NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued April 24, 2013
On appeal from Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. C-77-08.
Andrew L. Indeck argued the cause for appellants (Weber Gallagher Simpson Stapleton Fires & Newby, LLP, attorneys; Mr. Indeck, of counsel and on the brief; Jessica V. Henry, on the brief).
Charles M. Radler, Jr. argued the cause for respondents (Dughi, Hewit & Domalewski, attorneys; Craig A. Domalewski, Mr. Radler and Gary L. Riveles, on the brief).
Before Judges Grall, Koblitz and Accurso.
The dispute underlying this appeal concerns an agreement on the distribution of martial arts training videos and DVDs (recordings). Plaintiff Damian Ross is a martial arts instructor and self-defense trainer and the owner of Zenshin, LLC (Zenshin), a producer and distributor of martial arts visual instructional recordings. Defendant Christopher Pizzo is the president of defendants Noble Learning Systems, Inc. (Noble) and Close Combat, Co., LLC (Close Combat) (collectively defendants). In December 2005, Ross, on behalf of Zenshin, and Pizzo, on behalf of Noble, executed a distribution agreement, which addressed Zenshin's pre-existing recordings and future recordings made by Zenshin, Noble or the combined efforts of both that featured Ross, Pizzo or Carl Cestari, another martial arts expert.
In February 2008, plaintiffs filed a civil action charging defendants with conversion, invasion of privacy, misappropriation of Ross's name, likeness and reputation and misappropriation of Zenshin's and Ross's intellectual property. They also claimed entitlement to relief on theories of unjust enrichment and quantum meruit. Defendants filed an answer and counterclaim charging that plaintiffs interfered with prospective economic advantage and breached the covenant of good faith and fair dealing.
Defendants moved to enforce the agreement's arbitration clause, and subsequently the parties submitted a consent order, which the court entered, dismissing the litigation without prejudice and referring all claims and defenses to arbitration. In November 2011, the arbitrator, C. Judson Hamlin, denied defendants' motion for summary judgment based on their assertion that the litigation was pre-empted by federal copyright law, concluding that plaintiffs' analysis of the claims was more persuasive. He concluded that summary judgment on defendants' other claims had to abide Pizzo's deposition and ordered Pizzo to appear for a deposition.
On the day Pizzo was ordered to submit to the deposition, defendants moved before the Superior Court for a stay of the arbitration and entry of declaratory judgment defining the parties' respective rights as well as those of Cestari and his estate. The court denied that motion on the ground that defendants had waived their rights to proceed in court by consenting to arbitration.
Before the Superior Court denied defendants' motion, their attorney advised the arbitrator that Pizzo would not appear for the deposition. Consequently, the arbitrator struck defendants' pleadings. After the arbitrator scheduled a hearing for plaintiffs to present proof of their damages, defendants' attorney advised the arbitrator that his clients did not intend to further participate in the arbitration.
The arbitrator found in plaintiffs' favor and ultimately awarded plaintiffs $2, 071, 057 for misappropriation of names and likeness plus $16, 989.16 as contract damages and $350, 000 as punitive damages. Plaintiffs sought an order confirming the award and prejudgment interest, and defendants filed a cross-motion seeking to vacate the award and opposing prejudgment interest.
Following oral argument on the motions, on July 31, 2012, Judge Contillo issued a comprehensive letter opinion setting forth his findings and reasons for upholding the arbitrator's award and exercising his discretion to award prejudgment interest. Before this court, defendants argue: that the court erred in confirming the award because federal copyright law precludes recovery and the award contravenes the public policy of that law; the arbitrator's award is in manifest disregard of the federal law; the arbitrator exceeded his authority by awarding punitive damages; the arbitrator decided matters outside the scope of the arbitration; and the trial court erred in its award of prejudgment interest. We have considered these arguments in light of the standards governing a court's review of an arbitrator's award and determined that ...