SAPTA GLOBAL, INC. v. ICON SOLUTIONS, INC et al
OPINION. Signed by Chief Judge Jose L. Linares on 10/02/2017. (ek)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
SAPTA GLOBAL, TNC.,
CIVIL ACTION NO. 15-3757 (iLL)
ICON SOLUTIONS, INC., et aL,
LINARES, Chief District Judge
This action concerns a contractual dispute between the plaintiff, Sapta Global, Inc.
(hereinafter, “Sapta”), and the defendants, Icon Solutions, Inc. (hereinafter, “Icon”), and
Naveen Mudireddy. (ECF No. 1.) Icon and Mudireddy now move pursuant to Federal
Rule of Civil Procedure (hereinafter, “Rule”) 56 for summary judgment in their favor: (1)
as to Sapta’s claims that are asserted against them; (2) as to their counterclaim against
Sapta for the amount of $23,760 that is allegedly due and owing; and (3) for an award for
prejudgment interest upon the amount of $23,760 in the counterclaim. (ECF No. 35
through ECF No. 35-8; ECF No. 40 through ECF No. 40-4.) Sapta opposes the motion.
(ECF No. 38 through ECF No. 3 8-6.)
The Court resolves the motion for summary judgment upon a review of the papers
and without oral argument. See L. Civ. R. 78.1(b). For the following reasons, the Court:
(1) grants the motion insofar as it concerns Sapta’s claims and the counterclaim by Icon
and Mudireddy for $23,760; and (2) denies the motion insofar as it concerns an award of
prejudgment interest on the amount of $23,760 without prejudice.
The Court presumes that the parties are familiar with the underlying facts and
procedural history of the action that the Court has set forth in an earlier Opinion, and thus
the Court will only set forth a brief summary here. (ECF No. 13 (an Order dated August
17, 2015, which denied the motion by Icon and Mudireddy to dismiss the complaint);
ECF No. 12 (the Opinion underlying that Order).)
An entity known as Randstad Technologies LP (hereinafter, “Randstad”) entered
into a contract with Goodyear Tire & Rubber Company (hereinafter, “Goodyear”) to
provide a consultant to Goodyear to perform certain tasks concerning information
technology issues (hereinafter, “the IT Project”). (ECF No. 35-1 at 2; ECF No. 35-4 at
12.) Randstad then entered into a contract with Sapta (hereinafter, “the Sapta-Randstad
Agreement”) to provide such a consultant to Randstad, who Randstad would then provide
to Goodyear. (ECF No. 35-1 at 2, 5; ECF No. 35-3 at 2$.) Sapta, in turn, entered into a
contract with Icon (hereinafter, “the Sapta-Icon greement”) to provide Sapta with such
a consultant, i.e., Mudireddy, who Sapta had become aware of through a reference. (ECF
No. 35-1 at 4—5; ECF No. 35-4 at 2; ECF No. 35-4 at 13.)
As a result of the aforementioned contractual arrangements: (1) Icon provided
Mudireddy to Sapta; (2) $apta provided Mudireddy to Randstad; (3) Randstad provided
Mudireddy to Goodyear; and (4) Mudireddy worked on the IT Project at Goodyear.
(ECF No. 35-1 at 4—5; ECF No. 35-3 at 28—36; ECF No. 35-4 at 2; ECF No. 35-5 at 4,
14.) Furthermore, as a result of these contractual arrangements, the amount that Icon was
ultimately paid was diluted, because: (1) Goodyear paid Randstad a certain amount; (2)
Randstad then paid Sapta, and Randstad kept a portion of the amount that was paid to it
by Goodyear for itself; and (3) Sapta then paid Icon, and Sapta kept a portion of the
amount that was paid to it by Randstad for itself. (ECF No. 35-1 at 4, 6; ECF No. 35-2 at
7; ECF No. 35-4 at 18, 23.)
In addition to the aforementioned contractual arrangements, Sapta had a separate
contract with Mudireddy (hereinafter, “the Sapta-Mudireddy Agreement”), wherein
Mudireddy agreed to permit only Sapta to have discussions with Randstad concerning the
payment for Mudireddy’s services for the IT Project. (ECF No. 35-1 at 5; ECF No. 35-4
at 7.) Stated differently, Mudireddy was barred under the terms of the Sapta-Mudireddy
Agreement from discussing the payment for his services with Randstad directly.
Mudireddy’s work on the IT Project was completely overseen and directed by
Goodyear or by Randstad. (ECF No. 35-1 at 4, 6; ECF No. 35-2 at 5, 7, 12; ECF No. 403 at 1—2.) Sapta had no technical input in the IT Project. (ECF No. 35-1 at 6; ECF No.
35-4 at 16; see also ECF No. 35-4 at 12 (Sapta’s former executive vice president
admitting in a deposition that the project manager for the IT Project was
Sapta,” and that the project manager would have been employed by either Randstad or
Goodyear, although he was unsure as to which one).)
Icon held Mudireddy’s work visa. (ECF No. 35-1 at 8.) furthermore,
Mudireddvs salary and benefits were provided by Icon directly to Mudireddy. (ECF No.
35-4 at 2—3; ECF No. 35-5 at 8.) Indeed, the Sapta-Icon Agreement provided that any
consultants in Mudireddy’s position:
shall remain the employees of [Icon], and [Icon] shall be solely responsible
for payment of all wages, payroll taxes, Social Security taxes, Workers’
Comp. Premiums and other costs and charges incurred in connection with
its employees. It is expressly understood by the parties hereto that all
personnel supplied by [Icon] to SAPTA GLOBAL shall remain under the
employ of [Icon], and SAPTA GLOBAL shall have no obligation to
compensate the personnel. [Icon] further warrants and represents to SAPTA
GLOBAL that all personnel it provides for placement by SAPTA GLOBAL
shall be paid the prevailing wage for his or her level of expertise.
(ECF No. 35-4 at 3.)
At some point, Randstad terminated the Sapta-Randstad Agreement, and then
entered into a contract with Icon to provide Mudireddy’s services to Randstad, and
Randstad in turn provided Mudireddy to Goodyear for the IT Project. (ECf No. 35-1 at
6; ECF No. 35-4 at 36.) Sapta was removed from the overall arrangement completely.
As a result: (1) Goodyear paid Randstad a certain amount for Mudireddy’s services in
relation to the IT Project; (2) Randstad directly paid Icon, and Randstad kept a portion of
the amount paid to it by Goodyear for itself; and (3) Icon realized more profit.
Sapta now alleges that Icon breached the Sapta-Icon Agreement by bypassing
Sapta to deal with Randstad directly. Sapta also alleges that Mudireddy breached the
Sapta-Mudireddy Agreement by dealing with Randstad directly. Icon and Mudireddy, in
turn, assert a counterclaim for the breach of the Sapta-Icon Agreement against Sapta for
Sapta’s alleged failure to pay the amount of $23,760 that is due and owing for the
services performed by Mudireddy for Goodyear on the IT Project, plus prejudgment
interest thereon. (ECF No. 14; see also ECF No. 35-6 at 12—14 (copies of the invoices
from Icon that remain unpaid by Sapta).) In support of this counterclaim, Icon and
Mudireddy argue that they resorted to directly engaging with Randstad only because
Sapta had failed to keep up with the payments for Mudireddy’s services. (ECF No. 35-2
In support of their pending motion for summary judgment, Icon and Mudireddy
argue that Sapta was acting as an employment agency. (ECF No. 35-2.) This is
problematic, argue Icon and Mudireddy, because Sapta has failed to comply with the
licensing requirements for an employment agency pursuant to New Jersey law. As a
result of this failure, argue Icon and Mudireddy, Sapta is barred from seeking any
damages in relation to the Sapta-Icon Agreement and the Sapta-Mudireddy Agreement
from Icon and Mudireddy. (Id.) In contrast, Sapta argues that issues of fact remain as to
whether it was acting as an employment agency in this instance. (ECF No. 3 8-3.)
It is not necessary for the Court to restate the standard for resolving a motion for
summary judgment that is made pursuant to Rule 56, because that standard has been
already enunciated. See Fed.R.Civ.P. 56(a) (providing for an award of summary
judgment if there is no genuine dispute of material fact and the movant is entitled to
judgment as matter of law); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247—48
(1986) (setting forth the summary judgment standard); United States ex rel. Kosenke v.
Carlisle HMA, Inc., 554 F.3d 88, 94 (3d Cir. 2009) (setting forth the summary judgment
Employment agencies in New Jersey
Under the provisions of the New Jersey Private Employment Agency Act
(hereinafter, “the NJPEAA”), an employment agency is defined in relevant part as any
for a fee, charge or commission. [p]rocures or obtains, or offers, promises
or attempts to procure, obtain, or assist in procuring or obtaining
employment for ajob seeker or employees for an employer; or. [s]upplies
job seekers to employers seeking employees on a part-time or temporary
assignment basis who has not filed notification with the Attorney General
[under certain circumstances]
[a]cts as a placement firm, career
counseling service, or resume service[.]
The NWEAA, insofar as it concerns employment agencies, also provides that an
shall not bring or maintain an action in any court of this State for the
collection of a fee, charge or commission for the performance of any of the
activities regulated by [N.J.S.A. 34:8-43] without alleging and proving
[with the New Jersey Department of Consumer Affairs], as
appropriate, at the time the alleged cause of action arose.
N.J.S.A. 34:8-45(b). Stated differently, an employment agency is barred under New
Jersey law from seeking to recover damages for an amount that it would otherwise be
entitled to collect if that employment agency failed to procctre the required license to
Icon and Mudireddy are entitled to summary judgment in their favor
as to Sapta’s claims that are asserted against them
The Court concludes that Sapta was acting as an employment agency without the
proper license during its involvement in the multi-party arrangement for the provision of
Mudireddy’s services to Goodyear. There are several cases from the New Jersey state
courts that buttress the Court’s conclusion here.
For instance, in Data Informatics, Inc. v. Arner1SOURC’E Partners, 33$ N.J.
Super. 61 (N.J. App. Div. 2001), the plaintiff (Data Infonnatics) entered into an
agreement with the defendant (AmeriSOURCE) to provide the services of
AmeriSOURCEs consultant employee to the plaintiffs client (Alliance) for an
information technology project. Id. at 64—65. Under this arrangement: (1) Alliance paid
Data Informatics, which kept a portion of that payment for itself as a fee; (2) Data
Informatics in turn paid Amer1SOURCE; (3) AmeriSOURCE was responsible for
providing a salary and benefits to its employee; and (4) AmeriSOURCEs employee was
not directed, overseen, or provided technical input by Data Informatics for the Alliance
project in any way. Id. at 66—69. Eventually, Amer1SOURCE directly entered into a
contract with Alliance to place its employee with Alliance, thereby causing Alliance to
terminate its relationship with Data Informatics. Id. at 63—67.
Data Informatics then brought an action against Amer1SOURCE and its employee
for breach of contract and other claims. However, the claims asserted by Data
Informatics were disposed of in favor of Amer1SOURCE on summary judgment, because
the aforementioned facts demonstrated that Data Infoniiatics was acting as an unlicensed
employment agency. Thus, the state court held that the claims by Data Infoniiatics of
any sort to recover for its lost fees or damages caused by Amer1SOURCE or its employee
in contract, in tort, or otherwise
were barred for its failure to comply with the
NJPEAA. Id. at 78—80.
The facts and the contractual arrangements presented in Data Inforincitics are
strikingly similar to the instant case. In both cases: (1) the plaintiff initially provided the
services of the defendant’s employee to the plaintiffs client: (2) the work of the
defendant’s employee was not under the control or the direction of the plaintiff; (3) the
defendant’s employee was paid by the defendant; and (4) the defendant and the plaintiffs
client eventually came to their own agreement concerning the services of the defendant’s
employee, thereby cutting out the plaintiff. Just as the state court in Data Informatics
found that the plaintiff therein was acting as an unlicensed employment agency that was
barred from seeking recovery against the defendant and the defendant’s employee, so too
does this Court conclude that Sapta was acting as an unlicensed employment agency. As
a result, Sapta is barred from seeking recovery from Icon or Mudireddy on its claims
here. Id. at 78—80 (holding that the NJPEAA is designed to be regulatory and penal in
nature, and that any equitable principles will not defeat its reach).
In Ven-azano Consulting Soltttions, LLC v. JSIvJI’/ International, Inc., No. A-159712T3, 2014 WL 351059$ (N.J. App. Div. July 17, 2014), the plaintiff (VetTazano)
entered into an agreement with the defendant (JSMN) to place JSMN’s employee as an
information technology consultant with Verrazano’s client (Barclays Capital, Inc., or
Barclays). Id. at *1. Under this arrangement: (1) Barclays paid Verrazano, which kept a
portion of that payment for itself as a fee; (2) VelTazano in turn paid JSMN; (3) JSMN
was responsible for providing the salary and benefits to its employee; and (4) JSMN’s
employee was not directed, overseen, or provided technical input by Verrazano for the
project at issue in any way. Id.
A dispute arose between Verrazano and JSMN, and thereafter Verrazano brought
an action to compel JSMN and its employee to share the compensation that they
apparently began to receive from Barclays directly. The state court found that the
aforementioned facts demonstrated that Venazano was acting as an unlicensed
employment agency, and thus it was baiied from seeking any recovery from JSMN and
its employee in that instance. Id. at *3 Again, the facts set forth in Verrazano
Consulting Soltttions and the facts in the dispute of the instant case are strikingly similar,
and, thus, this Court concludes that Sapta was acting as an employment agency without
the required license, and is therefore ban-ed from seeking recovery from Icon and
Mudireddy under New Jersey law. See also Ifuturistics, Inc.
Avacorp, LLC, No. A-
565$-i 1T3, 2013 WL 3762885 (N.J. App. Div. July 19, 2013) (in a multi-party
arrangement concerning the provision of the services by an information technology
consultant, where the plaintiff did not control or supervise the consultant at issue, and
where the plaintiff would have collected a fee, granting summary judgment to a
defendant against the plaintiff because the plaintiff acted as an employment agency
without a license).
Sapta argues that there is a question of fact remaining as to which entity
supervised or controlled Mudireddy, and that the recoid only demonstrates at this
juncture that Sapta was not Mudireddy’s supervisor for the IT Project. (ECF No. 38-3 at
6.) However, as discussed above, the record demonstrates that either Randstad or
Goodyear indeed supervised Mudireddy. Furthermore, the fact that Sapta was clearly not
involved in overseeing Mudireddy’s work, yet expected to collect a fee based upon the
provision of his services on the IT Project, supports the arguments by Icon and
Mudireddy that Sapta was acting as an employment agency as defined by the NJPEAA.
Sapta also argues that Randstad could be viewed as the actual employment agency
in this multi-party arrangement. (ECF No. 38-3 at 8.) However, it is the relationship
between Sapta and Icon that is being analyzed here, and the Court will draw no
conclusions as to the potential success of a hypothetical claim against Randstad by any of
the parties herein.
For the Court to permit Sapta to enforce the Sapta-Icon Agreement or the Sapta
Mudireddy Agreement and to “recover the unpaid sums otherwise due,” in view of
Sapta’s failure to obtain the required license to operate as an employment agency in New
Jersey, “would strip the [NWEAA] of the gravitas intended by the Legislature as a
remedial statute.” Ifuturistics, 2013 WL 3762885, at 5. Thus, the motion by Icon and
Mudireddy for summary judgment insofar as it concerns Sapta’s claims that are asserted
against them is granted.
Counterclaim for $23,760
It is undisputed that Sapta has failed to honor certain invoices submitted to it by
Icon for Mudireddy’s services that amount to $23,760. (ECF No. 35-2 at 16.)
furthermore, it is undisputed that Sapta never objected to the amounts sought by Icon in
those invoices. In addition, as Sapta’s claims against Icon and Mudireddy are now barred
by the NWEAA, Sapta cannot argue that it is rightfully withholding payment to Icon and
Mudireddy in order to set off the alleged damages linked to Sapta’s claims. (ECF No.
38-3 at 18—20.)
Therefore, Icon and Mudireddy are entitled to summary judgment in their favor on
the counterclaim for $23,760 that is owed under the terms of the Sapta-Icon Agreement.
See frederico v. Home Depot, 507 F.3d 188, 203 (3d Cir. 2007) (holding that the breach
of a contract is proven if there is: (1) a contract; (2) a breach of that contract; (3) damages
flowing therefrom; and (4) the party seeking damages has performed its own duty under
the terms of that contract).
Icon and Mudireddy seek an award of prejudgment interest on the amount of
$23,760 that they are owed. (ECF No. 35-2 at 16.)
The Court is well aware that there is “a strong presumption in favor of awarding
prejudgment interest.” Marcus v. PQ
corp., 458 F. App’x 207, 214 (3d Cir. 2012).
However, Icon and Mudireddy have not provided the Court with a proposed prejudgment
interest rate or any proposed calculations for such an award. In addition, Icon and
Mudireddy did not direct the Court to a date from which the prejudgment interest
allegedly began to accrue from all of the possible starting dates, such as when each
separate invoice became past due, or when the last invoice became past due, or when the
counterclaim was asserted.
Therefore, the part of the motion for summary judgment that concerns an award of
prejudgment interest is denied without prejudice. However, Icon and Mudireddy are
granted leave to move again within fourteen days for summary judgment on the issue of
prejudgment interest. If Icon and Mudireddy choose to do so, they must: (1) file a new
notice of motion in accordance with the Federal Rules of Civil Procedure and the Local
Civil Rules; and (2) submit a certification that sets forth the appropriate prejudgment
interest rate, the date or dates from which the interest calculations are to commence, and
the actual calculations for the amount of prejudgment interest allegedly owed.
For the aforementioned reasons, the Court grants the motion filed by Icon and
Mudireddy for summary judgment in their favor insofar as the motion concerns: (1)
Sapta’s claims that are asserted against them: and (2) their counterclaim in the amount of
$23,760. However, the Court denies the motion insofar as it concerns an award of
prejudgment interest without prejudice.
In view of the disposition detailed above, the Court need not address the
alternative arguments raised by Icon and Mudireddy in support of their motion for
summary judgment. The Court will enter an appropriate order and judgment.
Chief dge, United States District Court
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