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News America Marketing In-Store Services, LLC v. Floorgraphics

December 12, 2012


The opinion of the court was delivered by: William J. Martini, U.S.D.J.:


This matter comes before the Court on Defendant Floorgraphics, Inc.'s ("FGI's") motion to dismiss this declaratory judgment action under Federal Rule of Civil Procedure 12(b)(6). Plaintiff News America Marketing In-Store Services, LLC ("NAM") opposes the motion. For the reasons set forth below, FGI's motion is DENIED.


As an initial matter, the Court notes that NAM's present action against FGI arises out of previous litigation between the parties, and that an understanding of those two related lawsuits bears on the present motion to dismiss.

The Parties' 2004 Lawsuit

On July 19, 2004, FGI commenced suit against NAM in this district at Floorgraphics, Inc. v. New America Marketing In-Store Services, 3:04-cv-3500 (AET) (the "2004 Lawsuit"). At that time, FGI and NAM were business rivals who each provided in-store advertising, promotion and sales merchandising services for sellers of consumer product goods. (Compl. ¶ 13.) In the 2004 Lawsuit, FGI accused NAM of unfair business practices, including allegations that NAM obtained unauthorized access to a password-protected website maintained by FGI. (Id. at ¶ 14.) The 2004 Lawsuit eventually went to trial before District Judge Anne. E. Thompson. During trial of the 2004 Lawsuit, Gary Henderson, a former NAM employee, gave unequivocal testimony -- as he did during his pre-trial deposition -- stating that he did not access FGI's password-protected website or direct anybody else to do so. (Id. at ¶ 18.) Thereafter, and prior to completion of the trial, FGI and NAM settled the 2004 Lawsuit on March 9, 2009 (the 2004 Settlement").*fn1

As a result of the 2004 Settlement, NAM paid FGI and four of its corporate officers an aggregate sum of $29,500,000 for certain FGI assets. (Id. at ¶ 25.) The parties also executed a six-page Mutual Release dated March 10, 2009, in which FGI agreed to: release[] and forever discharge[] News America from all claims, demands, rights, liabilities and causes of action of every nature and description whatsoever, whether based in law or equity, on federal, state, local, foreign, statutory or common law, . . (including, but not limited to, any and all claims arising out of or relating to any acts, omissions, or statements by News America), whether known or unknown, concealed or not concealed, . . . that were asserted or that could have been asserted . . . at any time, in any forum. . . . (See Mutual Release 2, 2009 Lawsuit, ECF No. 23-4.)

The 2009 Lawsuit

Shortly after consummating the 2004 Settlement, NAM came to believe that a substantial part of the assets which it paid FGI for pursuant to the 2004 Settlement were actually invalid, unassignable, or non-existent. As a result, on December 1, 2009, NAM commenced a new lawsuit against FGI and its corporate officers for breach of contract and fraud at News America Marketing In-Store Services v. Andijar, 2:09-cv-6070 (WJM) (the "2009 Lawsuit") (Compl. ¶ 27.) The 2009 Lawsuit remains pending before this Court.

FGI's Subsequent Discovery of New Evidence

FGI asserts that after it signed the Mutual Release on March 10, 2009, it discovered new evidence demonstrating that Gary Henderson committed perjury during his pre-trial deposition and at trial of the 2004 Lawsuit when he denied that he knew who was responsible for hacking into FGI's computer system. FGI asserts that as a result of Henderson's perjury, FGI was fraudulently induced into settling the 2004 Lawsuit. In light of that newly discovered evidence, FGI initially moved before Judge Thompson to reopen the 2004 Lawsuit pursuant to Federal Rule of Civil Procedure 60(b). On May 17, 2010, Judge Thompson denied that motion. The Third Circuit affirmed that decision via a mandate issued on May 13, 2011, at U.S.C.A. No. 10-2721.

Thereafter, on January 6, 2012, FGI moved before Magistrate Judge Mark Falk to amend its answer in the 2009 Lawsuit to include counterclaims against NAM for fraud, fraudulent inducement, and civil conspiracy, again based on newly discovered evidence of Mr. Henderson's alleged perjury (FGI's "Fraud Claims"). (Compl. ¶ 39; see also 2009 Lawsuit Hr'g Trans. 30, April 2, 2012, ECF No. 76.) NAM opposed FGI's motion and sought to instead have FGI's Fraud Claims dismissed with prejudice, based on its assertion that the 2004 Mutual Release barred FGI from bringing those Fraud Claims.

(Compl. ¶ 40.) The parties provided extensive briefing on that issue. (See 2009 Lawsuit, ECF Nos. 60, 64, 69.)

On April 2, 2012, Judge Falk held a hearing on FGI's motion to amend. At that hearing, Judge Falk noted NAM's zealous advocacy for dismissal of FGI's Fraud Claims with prejudice based on futility grounds, in light of the Mutual Release. (2009 Lawsuit Hr'g Trans. 35, April 2, 2012, ECF No. 76.) Judge Falk also noted his concern that making a dispositive ruling on that issue would encroach on the role of the district judge. (Id.) Ultimately, ...

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