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February 2, 2007
THE ODORE KING AND GARY LA BARBERA, TRUSTEES OF LOCAL 282 INTERNATIONAL BROTHERHOOD OF TEAMSTERS WELFARE, PENSION, ANNUITY, JOB TRAINING AND VACATION SICK LEAVE TRUST FUNDS, PLAINTIFFS,v.SILVER STREAK TRANSPORT LTD. AND CYNTHIA PERSICHILLI, DEFENDANTS.
MEMORANDUM and ORDER
Plaintiffs, the Trustees of Local 282 International Brotherhood of Teamsters Welfare, Pension, Annuity, Job Training and Vacation/Sick Leave Trust Funds (the "Funds"), bring this action pursuant to the Employer Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1132 and 1145. Plaintiffs seek to recover unpaid fringe benefit contributions, interest, liquidated damages, attorney's fees, and costs allegedly owed to the Funds by defendants Silver Streak Transport Ltd. ("Silver Streak") and Cynthia Persichilli.
Procedural History
Plaintiffs filed their complaint on February 28, 2005, and Silver Streak filed an answer on March 14, 2005. Docket Entries 1, 5. On February 3, 2006, the parties consented to Magistrate Judge jurisdiction for all purposes including entry of judgment. Docket Entry 13. Plaintiffs filed an Affidavit in support of their claims for damages on February 28, 2006. Docket Entries 14-16. Defendants submitted opposition to plaintiffs' claim for damages, dated March 9, 2006, but not filed electronically until April 10, 2006. Docket Entry 21. Plaintiffs filed a response to defendants' opposition on April 7, 2006. Docket Entry 20.
On July 19, 2006, I held a telephonic hearing, at which time both counsel presented oral argument on the issues discussed herein. Neither party sought to call witnesses and the parties requested that I render judgment based solely on the existing record. Hr. 6-7.*fn1 Plaintiffs submitted a post-argument letter on July 21, 2006. Docket Entry 23. Defendants were given the opportunity to submit a post-argument letter in response but declined to do so.
The parties have requested that I make findings of fact and conclusions of law, and enter judgment, based solely on the submitted papers and oral argument. Hr. 6-7. For the reasons discussed below, I dismiss the claims against Cynthia Persichilli, resolve the sole factual dispute in plaintiffs' favor, and direct the Clerk to enter a judgment against defendant Silver Streak in the amount of $25,588.09.
I. The Claims Against Cynthia Persichilli
Plaintiffs allege that Cynthia Persichilli, an officer of the Silver Streak corporation, submitted a contribution check to the Funds in her "personal capacity" for the period of December, 2001, and is therefore personally liable for the damages plaintiffs incurred when the check was returned for insufficient funds. Cmpl. ¶¶ 28-31; Hr. 7-8.
As I noted at the hearing on July 19, 2006, the check in question was drawn on a corporate account and was clearly tendered to satisfy a corporate obligation. Moreover, plaintiffs' acceptance of many other checks tendered in the same manner as this one over the course of years makes it clear that plaintiffs understood Ms. Persichilli to be satisfying a corporate obligation and were not relying upon her personal creditworthiness. Hr. 7-9. Therefore, the claims against Ms. Persichilli are dismissed.
II. The Documents Relevant to Each Period of Delinquent Contributions
Plaintiffs allege that defendant Silver Streak was delinquent in its payments for numerous contribution periods spanning from September, 2000 through June, 2005. Pl. ¶¶ 14-43.*fn2 Several bargaining agreements and trust declarations were in operation between the parties over that period of time. Because the agreements covering different periods set forth different relevant terms, such as the interest rate to be applied in the event of untimely payments, it is necessary to determine which document was in effect during each relevant time period.
A. Delinquent Contributions from September, 2000 through October, 2003
Plaintiffs and Silver Streak entered into a Collective Bargaining Agreement for the period from July 1, 1993 through June 30, 1996 ("1993-1996 CBA"). Pl. ¶ 7 and Ex. B. The terms of the 1993-1996 CBA remained in effect through June 30, 1999, pursuant to a Memorandum of Agreement ("MOA") executed by plaintiffs and Silver Streak. Pl. ¶ 8 and Ex. C. Plaintiffs executed a Restated Agreement and Declaration of Trust prior to December 31, 1999 (the "1999 Declaration"), although the exact date of this document's execution is not stated in the record. See Pl. ¶ 11 and Ex. G; Hr. 14-16.
Silver Streak did not sign the 1999 Declaration. Nevertheless, I conclude that Silver Streak is bound by its terms and conditions by virtue of its course of conduct.
An employer may be found to have agreed to the terms of an expired or unsigned CBA through a course of conduct indicative of an intent to be bound by those terms. Brown v. C. Volante Corp., 194 F.3d 351 (2d Cir. 1999). Whether an employer will be bound by an expired or an unsigned CBA depends on the specific facts of the case. Id. at 354-55. Here, the facts establish defendant's intention to be bound.
First, Silver Streak continued to use Local 282 employees and to submit signed remittance reports following the expiration of the MOA. Pl. ¶ 9 and Ex. D. Indeed, the following clause appears in capital letters above the signature line on every remittance report: "BY SIGNING THIS REPORT YOU AGREE TO ACCEPT THE TERMS OF THE CURRENT LOCAL 282 INDUSTRY COLLECTIVE BARGAINING AGREEMENT COVERING THE WORK PERFORMED BY YOUR EMPLOYEES." Pl. Ex. D. Silver Streak also complied with increases in wage contributions as set forth in the Collective Bargaining Agreement that was executed by plaintiffs and other industry employers for the period 2002 through 2005 (the "2002 CBA"), although Silver Streak did not sign that agreement either. Pl. ¶ 10 and Ex. E. Finally, Silver Streak consented to audits covering periods from 1999 through 2004 in accordance with the terms of the 1999 Declaration. Pl. ¶ 9. These uncontradicted facts, and Silver Streak's concession that it has no basis to argue that the 1999 Declaration was not in effect from September, 2000 through October, 2003 (Hr. 16), make it clear that Silver Streak consented to the terms of the 1999 Declaration through its course of conduct.*fn3
The 1999 Declaration provides, in pertinent part:
The failure of an Employer to pay the contributions required hereunder promptly when due shall be a violation of the Collective Bargaining Agreement between the said Employer and the Union as well as a violation of the Employer's obligations hereunder. . . . In addition to any other remedies to which the parties may be entitled an Employer in default for five working days shall be obligated to pay interest, at the rate specified in Section 5-501 of the General Obligations Law of the State of New York, as the same may be amended from time to time, on the monies due to the Trustees from the first day of the month when the payment was due to the date when payment was made, together with attorney's fees, auditor's fees and liquidated damages.
Pl. Ex. G at 30.
Section 5-501 of the General Obligations Law provides for a rate of interest at 6% per annum, with certain exceptions, "unless a different rate is prescribed in section fourteen-a of the banking law." N.Y. Gen. Oblig. L. § 5-501(1). A different rate is prescribed in Section 14-a of New York Banking Law: "The maximum rate of interest provided for in section 5-501 of the general obligations law shall be sixteen per centum per annum." N.Y. Bank. L. § 14-a(1). Another subsection of that statute makes clear that the 'maximum' rate of interest referenced in Section 14-a(1) is the 'prescribed' rate of interest referenced in New York General Obligations Law § 5-501(a):
Whenever reference is made . . . in any . . . law, contract or document to the rate of interest prescribed . . . pursuant to this section or any former section fourteen-a of this chapter, such reference shall be deemed a reference to the rate of interest prescribed in subdivision one of this section.
N.Y. Bank. L. § 14-a(5).
Thus, pursuant to the terms of the 1999 Declaration, plaintiffs are entitled to the following amounts with respect to any delinquent payments for the periods from January, 2000 through October, 2003, when the 1999 Declaration was amended: 1) 16% per annum interest; 2) attorney's fees; and 3) additional damages in "[t]he amount of interest charged on the unpaid contributions."*fn4
B. Delinquent Contributions from November, 2003 through June, 2005
On October 28, 2003, plaintiffs adopted an Amendment to the 1999 Declaration ("2003 Amendment"). Hr. 16; see also Pl. Ex. I (letter to employers outlining the terms of the 2003 Amendment). Silver Streak should be deemed bound by the 2003 Amendment, despite the fact that it was unilaterally executed by plaintiffs. First, Silver Streak's continuing course of conduct from that period up to the present date, with respect to the employment, wages, and fringe benefit contributions that it continued to provide to Local 282 Union workers, evidences its acceptance of the terms set forth in the 2003 Amendment. See Pl. ¶ 10 and Exs. D, E. Second, Silver Streak has not submitted any evidence to contradict plaintiffs' representations that the trustees notified Silver Streak of the 2003 Amendment. Hr. 16-17. Thus, it is clear that Silver Streak assented to the terms of the 2003 Amendment by its course of conduct.*fn5
The 2003 Amendment raised the interest applicable to delinquent contributions to 18% per annum. Pl. Ex. I. Therefore, for all untimely contributions to the Funds from November, 2003, through June, 2005, defendant is liable for the interest accrued at a rate of 18% per annum, or .015% per month. The other relevant provisions of the 1999 Declaration appear to be unaffected by the 2003 Amendment, and plaintiffs are therefore also entitled to attorney's fees and liquidated damages equal to the amount of interest due in connection with each delinquent payment during this period.
III. The Three Categories of Delinquent Contributions at Issue in This Suit
There are three categories of delinquent contributions at issue in this suit: first, those that remained unpaid at the time this suit was filed; second, those that were paid late but before the suit was filed; and third, those that first came due but were paid late after the suit was filed. The first category triggers the statutory damages in ERISA, 29 U.S.C. § 1132(g)(2). Plaintiffs are limited to contractual remedies, however, for the second and third categories.
A. Contributions that were Unpaid at the Time Suit was Filed
Pursuant to 29 U.S.C. § 1132(g)(2), plaintiffs are entitled to unpaid principal, interest, liquidated damages, and attorney's fees for any contributions that defendant had not paid at the time that this suit was filed. Plaintiffs allege that $294.41, a portion of the contributions due for December, 2001, remained unpaid at the time this suit was filed. Pl. ¶ 24.
Silver Streak signed and submitted a Remittance Report form to the Funds for December, 2001, indicating that $710.70 was owing as of February 28, 2002, for vacation and sick leave benefits. Pl. Ex. D. Silver Streak submitted a check made payable to "Local 282 Vacation/sick" in the amount of $710.70, dated February 28, 2002, which was returned to plaintiffs, unpaid by the bank for lack of funds in defendant's account. Compl. ¶ 29 and Ex. A; Hr. 11. By certified mail dated April 8, 2002, plaintiffs' attorney advised Silver Streak that the check it had remitted in the amount of $710.70 for vacation and sick leave for the claim period December, 2001, had bounced. Pl. Ex. H. The letter further advised that interest and attorney's fees were due in addition to the unpaid principal, and that unless the amount was paid in full within the next ten days, plaintiffs would commence legal action. Id. Subsequently, by certified mail dated October 10, 2002, plaintiffs' counsel advised Silver Streak that it was responsible for the interest accrued on delinquent contributions including those due for December, 2001. Id. Plaintiffs allege that, although defendant made subsequent installment payments to cover that particular contribution period in November, 2003, December, 2003, and May, 2005, a balance of $294.41 is still due. Hr. 11. Plaintiffs assert that they sent defendant letters requesting remittance of the unpaid $294.41 and that Silver Streak has never objected to the amounts set forth in these letters. Pl. ¶ 24.
Defendant contradicts plaintiffs' allegations by asserting that "[w]ith respect to the period[] of December, 2001 . . . no contributions were owed for these months and the plaintiff failed to bill for any alleged delinquency charges." Def. 16;*fn6 see also Hr. 10. In choosing which version of the facts to credit, I note that plaintiffs would have little interest in contending falsely that only part of the amount due for December, 2001 has been paid; were plaintiffs to fabricate, presumably they would allege that defendant made no payment at all for that month. Instead, plaintiffs present a detailed account, corroborated by documentary evidence, of defendant's failure to remit the entire amount due. I therefore find that there were unpaid contributions due from December, 2001, at the time this suit was filed, and that $294.41 for that period remains due to this day.
B. Untimely Contributions that were Paid Before the Suit was Filed or that Came Due After the Suit was Filed
Plaintiffs also allege that interest, liquidated damages, and attorney's fees are due for defendant's late payments to the Fund for most of the contribution periods from September, 2000 through June, 2005. Plaintiffs concede that for every period at issue up to December, 2004 (except December, 2001), Silver Streak paid the principal due and owing before this suit was commenced. Plaintiffs also seek to recover interest and liquidated damages for three periods after the lawsuit was filed in which defendant paid its contributions late. Plaintiffs are therefore not entitled to statutory damages with respect to any of these delinquent payments. Hr. 22. See Iron Workers Dist. Council of Western N.Y. and Vicinity Welfare and Pension Funds v. Hudson Steel Fabricators & Erectors, Inc., 68 F.3d 1502, 1507 (2d Cir. 1995) (explaining that to obtain one or all of the measures of relief set forth in 29 U.S.C. § 1132(g)(2), "the action must be one to enforce the obligation to pay contributions under § 1145, and therefore no such suit can be commenced in the absence of unpaid contributions"). However, as already discussed, the 1999 Declaration and the 2003 Amendment provide a contractual basis for the assessment of interest, additional damages, and attorney's fees in the event of untimely contribution payments.
C. The Reminder Letters and the Attorney Letters
Before calculating the amount of interest due, it is necessary to determine when defendant's payment obligation for each period in issue accrued. Certain letters sent by plaintiffs and their attorneys are relevant to this determination.
Each time that Silver Streak was in default of a contribution period payment for approximately ten days, plaintiffs mailed the company a letter alerting it that contributions were due (the "Reminder Letters"). The Reminder Letters provide, in pertinent part, as follows:
Please be advised that in the event that this delinquency is referred to Counsel, the employer will be responsible for additional interest, attorney's fees, liquidated damages and disbursements incurred.
Def. Ex. B (emphasis in original).Defendant correctly argues that the Reminder Letters mailed by plaintiffs afforded defendant a grace period within which it could avoid liquidated damages and attorney's fees if payment was made in full. Def. 14. Silver Streak had a right to rely on the promise in these letters that the attorney's fees and additional damages would only accrue if it failed to remit payment -- including the interest that had accrued -- within ten days from the date of the letter. The record reveals that defendant remitted payment within the window afforded by the Reminder Letter only once, for the July, 2003 contribution period. Because defendant did not pay any of the interest that had already accrued for its delinquency in making that contribution, however, the matter still had to be referred to plaintiffs' attorney for collection and defendant should not be relieved from attorney's fees and liquidated damages due for that period.*fn7
After each delinquency was referred for collection, plaintiffs' counsel sent Silver Streak follow-up letters (the "Attorney Letters"). See Def. 15 and Ex. C. The Attorney Letters make clear that Silver Streak is already responsible for "charges including but not limited to interest, liquidated damages, attorney's fees and audit charges" for the relevant pay period. Def. Ex. C. The Attorney Letters further provided that "[u]nless arrangements are made within the next ten (10) days to pay in full the amounts due and owing, it will be necessary for this office to commence legal action." Id. Thus, unlike the Reminder Letters and contrary to defendant's argument, the Attorney Letters cannot be reasonably read to afford defendant any additional grace period. The ten days referred to in these letters gave Silver Streak the opportunity to avoid legal action by making prompt payment, but did not offer any relief from the unpaid principal, interest, and liquidated damages already owing.
IV. Attorney's fees
Plaintiffs are also entitled to recover their attorney's fees. Upon a finding that defendant has been delinquent in paying contributions, liability for attorney's fees related to the litigation is mandatory under Section 1132(g). Iron Workers, 69 F.3d at 1506. Additionally, as discussed above, defendant is liable for attorney's fees incurred prior to commencement of this litigation pursuant to the terms of the 1999 Declaration and the Attorney Letters.
All claims for attorney's fees in the Second Circuit must comply with New York State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136 (2d Cir. 1983), which requires that contemporaneous time records be submitted with all fee applications. 711 F.2d at 1148. Plaintiffs have submitted an attorney's declaration and supporting contemporaneous time records. Pl. Ex. J. Plaintiffs seek reimbursement for $21,633.76 in attorney's fees for 108.10 hours of work billed at the following rates: $275 per hour for a partner of more than thirty years experience; $200 per hour for associates; and $70 per hour for a paralegal. In light of the partner's significant experience I find the hourly rates and the time expended to be reasonable. Pl. ¶ 45. However, I have reduced the award of attorney's fees to $21,371.66 because in a few instances plaintiffs' counsel appears to have billed for pay periods that are not alleged to have been delinquent.*fn8 Plaintiffs also request $747.58 in costs. I find the amount of costs plaintiffs seek to be reasonable and I therefore order that plaintiffs be awarded costs in the amount of $747.58.
V. Calculations
The following table reflects the Court's calculations of interest and liquidated damages, based on the above findings:
Pay PeriodPrincipal owedDate originally dueDate payment made*fn9Days delinquentInterest*fn10LD (interest)
12/01 *fn11294.412/15/02--1812234.73234.73
Totals 1550.221624.22
For the reasons stated above, I hereby direct that judgment be entered dismissing all claims against defendant Cynthia Persichilli and awarding plaintiffs, on their claims against defendant Silver Streak Transport Ltd., the total amount of $25,588.09, comprised of: 1) unpaid principal in the amount of $294.41; 2) interest in the amount of $1,550.22; 3) liquidated damages in the amount of $1,624.22; and 4) attorney's fees in the amount of $21,371.66 and $74.58 in costs.
Steven M. Gold United States Magistrate Judge
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Total Lateral Surcharge Pressure Due to Strip Loadby Ramon Jarquio, (M.ASCE), Civ. Engr.; New York City Transit Authority, 370 Jay St., Brooklyn, N.Y. 11201,
Serial Information: Journal of the Geotechnical Engineering Division, 1981, Vol. 107, Issue 10, Pg. 1424-1428
Document Type: Journal Paper
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Discussion: Hansen Bent (See full record)
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Abstract: This paper is presented to show that a direct solution for the total lateral surcharge pressure can be derived by mathematical manipulation of the variables in the given equation for the unit lateral surcharge pressure. Simplified expressions for the location of the centroid of the total lateral surcharge pressure and the point of maximum unit lateral pressure are also derived to complete the analysis.
Subject Headings: Lateral pressure | Mathematics | High-rise buildings | Lateral loads | Load factors
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text: Hi my name is Rawlings like the baseball! I just joined my new home one week ago in Phoenix Arizona. My friends tell me I might be one of the cutest puppies ever! So here I am. What do you think? I spend my day playing with my toys and I have learned to sit, lay down and fetch so my daddy can take me hunting when I'm full grown. I can't wait for my new parents to introduce me to my other furry friends once all my shots are complete. I'm 9 weeks old and have a big world to explore.


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Growth and indole-3-acetic acid biosynthesis of Azospirillum brasilense Sp245 is environmentally controlled
Batch and fed batch cultures of Azospirillum brasilense Sp245 were conducted in a bioreactor. Growth response, IAA biosynthesis and the expression of the ipdC gene were monitored in relation to the environmental conditions (temperature, availability of a carbon source and aeration). A. brasilense can grow and produce IAA in batch cultures between 20 and 38 °C in a standard minimal medium (MMAB) containing 2.5 g l−1l-malate and 50 μg ml−1 tryptophan. IAA synthesis requires depletion of the carbon source from the growth medium in batch culture, causing growth arrest. No significant amount of IAA can be detected in a fed batch culture. Varying the concentration of tryptophan in batch experiments has an effect on both growth and IAA synthesis. Finally we confirmed that aerobic growth inhibits IAA synthesis. The obtained profile for IAA synthesis coincides with the expression of the indole-3-pyruvate decarboxylase gene (ipdC), encoding a key enzyme in the IAA biosynthesis of A. brasilense.
- Azospirillum brasilense
- Fermentor
- Indole-3-acetic acid
1 Introduction
The genus Azospirillum consists of diazotrophic gram-negative bacteria occurring in the rhizosphere and intercellular spaces of the roots of several plant species. There are numerous reports on the improvement of plant growth and crop yield upon Azospirillum inoculation on plant roots. The observed plant response to Azospirillum inoculation is attributed to the production of indole-3-acetic acid (IAA) by these bacteria [[⇓⇓–[⇓]. IAA is the most important naturally occurring auxin and is implicated in many aspects of plant growth and development. In addition to its production in plants, IAA biosynthesis has been recorded in a few fungi, some protozoa and is widespread among plant-associated bacteria [[⇓⇓⇓⇓–[⇓]. Tryptophan (Trp) is a precursor for bacterial IAA biosynthesis for which different pathways have been described [[⇓,[0]. The indole-3-pyruvate decarboxylase (IPDC) is a key enzyme for IAA biosynthesis in Azospirillum brasilense, as an ipdC knock out mutant was found to produce only 10% of the wild type IAA production level [[1]. This gene is up-regulated by IAA as well as by synthetic auxins such as 1-naphthalene acetic acid and chlorophenoxy acids [[2]. Genes encoding IPDC have also been cloned from some other IAA producing bacterial species [[3⇓⇓⇓–[7].
Results obtained from Azospirillum field inoculations have been somewhat inconsistent [[8] suggesting that bacterial IAA biosynthesis may be drastically affected by environmental factors. A number of contradicting reports regarding factors that may influence the IAA biosynthesis of A. brasilense have been published [[2,[5,[9]. A precise and careful monitoring and control of culture conditions by the use of a fermentor could provide a better understanding of environmental factors controlling IAA biosynthesis. Results from some of such studies have been extrapolated to predict survival and activity in the fields [[0]. The work presented here is an attempt to define environmental conditions which may come into play in the regulation of growth, ipdC expression and the IAA biosynthesis of A. brasilense.
2 Materials and methods
2.1 Culture conditions
A. brasilense Sp245 (pFAJ64) [[2] was routinely maintained on l-malate minimal medium (MMAB) [[1] supplemented with tetracycline (25 μg ml−1).
Fermentations were conducted in a 5 l BioFlow 3000 bench-top fermentor (New Brunswick Scientific; USA). Sterile medium components were separately added to the fermentor (containing cool, sterile water) to make up a 3 l (2.5 l when in fed-batch mode) working volume. Unless stated otherwise, the set-points for the fermentation were temperature 30 °C, pH 6.8, dissolved oxygen (DO) 3%, and agitation 50–500 rpm. The DO-agitation cascade was selected in the controller to maintain the DO at set-point by automatically adjusting agitation speed in response to oxygen demand. 4 N H3PO4was used as the pH control solution. A pre-culture used to inoculate the fermentor was initiated by inoculating 100 ml of MMAB medium in a 250-ml Erlenmeyer flask with a loop of cells taken from an overnight plate culture and cultivating in an incubator shaker for 14 h at 30 °C and 180 rpm. To enable significant IAA accumulation and measurable ipdC gene expression levels, cultures were supplemented with 50 μg ml−1 Trp. In addition to the fermentor's internal controller, the bioprocess software (AFS-BioCommand, New Brunswick Scientific, USA) was routinely used to supervise the process. All data from the fermentor were transmitted to a computer loaded with the 'AFS-BioCommandR' software. Samples of 10-ml, used for measuring absorbance, residual l-malate, IAA and Trp concentrations, were withdrawn aseptically and divided into sub-samples for analysis. 5 ml of culture used for the analysis of IAA and Trp were centrifuged and the supernatant frozen until analysed. Samples used for quantitative β-glucuronidase were stored at 4 °C and analysed immediately at the end of the fermentation. In order to exclude any complications that may arise if the external signals such as DO and pH are not kept constant, cultivation was stopped when it became difficult to maintain the culture at set points. This time point is regarded as the elapsed fermentation time (EFT).
2.2 Analysis of cells and growth medium
Cell growth was estimated by measuring absorbance at 600 nm with a Genesys 6 spectrophotometer (Spectronic Instruments, Rochester, New York, USA). For the purposes of calculating growth rates, cell number was estimated from a calibration curve of OD versus CFU. The specific growth rate was determined with regression analysis from plots of ln CFU versus time at points during the exponential growth phase. l-malate concentrations were determined using a test kit from Roche (R-Biopharm, Germany). IAA and Trp were purified from 5 ml fermentation medium supernatant by solid phase extraction and analysed by gas chromatography/mass spectrometry (GC/MS) [[2] as pentafluorobenzyl (PFB) ester [[3]. For recovery purposes, [phenyl-13C6]-indole-3-acetic acid (Cambridge Isotope Laboratories, Andover, MA, USA) and [2′,4′,5′,6′,7′-d5]-l-Trp (CDN isotopes, Quebec, Canada) (100 ng each) were added as internal tracers. Quantitative analysis of β-glucuronidase activity was assayed in microtiter plates using the GUS extraction buffer and p-nitophenyl-β-d-glucuronide as substrate [[4]. The measured β-glucuronidase activity expressed as Miller units [[5] was used to monitor ipdC gene expression and represents the mean of three replicates.
3 Results
Three sets of fermentations were performed for all cases reported and all data shown represent the average of at least three replicates.
3.1 Initial experiments
A. brasilense has been isolated from different climatic regions and because their rhizosphere competence depends on their ability to grow on available nutrients in the rhizosphere [[6], the influence of temperature and nutritional status on cell growth was investigated. Growth tests in the fermentor were conducted at different temperatures in N-free and N-containing MMAB. Cell growth was measured after 20 h of growth. A. brasilense developed rapidly with as N source. Unless specified otherwise, 50 μg ml−1 Trp was added to this medium.
3.2 Influence of carbon status
Azospirillum spp. are most often isolated from poor soils with low carbon content and carbon availability may be a limiting factor for microbial growth in the rhizosphere [[7]. To investigate the influence of carbon status on IAA biosynthesis, two batch fermentations, 'A' and 'B' with 2.5 and 5.0 g l−1 initial l-malate concentrations, respectively, and fed batch fermentation with 2.5 g l−1 initial l-malate concentration were performed. For the fed-batch process, A. brasilense was first grown in batch mode and then switched to fed-batch mode after 5 h by feeding a 10 g l−1l-malate solution at the rate of 0.004 l h−l. Table 1 summarises the data for OD, l-malate and IAA concentrations and the ipdC expression for the respective cultures. l-malate was rapidly depleted in the batch cultures but was available throughout the course of fermentation in the fed batch process. Culture 'A' yielded the least cell concentration as estimated by absorbance at 600 nm but allowed the highest levels of IAA and ipdC expression. Neither IAA production nor ipdC expression was detected in the fed batch culture, indicating that carbon stress is required for IAA biosynthesis.
|Fed-batch culture
|A (control)
|Initial l-malate concentration (g l−1)
|Maximum OD600
|1.609 ± 0.06a
|2.045 ± 0.05*
|1.839 ± 0.08*
|Maximum IAA concentration (μg ml−1)
|3.731 ± 0.06a
|1.849 ± 0.05*
|0.0194 ± 0.05*
|Maximum ipdC expression (Miller units)
|443 ± 0.40a
|250 ± 0.30*
|Residual l-malate (g l−1)
Data represent the mean ± SD, n= 3 of samples taken after 18 h of EFT. ND, not detected.
aValues for fermentation A, serving as control.
*P < 0.05 relative to control.
3.3 Tryptophan modulates growth and IAA biosynthesis in a variety of ways
The production of IAA by Azospirillum cultures in MMAB is very low unless Trp is added. However, the effect of Trp on growth is not known. Growth experiments were therefore conducted in the absence and in the presence of Trp (50 and 200 μg ml−1). The growth patterns for these fermentations are illustrated by the OD plots in Fig. 1. In the logarithmic phase of growth, two distinct growth patterns were observed; a first fast growing phase (μ1) followed by a second slow one (μ2). The transition was seen at 8 h of EFT coinciding with the point where l-malate concentration dropped below 0.05 g l−1 (data not shown). The mean specific growth rates for cultures grown without Trp and with 50 and 200 μg l−1 Trp, respectively, were μ1: 0.23 ± 0.006, 0.20 ± 0.005 and 0.19 ± 0.007; μ2: 0.07 ± 0.011, 0.09 ± 0.05 and 0.1 ± 0.07. The stationary phase was remarkably short in culture supplemented with 50 μg ml−1 Trp. In medium supplemented with 200 μg ml−1 Trp, the culture exhibited the capacity to resume growth again after an intervening stationary phase. To further clarify the effect of Trp on growth, the fermentation profiles are presented in the DO and agitation trend graph in Fig. 2. At the beginning of the log phase of growth, the DO remained approximately at 100% of air saturation until inoculation, and then declined rapidly to the 3% setpoint. In the absence of Trp, this decline was fast and agitation speed was high reflecting increasing oxygen demand. Fig. 2 reveals that the log phase (reflected by an increasing agitation profile) was extended for a further 2 and 4 h of EFT in the presence of 50 and 200 μg l−1 Trp supplement, respectively. The stationary phase (reflected by a constant agitation and DO profile) was remarkably short in the presence of 50 μg ml−1 Trp. The agitation pattern at 200 μg ml−1 Trp supplement was strikingly different; characterized by a second rise in agitation speed after an intervening constant profile of about 10 h. These results are consistent with observations in Fig. 1.
The influence of Trp on IAA production and the expression of the ipdC gene are shown in Fig. 3. Without Trp, IAA production and ipdC expression were very low and were only observed at the late stationary phase of growth. When medium was supplemented with Trp, ipdC expression and IAA synthesis were enhanced several fold and were detected at the early stationary phase of growth. This early boost in IAA biosynthetic activity was higher in culture supplemented with 200 μg ml−1 Trp but in contrast to culture containing 50 μg ml−1 Trp the boost decreased as the culture progressed.
3.4 Aerobic conditions inhibit IAA biosynthesis
A. brasilense is attracted to zones of low oxygen concentrations and in aerobic or microaerobic conditions uses O2 as terminal electron acceptor [[8,[9]. Okon et al. [[0] reported that the IpdC pathway for IAA biosynthesis is elevated under anaerobic conditions. In contrast, however, Brandl and Lindow [[1] did not see any effect of O2 availability on the IAA biosynthesis and the expression of the ipdC promoter in Erwinia herbicola. To investigate the effect of oxygen availability, A. brasilense was also cultured under aerobic condition (30% DO). Aerobic conditions allowed a longer EFT but biomass concentration was not significantly affected. IAA production and the expression of the ipdC were drastically reduced (Fig. 4).
4 Discussion
The absence of IAA biosynthesis and ipdC expression during exponential growth in micro-aerobic batch cultures of A. brasilense and during growth in fed-batch cultures clearly indicate that carbon limitation and reduction in growth rate are necessary for IAA biosynthesis in A. brasilense. However, under aerobic conditions, neither the exhaustion of the carbon source nor a reduction in growth rate can trigger IAA biosynthesis. This implies that (i) IAA biosynthesis in A. brasilense is triggered by stress factors (including carbon and oxygen stress, and an entry into the stationary phase of growth) and (ii) these factors must act in concert to enable IAA biosynthesis. These results agree with a previous observation that the overproduction of the stationary phase sigma factor RpoS in Enterobacter cloacae and Pseudomonas putida GR12-2 enhanced IAA synthesis several folds [[2,[3]. The requirement for carbon starvation and a reduction in growth rate are similar features of other secondary metabolites produced by micro-organisms. The inability of Azospirillum to produce IAA when a carbon source is available may provide an explanation for the failure of plant growth promotion following Azospirillum inoculations in rich or highly fertilized soils [[⇓,[4]. The effect of Trp on the growth of A. brasilense has received little attention in the studies of IAA biosynthesis of A. brasilense. Our current findings contrast the long held view that adding Trp to the culture medium of A. brasilense affects neither the growth rate nor the length of the logarithmic phase of growth [[5]. Trp decreased the growth rate, increased the length of the logarithmic phase and allowed an increase in cell concentration. The degradation of Trp to indole, pyruvate and ammonia has been reported in Escherichia coli. Trp has also been implicated as the sole source of carbon and nitrogen in some species of Pseudomonadaceae and Bacillaceae [[6⇓⇓⇓–[0]. The resumption of growth after an intervening stationary phase when Trp was present in Fig. 1 suggests that a similar system may exist in A. brasilense. Similar amounts of Trp were detected in the supernatants of the different cultures at the end of the fermentation (data not shown), so it would be plausible to argue that Trp was used for other purposes (most probably growth) rather than for IAA biosynthesis. Trp has been known as the precursor for IAA biosynthesis in bacteria, but the question on whether the effect of Trp is merely due to an increase in precursor supply and/or the induction of one or more synthetases of the biosynthetic pathway has received conflicting answers. There have been reports on an increase in ipdC gene expression in A. brasilense Sp7 and Pseudomonas putida GR12-2, respectively, in response to exogenous tryptophan [[3,[1]. In contrast, the ipdC promoter in Erwinia herbicola 299R is not influenced by exogenous Trp [[1]. In this study, we observed that all conditions that deter IAA biosynthesis affect ipdC expression negatively. For instance, irrespective of the presence of 50 μg ml−1 of Trp in the medium, aerobic conditions suppress both IAA production and ipdC expression. Results from this work suggest that the up-regulation of ipdC expression is concomitant with the appearance of IAA in the growth medium and is independent of the presence of Trp (Figs. 3 and 4). These observations lend credence to our earlier report on the autoinduction of the ipdC promoter in A. brasilense by IAA [[2]. No physiological function is yet ascribed to IAA production in A. brasilense. In all culture conditions that favour IAA biosynthesis, the stationary phase is remarkably shorter suggesting that the presence of IAA in the medium could have some antibacterial effects upon accumulation in the bioreactor. Indeed, IAA had been shown to inhibit the growth of Saccharomyces cerevisiae[[2]. A. brasilense is also reputed to be capable of restricting the proliferation of a number of rhizosphere bacteria [[3]. Having previously demonstrated the up-regulation of ipdC expression by IAA, this observation apparently implies that IAA production is suicidal for Azospirillum. This will probably not be the case in the rhizosphere since bacterial IAA is taken up by plant roots and any residual IAA will be expected to dissipate in the rhizosphere and possibly be a factor in providing Azospirillum with the capabilities referenced in [[3] above. Moreover, Fig. 3 indicates another phenomenon in the IAA biosynthesis of A. brasilense that may cushion the effect of overproduction of IAA. A 200 μg ml−1 Trp supplement results in the accumulation of very high levels of IAA at the early stationary phase of growth but in contrast to medium supplemented with 50 μg ml−1 Trp, IAA levels did not increase and did not result in higher ipdC expression as growth progressed. A possible explanation is that when IAA is present at high concentrations at the early phase of growth, it may act as a signal for the cell indicating potentially lethal levels of IAA in the growth medium. This signal then initiates a downregulation of ipdC gene expression. The excess Trp is then metabolised thereby alleviating the carbon stress and thus arrest further IAA biosynthesis. This effectively implies that the IAA biosynthesis of Azospirillum is favoured by low tryptophan concentrations. Oxygen is an important environmental factor because in aerobic or microaerobic conditions, A. brasilence uses O2 as terminal electron acceptor. The IpdC pathway for IAA biosynthesis is elevated under anaerobic conditions [[0]. In contrast however, Brandl and Lindow [[1] did not see any effect of O2 availability on the IAA biosynthesis and the expression of the ipdC promoter in Erwinia herbicola. We previously demonstrated the prevalence of microaerobic conditions in the lower part of wheat roots by the use of nifH-gusA reporter construct in Azospirillum[[4]. Furthermore, oxygen consumption by microbes and/or by roots can lead to low oxygen levels in the rhizosphere [[5]. The elevation of IAA production in microaerobic condition may therefore be an adaptation by A. brasilense for optimal IAA production. Since the oxygen status in the rhizosphere depends on the texture, structure and the water content of the soil [[6], it is of utmost importance to consider these factors during field applications of Azospirillum cultures.
In conclusion, our findings suggest that IAA is only produced when the nutritional limits (low carbon and nitrogen conditions) are in place and when there is an associative relationship with plant roots resulting in low oxygen and the presence of Trp. The evolutionary role of IAA biosynthesis in A. brasilense may therefore be seen as a contest by the bacterium to survive in its environment by gaining maximum carbon from the plants while impairing the proliferation of competitors.
This work was supported by grant DB/03/077 from the research council of the Katholieke Universiteit Leuven. We thank Sevgi Öden for technical help with GC–MS analyses.
- © 2005 Federation of European Microbiological Societies


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United States District Court, Third Circuit
September 23, 2013
GN NETCOM, INC., Plaintiff,v.PLANTRONICS, INC., Defendant.
Joseph J. Farnan, Jr., Esq., Brian E. Farnan, Esq., Michael J. Farnan, Esq., FARNAN LLP, Wilmington, DE, Christopher S. Finnerty, Esq., Jeffrey S. Patterson, Esq., Michael R. Murphy, Esq., Morgan T. Nickerson, Esq., NELSON MULLINS RILEY & SCARBOROUGH, LLP, Boston, MA, Attorneys for Plaintiff GN Netcom, Inc.
Richard L. Horwitz, Esq., John A. Sensing, Esq., POTTER ANDERSON & CORROON LLP, Wilmington, DE, Jonathan M. Jacobson, Esq., Chul Pak, Esq., David H. Reichenberg, Esq., Robert Corp, Esq., WILSON SONSINI GOODRICH & ROSATI PC, New York, NY, Attorneys for Defendant Plantronics, Inc.
LEONARD P. STARK, District Judge.
Plaintiff GN Netcom, Inc. ("GN" or "Plaintiff") filed this action on October 12, 2012, accusing Defendant Plantronics, Inc. ("Plantronics"or "Defendant") of monopolization, attempted monopolization, restraint of trade, and tortious interference with business relations. (D.I. 1) On December 5, 2012, Plantronics moved to dismiss the Complaint under Rule 12(b)(6) for failure to state a claim. (D.I. 8) The Court conducted a hearing on June 24, 2013. (D.I. 19) (hereinafter "Tr.") For the reasons set forth below, the Court will deny Plantronics' motion.
The sufficiency of pleadings for non-fraud cases is governed by Rule 8 of the Federal Rules of Civil Procedure, which requires "a short and plain statement of the claim showing that the pleader is entitled to relief" When presented with a Rule 12(b)(6) motion to dismiss for failure to state a claim, the Court is required to conduct a two-part analysis. See Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). First, the Court separates the factual and legal elements of a claim, accepting "all of the complaint's well-pleaded facts as true, but [disregarding] any legal conclusions." Id. at 210-11. This first step requires the Court to draw all reasonable inferences in favor of the non-moving party. See Maio v. Aetna, Inc., 221 F.3d 472, 500 (3d Cir. 2000). However, the Court is not obligated to accept as true "bald assertions, " Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997) (internal quotation marks omitted), "unsupported conclusions and unwarranted inferences, " Schuylkill Energy Res., Inc. v. Pennsylvania Power & Light Co., 113 F.3d 405, 417 (3d Cir. 1997), or allegations that are "self-evidently false, " Nami v. Fauver, 82 F.3d 63, 69 (3d Cir. 1996).
Second, the Court must determine "whether the facts alleged in the complaint are sufficient to show that the plaintiff has a plausible claim for relief.' Fowler, 578 F.3d at 211 (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)). A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. This is a context-specific determination, requiring the Court "to draw on its judicial experience and common sense." Id. at 679. At bottom, "[t]he complaint must state enough facts to raise a reasonable expectation that discovery will reveal evidence of [each] necessary element" of a claim. Wilkerson v. New Media Tech. Charter Sch. Inc., 522 F.3d 315, 321 (3d Cir. 2008) (internal quotation marks omitted).
"[W]hen the allegations in a complaint, however true, could not raise a claim of entitlement to relief, this basic deficiency should... be exposed at the point of minimum expenditure of time and money by the parties and the court." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 558 (2007) (internal quotation marks omitted). Finally, although a non-fraud claim need not be pled with particularity or specificity, that claim must "give the defendant fair notice of what the... claim is and the grounds upon which it rests." Id. at 555.
With respect to the monopolization and attempted monopolization claims, Plantronics contends that GN has failed to: (1) allege an antitrust injury; and (2) properly define the relevant market. For the restraint of trade claim, Plantronics alleges that GN has failed to allege any anticompetitive conduct. Plantronics also contends that GN has not stated a claim for tortious interference.
A. Antitrust Injury
In order to sue for an antitrust violation, a plaintiff must demonstrate that it has suffered an antitrust injury. See Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977). To establish an antitrust injury, a plaintiff must show: "(1) harm of the type the antitrust laws were intended to prevent; and (2) injury to the plaintiff that flows from that which makes the defendant's acts unlawful." Race Tires America, Inc. v. Hoosier Racing Tire Corp., 614 F.3d 57, 76 (3rd Cir. 2010); see also Brunswick, 429 U.S. at 489.
1. Harm
An "[a]ntitrust analysis must always be attuned to the particular structure and circumstances of the industry at issue." ZF Meritor, LLC v. Eaton Corp., 696 F.3d 254, 283 (3d Cir. 2012). As such, the Court begins its analysis by examining the industry in which the parties compete, taking as true the well-pleaded factual allegations of the Complaint. The Complaint alleges a specialized market for headsets sold to Contact Centers in the United States. (Complaint at ¶ 6) Plantronics' headsets currently account for over 75% of headset sales in this market. ( Id. at ¶ 26) According to GN, a "vast majority" of Contact Centers purchase their headsets through a limited network of approximately 20 specialized independent distributors ("SlDs"). ( Id. at ¶¶ 23, 41) The SIDs are a "primary and critical" channel for headset sales to Contact Centers in the U.S. ( Id. at ¶ 24)
GN entered the relevant market in 1997 and is Plantronics' first significant competitor. ( Id. at ¶ 29) In response to GN's entry into the market, Plantronics introduced the Plantronics Only Distributor ("POD") program, [1] which prohibits SIDs from: "(1) marketing, advertising, or promoting competitive products; (2) purchasing competitive products directly from competing manufacturers; and (3) accepting sales incentives from competing manufacturers." ( Id. at ¶¶ 30, 31) As of the date of the Complaint, Plantronics had induced approximately 80% of SIDs to become Plantronics Only Dealers. ( Id. at ¶ 36) GN alleges that Plantronics' POD agreements have caused an antitrust injury by: (1) preventing entry of new competitors into the market; (2) decreasing consumer options and information about available competing products; and (3) causing the price of the products to remain artificially inflated. ( Id. at ¶¶ 53-61) The Court concludes that these allegations are sufficient to allege antitrust injury under the relevant antitrust laws. See, e.g., International Raw Materials v. Stauffer Chem. Co., 978 F.2d 1318, 1328 (3d Cir. Pa. 1992) (finding that "allegation of decreased competition in the [relevant] market is the type of harm targeted by the antitrust laws"); Gulfstream III Assocs., Inc. v. Gulfstream Aerospace Corp., 995 F.2d 425, 429 (3d Cir. 1993) (same).
Plantronics asks the Court to focus on the benefits of PODs, contending that these benefits evidence the agreement's pro-competitive nature.[2] According to Plantronics, "exclusivity is simply an outcome of the competitive process."[3] (D.I. 14 at 5) However, exclusive agreements are not always pro-competitive, even where they provide some benefits. See ZF Meritor, 696 F.3d at 289. To the contrary, exclusive dealing agreements can result in an antitrust injury "by allowing one supplier of goods or services unreasonably to deprive other suppliers of a market for their goods." Id. at 270. As the Third Circuit explained in ZF Meritor :
[S]uppose an established manufacturer has long held a dominant position but is starting to lose market share to an aggressive young rival. A set of strategically planned exclusive dealing contracts may slow the rival's expansion by requiring it to develop alternative outlets for its products or rely at least temporarily on inferior or more expensive outlets. Consumer injury results from the delay that the dominant firm imposes on the smaller rival's growth.
Id. at 271.
In its Complaint, GN alleges that Plantronics introduced its POD agreements in direct response to GN's entry into the market, preventing GN and other competitors from building a viable distribution network and competing with Plantronics' monopoly. (Complaint at ¶¶ 30, 39, 40) For purpose of Plantronics' motion to dismiss, the Court must accept the well-pleaded facts of the Complaint as true and give GN the benefit of all logical inferences. See Fowler, 578 F.3d at 210-211. Under this standard, and taking into account the nature of the market in which the parties compete, the Court concludes that GN has properly pled an antitrust injury.
Plantronics also relies on NicSand, Inc. v. 3M Co., 507 F.3d 442, 454 (6th Cir. 2007), arguing that "[n]othing in the Complaint suggests that GN Netcom has been prevented from competing for the business of any distributor." (D.I. 14 at 4) The argument, however, ignores the demands of the marketplace in which the respective agreements arose. In NicSand, industry practices required suppliers to offer retailers exclusive agreements, and the defendants there merely complied with that requirement by offering a more lucrative exclusive deal. See 507 F.3d at 454. The Court in NicSand recognized the unique nature of that industry, concluding that "[i]f retailers have made supplier exclusivity a barrier to entry, one cannot bring an antitrust claim against a supplier for acquiescing to that requirement." Id. Marketplace realities in this case, however, are quite different. According to the Complaint, Plantronics only introduced the POD agreements in response to GN's entry into the marketplace, creating a barrier to the market that did not previously exist. (Complaint at ¶ 30) Hence, again, GN has adequately pled antitrust injury.
2. Injury to Plaintiff
The second prong of the antitrust injury analysis requires allegation of an "injury to the plaintiff that flows from that which makes the defendant's acts unlawful." Brunswick, 429 U.S. at 489. "Th[is] second requirement is generally met if the plaintiff is a competitor or a consumer in the relevant market." Gulfstream, 995 F.2d at 429 (internal citation and quotation marks omitted). Because GN has pled that it is a direct competitor of Plantronics in the relevant market, the second prong of the test also is satisfied.
B. Relevant Market
Plantronics contends that GN has failed to properly define the relevant market. (D.I. 9 at 9-13) "[I]n most cases, proper market definition can be determined only after a factual inquiry into the commercial realities faced by consumers." Queen City Pizza v. Domino's Pizza, 124 F.3d 430, 436 (3d Cir. 1997). As such, motions to dismiss based on a failure to define the market "may be granted only if the alleged market makes no economic sense under any set of facts.'" PepsiCo, Inc. v. Coca-Cola Co., 1998 WL 547088, at *6 (S.D.N.Y. Aug. 27, 1998). "Absent an inherently implausible market allegation, the question must be resolved on the facts and economic realities of the case." Id.
For purposes of antitrust law, a relevant market definition can include both a product component and a geographic component. See Brown Shoe Co. v. United States, 370 U.S. 294, 324 (1962). GN alleges: "The relevant market for this action is the sale of corded and wireless headsets (Headsets') to Enterprise Contact Centers (Contact Centers') in the United States of America." (Complaint at ¶ 6) Plantronics challenges both the product and geography components of GN's market definition. (D.I. 9 at 9)
1. Product Market
Plantronics contends that GN has improperly restricted the product market to only headsets sold to "Contact Centers." (D.I. 9 at 9-12) According to Plantronics, "[t]he Complaint alleges no facts at all as to why headsets sold to other locations or to other customers (such as offices) are not in the same relevant market as those sold to Contact Centers." (D.I. 9 at 10) The Court disagrees.
As explained by the Supreme Court in Brown Shoe, 370 U.S. at 325, the boundaries of a market may be established by reference to such practical factors as "industry or public recognition of the []market as a separate economic entity, the product's peculiar characteristics and uses, unique production facilities, distinct customers, distinct prices, sensitivity to price changes, and specialized vendors." Courts have further held that "it is appropriate to limit a market to a discrete channel of distribution so long as it is shown, using established market-definition criteria, that enough customers do not view other methods of distribution as viable substitutes to the distribution method in question." PepsiCo, 1998 WL 547088, at *8 (summarizing relevant case law).
In this case, under the established market-definition criteria, GN's Complaint provides sufficient factual detail to support its proposed market definition. As explained in the Complaint, the headsets at issue here are sold to Contact Centers through a limited network of approximately 20 SIDs. (Complaint at ¶ 23) According to the Complaint, SIDs "provide a variety of services to their Contact Center customers, including regular ordering and restocking of inventory, new product demonstrations, returns and exchanges, technical know-how, and delivery services." ( Id. at ¶ 24) The Complaint further alleges that "[t]he parties have specialized sales and marketing strategies for purchases by Contact Centers." ( Id. at ¶ 15) Finally, GN notes that Plantronics' own documents refer to the "contact center market."[4] (D.I. 13 at 14) Accepting the allegations in the Complaint as true, and taking the economic realities of the industry into account, the Court concludes that GN's market definition is not "inherently implausible" and, thus, is adequate for pleading purposes.
2. Geographic Market
Plantronics likewise challenges GN's market definition on geographical grounds, contending that the market is improperly restricted to the United States. (D.I. 9 at 12) According to Plantronics, "There is nothing at all to explain why the proper geographic market for headsets is anything other than worldwide." (D.I. 9 at 13) The Court disagrees. The Complaint alleges that "warranty differences, " "voltage differences, " and "shipping costs" make it "impracticable for Contact Centers to purchase Headsets from suppliers outside the United States of America." (Complaint at ¶¶ 16-20) Accepting the allegations in the Complaint as true, the Court cannot conclude that GN's restriction of the market to the U.S. "makes no economic sense under any set of facts.'" PepsiCo, 1998 WL 547088, at *6. Again, GN's market definition is adequately pled.
C. Other Asserted Grounds
Plantronics has raised two additional grounds for dismissal: (1) failure to allege any anticompetitive conduct; and (2) failure to state a claim for tortious interference. There seems to be little dispute that the outcome with respect to these two issues is dependent on the Court's conclusion regarding antitrust injury. ( See Tr. at 45-46) Having found that GN has adequately alleged antitrust injury, the Court will likewise deny Plantronics' motion with respect to GN's restraint of trade and tortious interference claims.
Plantronics' motion will be denied. An Order consistent with this Memorandum Opinion will be entered.
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SALISBURY — The Dyer family plot in the West Salisbury Cemetery hosts a simple headstone in memory of Bobby Dyer, the prodigal son who left small-town life and his own budding motorcycle business more than six decades ago to serve his country during the Korean War.
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FERRISBURGH — Tucked in its scenic, secluded corner of West Ferrisburgh, Basin Harbor Club is off the beaten track for many Addison County residents. In July and August, however, Basin Harbor is a vibrant, bustling community, and an economic driver with an impact that reaches far beyond the rolling golf course and iconic Adirondack chairs that dot the resort property.
MIDDLEBURY — Middlebury police located the mother of a young boy found wandering in the roadway near the Pulp Mill Bridge on July 21. Police located the child's mother and have referred the matter to state officials.
In other action last week, Middlebury police:
• Were informed that someone had taken a checkbook from a Buttolph Drive residence on July 21.
It's high summer and already some of us are contemplating next year's garden. Perhaps this fall we will move some plants from one spot to another or maybe dig a completely new bed. And so the gardening cycle continues.
ORWELL — Another Vermont History Expo is behind us. The Orwell Historical Society Museum's One Room Schoolhouse exhibit (a smaller version of a permanent display) may have only taken a few weeks to prepare for, and a solid week to design and build, but if the comments in our guest book are any indication the time and effort paid off in dividends.
ADDISON COUNTY — As the state Agency of Agriculture debates whether to implement new regulations on farmers in the Missisquoi Bay watershed in an effort to cut down on phosphorus pollution, farmers in Addison County say more regulation is not the answer.
"The regulations that we have, including the Accepted Agricultural Practices, are adequate," said Bill Moore, legislative director for the Vermont Farm Bureau.
MIDDLEBURY — If you find you have overdue fines at Middlebury's Ilsley Public Library this August, be sure to bring peanut butter, diapers, soup, fruits or veggies with you when you return your books.
From Aug. 1-15, Ilsley patrons with outstanding fines will be able to pay them off with canned foods instead of cash.
Editor's note: This is the fourth in a series of stories on summer theater in Ripton.
RIPTON — Actor Jonathan Fried's connection with summer theater at Bread Loaf began with "Macbeth."
FERRISBURGH — On the third weekend of July, members of the Lake Champlain Maritime Museum's Rowing for Racing group of Community Rowers traveled to Boston for two days of whaleboat races in celebration of the Charles W. Morgan, the last wooden whaleship in the world.
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This position is now filled
Senior Sales Manager - Raw Materials
Bullet points
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About Our Client
Our client is a Global MNC with more then 15,000 employees Worldwide, they are market leader that manufactures materials that will be used in industries such as textile, performance solutions. Their growth is based on their quality standards and investment in developing cutting edge products to their clients.
Job Description
You will be accountable for the ASEAN market, focusing on push sales and preferentially drive the pull sales for our client most profitable product line.
You will be responsible for developing their market segment POV, commercial sales strategy/key bets for each country and work with various internal and external resources to implement them.
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- At least 10 years working experience in sales, business development or marketing function; Apparel or Textile industry experience is preferred.
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What's on Offer
Opportunity to join a global market leader that is expanding in the region, our client is providing a excellent package for the right talent and a clear career path with organic growth.


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1 unit for RM49 (rrp. RM99)
2 units for RM89 (rrp. RM198)
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Product specifications and features
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- Weight: 0.55kg
- Material: Polyester
Design A
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May 19, 1980
PLANT INDUSTRIES, INC., Plaintiff, against ROBERT B. BREGMAN, MALCOLM A. BORG, CONNIE A. COX, ALAN M. MORRISON, SERGE C. NAGGAR and THOMAS E. SINGER Defendants.
Plaintiff, Plant Industries, Inc. ("Plant") commenced this action on May 7, 1980 seeking injunctive relief for violations of section 14(a) of the Securities Exchange Act of 1934
and two of the rules promulgated thereunder which regulate the solicitation of proxies. These violations were allegedly committed by the defendants, the members of the Plant Industries Committee for New Management (the "Committee") in the course of a proxy fight they are now waging against Plant's current management and directors with regard to the election of directors at the annual meeting of the Plant shareholders to be held on May 21, 1980. Plaintiff initially moved for a preliminary injunction to enjoin the defendants from voting at the forthcoming meeting (1) any proxies they have received or will receive and (2) any shares of Plant stock they themselves own beneficially or of record.
Upon the argument of this motion, which occurred while the Court was conducting a rather complicated trial, the Court suggested the parties agree to a reasonable adjournment of the scheduled shareholders' meeting to permit consideration of the matter free from undue pressures. Their attempts to agree upon a form of a letter explaining the reasons for the adjournment failed whereupon the Court indicated it would hand down its ruling before the scheduled meeting. Plaintiff has modified its request for preliminary relief. It now seeks to enjoin the defendant Bregman from continuing alleged violations of the proxy rules and to require Bregman to send shareholders a letter of resolicitation and a statement correcting alleged material misstatements and advising them of alleged violations of Rule 14a-3, in which event plaintiff will agree to the adjournment of the meeting so as to permit Bregman to resolicit properly.
Since the parties have not agreed upon an adjournment of the scheduled meeting and defendant has not conceded any violations, the Court is perforce required to dispose of the matter under existing circumstances. After careful consideration of the affidavits, depositions and briefs submitted, the Court concludes that plaintiff's application is without evidential support that its motion is grounded upon such speculation, conjecture and surmise as to require its denial. In large measure, the application is founded upon disputed conversations and events which are not specified and from which plaintiff seeks to draw unreasonable inferences as to what the actual facts are.
The defendant Robert Bregman was an employee of Plant from February 1978 until January 21, 1980. He is a substantial shareholder in the plaintiff. While at Plant, Bregman became increasingly dissatisfied with the company's current management, particularly with its president, Hyman Katz, incidentally, his father-in-law. Sometime in late December 1979, Bregman's disenchantment culminated in a decision to take some action to have Katz removed. He approached each of the directors of Plant with a proposal that the board take such action. This approach was unsuccessful, Katz apparently learned of it, and Bregman was discharged on January 21, 1980. Bregman retained counsel a day or two later, formed the Committee and initiated the present proxy fight seeking to unseat the Katz-led board of directors. On February 15, 1980, Bregman filed Schedules 14B and 13D with the Securities and Exchange Commission.
On April 23, 1980 the Committee sent out its proxy materials, consisting of a proxy statement and a letter outlining the Committee's position.
The standards in this Circuit for preliminary injunctive relief are well-established. Plaintiff must show (a) either (1) likelihood of success on the merits, or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the plaintiff; and (b) in either case, irreparable injury.
The Merits of Plaintiff's Claims.
The complaint in this action contains two causes of action. One alleges violations of Rule 14a-3,
promulgated under section 14(a), claiming specifically six instances of allegedly unlawful solicitations by Bregman on behalf of himself and the Committee. For the purposes of this motion, however, plaintiff presses only one of these claims that Bregman improperly solicited the support of several stock brokers. The second count alleges violations of Rule 14a-9,
promulgated under section 14(a), in that the Committee's proxy materials are materially false and misleading with regard to seven distinct items. Plaintiff presses only two of these allegations, conceding that it does not have sufficient evidence to support the others at this time.
1. Alleged Violations of Rule 14a-3.
Rule 14a-3
prohibits the solicitation of a proxy "unless each person solicited is concurrently furnished or has previously been furnished with a written proxy statement containing the information specified in Schedule 14A."
This rule does not apply to a non-management solicitation where the total number of persons solicited is ten or fewer,
and in an election contest, the rule does not apply provided the person making the solicitation has previously filed a Schedule 14B
with the S.E.C. and certain other requirements have been met.
In light of this second exception, plaintiff challenges only solicitation activities it claims took place prior to February 15, 1980, the date the defendants filed their Schedule 14B.
To show that there is a likelihood it will succeed on the merits of its Rule 14a-3 claims or that it has raised sufficiently serious questions going to the merits, plaintiff maintains that the evidence it has submitted warrants the conclusion that there is a "substantial probability" that Bregman "solicited support from at least several registered representatives" prior to the filing of the Schedule 14B. Plaintiff points first to contacts Bregman admittedly had with certain friends and acquaintances who were members of the securities industry Strauss, Spiewak, Shore and Sidel while he was still a Plant employee prior to January 21, 1980 and to his simple statement that "a lot of brokers called" him at Plant. It also refers to the affidavits of two Plant directors Goldfeld and Fritz whom Bregman sought to persuade to join him in his efforts to oust Katz before he was fired. Fritz states that Bregman told him he controlled 60% of Plant's stock and Goldfeld states that Bregman told him that he controlled one and a half million shares, that he had spoken with his friends who were brokers and that they had said they would support Bregman. Bregman denies that he made any such statement to Goldfeld and avers he told Goldfeld only that he "knew where the stock was" in response to his inquiry as to what support he had. Thus there is a clear issue of fact as to what was said at this meeting.
Aside from this disputed statement, there is no proof that Bregman ever discussed a proxy fight with the brokers he spoke to, let alone that he actively solicited their support. Plaintiff's position is based on assumption upon assumption. It reasons that Bregman would not have taken his case to the board, jeopardizing his job, unless he knew he had "firm support" from brokers, and then infers from this initial assumption that Bregman had in fact solicited those brokers and obtained their support before he went to the board. It makes still another assumption that the brokers would not have indicated their support without having previously solicited their customers in support of Bregman.
This chain of logic is constructed of the most tenuous links it is without support in the record and the inferences plaintiff seeks to draw are sheer speculation. Bregman's unrefuted deposition reveals that his contacts with the brokers who followed Plant's stock were, on the whole, initiated by them and were proper inquiries of Bregman about general matters pertaining to Plant's business. It also reveals that Bregman was extremely disgruntled with Plant's management and that, while not a wealthy man, Bregman possesses substantial assets (over $ 200,000) and a trade. These facts undermine plaintiff's contention that Bregman would not have jeopardized his position at Plant without first obtaining the brokers' support.
The next arguments made by plaintiff to support its claim of Rule 14a-3 violations involve contacts Bregman had with certain brokers after he left Plant on January 21st. Bregman testified that he had conversations with Sidel and Strauss in which he read them a press release issued by Plant on Selvac, a key product, the development of which was of special interest to the brokers. These conversations had no relation to the proxy fight; Bregman states in fact that he told neither man of his own dissatisfaction with Katz' performance. Plaintiff, however, after first fixing the date of these conversations as subsequent to Bregman's departure from Plant, concludes, solely from the fact that by that time Bregman was considering a proxy fight and had retained counsel, that "it is simply not credible" that Bregman did nothing but read them the press release. It urges the inference is warranted that what in fact Bregman did was to solicit their support for his slate. Again, this inference is unwarranted; it is pure guesswork, utterly without a factual basis in the record.
Although afforded the opportunity, plaintiff deposed neither Sidel nor Strauss.
The final "proof" of solicitation upon which plaintiff relies is a handwritten memorandum of a conversation with Hal McGuire, a registered representative of Shearson Loeb Rhodes, dated January 23, 1980 (prior to the filing of the Schedule 14B). The memo indicates Bregman spoke to McGuire about the possibility that someone named Eli Rabb might be interested in serving on Bregman's opposition slate of directors. Plaintiff contends that the memo "make(s) plain" that Bregman solicited McGuire's support by that date because "he certainly would not have asked McGuire (for assistance in obtaining Rabb for the slate) unless on that occasion or previously he solicited McGuire's support." This conclusion is a non sequitur and is without an iota of factual support in the record. In this instance too, no attempt was made to depose McGuire and instead plaintiff chose to speculate on what was said. Particularly in light of Bregman's numerous acquaintances in the securities industry, there is absolutely no reason that his request for assistance in approaching a potential board member must inevitably have been preceded by a solicitation of support.
In sum, to prove that it can make out its claim of improper solicitations on the merits, plaintiff proffers a few seemingly innocent communications by Bregman with members of the brokerage community and seeks to bolster them into unlawful activity by inferences that are unsupported by reason or the record. Accordingly, with respect to the Rule 14a-3 claims, plaintiff has failed to develop an adequate factual predicate to show a likelihood of success on the merits or to raise sufficiently serious questions going to the merits to constitute fair ground for litigation.
Assuming that plaintiff had shown a sufficient factual base to conclude that Bregman had sought the support of the brokers he spoke to, the Court nonetheless would conclude that its legal position failed to meet the standard for preliminary relief. Plaintiff takes the position that any solicitation of brokers by Bregman is not within the proxy rule exception for solicitations of under ten persons
because the solicitation of brokers must be construed as the solicitation of the brokers' customers who number more than ten. This must be the case, plaintiff argues, because the brokers are in a position to influence their customers and Bregman would not have solicited the brokers unless he thought they could influence their customers. Plaintiff's argument is without substance. It concedes that there is no authority for such an interpretation of the proxy rules. Thus the ultimate success on the merits of its solicitation claims depends on the resolution in its favor of a completely unprecedented question of law. In such circumstances, it cannot be concluded that plaintiff has shown a likelihood of success on the merits.
2. Alleged Violations of Rule 14a-9.
To prevail on its Rule 14a-9
claims, plaintiff must prove (1) that the proxy materials contain a false or misleading statement of a material fact or omit to state a material fact necessary to make the statement not false or misleading and (2) that the misstatement or omission of a material fact was the result of knowing, reckless or negligent conduct.
The Supreme Court in TSC Industries, Inc. v. Northway, Inc.,
stated the now classic standard of materiality under Rule 14a-9; a misstatement or omission is material
if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote. (This standard) does not require proof of a substantial likelihood that disclosure of the omitted fact would have caused the reasonable investor to change his vote. What the standard does contemplate is a showing of a substantial likelihood that, under all the circumstances, the omitted fact would have assumed actual significance in the deliberations of the reasonable shareholder. Put another way, there must be a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the "total mix" of information made available.
In determining whether a statement or omission is false or misleading, the proper standard is "(f)air accuracy, not perfection."
As the Court of Appeals has aptly stated: "Rare indeed is the proxy statement whose language could not be improved upon by a judicial craftsman sitting in the serenity of his chambers. This is particularly so where the statement is prepared in the "hurly-burly' of a contested election. "Not every corporate counsel is a Benjamin Cardozo . . .', and nit-picking should not become the name of the game."
Plaintiff claims that the letter to shareholders accompanying the Committee's proxy statement contained two statements that were materially false and misleading, in violation of Rule 14a-9. The first statement was:
The Company's independent auditors have found it necessary to qualify their opinion of the Company's financial statements for each of the past ten years, although when Mr. Katz first took over the accountants' opinions were unqualified. Such qualifications relate to litigation, and the recoverability of costs represented by property, plant, equipment, inventory, research and development, production start-up and market development expenses, which costs appear as assets on the Company's balance sheets.
Plaintiff concedes the truth of the first sentence quoted. Plant's financial statements have in fact been qualified in each of the past ten years. It also admits that in each of those years the reasons for the qualified statements were one or more of the items given in the second sentence from the Committee's letter. Plaintiff nonetheless contends that this statement is materially misleading because of the "clear and intended" implications it finds in it that, for each year referred to, each listed category was a reason for the accountants' qualification, and that Plant's costs for research and development, production start-up and market development were listed as assets in the financials in each of the past ten years. These implications are false, Plant claims, because after 1974 none of the qualifications related to research and development costs and after 1975, none related to production start-up and market development.
Simply put, Plant's claim with respect to the qualifications statement is a clear instance of "nit-picking." The fact is the financials were qualified in each year and for one or more of the reasons given. The implications urged by the plaintiff that there were qualifications in each year relating to each specific category reflect a strained and unnatural reading of the language. Moreover, given the literal accuracy of the Committee's language and the undisputed truth of the basic charge made in the statement, it is seriously to be doubted that the disclosure of a list attributing reasons for the qualifications year by year would have "significantly altered the "total mix' of information" available to the shareholders. Thus the Court concludes that the statement quoted above is not misleading; but assuming arguendo the implications urged by plaintiff are found in the language, there is no substantial likelihood a reasonable shareholder would consider important in deciding how to vote the fact that, while there were qualifications to the financial statements in all years, they did not relate to each of the categories in each year. Moreover, it should be noted that plaintiff, in a communication to the shareholders, has already apprised them that the qualifications in certain years did not apply to certain categories.
The second statement in the Committee's letter complained of by Plant says:
The Katz-led board has caused our Company to lose in excess of $ 14,250,000 before taxes on these three businesses, none of which, through last year, had contributed one thin dime to Company earnings before income taxes and extraordinary items.
One of the three "businesses" referred to is Plant's "Synthetic Woven Fabrics" operation (which consists of the Plant subsidiary, Plant Industries (Texas) Inc.). Plaintiff alleges that the quoted statement is materially false because Plant Industries (Texas) Inc. had an "operating profit" of $ 320,000 for fiscal 1979 (a figure determined before allocation of general corporate expenses, research and development and interest expenses). This, however, is not the figure described in the Committee's statement which speaks of "contributions to Company earnings." Plant's own annual report contains a table which purports to show "the contribution to . . . net income (of Plant) (before provision for income taxes and extraordinary items) of the principal lines of business of the Company." This table indicates there were no such contributions from the woven synthetic cloth operation for the year ending 1979. It is from this table that the Committee derived its information and the proxy materials clearly indicate the source of its information and disclaim the accuracy of the Company's figures. The Court finds not a glimmer of a falsehood and thus no possibility of success on the merits of this Rule 14a-9 claim.
In sum, the plaintiff has also failed with respect to its Rule 14a-9 allegations to meet its burden of showing either a likelihood of success or the existence of sufficiently serious questions going to the merits to make its claims fair ground for litigation.
Irreparable Injury.
Having concluded that plaintiff has not made a sufficient showing as to the merits of its claims to warrant a preliminary injunction, it is not necessary to dwell long on the question of irreparable harm.
The Court notes, however, that plaintiff has made no showing that irreparable injury will flow from the conduct of the defendants unless the Court grants the very drastic injunction sought here. Plant argues only that if the Committee is successful in its proxy fight but is ultimately found to have violated the law "there may well be no way of fashioning effective relief" (emphasis added). This argument is without merit. To allow an election to proceed in the face of allegations of improper solicitations and misleading proxy materials does not in and of itself work an irreparable injury on the party challenging the materials.
The Court possesses the power, if necessary, to void the election, order resolicitation and otherwise "unscramble" this kind of transaction.
In accordance with the foregoing, plaintiff's motion for a preliminary injunction is denied.
So ordered.
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