United States District Court, D. New Jersey
HONORABLE TONIANNE J. BONGIOVANNI, UNITED STATES MAGISTRATE
pending before the Court is Plaintiff TLE Marketing
Corporation's (“TLE”) motion to amend the
pleadings in order to add an alternative claim for relief
under the New Jersey Sales Representative Act, N.J.S.A.
2A:61A-1, et seq. (the “NJSRA”) [Docket
Entry No. 34]. Defendant WBM, LLC (“WBM”) has
opposed TLE's motion on futility grounds. The Court has
fully reviewed the arguments made in support of and in
opposition to TLE's motion. The Court considers TLE's
motion to amend without oral argument pursuant to L.Civ.R.
78.1(b). For the reasons set forth more fully below,
TLE's motion to amend to add a claim for relief under the
NJSRA is GRANTED.
Background and Procedural History
matter arises out of TLE's claims against WBM based on
WBM's termination of the parties' sales
representative agreement, the last of which was dated January
19, 2017. TLE initially brought suit against WBM in the State
District Court for Hennepin County, Minnesota. In its
Complaint, TLE asserted 4 claims against WBM: (1) Wrongful
Termination Violation of Minn. Stat. §325E.37 (Count I);
(2) Failure to Pay Commissions Violation of Minn. Stat.
§325E.37 (Count II); (3) Breach of Contract (Count III);
and (4) Violation Minn. Stat. §181.145 (Count IV).
(See, generally, Compl; Docket Entry No. 1-1). WBM
removed this matter to the United States District Court for
the District of Minnesota on August 17, 2017. (Notice of
Removal; Docket Entry No. 1). On August 24, 2017, WBM filed
its Answer as well as a Counterclaim against TLE. (Docket
Entry No. 6). WBM simultaneously moved to transfer this
matter to the District of New Jersey (Docket Entry No. 7).
WBM's motion to transfer was granted on November 16,
2017. (Order of 11/16/2017; Docket Entry No. 22).
the matter was transferred to this District, the Court
scheduled an Initial Conference for January 3, 2018. (Order
Scheduling Conference of 11/27/2017; Docket Entry No. 24).
The Court conducted the Initial Conference on January 3, 2018
and entered a schedule in the matter. (See
Scheduling Order of 1/3/2018; Docket Entry No. 29). Pursuant
to the Court's schedule, the parties had until March 23,
2018 to move to amend the pleadings and/or add new parties.
In accordance with the Court's Scheduling Order, TLE
timely filed the instant motion to amend on February 20,
2018. (Docket Entry No. 34). Through its motion, TLE seeks to
add a fifth count to its Complaint based on WBM's alleged
failure to pay commissions in violation of the NJSRA.
(See Aff. Of D. Clay Taylor, Ex. 2, Proposed Am.
Compl., Count V; Docket Entry No. 34-2).
TLE filed its motion, the Court conducted a status conference
with the parties. Text Minute Entry of 4/18/2018. During the
conference, the Court directed the parties to explore
settlement and scheduled a settlement conference for May 21,
2018. Text Order of 4/24/2018; Docket Entry No. 37.
Unfortunately, it became apparent prior to the scheduled
settlement conference that such a conference would not be
fruitful at that juncture in the case. As a result, the Court
entered a Letter Order cancelling the settlement conference
and indicating that the discovery schedule would be set after
TLE's motion to amend was decided. Letter Order of
5/8/2018 at 1; Docket Entry No. 38.
already noted, TLE seeks to amend its Complaint to add a
claim against WBM for failure to pay commissions in violation
of the NJSRA. TLE argues that its motion should be granted
under the liberal amendment standards set forth in
Fed.R.Civ.P. (“Rule”) 15(a). TLE notes that,
here, no arguments have been made that its “proposed
amendment was brought in bad faith or for a dilatory purpose,
or that [WBM] will suffer any prejudice if the amendment is
granted.” (TLE Br. at 6; Docket Entry No. 34-1).
Instead, WBM only argues that its proposed amendment should
be denied because it is futile. TLE, however, maintains that
based on the language contained in its sales representative
agreement, its proposed claim under the NJSRA is plausible
and nothing in the unpublished case of Brownstone
Specialty Finance v. Freedom Mort. Corp., Civ. No.
16-5412 (NLH/AMD), 2017 WL 2829607 (D.N.J. June 30, 2017)
requires a decision to the contrary. (TLE Br. at 7-11; TLE
Reply Br. at 1-2, Docket Entry No. 36).
also suggests that Brownstone may have been
incorrectly decided as the Brownstone court
“ignored the sections of the NJSRA after the
definitions[, ]” each of which “actually make it
clear that sales representatives' statutory rights are
not limited to just commissions, but rather that they extend
to recovering ‘commissions and other
compensation.'” (TLE Br. at 10 (quoting N.J.S.A.
2A:61A-2(A), N.J.S.A. 2A:61A-3(a), N.J.S.A. 3A:61A-4)). TLE
argues that “[t]hese provisions indicate that the scope
of the Act is not limited solely to the recovery of
commissions -instead it appears that an independent sales
representative may assert a claim under the Act for
compensation that might be due and owning other than
commissions.” (Id.) As a result, TLE argues
that even if the “commissions” at issue under the
parties' sales representative agreement do not qualify as
“commissions” under the NJSRA, TLE still has a
viable claim for this “other compensation” under
the Act. (Id. at 10-11).
however, maintains that TLE's motion should be denied
because the proposed amendment is futile as the compensation
at issue in this case is not covered under the NJSRA. In this
regard, WBM notes that under the NJSRA, the term
“commission” is “expressly defined as
‘compensation . . . the rate of which is expressed'
in one of two ways: either (1) ‘as a percentage of the
dollar amount of orders or sales,' or (2) ‘as a
specified amount per order or per sale.'” (WBM Opp.
Br. at 5 (quoting N.J.S.A. § 2A:61-A-1); Docket Entry
No. 35). WBM contends that Brownstone made clear
that “commissions” under the NJSRA do not include
“‘percentage-based compensations related to
profits.'” (Id. at 6 (quoting
Brownstone, 2017 WL 2829607, at *4)). WBM further
argues that, here, TLE's commission is tied to WBM's
measure of profits. Indeed, WBM argues that in both
Brownstone and pursuant to the parties' sales
representative agreement the fee to be paid “(1)
involved a measurement of net revenue resulting from the sale
of a product (‘the sale of a loan' in
Brownstone and ‘sales of [Himalayan Salt]
Products' here) and (2) provided for a compensation rate
(12 percent in Brownstone and 10 percent here)
applicable to the revenue generated.” (Id. at
7). As a result, WBM claims that TLE's
“commissions” do not fall within the definition
of that term under the NJSRA. As such, WBM argues that
TLE's motion to amend must be denied.
further contends that the fact that the payment to be made
under the parties' sales representative agreement was
called a “commission” rather than a
“consultant fee, ” as in Brownstone,
does nothing to change the aforementioned analysis. In this
regard, WBM argues that “nothing in the
Brownstone decision even suggests that the decision
turned on what the payment was called (or not
called)[.]” (Id. at 8). Instead, WBM claims
that “[w]hat is important is how the payments were
calculated and, here, as in Brownstone, the payments
were tied to a percentage of profits, not simply based on the
number of sales made or orders submitted.”
also argues that TLE's alternative claim that even if the
“commissions” under the parties' sales
representative agreement are not “commissions” as
defined by the NJSRA, TLE still has a viable cause of action
under the NJSRA because the “commissions” would
qualify as “other compensation” under the NJSRA
is likewise futile. Specifically, WBM argues that the NJSRA
only applies to “principals” and “sales
representatives” and that the NJSRA defines both of
those terms by referencing the compensation of someone
“‘by commission'” as that term is
defined in the statute. (Id. at 8-9 (quoting
N.J.S.A. 2A:61A-1(b), (c)). WBM contends that because the
compensation at issue in the parties' sales
representative agreement is not a “commission”
under the NJSRA, WBM is not a “principal” and TLE
is not a “sales representative” for purposes of
the NJSRA. Thus, WBM maintains that TLE “cannot bring
any claim under the [NJ]SRA[.]” (Id. at 9).
Standard of Review
to Rule 15(a)(2), leave to amend the pleadings is generally
granted freely. See Foman v. Davis,371 U.S. 178,
182 (1962); Alvin v. Suzuki, 227 F.3d 107, 121 (3d
Cir. 2000). Nevertheless, the Court may deny a motion to
amend where there is “undue delay, bad faith or
dilatory motive on the part of the movant, repeated failure
to cure deficiencies by amendments previously allowed, undue
prejudice to the opposing party by virtue of allowance of the
amendment, [or] futility of the amendment.”
Id. However, where there is an absence of undue
delay, bad faith, prejudice or futility, a motion for leave
to amend a ...