ADP, LLC v. ULTIMATE SOFTWARE GROUP, INC.
Filing
129
OPINION. Signed by Judge Kevin McNulty on 4/17/18. (DD, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
ADP, LLC
Civ. No. 16-8664 (KM) (MAR)
Plaintiff,
OPINION
V.
ULTIMATE SOFTWARE GROUP, INC.,
Defendant.
KEVIN MCNULTY, U.S.D.J.:
Now before the Court is the motion (ECF no. 121) of the plaintiff, ADP,
Inc. (“ADP”) for reconsideration of the Court’s decision denying ADP’s motion to
dismiss the counterclaims of defendant Ultimate Software Group, Inc. (“USG”).
As I
write for
the parties, this opinion assumes familiarity with the Court’s
prior Order (ECF no. 120) and Opinion (“Op.”, ECF no. 124).’
The standards governing a motion for reconsideration are well settled.
See generally D.N.J. Loc. Civ. R. 7.1(i). Reconsideration is an “extraordinary
remedy,” to be granted “sparingly.” NL Indus. Inc. v. Commercial Union Ins. Co.,
935 F. Supp. 513, 516 (D.N.J. 1996). Generally, reconsideration is granted in
three scenarios; (1) when there has been an intervening change in the law; (2)
when new evidence has become available; or (3) when necessary to correct a
clear error of law or to prevent manifest injustice. See North River Ins. Co. v.
CIGNA Reinsurance Co., 52 F.3d 1194, 1218 (3d Cir. 1995); Carmichael v.
The Opinion was originally filed as ECF no. 119. 1 then filed an amended
version of the Opinion (ECF no. 124) which corrected two citations to a prior case,
*4 (D.N.J. Nov. 30, 2016). As
NV)?, Inc. v. Davem, No. 15-5059, 2015 WL 7013459, at
there was no change in substance or pagination between the two versions, I here cite
to the amended version, ECF no, 124.
1
Everson, 2004 WL 1587894, at *1 (D.N.J. May 21, 2004). Local Rule 7,1(i)
requires such a motion to specifically identifSr “the matter or controlling
decisions which the party believes the Judge or Magistrate Judge has
overlooked.” Id.; see also Egloff v. New Jersey Air Nat’l Guard, 684 F. Supp.
1275, 1279 (D.N.J. 1988). Evidence or arguments that were available at the
time of the original decision will not support a motion for reconsideration.
Damiano v. Sony Music Entm’t, Inc., 975 F. Supp. 623, 636 (D.N.J. 1997); see
also North River Ins. Co., 52 F.3d at 1218; Bapu Corp. v. Choice Hotels Int’l, Inc.,
2010 WL 5418972, at *4 (D.N.J. Dec. 23, 2010) (citing P. Schoenfeld Asset
Mgmt. LLC v. Cendant Corp., 161 F. Supp. 2d 349, 352 (D.N.J. 2001)).
ADP’s motion presents no such “overlooked” issue. To read ADP’s brief,
one would think that the Noerr-Pennington issue had been decided against it.
But there is no dispute as to the applicable legal standards under Noerr
Pennington. I merely ruled that I would not dispose of the matter on a motion to
dismiss, but would revisit it on summary judgment with the benefit of a record.
That was and is the only question presented. I adhere to that ruling.
DISCUSSION
A.
Reconsideration
Like many a litigant, ADP brings a motion for reconsideration asserting
that the Court, in deciding as it did, must have “ignored” or “overlooked” its
submissions or arguments. In particular, ADP says, the Court did not consider
the prior cases attached to the Cmz declarations, or rule on its request for
judicial notice of them. This reconsideration motion is plainly meritiess, in that
it can easily be disposed of via quotations from my prior Opinion.
The prior cases are litigations brought by ADP against others. Because it
“won” almost a]] of them, ADP says, the sham litigation exception cannot apply,
and Noerr-Pennington must be held to bar the counterclaims as a matter of law.
ADP seems to define a win as enforcement, to any degree, of a restrictive
covenant.
2
In fact, I did not miss the citations to the other cases, nor did I believe I
was powerless to consider them. My Opinion specifically noted that “I may also
take judicial notice of another court’s opinion, ‘not for the truth of the facts
recited therein, but for the existence of the opinion, which is not subject to
reasonable dispute over its authenticity.’ S. Cross Overseas Agencies, Inc. v.
WahKwong Shipping Gip. Ltd., 181 F.3d 410, 426—27 (3d Cir. 1999). See
generally Fed. R. Evid. 201.” (Op. at
4)2
I reviewed the submissions, considered the effect of those thirteen prior
cases, and ruled as follows:
Describing a series of cases where the non-compete agreements
were litigated, ADP touts a won-lost3 record of 12-1. ([P1. Brf. at
18—21.) USG disputes the reading of these cases as victories for
ADP, while also pointing out that there is still a factual controversy
as to whether the first prong of Professional Real Estate
(“objectively baseless”) has been met. (Def. Opp. at 20, 25.) At the
motion-to-dismiss stage and without the benefit of discovery
definitively setting out the universe of cases between ADP, USG,
and its employees, it is too early to decide whether the series of
litigations pursued by ADP against USQ and its employees
constitute “sham litigation.”
(Op. at 8) Indeed, the citation to the plaintiffs brief refers to its discussion of
the very cases that the court supposedly “overlooked.”
Implicit in ADP’s analysis seems to be some notion that, if it has “won” a
large majority of prior similar litigations, then the court is compelled to dismiss
the counterclaims at the motion to dismiss stage. Not so. A court may, in a
sufficiently clear case, decide a Noen—Pennington issue at the motion to dismiss
stage. (ADP seems to read “may” as “must.”) Alternatively, it may often present
I do not, by the way, routinely include this material as boilerplate when reciting
the standard of review on a Rule 12(b)(6) motion to dismiss. I include it when I am
asked to take note of another court’s opinion.
A win seems to mean, according to ADP’s briefing, a finding by the court that
ADP’s restrictive covenant with its former employee was, at least in part, valid and
enforceable. [This fn. in original]
2
3
a jury question, or at least a summary judgment question. I acknowledged, and
did not “overlook,” that principle in my earlier Opinion:
A court may decide the applicability of the Noerr-Pennington
doctrine on a motion to dismiss under Fed. R. Civ. P. 12(b)(6) if no
factual issues are present. Trustees of Univ. of Pa. v. St. Jude
Children’s Res. Hosp., 940 F. Supp. 2d 233, 242—43 (E.D. Pa.
2013) (“To be sure, the question of whether litigation is a sham can
be a fact question for the jury. But as the Supreme Court
explained in PRE, when ‘there is no dispute over the predicate facts
of the underlying legal proceeding, a court may decide probable
cause [and thus Noerr-Pennington applicability] as a matter of law.”
(citations omitted and emphasis added)); Asphalt Paving Sys. v.
Asphalt Maint. Sols., LLC, No. 12-2370, 2013 WL 1292200, at *7..*8
(E.D. Pa. Mar. 28, 2013) (deciding only that Noerr-Pennington
immunity applied in its grant of dismissal); Bristol-Myers Squibb
Co. v. WAX Corp., 77 F. Supp. 2d 606, 616 (D.N.J. 2000) (same).
(Op. at 6 n.3)
As pointed out in my prior Opinion, the applicability of the doctrine is
not just a matter of compiling a won/lost record. That history of litigation
against others is of course relevant, but it is not necessarily dispositive. As
pointed out in my prior Opinion,
[t]he standard set out in [California Motor Transportation Co. v.
Trucking Unlimited, 404 U.S. 508 (1972)] governs in those cases;
the court should ask “whether a series of petitions were filed with
or without regard to merit and for the purpose of using
governmental process (as opposed to the outcome of that process)
to harm a market rival and restrain trade.” Id. The court is expected
to perform a more holistic review that may include looking at the
filing success of the claimant, evidence of bad faith, and the
magnitude and nature of the collateral harm caused by the filings
as circumstantial evidence of the subjective motivations of the
petitioner. Id. at 180—81.
(Op. at 6)(emphasis added)
That “holistic review” is one which “may include,” but is not limited to,
the success, or not, of the actions. (Id.) “This inquiry asks whether a series of
petitions were filed with or without regard to merit and for the purpose of using
4
the governmental process (as opposed to the outcome of that process) to harm a
market rival and restrain trade.” Hanover 3201 Realty, LLC v. Viii.
Supermarkets, Inc., 806 F.3d 162, 180 (3d Cir. 2015) (emphasis added). The
counterclaim complaint alleges such misuse of the litigation process.
The Court will consider the other factors identified in Caifomia Motor in
assessing whether litigation was brought in bad faith simply to intimidate or
discourage competition. I hasten to state that I am not finding that it was; all I
have ruled is that the determination will be made later in the process.
The motion for reconsideration is denied.
Certification for Interlocutory Appeal
B.
A district court may, within its discretion, certify an interlocutory order
for immediate appeal:
(b) When a district judge, in making in a civil action an order
not otherwise appealable under this section, shall be of the opinion
that such order involves a controlling question of law as to which
there is substantial ground for difference of opinion and that an
immediate appeal from the order may materially advance the
ultimate termination of the litigation, he shall so state in writing in
such order.
28 U.S.C.
§
1292(b). See also Simon a United States, 341 F.3d 193, 199 (3d Cir.
2003). Thus to certify an order for appeal, the court must find “(1) that the
order of appealability involves a controlling question of law, (2) as to which
there is a substantial ground for a difference of opinion, and (3) that an
immediate appeal may materially advance the ultimate termination of the
litigation.” Ensey v. Gov’t Employers Ins. Co., No. CV 12-7669 (JEI/KMW), 2014
WL 12613400, at *2 (D.N.J. Aug. 18, 2014) (citing Katz v. Carte Blanche Corp.,
496 F.2d 747, 753 (3d Cir. 1974)). Certification is not mandatory, however;
even if the three criteria are met, it is discretionary. Id. (citing Bachowski
i.’.
Useng, 545 F.2d 363, 368 (3d Cir. 1976); P. Schoenfeid Asset Mgmt. LLC v.
Cendant Corp., 161 F. Supp. 2d 355, 358 (2001)). My order, a routine
application of the Rule 12(b)(6) standard, serves only to delay consideration of
the substantive issue until the completion of discovery and summary
judgment. It does not present grounds for an interlocutory appeal.
I first consider in order the purportedly controversial, appeal-worthy
“controlling questions” as presented by ADP:
1) Whether a court on a motion to dismiss under the Noerr
Pennington doctrine may fail to consider crucial evidence
presented by the moving party to defeat the “sham litigation”
exception. The Court did not consider the Cruz declarations or the
opinions attached to them as exhibits.
The court did not rule that it was entitled to “fail to consider crucial
evidence.” Nor did it in fact fail to consider that evidence. The “evidence” here
consists of thirteen prior decisions in cases brought by ADP. As outlined above,
I read and considered them.
2) Whether a court on a motion to dismiss under the Noerr
Pennington doctrine may fail to consider and rule on a request for
judicial notice of crucial evidence presented by the moving party to
defeat the “sham litigation” exception. The Court did not rule on
ADP’s request for judicial notice.
The court did not “fail to consider and rule on a request for judicial
notice.” Once again, the “crucial evidence” consists of the thirteen prior
decisions. Not only did the court’s Opinion specifically provide that “1 may also
take judicial notice of another court’s opinion
....“
I did take notice of those
prior decisions; I specifically cited to pages 18—2 1 in ADP’s brief, where they
were discussed; and I dealt with ADP’s argument that this won/lost record
entitled it to the relief requested.
3) Whether the materials presented on ADP’s motion are of a
nature sufficient to refute the “sham litigation” exception to Noerr
Pennington as that exception has been construed by the Third
Circuit in Hanover 3201 Realty. Review of the opinions presented
is sufficient to satisfy the “holistic review.”
This court’s prior opinion cited and followed the standards set forth in
Hanover 3201 Realty, LLC v. Village Supermarkets, Inc., 806 F.3d 162, 178 (3d
Cir. 2015). Hanover, however, partially reversed the dismissal of an antitrust
6
suit, and also found that there was sham litigation, disentitling the defendant
to assert the Noen—Penninyton defense. The case went up to the Court of
Appeals on an ordinary appeal from a final decision. The particular issue
here—whether it is error to deny a motion to dismiss on Noerr
Pennington/ sham litigation grounds—was not presented. That issue involves
no more than an application of agreed-upon standards to the facts, and a
judgment call about whether further discovery is required. As such, it is not
really a “question of law” requiring appellate guidance at all. See Ahrenholz v.
Bd. Of Trustees, 219 F.3d 674, 676—77
putative
§
(7th
Cir. 2000) (looking to whether a
1292(b) appeal concerns a “pure question of law,” such as the
“meaning of a statutory or constitutional provision, regulation, or common law
doctrine”) .“
In addition, a
§
1292(b) appeal is appropriate for an order which, at least,
“if erroneous, would be reversible error on final appeal.” Katz, 496 F.2d at 755.
This order, denying a motion to dismiss, would have little if any significance on
a final appeal; it is the kind of interlocutory issue which, if incorrect, is likely to
be corrected or mooted by subsequent developments in the litigation. It can
most profitably be heard in the usual course, on appeal from a final decision.
The following cases, cites by UGS, are to a similar effect as to controlling
questions of law: In re Schering-Plough Corp., No. 08-cv-397 (DMC), 2010 WL
2546054, at *4 (D.N.J. June 21, 2010) (“This Court has previously determined that
certification to appeal the interlocutory Order is inappropriate when the underlying
order involves mixed questions of fact and law because Section 1292(b) was not
designed to secure appellate review of factual matters or of the application of the
acknowledged law to the facts of a particular case, matters which are within the sound
discretion of the trial court.” (internal quotation marks and brackets omitted)); Adsta
Records, Inc. ti. Flea World, Inc., No. 03-cv-2670 (JUS), 2006 WL 2882990, at *2 (D.N.J.
Oct. 10, 2006) (“Courts in this District have held that, although a question may
appear to be a controlling question of law, questions about a district court’s
application of the facts of a case to established legal standards are not controlling
questions of law for purposes of Section 1292(b).”); Krishanthi ii. Rajaratnam, No. 09cv-05395 (DMC), 2011 WL 1885707, at *3 (D.N.J. May 18, 2011) (“Here, Defendants
challenge the sufficiency of the facts alleged, and the application of the legal standard
to the facts at issue; thus, Defendants’ argument by necessity involves an interplay of
facts and law, and such matters are within the discretion of this Court. Therefore,
Defendants have not established that this Courts Opinion exclusively concerns
controlling questions of law.”).
4
7
See 28 U.S.C.
§
1291. An interlocutory appeal may also be appropriate where
resolution of the question is of great consequence to the litigation. Katz, supra.
This question, however, implicates only the usual inconvenience of litigating an
issue on which ADP believes it will prevail.
Nor is this a disputed or controversial question. “Substantial grounds for
difference of opinion” exist, for purposes of section 1292(b), when the courts
that have examined an issue reach “conflicting and contradictory opinions
upon the particular question of law.” Ensey a Gov’t Employers Ins. Co., No. CV
12-7669 (JEI/KMW), 2014 WL 12613400, at *2 (D.N.J. Aug. 18, 2014) (quoting
Kotheck a General Motors Corp., 702 F. Supp. 532, 542 (E.D. Pa. 1988)). See
also Cuttic v. Crozer—Chester Med. Ctr., 806 F. Supp. 2d 796, 804—05 (E.D. Pa.
2011) (“[S]ubstantial grounds for difference of opinion exist where there is
general doubt or conflicting precedent as to the correct legal standard.”). There
is no disagreement, doubt, or dispute in the case law as to the applicable
standards under California Market or Hanover. The only question is whether
those standards will be applied now, or later, to achieve a substantive result.
On that score, I consider whether an interlocutory appeal would
materially advance the ultimate termination of the litigation. That question
must be considered in the context of the general policy against piecemeal
litigation that is embodied in 28 U.S.C.
U.S.C.
§
§
1292 and the final-decision rule of 28
1291. This litigation will go forward in any event, and the
counterclaims will probably involve contentions and witnesses that to some
extent will overlap with the merits of the main claims. Interrupting the progress
of the case for a round-trip to the Court of Appeals is as likely to delay as to
hasten the day when the merits can finally be resolved. And ADP is frank about
its desire to stay all proceedings on the counterclaims pending the outcome of
this motion and any resulting interlocutory appeal.
For all of the foregoing reasons, a certificate of appealability pursuant to
28 U.S.C.
§
1292(b) is denied.
8
C.
Stay/Extension of time
ADP seeks to stay proceedings on the counterclaim pending resolution of
this motion and, if the motion is granted, pending the outcome of any
interlocutory appeal. In light of my rulings, that application is moot, and
therefore is denied.
ADP also seeks a stay of its time to answer the Counterclaims pending
resolution of this motion for reconsideration. That application, too, is denied as
moot.
CONCLUSION
For the reasons stated above ADP’s motion for reconsideration and
associated relief (ECF no. 121) is denied.
An appropriate order follows.
Dated: April 17, 2018
I
Kevin McNulty
United States District Judge
9
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