Why would a Federal Magistrate dismiss our action in Federal court? Judge Kugler did so based on a technical filing error and he dismissed our opportunity to sue on this issue in Federal Court permanently. M’s former employer, NDT, was a resident of Oregon. M a resident of New Jersey. M did not want to arbitrate the issues between the parties and petitioned the State Court in New Jersey and he filed a lawsuit there to set the arbitration aside and to access the more liberal law of the State of New Jersey as opposed the law in the State of Oregon. The contract required that Oregon law be applied in this case.
We moved to have the case decided in Federal Court, as opposed to State court and had decided to just go ahead and litigate the case in its entirety in Federal Court in NJ. But something happened. My attorneys did not file a single page memo as required by Federal Court and the Judge on the case dismissed the case with prejudice, meaning he was not going to give us an opportunity to refile the case. Typically a dismissal like this would simple meaning a defaulted filing which would allow the lawsuit to be refiled properly, but this Judge took the step necessary to make sure that we could not on this matter ever access the U.S. District Court of New Jersey.
I received a call from an investigator that told me Sandra Ware, M’s girlfriend, went to law school with one of The Federal Judge’s law clerk and he suspected they had met and discussed this matter. He further concluded that if the law clerk was assigned to this case specifically, the clerk would likely have written the order and may have even slipped this by the Judge. Some time later M admitted to me that they had met this Judge many times at Rutgers Law School events. I rather doubted that. But it is what he said.
In any event I was livid. At the time I did not conceive, could not imagine, that Robert E. Jones would have contacted Robert Kugler, the then Federal Magistrate responsible for this case. I suppose that’s a possible explanation as to why our case dismissed with prejudice as opposed to being notified that our paper work was not in order and we needed to get the Notice of Removal filed appropriately. I doubt it is true and did not contemplate that at the time. But since Linda Marshall brought into the arbitration a hearing involving one of my other companies, it now raises this as a probative question.
I fired off a letter challenging the “why” of dismissing our case with prejudice and brought to his attention the conclusions reached by our investigator. I added one of the pages from our forensic expert report on the 120 gig hard drive. If the law clerk did in fact meet with Sandra Ware at the Diner just a few blocks form the courthouse, then I wanted the Judge to know that he engaged in this behavior for a household engaged in that behavior. I realize that the Judge may have taken this action to benefit a former Rutgers Law School alumni, as was he and his law clerks, but that action was an insult to the independent judiciary we count as a bedrock freedom.
By way of explanation my attorney’s out of New York had billed M’s employer and my company some $90,000 for this work to date. So, yes I was upset. But more importantly, the Federal Courts are designed to hear issues between parties with residents in different states to avoid a hometown advantage. Judge Kugler, with the motion to dismiss with prejudice denied my company that opportunity. With prejudice means that the matter may not be brought to Federal Court…anywhere. And the matter was to enforce the arbitration agreement.
Judge Kugler was not very happy with me and what was to follow became one of the more educational and instructional periods of my life…in the courtroom anyway. Judge Kugler ordered me to New Jersey to stand trial for contempt and interference of the court. He demanded that I be there in person some 30 days after his notice. So I hired yet another attorney, paid him $10,000, and he went about the business of what he claimed was trying to keep me out of jail.
Anyway, I went to the hearing Judge Kugler ordered me to attend. Sandra and M were there. The law clerk friend was there. The US Attorneys office representative was there. And during the opening commentary the US Attorney said they were confused as to why they were summoned by the Judge. The Judge told them of the letter. And further told them that they may be called upon to prosecute me. To the US Attorneys credit, “he said the their office would not in any way be interested in prosecuting me nor anyone else exercising their right to free speech.” By then the U.S. Attorney was also aware I had filed a complaint against Judge Kugler. In any event there would be no prosecution. I met with the U.S. Attorney after court.
For the next 20 minutes or so Judge Kugler yelled and carried on, dressing me down on every third paragraph. He brought his clerks in to the witness the carnage. I recognized the clerk in question almost immediately from the photographs provided to my attorney by the aforementioned investigator. I said little. My attorney of course asked that he recuse himself from this matter, but he did not. He explained the inherent conflict and the inappropriateness of the hearing itself. And then it was over. The Judge asked my attorney to join him in back in Chambers. I was asked to join my attorney for lunch down the block a bit and I headed over to the diner and waited for him.
And a half an hour or so later my attorney did in fact join me and we had an early lunch. During the lunch K told me the Judge had asked that I withdraw the complaint. “Is the Judge willing to reimburse my cost and fees?”, I asked.”You’ve read the letter and it was written assuming the Judge knew nothing of the friendship between Sandra and his clerk and that he should know.” Yes that’s true K said…and you aren’t getting your money back.
Are you going to withdraw the complaint?. No, I said. Apparently the cost of free speech is $10,000 plus expenses, per event. “Well then” K said, “I suggest you go the airport and get the hell out of the state as soon as you can before the Judge sends for you again. I’ll tell him this afternoon.” Very well then. Check Please.
Judge Kugler is not without his detractors. No Judge is. The issue I have with him, when the emotion is removed, is that he dismissed the case with prejudice over a technical filing error. This is extremely rare.
Eventually we went to state court in New Jersey. M argued that he should not have to submit to arbitration or be subject to Oregon law or the non-compete. We prevailed and the case was now out of New Jersey heading back to Oregon.
By the way our contract did not have a non-compete. It really is just a non-contact clause. You can’t solicit our clients. if you take one, you have to pay a portion of the revenue you generate. Simple.
For a short time thereafter, we offered a walk away. M’s attorney demanded $20,000 or else they were not going to settle out the claim. We stuck firm on the walk away, where neither party paid the other. M was out very little. We on the other hand were out close to $150,000, for legal fees to date and another $125,000 from the shutdown. All because M retaliated against my company for firing him by removing and destroying FoxPro programs (code, forms, executables, Tables, etc.) used to process data and generate reports for our clients. M’s attorneys always worked on contingency. Mine were paid by the hour. That’s just the way it works and that’s why lawsuits can be settlement tools. I’ve never been a fan of paying something when we did nothing wrong. It may be the cheapest way. But it is not the right way. Looking back though I wish I had just paid the $20,000. The future cost me a lot more than that. It is still costing me.