Law of Cards: Judge Allows J&T’s Fraud Suit Against Upper Deck to Continue
It's been four months since we last checked in on the Pirozzi and J&T Hobby v. Upper Deck and McWilliam lawsuit. That's not because nothing happened over that time frame. It's because everything that happened was complicated and boring.
To recap, at the beginning of this action, Upper Deck successfully blew up J&T's fraud case. For a little bit at least. Basically, Upper Deck argued that J&T did not provide enough evidence to support its claims, so the case should not go forward.
Legal translation: To plead fraud you need to identify the "who, what where, when and how" of the claim. This creates a higher bar than the average case, and if that burden isn't met, the case doesn't start…it gets dismissed.
The court agreed with Upper Deck, but gave J&T another chance to identify the “who, what, where, when and how.”
J&T then filed a new, amended complaint which provided copious details about the alleged fraud. As I predicted in that article:
We'll soon find out if J&T got it right, because I guarantee UD will file a very similar motion to what it won on last time.
Legal translation: The motion will say, "Hey judge, yet again, they didn't fully identify 'the who, what, where, when and how' of the alleged fraud. Can you kill this case now for good?"
Well, since the last article, Upper Deck did just that. It filed motions saying, "Judge, they still didn't get it right."
Legal translation: The motions actually said more, a lot more, and used words like "demurrer" and focused on statutes of limitations, pleading standards, etc, etc. Had I written an article on it, could have unleashed a dangerous wave of somnambulism on card collectors. So, I resisted. My summary of "they still didn’t get it right," however, is a dead-on summary.
J&T then responded by saying, "We did enough." Although it took them multiple filings and a lot more pages to say that.
Finally, Upper Deck filed replies that can be succinctly summarized as saying, "No, you didn't."
With that in mind, let's just jump to the result: The court agreed with J&T that its fraud claims were pled with sufficient specificity.
What's this mean? The case can finally begin.
Legal translation: The case was filed last August, and because of these motions, it really hasn't begun yet. Sure, we've seen some of the alleged substance from J&T, but we haven't seen the evidence backing it up yet. We also haven't seen Upper Deck's responses, or evidence either.
While this is a win for J&T, it does not mean it will win the case. It just means its foot is in the courtroom door, and it can start walking down the long road of litigation.
If this case does not settle it will be a long, long road. As I noted previously, paragraphs 14-22 of J&T's amended complaint were filled with a who's who of potential witnesses. I bet each of those lucky witnesses will spend at least one day in a hotel room surrounded by attorneys from both sides, answering deposition questions.
The court hints at this in the order, too (although, the judge did not find paragraph 14 as interesting as I did.):
At paragraphs 15 through 22 of the First Amended Complaint ("FAC") Plaintiffs set forth eight specific misrepresentations of materials facts concerning Defendants' repeated denials and concealment of acts allegedly vital to the business relationship between Plaintiffs and Defendants. Plaintiffs allege that Defendants repeatedly denied and concealed that they had interests in distributors competing directly with Plaintiffs and that they were giving Plaintiffs' competitors' preferential treatment, selling products to them at lower prices and providing them with more desirable and limited products.
As the case progresses (if the case progresses and doesn't settle that is) it should be interesting to follow at a minimum for the testimony about those alleged "eight specific misrepresentations."
Upper Deck's answer to this now proper complaint is due in just over two weeks. When it's filed, we'll get our first glimpse at Upper Deck's positions.
Don't expect too much from the filing, however. It'll likely just say, "Deny, Deny, Deny."
Legal translation: Although it's a high barrier to start a fraud case, defendants can still just say, "Nah, we didn't do it," and that's sufficient.
After that, though, we're off to the races. In another six months or so.
If you'd like to read the court's order, here it is. Don't read it before operating heavy machinery or getting behind the wheel of a car though. It could result in drowsiness.
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