Methode Electronics, Incorporated v. Adam Technologies, Incorporated

371 F.3d 923 (2004)

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Nature of the Case

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Facts

P owned all the stock of D, a New Jersey corporation with its principal place of business in New Jersey. P and D had a court dispute in New Jersey, and under the settlement, P was to sell to Vincent DeVito all of its shares in D as well as the D trade name and trademarks and a large amount of inventory. Under a separate license agreement, P obtained an exclusive right to market the remaining D products it had on hand. D and DeVito would do nothing to interfere with P's exclusive license. Less than a day after the licensing agreement was signed, D and DeVito issued a press release to P's customers which announced that 'D will be accepting orders and opportunities for more than 5,000,000 connectors stocked at its Union, NJ facility.' P then filed the present case in Illinois. The allegation in the verified complaint states: Adam Tech and/or Mr. DeVito issued the Press Release to Methode distributors and customers throughout North America, including distributors and customers in this District. D sent P a letter advising that Illinois was not a proper forum for the action and that D's actions were permitted under the agreement. D stated that if P proceeded with this case in Illinois, he would seek sanctions under Rule 11. P made a motion for a temporary restraining order. D challenged the allegation that venue was proper in the Northern District of Illinois and disclosed the portion of the settlement agreement that authorized DeVito to sell inventory delivered by P during the exclusivity period of the license agreement. The judge determined that P had omitted 'relevant information that the court should have been given.' The court granted D's venue transfer to New Jersey. D orally moved for sanctions, requesting that they be awarded costs incurred as a result of being improperly hauled into court in Illinois. A briefing schedule was set on the motion. P then filed a notice of voluntary dismissal of the case without prejudice pursuant to Fed. R. Civ. P. 41(a). The judge issued an order saying that the venue allegation not only lacked evidentiary support but was intentionally false and that P's conduct in advancing it was 'intentionally deceptive.' The judge imposed sanctions against P: a fine of $10,000 payable to the court and half Ds' attorney fees and expenses, which would be determined later. The same sanction was assessed against P's attorney. The attorney fees were later stipulated to be $45,000. P appealed.