Law of Cards: Upper Deck Distribution Lawsuit Escalates with Amended Complaint

Law of Cards: Upper Deck Distribution Lawsuit Escalates with Amended Complaint

When we last checked in on the J&T Hobby v. Upper Deck lawsuit (over a distribution agreement allegedly gone wrong), UD scored a significant victory by getting J&T's complaint tossed out. Hope was not completely lost for J&T, because the court did give it a second chance—it could continue if it could specifically spell out the who, what, where, when and how of its fraud claim.

Legal translation: J&T needs to identify specific people by name, places, specific dates and the mechanism of the alleged fraud.

To try and meet the court's requirement, on January 4, J&T filed its amended complaint in which it goes into excruciating detail about the alleged fraud, including a narrative involving a "who's who" of the trading card world.

The story within the amended complaint basically is that a distributor called Edgeman and a retailer called Vintage were given preferential treatment in violation of UD's distribution contract with J&T. UD also allegedly gave Edgeman and Vintage "preferential treatment," such as letting them sell product at lower prices or a discount, or giving them more limited, in-demand and desirable products than what was given to J&T. Again, J&T alleges this was all in violation of its deal with UD.

J&T also alleges that through this relationship, UD "undercut" J&T's prices, usurped its profits, unloaded undesirable product on J&T at uncompetitive prices, defeated the benefits of the contract , and otherwise tried to put J&T out of business.

J&T also alleges that Edgeman and Vintage were at least partially owned by UD and/or Richard McWilliam as well. J&T claims that every time they tried to get to the bottom of whether any of the above was true or not, everyone it talked to from UD denied it.

So, basically, J&T’s new complaint can be summed up as "We had a contract, they violated it, they repeatedly lied to us about it, and they improperly benefited from it all."

Is J&T's amended complaint sufficient? The complaint does a much better job of explaining the alleged fraud, but pleading fraud has such a high bar there are never any guarantees. I think J&T gets it right here. They definitely get the "who, what, where and when." It's the "how" part that is more subjective. So if the judge does dismiss the complaint (or somehow limits the action to only certain causes), it would not shock me either.

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?"

For those of you interested in the gory details, and seeing a "who's who" of the trading card industry, you'll definitely want to check out paragraphs 14-22 and 28 of the complaint. J&T also attaches a copy of one of the distribution agreements it had with UD.

The information provided in Paul Lesko's "Law of Cards" column is not intended to be legal advice, but merely conveys general information related to legal issues commonly encountered in the sports industry. This information is not intended to create any legal relationship between Paul Lesko, the Simmons Browder Gianaris Angelides & Barnerd LLC or any attorney and the user. Neither the transmission nor receipt of these website materials will create an attorney-client relationship between the author and the readers.

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Paul Lesko is a shareholder at Simmons Hanly Conroy and the chair of its Intellectual Property Department (http://www.simmonsfirm.com). Don’t hold the fact that Paul is a lawyer against him, he’s also a rabid baseball and college basketball fan, and an avid baseball card collector. Paul can be found on Twitter @Paul_Lesko and Google+.

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