Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 1 of 32 PageID: 1370
`
`Case 3:17-cv-12706—MAS-DEA Document 45 Filed 05/31/20 Page 1 of 32 PageID: 1370
`
`NOT FOR PUBLICATION
`
`UNITED STATES DISTRICT COURT
`DISTRICT OF NEW JERSEY
`
`
`CENTRAL JERSEY, CML,
`
`Plaintiff,
`
`v.
`
`Civil Action No. 17-12706 (MAS) (DEA)
`
`KAUSHIK PATEL, e! at,
`
`MEMORANDUM OPINION
`
`Defendants.
`
`SHIPP, District Judge
`
`This matter comes before the Court upon Defendants Kaushik Patel, Ashwin Chaudhary,
`
`Dipen Patel, Yogesh Patel, Vipul Patel, 6qu Puri, Nilesh Patel, Danny Saparia, the Estate of
`
`Suresh Patel, and Atul Patel’s Motion for Summary Judgment (ECF N0. 28), and Plaintiff Central
`
`Jersey, CML’s (“Plaintiff’ or the “Central CML”) Amended Motion for Summary Judgment (ECF
`
`No. 40).l In response to Defendants’ Motion, Plaintiff submitted a Statement of Material Facts in
`
`Opposition (ECF No. 32) and an Opposition Brief (ECF No. 33), to which Defendants replied
`
`(ECF No. 35.) Defendants opposed Plaintiff‘s Motion. (ECF No. 44.) Plaintiff did not reply to
`
`Defendants’ opposition.2 The Court has carefully considered the parties’ submissions and decides
`
`' The Court notes that Plaintiff’s Motion was unaccompanied by a Notice of Motion. as required
`by Local Civil Rule 7.](b)(2).
`
`2 Plaintiff submitted an informal Letter Brief in reply to Defendants‘ opposition to Plaintiff’s
`original motion for summary judgment. (ECF No. 36.) Plaintiff, however, did not file a reply to
`Defendants’ opposition to Plaintiff’s Amended Motion for Summary Judgment. The Court also
`notes that Plaintiff’s Letter Brief, apart from briefly referencing a case cited by Defendants,
`
`

`

`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 2 of 32 PageID: 1371
`
`Case 3:17-cv-12706—MAS-DEA Document 45 Filed 05/31/20 Page 2 of 32 PageID: 1371
`
`this matter without oral argument pursuant to Local Civil Rule 78.1. For the reasons set forth
`
`below, Plaintiff‘s Amended Motion for Summary Judgment is denied and Defendants’ Motion for
`
`Summary Judgment is granted.
`
`BACKGROUND
`
`A.
`
`Undisputed Facts
`
`1.
`
`Background Information and the South CML
`
`The South Jersey CML, LLC (the “South CML”) is a limited liability company, organized
`
`under the laws ofNew Jersey, that manages and operates a baking facility that distributes inventory
`
`to Dunkin’ Donuts stores throughout southern New Jersey.3 (Plaintiff's Statement of Undisputed
`
`Material Facts (“PSUMF”) W 1—2, ECF No. 401; Defendants Statement of Undisputed Material
`
`Facts (“DSUMF”) 1i 2, ECF No. 28—2.) Defendants are 10 of the 12 members of the South CML.
`
`(Plaintiff’s Responsive Statement of Material Facts and Counter-Statement of Material Facts
`
`(“PRSUMF”) 1i 1, ECF No. 32; DSUMF T 1.) The South CML delivers product to Dunkin’ Donuts
`
`locations and operates under an Approved Bakery Manufacturing Agreement (“ABMA”), which
`
`is a third-party manufacturing agreement and not a franchise agreement. (PSUMF W 4—5; DSUMF
`
`17? 2, 4.) Dunkin’ Brands Group, Inc. ("Dunkin’ Brands”) does not have a direct ownership interest
`
`in the South CML. (PSUMF 'r 4; see also DSUMF 'r 6.)
`
`On or about December 17, 2013, Chris Powers, the Senior Manufacturing Manager of
`
`Dunkin’ Brands, informed non-party Sailesh “Sam” Patel, the lead board member of the South
`
`CML, that the South CML had been approved to supply Dunkin' Donuts products. (PRSUMF 1i 6;
`
`DSUMF T 6.) The South CML commenced operations in or around July 2014. (PRSUMF 1i 7;
`
`DSUMF fl 7.) When it opened, the South CML had signed supply agreements with approximately
`
`

`

`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 3 of 32 PageID: 1372
`
`Case 3:17-cv-12706—MAS-DEA Document 45 Filed 05/31/20 Page 3 of 32 PageID: 1372
`
`80 Dunkin’ Donuts franchises. (PRSUMF ‘ 8; DSUMF '1 8.) After opening, the South CML
`
`struggled to bring additional franchises on board as customers. (PSUMF 11 10.)
`
`Alexander McCourt (“McCourt”) was hired by Dunkin' Brands in or around July 201 l to
`
`be a Manufacturing Operations Manager. (PSUMF 'IT 6; DSUMF 1T. 10.) While working for Dunkin’
`
`Brands, McCourt became acquainted with Sam Patel and non-party Paresh Patel. (PSUMF 11 7; see
`
`Transcript of the Deposition of Paresh Patel (“Paresh Patel Dep. TL”) 212—] 1, Ex. D to Pl.’s Am.
`
`Mot., ECF No. 40-7; see Transcript of the Deposition of Alexander McCourt ("McCourt Dep.
`
`TL”) 4327—22, Ex. C to Pl.’s Am. Mot., ECF No. 40-6.) Sam and Paresh Patel solicited McCourt’s
`
`help with building the South CML facility. (PSUMF ‘ 7.) In or around November 2014, McCourt
`
`resigned his position with Dunkin‘ Brands after Sam and Paresh Patel recruited him to join the
`
`South CML as the Plant Manager. (PSUMF1111 11—12;DSUMF '7 l I.) As Plant Manager, McCourt
`
`was the highest-ranking non-member of the South CML. and oversaw all production operations
`
`and participated in board meetings with Defendants and the remaining members ofthe South CML.
`
`(DSUMF 11 12.) McCourt never executed a formal employment agreement with the South CML
`
`and also never became a member of the LLC. (PSUMF 11 13; DSUMF 1] 13.)
`
`2.
`
`Development of the Central CML
`
`In October or November of 2015, McCourt became interested in the prospect of opening
`
`his own central manufacturing facility, the Central CML near Trenton, New Jersey. (PSUMF11 I6;
`
`DSUMF 11 17.) During a meeting with a business associate, Christopher Fifis, McCourt learned of
`
`New Jersey’s Grow NJ tax credit program, available for new businesses. (PSUMF 11 17; DSUMF
`
`1| l7.) McCourt believed the Central CML would be profitable if he was able to secure the tax
`
`credits from the Grow NJ program. (PRSUMF 11 17; DSUMF 1] 17.) McCourt discussed the idea
`
`for the Central CML with Paresh Patel, who expressed interest in joining the project with him.
`
`

`

`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 4 of 32 PageID: 1373
`
`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 4 of 32 PageID: 1373
`
`(PRSUMF 1] 19; DSUMF 1] l9.) McCourt and Paresh Patel began to search for potential locations
`
`for the Central CML. (PRSUMF 1] 20; DSUMF 1] 20.) McCourt and Patel did not mention their
`
`plans for the Central CML to Defendants at this time. (PRSUMF 1] 20; DSUMF 1] 20.)
`
`On November 25, 2015, the Central CML was officially formed, with McCourt and Paresh
`
`Patel each possessing a 50% ownership share and McCourt serving as Chief Executive Officer.
`
`(PRSUMF 1] 21; DSUMF 1] 21.) Between its formation and June 2016, Defendants were entirely
`
`unaware of the Central CML and the actions of McCourt and Paresh Patel. (PRSUMF 1] 23;
`
`DSUMF 1] 23.) In December 2015, McCourt and Paresh Patel gave a tour of the South CML facility
`
`to Trenton mayor Eric Jackson and the President and CEO of the Trenton Chamber of Commerce,
`
`to promote the Central CML as an economic opportunity for the city of Trenton. (PSUMF 1] 20;
`
`DSUMF1]1] 24-25.) Defendants, however, were at no point informed that such a tour had occurred.
`
`(PRSUMF 1] 24; DSUMF 1] 24.) On December 31. 2015, the Director of Trenton’s Division of
`
`Economic and Industrial Development emailed McCourt and expressed excitement at the proposed
`
`Central CML project. (PRSUMF T 26; DSUMF 1] 26.) At some point prior to discussing his plans
`
`for the Central CML with Defendants, McCourt met with representatives of Bank of America
`
`about financing for the Central CML. (PRSUMF '1 27; DSUMF " 27.)
`
`On August 31, 2016, McCourt submitted an application for tax credits to the New Jersey
`
`Economic Development Authority ("NJEDA"). which operated the Grow NJ tax credit program.
`
`(PSUMF 1]1] 21—22; DSUMF 1] 29; see also Ex. F to PL's Motion, ECF No. 40-9.) On October 14,
`
`2016, the NJEDA approved McCourt’s application and awarded the Central CML $18.9 million
`
`in tax credits (the “NJGROW Tax Credits") over a 10-year period. (PSUMF 1] 23; DSUMF 1] 29.)
`
`The NJGROW Tax Credits would be applied to the Central CML‘S payroll taxes for every
`
`employee that it hired. (PRSUMF 1]1' 29, 78; DSUMF 'r 29.)
`
`

`

`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 5 of 32 PageID: 1374
`
`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 5 of 32 PageID: 1374
`
`3.
`
`Defendants Learn of the Central CML
`
`In June 2016, seven months after the formation of the Central CML, McCourt informed
`
`Defendants of its existence during a South CML board meeting. (PSUMF 11
`
`25; DSUMF
`
`111 30—31.) On June 12, 2016, McCourt sent Defendants a pro forma, seeking investment in the
`
`Central CML in exchange for an ownership stake. (PSUMF 1111 25—26; DSUMF '11 32; PRSUMF
`
`1111 32, 36.) By the terms of the pro forma, each Defendant would invest $350,000 and receive a
`
`5% ownership stake in the Central CML in return. (PRSUMF T 32; DSUMF 11 32.) The same pro
`
`forma called for McCourt to possess a 22% ownership stake and draw an annual salary of
`
`$771,461, without requiring him to make any capital contributions. (PRSUMF 11 32; DSUMF 11
`
`32.) On July 30, 2016, McCourt circulated a revised pro forma, wherein each Defendant would
`
`receive a 6% ownership share in exchange for each Defendant investing $300,000. Under this
`
`proposal, McCourt would draw the same annual salary and receive a 21% ownership share, still
`
`without making capital contributions. (PRSUMF '11 32; DSUMF 11 32.)
`
`On October 10, 2016, McCourt sent correspondence and a proposed business plan for the
`
`Central CML to Ronald Cumbee of Dunkin’ Brands. (PRSUMF 1] 37; DSUMF 11 37.) Defendants
`
`were not included in McCourt’s correspondence, however, the proposed business plan indicated
`
`that the Central CML and South CML would combine training, development, and other resources.
`
`(PRSUMF 11 37; DSUMF 11 37; see Oct. 10, 2016 Correspondence and Business Plan "‘8.“l Ex. P to
`
`Defs.’ Mot, ECF No. 28-18.) The proposed business plan also stated that "[o]wnership is not the
`
`same between both [the Central and South CML] facilities.” (Oct. 10, 2016 Correspondence and
`
`Business Plan *5.) On October 15, 2016, Dunkin‘ Brands former Senior Director of Global
`
`4 Page numbers preceded by an asterisk refer to the page number listed in the ECF header.
`
`

`

`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 6 of 32 PageID: 1375
`
`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 6 of 32 PageID: 1375
`
`Manufacturing, Joseph Koudelka (“Koudelka”)S sent an e-mail message to Paresh Patel stating, in
`
`relevant part, “[a]s we discussed last week, once we have the multi-year pro-forma starting with
`
`the base of 100 stores we will be able to finalize our review.” (Oct. 15, 2016 Koudelka E-Mail
`
`Message, Ex. HH to Defs.’ Mot, ECF No. 28-36.)6
`
`4.
`
`The Consent Resolutions and the October 27, 2016 Letter
`
`On or about October 2], 2016, Defendants and Sam Patel met and jointly decided they
`
`would not invest in or be involved with the Central CML. (DSUMF 1] 39.) On the same day,
`
`Defendants and Sam Patel executed two resolutions (the "Consent Resolutions”), wherein the
`
`parties confirmed (1) they would not be "joining [the Central CML] in any capacity whatsoever”;
`
`(2) they would notjoin the Central CML as investors, LLC members, members of the management
`
`team, "or [maintain] any other affiliations whatsoever”; and (3) they would not use the Central
`
`CML "as their supplier for their currently (sic) or in future partially or fully owned retail Dunkin[’]
`
`Donuts units provided that [the South CML] supplies [d]onuts to their future Dunkin[’] Donuts
`
`units at prevailing donut price.” (PSUMF 1F. 28—29; DSLTMF '5 40; PRSUMF 1} 40; see Consent
`
`Resolutions *3, Ex. R. to Defs.‘ Mot, ECF No. 28-20.)? Defendants and Sam Patel also resolved
`
`to "send a letter to Dunkin[’] Brands and their officers emphasizing the financial consequences of
`
`opening up [the Central CML] to our current [South CML]." (Consent Resolutions *2.)
`
`5 Koudelka served as Senior Director of Global Manufacturing until December 2017. (PRSUMF
`1] 82; DSUMF 11 82.) Koudelka was responsible for evaluating proposals for new central
`manufacturing facilities. (PRSUMFfil 82; DSUMF "ll 82.)
`
`6 The Court notes that Defendants repeatedly reference a November 8, 2016 e-mail message from
`Koudelka and reference it as being attached as Exhibit .lJ. (See. e.g.. Defs.’ Moving Br. 13, ECF
`No. 28-1.) Defendants, however, did not attach an Exhibit.” to their motion and it does not appear
`anywhere else on the docket.
`
`7 Plaintiff’s Statement of Undisputed Material Facts erroneously states that
`
`the Consent
`
`

`

`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 7 of 32 PageID: 1376
`
`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 7 of 32 PageID: 1376
`
`On October 27, 2016, Defendants, through their counsel at the time, sent correspondence
`
`(the “October 27, 2016 Letter”) to three Dunkin’ Brands executives. (PSUMF 1] 29; DSUMF 1] 41;
`
`see Oct. 27, 2016 Letter, Ex. S to Defs.’ Mot, ECF No. .) Attached to the October 27, 2016 Letter
`
`were the Consent Resolutions. (DSUMF 1] 41; see Oct. 27, 2016 Letter.) The October 27, 2016
`
`Letter stated, in relevant part,
`
`[Defendants] just learned that a central baking facility has been
`approved for a location in Trenton, New Jersey.
`[- - -]
`[T e South CML] is not part of this proposed venture, nor were they
`consulted.
`.
`.
`. They confirm they are not involved in this new
`venture in any capacity. The proposed Trenton facility is not an
`extension of [the South CML] in any manner or fashion.
`
`The vast majority of the Members/Managers of [the South CML]
`are largely loyal Dunkin’ Brands franchisees who have made
`significant investments in the [South CML]. The creation of a
`Trenton facility will directly impact their business operations and
`potentially cause them to suffer significant monetary losses.
`
`There is apparently some confusion about the nature and ownership
`of the Trenton facility. This indicates to [Defendants] that the true
`facts about the ownership may not have been fully understood by
`Dunkin’ Brands. It does appear that a Member of [the South CML]
`is participating in such venture. However, he was not acting on
`behalf of the entity and any representation or impression to that
`effect would have been erroneous andi’or misleading.
`
`[The South CML] would respectfully ask for an immediate review
`of this project. There is certainly no basis to damage loyal Dunkin'
`supporters who continue to work and improve the product and
`service. [The South CML] is certainly willing and able to handle
`additional capacity needs. [Defendants] verily believe[] that they
`could add significant additional capacity, thus making the need for
`the Trenton facility superfluous. [Defendants] would thus ask for
`your immediate attention to this matter.
`
`(PSUMF 1] 29; DSUMF 1] 41; see also Oct. 27, 2016 Letter.)
`
`

`

`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 8 of 32 PageID: 1377
`
`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 8 of 32 PageID: 1377
`
`5.
`
`The Continued Development of the Central CML
`
`After Defendants expressed their lack of interest in investing in the Central CML, McCourt
`
`and Paresh Patel continued to seek Dunkin’ Brands approval of the Central CML. (PRSUMF 11 45;
`
`DSUMF 1] 45.) On November 17, 2016, nearly a year after the formation of the Central CML,
`
`McCourt resigned from his position with the South CML. (DSUMF 1i 2] n.2, 1] 47.)8 On or about
`
`November 23, 2016, Sam Patel—who had been a signatory on both the October 27, 2016 Letter
`
`and the Consent Resolutions—signed a partnership agreement (the "Partnership Agreement”) with
`
`McCourt and Paresh Patel for the Central CML. (PSUMF 1] 329; DSUMF 11 48, n.3; see generally
`
`Partnership Agreement, Ex. V to Defs.’ Mot., ECF No. 28-24.) Under the Partnership Agreement,
`
`Paresh Patel’s uncle, Pravin Patel, would make a capital contribution of $1 .2 million in exchange
`
`for an 18% ownership interest. (PRSUMF 1] 48; DSUMF 11 48.) McCourt would receive a 24%
`
`ownership stake without making any capital contribution. (PRSUMF 11 48; DSUMF 11 48.) Pravin
`
`Patel testified, however, that he never knew about the Partnership Agreement, never signed it,
`
`never actually provided any funding to the Central CML, and was never asked to make a $1.2
`
`million contribution. (PRSUMF “r 49; DSUMF 1: 49.)
`
`8 The Court notes that although Plaintiff’s Complaint and Plaintiffs Statement of Undisputed
`Material Facts both assert that McCourt stepped down from the South CML in "early 2016,” the
`record indicates he did not resign until November 17. 2016. (Compare Compl. 11 25. PSUMF 1' 16
`with Nov. 17, 2016 McCourt Email, Ex. .I to DSUMF, ECF No. 28-12.)
`
`9 The Court notes that. after a single additional paragraph, Plaintiff‘s recitation of material facts
`concludes with this event. (See generally PSUMF.) Defendants’ recitation of material facts,
`however, continues an additional 55 paragraphs. (See generally DSUMF.) Plaintiffs Responsive
`Statement of Material Facts and Counter-Statement of Material Facts addresses the remaining
`paragraphs of Defendants’ submissions and either characterizes them as "[a]dmitted," or sets forth
`Plaintiff s dispute. (See generally PRSUMF.) The Court. therefore, only references those two
`
`

`

`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 9 of 32 PageID: 1378
`
`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 9 of 32 PageID: 1378
`
`Under the Partnership Agreement, Sam Patel agreed to (1) “bring on board all [South CML]
`
`members to endorse [the Central CML] project with Dunkin’ Brands”; (2) “help secure bank
`
`financing of $1 1,500,000.00”; and (3) meet with Koudelka. (PRSUMF 11 50; DSUMF 11 50; see
`
`also Partnership Agreement.) Sam Patel never informed Defendants that he was a signatory to the
`
`Partnership Agreement, either before or after its execution. (PRSUMF 11 51; DSUMF 11 51.)
`
`In or around early-December 2016, Sam Patel and Paresh Patel met with Koudelka.
`
`(PRSUMF 11 52; DSUMF 11 52.) Sam Patel informed Koudelka that he would once again attempt
`
`to convince Defendants tojoin the Central CML. (PRSUMF 11 52; DSUMF 11 52.) Koudelka noted
`
`that the Central CML would need commitments from at least 75 stores to secure approval from
`
`Dunkin’ Brands. (PRSUMF 11 52; DSUMF 11 52.) Sam Patel did not inform Defendants he was
`
`making this trip or that he made any representations about them or their intentions to Koudelka.
`
`(DSUMF 11 54.) In or around December 2016, Paresh Patel removed himself as a member of the
`
`Central CML. (PRSUMF 11 S6; DSUMF1156.) In late 2016, McCourt attempted to secure financing
`
`for the Central CML and executed a Memorandum of Understanding with Capital Solutions, Inc.
`
`to purchase and lease a production facility to the Central CML. (PRSUMF 11 57; DSUMF 11 57.)
`
`Ultimately, McCourt never secured a bank loan and no outside investors ever invested in the
`
`Central CML. (PRSUMF1158; DSUMF1158.)
`
`On January 25. 2017, McCourt informed Paresh Patel he was abandoning the Central CML
`
`project and surrendering the $18.9 million in NJGROW Tax Credits because “other companies [he
`
`had] been working with [had] not developed in time for [McCourt] to stay with [the] Trenton deal."
`
`(PRSUMF 11 59; DSUMF 11 59; see also Jan. 25, 2017 McCourt Email Message, Ex. Y to Defs.’
`
`Mot ECF No. 28-27.) McCourt also asked Paresh Patel to see if McCourt would be able to return
`
`

`

`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 10 of 32 PageID: 1379
`
`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 10 of 32 PageID: 1379
`
`to the South CML. (PRSUMF 1] 59; DSUMF 1] 59; see also Jan. 25, 2017 McCourt Email
`
`Message.)'0
`
`On or about February 16, 2017, McCourt again began working on the Central CML project.
`
`(PRSUMF 1] 60; DSUMF 1] 60.) He emailed Paresh Patel and Sam Patel and referenced that Sam
`
`Patel was working on a new proposal for the Central CML. (PRSUMF 1] 60; DSUMF 1] 60; see
`
`also Feb. 16, 2017 E-mail Message Chain, Ex. Z to Defs.’ Mot, ECF No. 28-28.) McCourt noted
`
`that, in order to secure a partnership with a specific wholesale company, Sam Patel would have to
`
`secure the interest and investment of Defendants. (PRSUMF 1] 60; DSUMF 1] 60; see also Feb. 16,
`
`2017 E-mail Message Chain) On or about March 23, 2017, McCourt told representatives of the
`
`NJEDA that he was continuing to attempt to secure Defendants’ endorsement of the Central CML
`
`project. (PRSUMF 1] 61; DSUMF 1] 61.) After this meeting, McCourt took no further steps to
`
`advance the project. (DSUMF 1] 62.)ll
`
`On or about December 28, 2017, the NJEDA sent McCourt correspondence stating that its
`
`obligation to provide the NJGROW Tax Credits had expired on October 14, 2017 because the
`
`Central CML had failed to provide the NJEDA with the required documentation, which was a
`
`'0 The Court notes that it is unclear from the record whether Paresh Patel ever followed up on
`McCourt’s request or whether any further steps relating to McCourt potentially rejoining the South
`CML were taken.
`
`“ Plaintiff contests this assertion. (See PRSUMF "I; 62.) Plaintiffs contention. however,
`contradicted by McCourt’s own deposition testimony, which reads, in relevant part,
`
`is
`
`Q. So after you walked out the door from [the March 23, 2017]
`meeting, is it fair to say you took absolutely no steps to advance the
`[Central CML] project?
`'
`
`A. That would be accurate. yeah.
`
`(McCourt Dep. Tr. 217:12—24.) The Court, accordingly. finds Plaintiffs objection to be without
`
`

`

`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 11 of 32 PageID: 1380
`
`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 11 of 32 PageID: 1380
`
`condition of approval. (PRSUMF 1] 63; DSUMF 1] 63; NJEDA Correspondence, Ex. BB to Defs.’
`
`Mot, ECF No. 28-30.)
`
`Plaintiff admits that Dunkin’ Brands never approved or denied the Central CML’s proposal
`
`to operate a central manufacturing location in Trenton. (PRSUMF 1] 64; DSUMF 1] 64.) McCourt
`
`has also not followed up with Dunkin’ Brands to determine whether Dunkin' Brands would have
`
`approved or rejected the Central CML. (PRSUMF 1] 65; DSUMF1] 65.)
`
`B.
`
`Disputed Facts
`
`Defendants dispute Plaintiff's assertion that the South CML “service[s] an[] area of
`
`approximately 555 stores,” of which about 150 do not receive their product from large kitchens,
`
`and “[o]f the remaining 400+ stores in the general Ballmahr (sic) geographic market area, [the
`
`South CML] services in excess of 50% of those stores and. consequently, possesses significant
`
`market share and is able to exercise broad market power.” (PSUMF 11 15; Defendants’ Response
`
`to Plaintiff’s Statement of Material Facts (“DRSUMF”) 'I] 15, ECF No. 44-1.) In particular,
`
`Defendants dispute the assertion that
`
`they have “broad market power.” (DRSUMF 1} 15.)
`
`Defendants also dispute Plaintiff‘s contention that the NJGROW Tax Credits “were estimated to
`
`generate $12 to $14 million in revenue if sold on the secondary market.” (DRSUMF 1] 24; PSUMF
`
`ll 24.)
`
`Plaintiff disputes Defendants’ characterization regarding the circumstances of Mayor Eric
`
`Jackson’s visit to the South CML. (PRSUMF T'II 24—25; DSUMF W 24-25.) Plaintiff asserts that,
`
`prior to Mayor Jackson’s visit, there was no requirement that members of the South CML had to
`
`obtain permission prior to bringing a non-family member to the facility. (PRSUMF T1] 24-25;
`
`DSUMF 111] 24-25.) Plaintiff also contest Defendants assertion that on or around April 29, 2016
`
`(the "April 29 Amendment”). Defendants, Sam Patel, and Paresh Patel executed an amendment to
`
`

`

`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 12 of 32 PageID: 1381
`
`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 12 of 32 PageID: 1381
`
`the South CML operating agreement under which the parties agreed “not to directly or indirectly
`
`own, manage, Operate[], control, be employed by, finance or participate in. consult with or for, or
`
`be connected with any business in competition with [the South CML] for a period of five years
`
`from divestiture from [the South CML].” (DSUMF 1] 28; PRSUMF 1] 28.) Rather, Plaintiff asserts
`
`that Paresh Patel was never presented with nor signed the alleged April 29 Amendment.
`
`(PRSUMF1128.)l2
`
`C.
`
`Procedural History
`
`On December 6, 2017, Plaintiff filed a four-count Complaint13 against Defendants: Count
`
`One, for violations of section 2 of the Sherman Antitrust Act, 15 U.S.C. § 2, and section 4 of the
`
`Clayton Act, 15 U.S.C. § 15 (Compl. 111] 51—67, ECF No. 1); Count Two, for violations ofthe New
`
`Jersey Antitrust Act, NJ. Stat. Ann. §§ 56:9—1, er seq. (Id. 1111 68—76); Count Three for common
`
`law tortious interference (Id. 111] 77-86); and Count Four for common law civil conspiracy (Id.
`
`W 87—90). On February 5, 2018, Defendants answered the Complaint. (ECF No. 16.)
`
`On March 8, 2018,
`
`the Honorable Douglas E. Arpert, U.S.M.J., entered the Pretrial
`
`Scheduling Order, with fact discovery set to close on November 1, 2018 and motions to amend or
`
`add new parties due by September 28, 2018. (ECF No. 18.) Fact discovery was extended to
`
`December 31, 2018 by Judge Arpert’s Final Scheduling Order. (ECF No. 22.)
`
`On February 21, 2019, Plaintiff filed a Motion to Amend his Complaint (ECF No. 27),
`
`seeking to add non-party Sam Patel as a named defendant. which Defendants opposed (ECF No.
`
`30). On February 22, 2019, the parties filed cross-motions for summary judgment. (ECF Nos. 28,
`
`'2 The Court notes that Plaintiff agrees, however, that "[D]efendants never took any action on this
`alleged amendment.” (PRSUMF ‘ 28.)
`
`'3 Plaintiffs Complaint also named "XYZ Corp[s]. 1—5". "ABC. LLC[s] 1—5”, “John Does 1—10",
`
`

`

`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 13 of 32 PageID: 1382
`
`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 13 of 32 PageID: 1382
`
`29.) On March 18, 2019, Judge Arpert held oral argument on Plaintiff‘s Motion to Amend and
`
`entered an order denying the motion. (ECF Nos. 37~38.)
`
`On September 6, 2019, the Court dismissed Plaintiff’s Motion for Summary Judgment for
`
`failure to include a statement of material facts not
`
`in dispute,
`
`in violation of Local Civil
`
`Rule 56.1(a). (Sept. 6, 2019 Order, ECF No. 39.) The Court also administratively terminated
`
`Defendants’ Motion for Summary Judgment, pending Plaintiff refiling their motion in accordance
`
`with the Local Civil Rules.
`
`On October 4, 2019, Plaintiff filed an Amended Motion for Summary Judgment. (ECF
`
`No. 40.) On October 9, 2019, the Court entered a Letter Order reinstating Defendants’ Motion for
`
`Summary Judgment. (ECF No. 43.)
`
`PARTIES’ POSITIONS
`
`The parties dispute whether the Court should employ the per se standard or the "rule of
`
`reason” standard in its analysis of the antitrust claims. Plaintiff advocates for the Court to use the
`
`per 52 standard, while Defendants contend that the “rule of reason” is proper. The Court addresses
`
`these arguments in section IV, infra, and here recites the remainder of the parties‘ substantive
`
`arguments.
`
`A.
`
`Plaintiff’s Position
`
`Plaintiff contends that Defendants committed antitrust violations and entered into a
`
`horizontal agreement and group boycott when they executed the Consenting Resolutions not to
`
`join or do business with the Central CML. (PL’s Moving Br. 4, ECF No. 40.) Plaintiff avers that
`
`the October 27, 2016 Letter is further evidence of this impermissible agreement and boycott. (Id)
`
`Plaintiff claims that Defendants “withheld doing business with the [Central CML] in order to
`
`extract a higher percentage ownership [share] from the [Central CML] for their initial capital
`
`

`

`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 14 of 32 PageID: 1383
`
`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 14 of 32 PageID: 1383
`
`contributions.” (Id. at 5.) Plaintiff further contends that Defendants refused to do business with the
`
`Central CML out of a fear that its entry into the marketplace would cause economic damage to the
`
`South CML by way of increased competition. (Id. at 6.)
`
`As to its tortious interference claim, Plaintiff argues that it “had an anticipated economic
`
`benefit in that it was seeking to construct and open a central manufacturing facility that, as
`
`demonstrated by the success of the [South CML], could be potentially lucrative.” (Id at 9.)
`
`Plaintiff contends that Defendants intentionally interfered with this potential economic advantage,
`
`and points to the October 27, 2016 Letter as proof. (Id. at 9—10.) Plaintiff contends that it had a
`
`reasonable expectation of receiving this economic benefit because: (I) “[a]n area for the facility
`
`had been sourced and the NJGROW [T]ax [C]redits had been awarded” and (2) Plaintiff was “in
`
`the process of obtaining [] start-up capital.” (Id. at 10.) Plaintiff asserts it suffered injury in the
`
`form of the lost NJGROW Tax Credits and the “lapsing of its real estate deal” to purchase a site
`
`for the proposed facility. (Id.)
`
`The Court notes that, apart from a single sentence averring that the October 27, 2016 Letter
`
`was an overt act in furtherance of a civil conspiracy, Plaintiff’s Motion never addresses the civil
`
`conspiracy claim asserted in Plaintiffs Complaint. (See generally id.)
`
`B.
`
`Defendants’ Position
`
`Defendants argue there is no basis for Plaintiff's claims and assert that they did not form a
`
`group boycott of the Central CML, did not engage in anti-competitive behavior, and did not make
`
`material misrepresentations to Plaintiff. (Defs.’ Moving Br. 1, ECF No. 28-1.) Rather they contend
`
`they simply did not wish to invest in or be involved with the Central CML. (Id) Defendants assert
`
`that McCourt and Paresh Patel surreptitiously formed the Central CML and did not
`
`inform
`
`

`

`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 15 of 32 PageID: 1384
`
`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 15 of 32 PageID: 1384
`
`Defendants of its existence for nearly seven months. (Id) Indeed, McCourt was still working for
`
`the South CML while simultaneously developing the Central CML. (Id)
`
`Defendants aver that they did not engage in anti-competitive behavior, but simply did not
`
`want to join the Central CML because McCourt sought a $350,000 individual investment in
`
`exchange for only a 5% ownership share. (Id. at 2.) The October 27, 2016 Letter, was not anti-
`
`competitive because they did not demand that Dunkin’ Brands reject the Central CML‘s proposal.
`
`(Id.) Instead they sought to clarify that the South CML was not involved with the Central CML.
`
`(Id) Defendants also point out that Plaintiff only brought this action against them and did not name
`
`Sam Patel as a defendant, even though he was the one who made misrepresentations to McCourt
`
`about Defendants’ interest in the Central CML. (Id. at 3.)
`
`Defendants argue they did not engage in a horizontal boycott because a horizontal boycott
`
`is an agreement between competitors and Defendants are all members of the same limited liability
`
`company and, as such, are not competitors. (Id.) Because Defendants did not engage in any
`
`unlawful anti-competitive behavior, Defendants argue that Plaintiff‘s claims
`
`for
`
`tortious
`
`interference and civil conspiracy fail. (Id)
`
`LEGAL STANDARD
`
`A “court shall grant summary judgment if the movant shows that there is no genuine
`
`dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.
`
`Civ. P. 56(a). To reach this decision. “the Court must determine "whether the pleadings,
`
`depositions, answers to interrogatories, admissions on file, and affidavits Show that there is no
`
`genuine [dispute] of material fact."’ Lamberson v. Pennsylvania, 561 F. App’x 201, 206 (3d Cir.
`
`2014) (quoting :lwIcrcfarlan v. Ivy Hill SNF, L.L.C., 675 F.3d 266, 271 (3d Cir. 2012)). “Only
`
`disputes over facts that might affect the outcome of the suit under the governing law will properly
`
`

`

`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 16 of 32 PageID: 1385
`
`Case 3:17-cv-12706-MAS-DEA Document 45 Filed 05/31/20 Page 16 of 32 PageID: 1385
`
`preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc, 477 U.S. 242, 248
`
`(1986). A material fact raises a “genuine” dispute "if the evidence is such that a reasonable jury
`
`could return a verdict for the nonmoving party.” Williams v. Borough of W. Chester, 891 F.2d 458,
`
`459 (3d Cir. 1989) (quoting Anderson, 477 U.S. at 248).
`
`"In evaluating the evidence, the Court must consider all facts and their logical inferences
`
`in the light most favorable to the non-moving party.” Rhodes v. Morix Servicing, LLC, 302
`
`F. Supp. 3d 656, 661 (D.N.J. 2018) (citing Carley v. Klein, 298 F.3d 271, 276—77 (3d Cir. 2002)).
`
`"While the moving party bears the initial burden of proving an absence of a genuine dispute of
`
`material fact, meeting this obligation shifts the burden [t]o the non-moving party to ‘s