IDINGO LLC et al v. COHEN et al

Filing 44

OPINION filed. Signed by Judge Anne E. Thompson on 6/2/2017. (mmh)

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

RECEIVED

JUN 0 2 2017
IDINGO LLC, a Delaware limited liability
company, and HY ENTERPRISE, LLC, a
Delaware limited liability company,

AT 8:30
WILLIAM T. WALSH
CLERK

M

Civ. No. 16-6525
Plaintiffs,

OPINION

v.
AMIR COHEN, SHAY COHEN, and
SHAMIR, LLC, a Delaware limited liability
company,
Defendants.
THOMPSON, U.S.D.J.

INTRODUCTION
This matter has come before the Court on a motion to enforce settlement brought by
Plaintiffs !dingo LLC and HY Enterprise, LLC (collectively "Plaintiffs"). (ECF No. 37).
Defendants Amir Cohen, Shay Cohen, and Shamir, LLC (collectively "Defendants") oppose the
motion. (ECF No. 39). The Court has decided the motion based on the written submissions of the
parties and a hearing held on May 10, 2017. For the following reasons, Plaintiffs' motion is denied.

BACKGROUND
This case is a dispute over an employee who left a company and allegedly unlawfully
misappropriated the company's trade secrets and confidential information and competed with the
company in violation of his employment agreements. The Court previously entered an order, which
temporarily enjoins Defendants from, inter alia, selling or marketing health supplement products
that Plaintiffs also sell, and from using or disclosing Plaintiffs' confidential information or trade
secrets. (ECF No. 7). The Court has since ruled on Defendants' motion to dismiss and it appears

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that the parties engaged in settlement negotiations. Subsequently, Plaintiffs filed the instant motion
to enforce settlement. (ECF No. 37).

DISCUSSION
"Construction and enforcement of settlement agreements is governed by state law."
Muhammad v. Dept. of Corrections, 2012 WL 1393052, at *2 (D.N.J. Apr. 20, 2012) (citing
Excelsior Ins. Co. v. Pennsbury Pain Ctr., 975 F. Supp. 342, 348-49 (D.N.J.1996)). In New Jersey,
a settlement i~ a "contract like any other contract," id. (quoting Pesldn v. Pesldn, 271 N.J. Super.
261, 683 (App. Div. 1994)), and should be honored and enforced absent "a demonstration of fraud
or other compelling circumstances." Lawn Doctor, Inc. v. Rizzo, 2012 WL 6156228, at *6 (D.N.J.
Dec. 11, 2012) (quoting Pascarella v. Bruck, 190 N.J. Super. 118, 124-25 (App. Div. 1983)
(internal quotations omitted)). Like a contract, a settlement must have ''the basic contract fonnation
elements of offer and acceptance of sufficiently definite essential terms, or in other words, mutual
asset to the same terms (a 'meeting of the minds')." LNT Merchandising Co. v. Dyson, Inc., 2009
WL 2169236, at *2 (D.N.J. Jul. 21, 2009).
New Jersey has a "strong public policy favoring settlements," Nolan v. Lee Ho, 120 N.J.
465, 472 (1990), such that courts "strain to give effect to the terms of a settlement wherever
possible," Dep't ofPub. Advocate v. N.J. Bd. Of Pub. Utils., 206 N.J. Super. 523, 527-28 (App. Div.
1985). As such, oral settlements are binding, even when the parties "contemplate the later
execution of a formal document to memorialize their undertaking." U.S. v. Lightman, 988 F. Supp.
448, 459 (D.N.J. 1997). The party seeking to enforce the sett~ement has the initial burden of
proving its existence. See Lightman, 988 F. Supp. at 458.
In this case, it appears that the parties engaged in settlement negotiations and exchanged
multiple drafts of a consent judgment and settlement agreement. The main issue here is whether the
. parties came to an agreement regarding the amount of the liquidated damages provision in these

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documents. Originally, on January -17th, Plaintiffs' counsel sent a draft consent judgment to
Defendants' counsel, which included a $50,000 liquidated damages provision. (Declaration of
Bruce D. Greenberg ("Greenberg Deel."), ECF No. 37-2 at if 8). Defendants' counsel provisionally
responded that Defendants could agree to the substantive terms, but would also need to review a full
settlement agreement. (Id.

if 9).

On January 24th,_ Plaintiffs' counsel sent a draft of a full settlement

agreement, which contained a revised liquidated damages provisions in the amount of $500,000.

(Id.,, 11-12). The parties then negotiated over and edited the settlement agreement and consent
· judgment via e-mail. On February 7th, Plaintiffs' counsel sent proposed final versions of the
documents to Defendants' counsel. (Id., 16). On February 13th, Defendants' counsel returned
signed, but altered, versions of both documents. (Id.

if 17).

The liquidated damages provision in

both documents had been changed from $500,000 to $50,000. (Id. , 17).
Plaintiffs seek to enforce the version of the settlement agreement and consent judgment sent
to Defendants via e-mail on F ebtuary 7th. Defendants argue that they never manifested an intent to
be bound by that agreement, which included the $500,000 liquidated damages provision.·.· It appears
to the Court that the liquidated damages provision is a material term of the proposed agreements,
and the parties never agreed on a specific amount for that provision. Despite negotiations between
the parties, the Court is not persuaded that both parties ever demonstrated mutual assent to the terms
of any one version of the consent judgment and settlement agreement. Plaintiffs have not met their
burden of proving that the parties agreed to a binding settlement agreement. Plaintiffs' motion to
enforce settlement will be denied, and the temporary restraints previously ordered by the Court will
remain in effect.

CONCLUSION
For the reasons stated herein, Plaintiffs' motion is denied. An appropriate order will follow.
Isl Anne E. Thompson
ANNE E. THOMPSON, U.S.D.J.

Date: June 2, 2017

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