sild
since May, 2008; (4) found in Avaya’s favor in TLI/C’s PDS
patches tying claim; (5) vacated the damages award to TLI/C; (6)
vacated the award of prejudgment interest to TLI/C; and (7)
vacated the injunction TLI/C had obtained.
5.

TLI/C submitted a petition for rehearing to the Third

Circuit, which was denied on November 16, 2016.

TLI/C filed a

motion with the Third Circuit seeking to stay the mandate as it
seeks Supreme Court review, pursuant to Fed. R. App. P.
41(d)(2).

The Third Circuit both denied TLI/C’s motion and

issued its mandate to this Court vacating the judgments under
appeal and remanding for further proceedings including a new
trial on the remaining claims, on December 5, 2016.
6.

The operative language of the bonds is identical:

“[T]he condition of [the surety’s] obligation is such that Avaya
Inc. shall prosecute its appeal to effect and … the judgment is
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reversed in its entirety, then the above obligation is to be
void.”

[Docket Item 1407 at 2-3; Docket Item 1471 at 2-3].

Defendant TLI/C does not dispute that the governing language of
the bonds was satisfied by the Third Circuit’s determinations of
the issues on appeal.

In other words, the judgment that made

Defendant TLI/C a judgment creditor for more than $62 million
and the prevailing party entitled to seek millions of dollars in
attorney’s fees and costs has been vacated.

Preparations are

underway for the retrial of the remaining issues.

[See Order at

Docket Item 1495, setting status conference for January 6,
2017.]
7.

Defendant TLI/C instead argues that it opposes any

release of the bonds until the Supreme Court decides TLI/C’s
anticipated petition for certiorari; TLI/C seeks protection in
the event the Supreme Court grants certiorari and restores its
antitrust judgment, pointing out news reports that Avaya is in
difficult financial straits and is likely to file for bankruptcy
very soon.

(See TLI/C Br. in Opp., Docket Item 1493 at 1-7.)

TLI/C cites to reports of declining credit ratings for Avaya in
the trade press, including a November 23, 2016 Wall Street
Journal report that Avaya could file for Chapter 11 protection
as soon as December.
8.

(Id., Br. in Opp. at 3 n.1.)

TLI/C asks this Court to invoke its equitable power to

leave the bonds in place pending resolution of TLI/C’s petition
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for certiorari to spare TLI/C the prospect of an unrecoverable
economic loss if its judgment is restored by the Supreme Court.
(Id. at 8.)

TLI/C cites no cases for the proposition that a

District Court has the power to extend a stay pending appeal
beyond the time when the appeal has been decided and the mandate
issued overturning the prior District Court judgment.

Instead,

the language of the supersedeas bonds themselves is to the
contrary, as noted above, and the District Court is without
authority to predict whether the Supreme Court will probably
restore TLI/C’s judgments when the Court of Appeals has set them
aside and refused a petition for en banc rehearing, as well as
having denied a stay of its mandate.
9.

Accordingly, this Court will not prolong the pendency

of the supersedeas bonds which are, by their own terms, now void
due to the Court of Appeals’ decisions.
10.

Avaya’s motion will be granted and the accompanying

Final Order Discharging Supersedeas Bond Nos. 106112073 &
106281352 will be entered.

December 23, 2016
Date

s/ Jerome B. Simandle
JEROME B. SIMANDLE
Chief U.S. District Judge

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