L'OREAL USA, INC. VS. WORMSER CORPORATION (L-6069-19, BERGEN COUNTY AND STATEWIDE) ( 2021 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4073-19
L'ORÉAL USA, INC.,
Plaintiff-Appellant,
WORMSER CORPORATION
and PROCESS TECHNOLOGIES
AND PACKAGING, LLC,
Defendants-Respondents.
____________________________
Submitted March 15, 2021 – Decided March 31, 2021
Before Judges Sabatino and DeAlmeida.
On appeal from the Superior Court of New Jersey, Law
Division, Bergen County, Docket No. L-6069-19.
K&L Gates LLP, attorneys for appellant (Anthony P.
La Rocco and Charles F. Rysavy, on the briefs).
Kagen, Casperen & Bogart PLLC, attorneys for
respondent Wormser Corporation (Joshua C. Gillette,
on the brief).
Dughi, Hewit & Domalewski, PC, attorneys for
respondent Process Technologies and Packaging, LLC
(Russell L. Hewit, on the brief).
PER CURIAM
This appeal involves an exceedingly narrow issue concerning whether the
Law Division erred by inserting "with prejudice" language into an order
dismissing a complaint for lack of subject matter jurisdiction because plaintiff
filed suit in the wrong state. For the reasons that follow, we affirm the
complaint's dismissal but modify the trial court's order to specify that the
dismissal is without prejudice, in accordance with Rule 4:37-2(d).
This procedural tangle arises out of a forum selection clause designating
jurisdiction in plaintiff's home state of New York. The pertinent circumstances
can be succinctly stated.
Plaintiff L'Oréal USA, Inc. ("L'Oréal") entered into a contract with
defendant Wormser Corporation ("Wormser") to develop a new cosmetic
product called "Confidence in a Foundation™." Wormser, in turn, utilized a
subcontractor company in which it owns a minority interest, Process
Technologies and Packaging, LLC ("Process Tech") to perform the contract.
After customers complained about the product, L'Oréal pulled it from the
market.
A forum selection clause in Paragraph 16 of the contract between L'Oréal
and Wormser specified that any litigation of disputes under that contract must
be brought in "the city where [L'Oréal's] registered address is," i.e., New York
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City. Despite that provision, L'Oréal filed suit against defendants Wormser and
Process Tech three times in this state: (1) a July 2019 complaint in the United
States District Court (which L'Oréal soon voluntarily withdrew); (2) an August
2019 complaint in the Law Division in Bergen County, and (3) an amended
complaint in the Law Division of that same county.
Citing L'Oréal's forum selection clause, Wormser and Process Tech
moved to dismiss the Law Division action for lack of subject matter jurisdiction,
arguing that the case should have been filed in New York.
In a series of orders dated May 13, 2020, May 29, 2020, and June 5, 2020,
the Law Division dismissed the New Jersey complaint as to both defendants for
lack of subject matter jurisdiction. In the May 13, 2020 order, the trial court
granted Wormser's motion to dismiss "with prejudice." All three parties
thereafter joined in a letter advising the judge that they consented to having the
May 13, 2020 order amended to apply to both Wormser and Process Tech's
motions to dismiss and the order revised to simply say the case was dismissed
"without prejudice." The trial judge did not adopt this proposal and instead, in
its May 29, 2020 order, granted Process Tech's motion to dismiss and, sua
sponte, inserted language dismissing the Law Division complaint "with
prejudice for the action being brought within the state courts of New Jersey."
The trial court also denied plaintiff's motion to amend the May 13, 2020 order
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in its June 5, 2020 order and asserted the denied order "is [dismissed] with
prejudice within the jurisdiction of New Jersey."
This appeal ensued. Meanwhile, L'Oréal has filed a duplicate action
against defendants in the New York state courts. Defendants have moved to
dismiss that lawsuit. We have been advised by an update letter from counsel
that the motion to dismiss is scheduled to be orally argued before the New York
court in mid-May.
Rule 4:37-2(d) clearly instructs that: "Unless the order of dismissal
otherwise specifies, a dismissal under R. 4:37-2(b) or (c) and any dismissal not
specifically provided for by R. 4:37, other than a dismissal for lack of
jurisdiction, operates as an adjudication on the merits." (Emphasis added). A
dismissal for lack of subject matter jurisdiction due to a forum selection clause
requiring suit to be brought in some other jurisdiction is not an adjudication on
the merits. See Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 596 (1991)
(noting that enforcement of a forum selection clause "allows for judicial
resolution of claims against [the defendant]" in the designated forum). The
dismissal on that procedural basis is not a determination "on the merits."
Velasquez v. Franz, 123 N.J. 498, 505-06 (1991) (explaining that the
preclusionary doctrine of res judicata requires, among other things, a final
judgment in the earlier action rendered "on the merits").
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We discern no reasonable basis for the trial court to have specified in the
dismissal order in this case that it was "with prejudice" as to any further
litigation in New Jersey. Although it is puzzling why L'Oréal's counsel filed
three successive complaints in this state in contravention of the forum selection
clause, the language injected by the court was inconsistent with Rule 4:37-2(d)
and inappropriate. In the unlikely event that L'Oréal filed a fourth complaint in
this state, we presume defendants would readily invoke the entire controversy
doctrine to repel it. See R. 4:30A; DiTrolio v. Antiles, 142 N.J. 253, 267 (1995).
The trial court's orders of dismissal are affirmed, with the following
modifications. The May 13, 2020 order shall be revised to replace the phrase
"with prejudice" to "without prejudice." The May 29, 2020 order shall be
revised to replace the phrase "with prejudice for the action being brought within
the state courts of New Jersey" with the phrase "without prejudice." Our judicial
colleagues in the New York courts now may be guided accordingly. The trial
court shall issue implementing orders consistent with this opinion within ten
days.
Affirmed, as modified.
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