L'OREAL USA, INC. VS. WORMSER CORPORATION (L-6069-19, BERGEN COUNTY AND STATEWIDE)

• Court: New Jersey Superior Court Appellate Division
• Decided: March 31, 2021
• Docket: A-4073-19
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-4073-19

L'ORÉAL USA, INC.,

Plaintiff-Appellant,

WORMSER CORPORATION and PROCESS TECHNOLOGIES AND PACKAGING, LLC,

Defendants-Respondents. ____________________________

Submitted March 15, 2021 – Decided March 31, 2021

Before Judges Sabatino and DeAlmeida.

On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-6069-19.

K&L Gates LLP, attorneys for appellant (Anthony P. La Rocco and Charles F. Rysavy, on the briefs).

Kagen, Casperen & Bogart PLLC, attorneys for respondent Wormser Corporation (Joshua C. Gillette, on the brief).

Dughi, Hewit & Domalewski, PC, attorneys for respondent Process Technologies and Packaging, LLC (Russell L. Hewit, on the brief). PER CURIAM

This appeal involves an exceedingly narrow issue concerning whether the

Law Division erred by inserting "with prejudice" language into an order

dismissing a complaint for lack of subject matter jurisdiction because plaintiff

filed suit in the wrong state. For the reasons that follow, we affirm the

complaint's dismissal but modify the trial court's order to specify that the

dismissal is without prejudice, in accordance with Rule 4:37-2(d).

This procedural tangle arises out of a forum selection clause designating

jurisdiction in plaintiff's home state of New York. The pertinent circumstances

can be succinctly stated.

Plaintiff L'Oréal USA, Inc. ("L'Oréal") entered into a contract with

defendant Wormser Corporation ("Wormser") to develop a new cosmetic

product called "Confidence in a Foundation™." Wormser, in turn, utilized a

subcontractor company in which it owns a minority interest, Process

Technologies and Packaging, LLC ("Process Tech") to perform the contract.

After customers complained about the product, L'Oréal pulled it from the

market.

A forum selection clause in Paragraph 16 of the contract between L'Oréal

and Wormser specified that any litigation of disputes under that contract must

be brought in "the city where [L'Oréal's] registered address is," i.e., New York A-4073-19 2 City. Despite that provision, L'Oréal filed suit against defendants Wormser and

Process Tech three times in this state: (1) a July 2019 complaint in the United

States District Court (which L'Oréal soon voluntarily withdrew); (2) an August

2019 complaint in the Law Division in Bergen County, and (3) an amended

complaint in the Law Division of that same county.

Citing L'Oréal's forum selection clause, Wormser and Process Tech

moved to dismiss the Law Division action for lack of subject matter jurisdiction,

arguing that the case should have been filed in New York.

In a series of orders dated May 13, 2020, May 29, 2020, and June 5, 2020,

the Law Division dismissed the New Jersey complaint as to both defendants for

lack of subject matter jurisdiction. In the May 13, 2020 order, the trial court

granted Wormser's motion to dismiss "with prejudice." All three parties

thereafter joined in a letter advising the judge that they consented to having the

May 13, 2020 order amended to apply to both Wormser and Process Tech's

motions to dismiss and the order revised to simply say the case was dismissed

"without prejudice." The trial judge did not adopt this proposal and instead, in

its May 29, 2020 order, granted Process Tech's motion to dismiss and, sua

sponte, inserted language dismissing the Law Division complaint "with

prejudice for the action being brought within the state courts of New Jersey."

The trial court also denied plaintiff's motion to amend the May 13, 2020 order A-4073-19 3 in its June 5, 2020 order and asserted the denied order "is [dismissed] with

prejudice within the jurisdiction of New Jersey."

This appeal ensued. Meanwhile, L'Oréal has filed a duplicate action

against defendants in the New York state courts. Defendants have moved to

dismiss that lawsuit. We have been advised by an update letter from counsel

that the motion to dismiss is scheduled to be orally argued before the New York

court in mid-May.

Rule 4:37-2(d) clearly instructs that: "Unless the order of dismissal

otherwise specifies, a dismissal under R. 4:37-2(b) or (c) and any dismissal not

specifically provided for by R. 4:37, other than a dismissal for lack of

jurisdiction, operates as an adjudication on the merits." (Emphasis added). A

dismissal for lack of subject matter jurisdiction due to a forum selection clause

requiring suit to be brought in some other jurisdiction is not an adjudication on

the merits. See Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 596 (1991)

(noting that enforcement of a forum selection clause "allows for judicial

resolution of claims against [the defendant]" in the designated forum). The

dismissal on that procedural basis is not a determination "on the merits."

Velasquez v. Franz, 123 N.J. 498, 505-06 (1991) (explaining that the

preclusionary doctrine of res judicata requires, among other things, a final

judgment in the earlier action rendered "on the merits"). A-4073-19 4 We discern no reasonable basis for the trial court to have specified in the

dismissal order in this case that it was "with prejudice" as to any further

litigation in New Jersey. Although it is puzzling why L'Oréal's counsel filed

three successive complaints in this state in contravention of the forum selection

clause, the language injected by the court was inconsistent with Rule 4:37-2(d)

and inappropriate. In the unlikely event that L'Oréal filed a fourth complaint in

this state, we presume defendants would readily invoke the entire controversy

doctrine to repel it. See R. 4:30A; DiTrolio v. Antiles, 142 N.J. 253, 267 (1995).

The trial court's orders of dismissal are affirmed, with the following

modifications. The May 13, 2020 order shall be revised to replace the phrase

"with prejudice" to "without prejudice." The May 29, 2020 order shall be

revised to replace the phrase "with prejudice for the action being brought within

the state courts of New Jersey" with the phrase "without prejudice." Our judicial

colleagues in the New York courts now may be guided accordingly. The trial

court shall issue implementing orders consistent with this opinion within ten

days.

Affirmed, as modified.

A-4073-19 5