GI SPORTZ, INC. et al v. VALKEN, INC
Filing
89
OPINION. Signed by Judge Noel L. Hillman on 6/22/2018. (rtm, )
Case 1:16-cv-07170-NLH-KMW Document 89 Filed 06/25/18 Page 1 of 12 PageID: 1331
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
G.I. SPORTZ, INC. and
GI SPORTZ DIRECT, LLC,
Plaintiffs,
1:16-cv-07170-NLH-KMW
OPINION
v.
VALKEN, INC.,
Defendant.
APPEARANCES:
JOHN M. HANAMIRIAN
HANAMIRIAN LAW FIRM PC
40 EAST MAIN STREET
MORRESTOWN, NJ 08057
On behalf of Plaintiffs
ANTHONY J. DIMARINO, III
EMMETT STEPHAN COLLAZO
A.J. DIMARINO, III, PC
41 GROVE STREET
HADDONFIELD, NJ 08033
On behalf of Defendant
HILLMAN, District Judge
This matter concerns claims for trade dress violations
regarding the patterns on paintballs.
Presently before the
Court is the motion of Defendant to enforce a settlement that
Defendant contends it entered into with Plaintiff. 1
1
For the
Defendant has requested that portions of its briefs and
supporting materials be redacted because it has a strong
interest in protecting its pricing information and settlement
negotiations. The Court finds that the limited portions of
Defendant’s submissions it seeks to redact meet the requirements
of Local Civil Rule 5.3(c)(3).
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reasons expressed below, Defendant’s motion will be denied.
BACKGROUND
Plaintiffs, G.I. Sportz, Inc. and GI Sportz Direct, LLC
(hereinafter “GI”), claim that GI is the world’s leading
provider of equipment and supplies to the paintball industry.
GI owns a federal trademark registration, U.S. Reg. No.
3,049,101, which covers the trade dress of paintballs with
“contrasting colors blended randomly together to form the
appearance of a fanciful design on the surface of a paintball,”
called the “Marballizer” trade dress.
The Marballizer trade
dress has been in existence for over twenty years, and according
to GI, in addition to being inherently distinctive, it has
achieved a significant secondary meaning among dealers and
consumers of paintballs, including an indication of high quality
paintballs.
In the instant action, GI claims that Defendant, Valken,
Inc., has infringed on GI’s trade dress by manufacturing,
marketing, and selling paintballs with the Marballizer design.
Previously, in September 2012 GI, formerly Kee Action Sports,
sued Valken for the same conduct, but the parties settled their
dispute in March 2014.
See Kee Action Sports LLC v. Valken
Inc., Civil Action 1:12-cv-06069-NLH-KMW.
GI claims that Valken
has resumed its infringement, and has breached their settlement
agreement.
2
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GI filed this action on October 13, 2016.
On November 4,
4, 2016, Valken filed its answer, affirmative defenses, and
counterclaims.
On November 23, 2016, GI simultaneously filed a
motion for preliminary injunction and a motion to strike
Valken’s affirmative defenses.
The Court heard GI’s preliminary
injunction motion on December 21, 2016, and granted GI’s motion,
ordering that Valken was enjoined throughout the United States
from “making, having made, importing, advertising, distributing,
offering and selling paintballs with a shell having the
appearance of a marble, specifically, a surface design having
contrasting colors blended randomly together.”
(See Docket No.
44, 49, 57.)
Thereafter, the case proceeded through discovery and on
March 21, 2017, the matter was referred to mediation, which was
ultimately unsuccessful.
The Court denied GI’s motion to strike
Valken’s affirmative defenses on June 15, 2017.
(Docket No. 72,
73.)
Valken has filed the instant motion to enforce a settlement
it contends the parties agreed to on August 2, 2017.
Valken
relates that Eugenio Postorivo, Valken’s President and CEO, and
Joe Colonese, Valken’s Vice-President, traveled to Florida to
meet with GI’s CEO, Richmond Italia, at a restaurant to discuss
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the pending litigation between Valken and GI, 2 which includes two
other cases related to this action. 3
Valken contends that during
the first two hours of their meeting, Postorivo and Italia
reached an agreement to resolve all the pending litigation.
Valken further contends that aside from discussing the fine
points of the agreement at various times during the two-day
visit, the agreement between Postorivo and Italia never waivered
as to the terms of Valken’s purchase of paint from GI, Valken’s
payment of outstanding invoices, and future dispute resolution
procedures.
Valken argues that Postorivo and Italia’s oral
agreement, which was reduced to writing and emailed by Valken’s
counsel to GI a few days later, is an enforceable contract.
Valken contends that GI’s after-the-fact attempt to disclaim the
settlement is improper, and the Court should enforce the terms
of the parties’ agreement.
GI rejects Valken’s representation that an agreement was
reached in Florida.
GI contends that Italia never represented
he had authority to settle all the pending litigation, and he
could not have made such a representation because any agreement
to settle must be approved by GI’s board of directors.
GI
2
Italia states that he was unaware that Postorivo traveled to
Florida with Colonese until he walked into the restaurant and
saw Postorivo sitting at the bar with Colonese.
3
See GI Sportz, Inc. v. Valken, Inc., Civil Action 1:17-cv-05040
and 1:17-cv-05590.
4
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further contends that most of the purported terms of the
settlement proffered by Valken were never discussed, and the
terms are so contrary to GI’s interests and in conflict with the
history of the parties, it is clearly evident that GI did not
agree to them.
In short, GI argues that the majority of the
parties’ interactions were social with no discussion of the
pending litigation, and that Valken “conjured from thin air” the
purported settlement.
DISCUSSION
A.
Subject matter jurisdiction
GI’s trade dress infringement claims arise under the Lanham
Act, 15 U.S.C. § 1051 et seq., and GI’s breach of contract,
common law infringement, and unfair competition claims arise
under New Jersey law.
This Court has jurisdiction over GI’s
federal claims under 28 U.S.C. § 1331, and supplemental
jurisdiction over GI’s state law claims under 28 U.S.C. § 1367.
B.
Standard for Motion to Enforce a Settlement
The law governing the enforcement of a settlement agreement
holds that a settlement agreement between parties to a lawsuit
is a contract like any other contract.
Peskin v. Peskin, 638
A.2d 849, 857 (N.J. Super. Ct. App. Div. 1994) (citing Nolan v.
Lee Ho, 577 A.2d 143, 146 (N.J. 1990)).
A contract is formed
where there is offer and acceptance and terms sufficiently
definite that the performance to be rendered by each party can
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be ascertained with reasonable certainty.
U.S. v. Lightman, 988
F. Supp. 448, 458 (D.N.J. 1997) (citing Weichert Co. Realtors v.
Ryan, 128 N.J. 427, 435, 608 A.2d 280 (1992)).
That contract is
enforceable if the parties agree on essential terms and manifest
an intention to be bound by those terms.
Id.
Where the parties
do not agree on one or more essential terms, however, courts
generally hold that the agreement is unenforceable.
Id.
The party seeking to enforce the alleged settlement
agreement has the burden of proving the existence of the
agreement under contract law.
Id. (citations omitted).
Courts
treat a motion to enforce settlement under the same standard as
a motion for summary judgment because the central issue is
whether there is any disputed issue of material fact as to the
validity of the settlement agreement.
Washington v. Klem, 388
F. App’x 84, 85 (3d Cir. 2010) (citing Tiernan v. Devoe, 923
F.2d 1024, 1031 (3d Cir. 1991)).
Summary judgment is appropriate where the Court is
satisfied that the materials in the record, including
depositions, documents, electronically stored information,
affidavits or declarations, stipulations, admissions, or
interrogatory answers, demonstrate that there is no genuine
issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.
Celotex Corp. v.
Catrett, 477 U.S. 317, 330 (1986); Fed. R. Civ. P. 56(a).
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An issue is “genuine” if it is supported by evidence such
that a reasonable jury could return a verdict in the nonmoving
party’s favor.
248 (1986).
Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
A fact is “material” if, under the governing
substantive law, a dispute about the fact might affect the
outcome of the suit.
Id.
In considering a motion for summary
judgment, a district court may not make credibility
determinations or engage in any weighing of the evidence;
instead, the non-moving party's evidence “is to be believed and
all justifiable inferences are to be drawn in his favor.”
Marino v. Industrial Crating Co., 358 F.3d 241, 247 (3d Cir.
2004)(quoting Anderson, 477 U.S. at 255).
Initially, the moving party has the burden of demonstrating
the absence of a genuine issue of material fact.
v. Catrett, 477 U.S. 317, 323 (1986).
Celotex Corp.
Once the moving party has
met this burden, the nonmoving party must identify, by
affidavits or otherwise, specific facts showing that there is a
genuine issue for trial.
Id.
Thus, to withstand a properly
supported motion for summary judgment, the nonmoving party must
identify specific facts and affirmative evidence that contradict
those offered by the moving party.
57.
Anderson, 477 U.S. at 256-
A party opposing summary judgment must do more than just
rest upon mere allegations, general denials, or vague
statements.
Saldana v. Kmart Corp., 260 F.3d 228, 232 (3d Cir.
7
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2001).
C.
Analysis
GI has challenged the purported settlement agreement
proffered by Valken on several bases, but the Court need only
consider one:
Whether Italia had the authority to enter into a
binding settlement agreement on behalf of GI.
Valken contends that Italia had the authority to enter into
a settlement agreement because of his position as CEO of GI, and
because Italia represented to Postorivo that his position as
principal and decision-maker at GI conferred that authority.
Italia, however, refutes that he made such representations, and
relates that any agreement to settle litigation involving GI
must be approved by GI’s board of directors in order to be a
valid and binding contract.
Thus, before assessing the content
of the purported settlement agreement, the Court must determine
whether Italia had the authority to enter into a settlement
agreement in the first place.
Agency principles govern the analysis.
Actual authority,
either express or implied, may “‘be created by written or spoken
words or other conduct of the principal which, reasonably
interpreted, causes the agent to believe that the principal
desires him so to act on the principal’s account.’”
Jennings v.
Reed, 885 A.2d 482, 490 (N.J. Super. Ct. App. Div. 2005)
(quoting Restatement (Second) of Agency § 26 (1958)).
8
On the
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other hand, “‘apparent authority . . . is created as to a third
person by written or spoken words or any other conduct of the
principal which, reasonably interpreted, causes the third person
to believe that the principal consents to have the act done on
his behalf by the person purporting to act for him.’”
Id. § 27.
Specifically with regard to settlement agreements, the
issue of authority to settle most often arises in situations
where a party argues that an attorney did not have authority to
settle the matter on behalf of his client.
That context is
instructive here.
“The general rule is that unless an attorney is
specifically authorized by the client to settle a case, the
consent of the client is necessary.”
Amatuzzo v. Kozmiuk, 703
A.2d 9, 12 (N.J. Super. App. Div. 1997) (citations omitted).
Negotiations of an attorney are not binding on the client unless
(1) the client has expressly authorized the settlement, or (2)
“the client’s voluntary act has placed the attorney in a
situation wherein a person of ordinary prudence would be
justified in presuming that the attorney had authority to enter
into a settlement, not just negotiations, on behalf of the
client.”
Id. (citations omitted).
The attorney’s words or acts
alone are insufficient, however, to cloak the attorney with
apparent authority.
Id. (citations omitted).
Thus, Valken, as the party with the burden of proving an
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enforceable settlement exists, must establish that Italia, as
the agent for GI, had actual or apparent authority to bind GI to
a settlement.
Valken has failed to do so.
Valken contends that Italia had authority to settle because
he is CEO of GI.
Valken also contends that Italia told
Postorivo he had such authority.
In response, GI refutes both
representations by Valken in a sworn declaration by Italia, as
well as by William Ceranski, Vice-President of Worldwide Sales
for GI who was present during several of the parties’ gatherings
in Florida.
GI’s position that Italia did not have authority to
independently enter into a binding settlement agreement because
it must be approved by GI’s board was also communicated by GI’s
counsel to Valken’s counsel in three written communications on
August 23, 29, and 30, 2017.
Valken’s self-serving view of Italia’s settlement authority
does not meet its burden of demonstrating the absence of a
genuine issue of material fact on that issue.
Valken has also
failed to provide any evidence that GI conferred settlement
authority on Italia, or that GI’s actions would have lead Valken
to believe that Italia had such authority.
To the contrary, GI
has provided specific facts to prove otherwise.
Moreover, even
if Italia had conveyed to Postorivo his ability to enter into a
settlement agreement, that unilateral representation would be
insufficient to actually bind GI to that settlement.
10
See In re
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Gliottone, 2013 WL 275956, at *6 (N.J. Super. Ct. App. Div.
2013) (quoting Mercer v. Weyerhaeuser Co., 735 A.2d 576, 592
(N.J. Super. Ct. App. Div. 1999) (“It is well-established that
‘the appearance of authority . . . cannot be established alone
and solely by proof of [conduct by] the supposed agent.”);
Hunterdon County Dist. Soc. for Prevention of Cruelty to
Animals, Inc. v. New Jersey State Soc. for Prevention of Cruelty
to Animals, 2009 WL 1507057, at *1–2 (N.J. Super. Ct. App. Div.
2009) (noting that even though there was a factual discrepancy
between the testimony of plaintiff’s counsel and the defendant,
the burden of establishing apparent authority rests with the
party seeking to establish such authority, and finding that the
plaintiff did not meet its burden of proving that defense
counsel had settlement authority because although the settlement
was placed on the record and defense counsel did not state on
the record that board approval was necessary for the settlement,
board approval was necessary to be binding); Coleman Enterprises
Co. v. Scottsdale Insurance Company, 2017 WL 1224545, at *4
(D.N.J. 2017) (denying motion to enforce a settlement because
disputed material facts existed as to whether the plaintiff’s
contractor could bind plaintiff to any settlement); cf. Thorner
v. Sony Computer Entertainment America LLC, 2013 WL 1145200, at
*8 (D.N.J. 2013) (“Thorner's attorneys had apparent authority to
bind him to the Settlement Agreement, because Thorner knowingly
11
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placed his attorneys in such a situation that Sony, Sony's
counsel, and the Magistrate Judge were justified in believing
that Thorner’s attorneys had authority to bind Thorner to the
Settlement Agreement.”).
Thus, regardless of the terms of a purported settlement, a
court cannot enforce an agreement where there is no evidence
that one party had actual or apparent authority to enter into
that agreement.
Consequently, the Court must deny Valken’s
motion to enforce the settlement agreement because it has not
met its burden to prove that a binding settlement agreement
exists.
An appropriate Order will be entered.
Date:
June 22, 2018
At Camden, New Jersey
s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.
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