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Pharmaceutical Sales v. J.W.S. Delavau Co.

July 10, 2000


The opinion of the court was delivered by: Cooper, District Judge



This matter comes before the Court on an appeal by defendant J.W.S. Delavau Co. ("Delavau") from an Order entered by Magistrate Judge Wolfson on April 4, 2000, denying Delavau's motion for leave to file a third amended answer to add a public policy defense. For the reasons set forth in this Memorandum and Order, we will reverse and permit the pleading to be filed.


The background facts have been set forth in this Court's Memorandum Opinions dated May 13, 1999 and July 9, 1999, *fn1 and in the interest of brevity are incorporated by reference herein. Briefly, plaintiff Pharmaceutical Sales and Consulting Corporation ("PSCC") and Delavau entered into a Sales, Consulting and Confidential Disclosure Agreement ("the Agreement"), which was executed by the parties on July 1, 1992. Pharmaceutical Sales, 59 F. Supp. 2d at 409. The Agreement provided that Delavau was to pay PSCC a commission for sales PSCC brought to Delavau from Lederle Laboratories, Inc. ("Lederle"). Id. The Agreement was signed by John Sadlon ("Sadlon"), as president of PSCC, and on its behalf. Id. at 409-10. PSCC brought this action for breach of contract, alleging that defendant Delavau failed to pay commissions due and owing to PSCC pursuant to the Agreement. Id.

Delavau had previously moved for leave to file a second amended answer to state counterclaims against two individuals, namely Sadlon and Laura Micelli ("Micelli"), as counterclaim defendants in this suit. See id. at 410. This Court treated Delavau's prior motion as a motion to amend the Final Pretrial Order filed on October 1, 1997 and granted it. Id. at 411, 416-17. Delavau filed its second amended answer on July 9, 1999.

On September 27, 1999, Judge Wolfson ordered discovery limited to the relationship between Sadlon and Micelli, and their relationship with PSCC. (See Order filed 9-27-99.) The order required discovery to be completed by November 30, 1999. (Id.)

On January 3, 2000, PSCC moved to amend its complaint, alleging that Delavau had fraudulently transferred assets to Accucorp., Inc. ("Accucorp"). On February 23, 2000, Judge Wolfson entered an Order granting PSCC leave to amend its complaint to add Accucorp as a defendant and to assert a cause of action for violation of the Uniform Fraudulent Transfer Act, but stayed further discovery on this claim, pending final judgment. (See Order filed 2-23-00.)

At a pretrial conference on March 7, 2000, Judge Wolfson granted Delavau's request to file a motion for leave to amend its answer to add an affirmative defense of public policy. (See Supplemental Certif. of Richard S. Hyland, Esq. in Supp. of Appeal ¶ 3.) Delavau's request was premised on newly-acquired evidence suggesting that PSCC and Richard T. DiBenedetto, Sr. ("DiBenedetto"), Lederle's director of quality assurance, engaged in a scheme of commercial bribery in violation of New Jersey's Commercial Bribery Statute (the "Bribery Statute"), N.J. Stat. Ann. § 2C:21-10. (Delavau's Br. in Supp. of Appeal dated 4-17-00 at 4-5.) Delavau alleges that it learned for the first time on August 26, 1999, that Micelli was married to DiBenedetto's son, Richard T. DiBenedetto, Jr., and that DiBenedetto was responsible for approving Delavau as an outside contractor. (See Delavau's Br. in Supp. of Appeal at 4.) Delavau alleges that DiBenedetto violated a duty of fidelity owed to Lederle by agreeing to steer Lederle's business to Delavau. (See generally Def.'s Br. in Supp. of Appeal at 5-9, 13-19.) Delavau also asserts that, in exchange, PSCC agreed to pay one-half of the commissions earned by PSCC on such sales to Micelli, DiBenedetto's daughter-in-law, by making her a partner in PSCC without any consideration. (Id.)

Judge Wolfson heard oral argument on Delavau's motion on April 3, 2000, and ruled that Delavau's proposed amendment would be futile because Delavau does not allege that DiBenedetto received a direct benefit, which she found to be an element of the Bribery Statute. (See Tr. of 4-3-00 Hr'g at 14-15.) In so ruling, Judge Wolfson stated:

Essentially, . . . I find that the motion itself at this point would be futile, because [the facts alleged do not amount to a violation] of the Commercial Bribery Statute to raise a public policy defense. [One, t]here is no indication at all that Mr. DeBennedetto, Sr. (sic) received any benefit other than a psychological one perhaps that his children might benefit in some way from the commission that Delavau was going to be paying. . . . [Second,] I did not find anything in the case law that would extend the kind of benefit you're suggesting to that statute. (Id.)

Judge Wolfson's ruling was memorialized in an Order filed on April 4, 2000. Delavau now appeals that order.


A district court, in reviewing a magistrate judge's order on a non-dispositive motion, may modify or vacate the order only if the ruling was "clearly erroneous or contrary to law." 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(a); Loc. R. 72.1(c)(1); see Cipollone v. Liggett Group, Inc., 785 F.2d 1108, 1113 & n.5 (3d Cir. 1986). "A finding is clearly erroneous `when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.'" Dome Petroleum Ltd. v. Employers Mut. Liab. Ins. Co., 131 F.R.D. 63, 65 (D.N.J. 1990) (quoting United States v. Gypsum Co., 333 U.S. 364, 395 (1948)). ...

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